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Low-Income Families and Opportunity

From The State of Opportunity in America Report

The Opportunity Agenda has released The State of Opportunity in America, the first national report to measure how opportunity is faring in the United States.  The report assesses the level of opportunity for all in our nation, with special attention to low-income families and other groups who have been denied full opportunity. 

American opportunity means that everyone should have a fair chance to achieve his or her full potential.  Ensuring that fair chance requires equal treatment, economic security and mobility, a voice in decisions that affect us, a chance to start over after misfortune or missteps, and a sense of shared responsibility for each other as neighbors and fellow Americans.  The report assesses opportunity along each of these core American values and offers solutions to eliminate barriers so that everyone in our country has the chance to live the American Dream.

The report finds that, despite some areas of progress, opportunity is at risk for all Americans.  The traditional steppingstones to opportunity—an affordable home, a college education, a decent job at a living wage, access to quality health care, and economic security—are moving farther and farther out of reach for everyday Americans.  Findings and recommendations of particular relevance to low-income families include the following:

Low-income families face multiple barriers to opportunity.  Many of these barriers are increasing and cannot be overcome through hard work and perseverance alone. 

• Poverty.  In 2004, nearly 37 million people—about one in eight U.S. residents—lived in poverty.  More than one-third of these are children under age 18.¹  
  • In 2003, more than 24 million people who worked full- or part-time lived in poverty, and over one in ten poor people worked full-time.²  
  • A parent who works full-time at the federal minimum wage to support a family of three makes $5,000 under the poverty line.³  
  • The percentage of full-time workers who fall below the poverty line has increased by 42% since 1978.  The number of these workers has more than doubled since 1978, rising from about 1.3 million to almost 2.9 million workers in 2004.⁴
• Wage Inequality.  Between 1979 and 2003, wages for the top 5% of wage earners grew by 31%, while wages for workers in the bottom tenth remained stagnant, declining by 0.9%.⁵
• College Less Affordable.  Between 1980 and 2000, the share of a low income family’s earnings required to pay for one year at a public four-year college increased from 13% to 25%.  Need-based student aid has not kept pace with this increase.⁶
• Housing.  Of the 4.4 million “working poor” households in the United States, nearly 60% pay more than half of their incomes for housing or live in dilapidated conditions.  Nearly three in five of these households have children.⁷
  • Although homeownership has slightly increased nationally in the last 20 years, the rate of homeownership growth has disproportionately favored higher income groups.  Between 1970 and 2003, homeownership among the top income quintile grew by over 10%, while slightly declining among the lowest fifth of wage earners.⁸
  • On average, families with extremely low incomes can afford to rent a two-bedroom house at fair market price in only nine U.S. counties, and in only four counties can a person working full-time at the minimum wage afford even a one-bedroom apartment.⁹

Bold action by our government and national institutions is needed to expand opportunity for all.  The report urges our nation’s leaders to:

• Assess the impact of public policies on all dimensions of opportunity, by requiring Opportunity Impact Statements for all publicly funded projects. 
• Train Americans to adapt to a global economy, evolving technology, and an increasingly diverse population—with particular attention to groups of Americans who face the steepest barriers to opportunity.
• Modernize safety net programs that help people meet their basic needs and become economically secure.
• Renew a commitment to human rights in the United States, by vigorously enforcing existing civil rights laws and implementing a new generation of human rights laws.
• Prioritize crime prevention and rehabilitation over incarceration.
• Protect democratic participation and promote diverse involvement in the American political process by establishing minimum federal standards for voting equipment and procedures and by vigorously enforcing the Voting Rights Act and the Help America Vote Act.

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Endnotes

1. U.S. Bureau of the Census, Income, Poverty, and Health Insurance Coverage in the United States: 2004, Current Population Reports (Washington, D.C.: U.S. Government Printing Office, 2005).
2. U.S. Bureau of the Census 2005, Historical Poverty Tables, Table 18.
3. L. Mishel, J. Bernstein, and S. Allegretto, The State of Working America, 2004/2005 (Ithaca, N.Y.: ILR Press, 2005).
4. U.S. Bureau of the Census 2005, Table 18.
5. Economic Policy Institute analysis of Current Population Survey data, 2005.
6. The Institute for Higher Education Policy, Investing in America’s Future: Why Student Aid Pays Off for
   Society and Individuals (Washington, D.C.: The Institute for Higher Education Policy, May 2004).
7. Center for Housing Policy, “Housing Problems of the Working Poor,” New Century Housing 5, issue 1 (April 2004).  “Working poor” families are defined as those in which one or more family member works, yet family income is at or below the federal poverty threshold ($17,650 for a family of four). 
8. Economic Policy Institute analysis of Current Population Survey data, 2005.
9. National Low Income Housing Coalition, “Out of Reach 2004,” www.nlihc.org/oor2004 (11 July 2005).