Low-Income Working Families: Updated Facts and Figures

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Abstract

A large percentage of American families have low incomes, which lead to a host of challenges and disadvantages for both parents and children. In 2006, one out of every three families with children had incomes below twice the federal poverty level (FPL): $40,888 for a family with two adults and two children. While these families face many of the same challenges as other families, they are particularly financially vulnerable. This fact sheet provides statistics on the work effort, earnings, health care access and other characteristics of these families.

Introduction

A large percentage of American families have low incomes, which lead to a host of challenges and disadvantages for both parents and children. In 2006, one out of every three families with children had incomes below twice the federal poverty level (FPL): $40,888 for a family with two adults and two children (see figure 1). While these families face many of the same challenges as other families, they are particularly financially vulnerable. These low-income families struggle to find and keep work, pay their bills, and provide their children with essentials like housing and health care.

• Low-income parents work a lot. Even though low-income families worked substantially less than higher-income families in 2006, nearly half (48.6 percent) fell in the high-intensity category—meaning at least one parent worked full time, all year. Another 17.8 percent worked a moderate amount, 5.6 percent worked a low amount, and 8.2 percent worked for themselves. [See table 1 and figure 2.]
• Low wages explain why these families have low incomes. The vast majority of low-income families’ income comes from earnings—89 percent in the case of low-income families with at least one full-time, full-year worker in 2006. These high-work families made roughly $25,000 during 2006 (only 22 percent above the poverty level for a family of four). Those in the medium– and low–work intensity categories had even lower incomes, roughly $13,860 and $6,300, respectively. [See table 2.]
• Single-parent families are in even worse economic situations. Single-parent families are almost twice as likely to have low incomes compared to all families with children, and almost three times as likely to have low incomes compared to married-couple families with children. Seventy percent of single parents are in the workforce, but only about 40 percent work full time—perhaps because of child care challenges and other family responsibilities. When they are able to work, low-income single parents work for lower wages; in 2006, single parents earned about $10 an hour while married parents earned about $11 an hour. The median wage rates for each group are about $1 lower.

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