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We Need Better Labor Force Participation Among Low-Income Americans

A new report highlights why increasing labor force participation among the poor may be harder than it sounds.

By Dwyer Gunn

Paul Ryan and House Republicans recently released their plan to fight poverty in America. The importance of work is a central theme to the report. Here’s a chart from the report illustrating the relationship between labor force participation and poverty:


(Chart: A Better Way)

“[O]f all working-age adults (18–64) who were in poverty in 2014, almost two in three were not working at all, and another 27 percent were working only part-time,” Ryan writes in his report. “On the other hand, in 2014, only 2.7 percent of full-time workers lived below the poverty level, compared with 32.3 percent of adults who do not work. Even part-time work makes a significant difference; only 17.5 percent of part-time workers lived below the poverty level.”

Ryan’s plan calls for a number of reforms aimed at increasing labor force participation among low-income Americans. These reforms include, among other things, strengthening the work requirements for recipients of Temporary Assistance for Needy Families and Supplemental Nutrition Assistance Program benefits, helping non-custodial parents find employment, and reforming the Supplemental Security Income program.

But a new report suggests that increasing employment rates among low-income Americans may not be as simple as Ryan makes it seem. In their paper, economists Diane Whitmore Schanzenbach, Lauren Bauer, and Ryan Nunn counted 46.7 million Americans living in poverty in 2014. That’s 14.8 percent of the population.


(Chart: The Hamilton Project)

This chart, from the Hamilton Project report, provides some demographic context.

As the chart demonstrates, 35 percent of Americans living under the poverty line in 2014 were children; 25 percent were in the labor force in some capacity; 10 percent were disabled; and 10 percent were senior citizens. Only 3 percent of poor Americans in 2014 were healthy, working-age adults who either weren’t in the labor force, disabled, retired, or working as a student or caregiver.


(Chart: The Hamilton Project)

So what happens when you strip out children and the elderly and just focus on working-age adults? This second chard shows what that demographic was up to in 2014.

Forty-five percent of poor, working-age adults in 2014 were in the labor force in some capacity — either as full-time workers (13 percent), part-time workers (27 percent), or job-seekers (5 percent). Among those not in the labor force, the vast majority were disabled, caregivers, or students. And those part-time workers aren’t exactly at home twiddling their thumbs. Forty percent of part-time workers are “involuntary part-time,” meaning they’d like to be working full time but can’t find work; another 44 percent are students, caregivers, or disabled.

The GOP isn’t wrong about the importance of work. An analysis last month by the Brookings Institution modeled how various hypothetical policy interventions — upping high school graduation rates, increasing the minimum wage, giving single mothers “a helping hand,” and so forth — would affect the incomes of the bottom third of Americans. They found that full-time employment among all household heads produced the biggest income boost, by a pretty large margin:

(Chart: Brookings)

But this recent report from the Hamilton Project suggests that most poor Americans who aren’t working generally have a pretty good reason for not being in the labor force at a given time—a fact that has important implications for designing policies and programs that successfully lift Americans out of poverty. If we want to increase the labor force participation rates of low-income Americans, we first need to understand and address the barriers to employment that they face.