How Low Wages Hurt Families and Perpetuate Poverty


April 9, 2015

This post was originally published on Oxfam America’s blog, The Politics of Poverty, on April 7.

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Tyree Johnson, who’s worked for 20 years at a fast-food restaurant, rides a train on his way to work in Chicago. The pay gap separating fast-food workers from their chief executive officers is growing dramatically. Photo: Judy Griesedieck / MCT /MCT via Getty Images

Low wages for workers today are likely to predict low wages for those same workers tomorrow (and for many years after), as a new survey of research for Oxfam America by Shawn Fremstad, a Senior Fellow at the Center for American Progress, reveals.

Poverty-level wages not only mean that workers live in poverty; they also have a host of other negative effects that relegate these workers to a lifetime stuck in America’s growing low-wage economy.

With more than 4 in 10 children who start life at the bottom of the income distribution staying at the bottom in adulthood, it is clear that America’s once-vaunted reputation for rags-to-riches mobility is no longer so deserved. Republicans and Democrats both recognize that upward social mobility is too low and has fallen behind that of most Western European countries.

While more has been written about the flagging American Dream of inter-generational mobility (whether children are able to do better than their parents), intra-generational mobility (whether individuals ascend the socio-economic ladder in their own lifetimes) is also sparse. Low-wage workers are in jobs that are insecure and make it virtually impossible for them to invest in education or training, or to buy a car, to get to a better job. In addition, studies have found that low-wages have particularly harmful effects on families, children, and workers’ health, which, in turn, are additional barriers to workers getting better jobs.

  1. Much research suggests that workers in low-wage careers are less likely to marry and more likely to divorce and experience family instability. Single parents generally have lower living standards than two-parent households, and this hits single mothers especially hard. Eliminating the gender pay gap would cut the poverty rate in half for working single mothers, according to the Institute for Women’s Policy Research, and—not surprisingly—higher wages generally lead to more stable families.
  1. Low wages make child care unaffordable, causing enormous strains on families and single parents. For working parents who are paid poverty-level wages, 30 percent of their income goes to child care, the Census Bureau reports. For “near poor” workers—those paid between the poverty line and double that level—child care consumes about 20 percent of income. Higher wages, together with more generous public subsidies or tax credits for low-income families, make child care more affordable, significantly reducing the impossible “choice” that many low-wage workers have to make between caring for their children and working.
  1. Low wages are unhealthy. While arduous work and unsafe working conditions take their own toll, low-wage workers are less likely to get decent health care simply because they cannot afford it. J. Paul Leigh, a University of California-Davis epidemiologist also found a strong relationship between low wages and increased obesity and hypertension, particularly among women and workers under age 44. Low wages are associated with increased stress, low self-esteem, and a greater tendency to engage in unhealthy behaviors like smoking. The health effects of low wages become a vicious cycle, in which poor health hinders employment and income growth. By contrast, higher wages and better health give workers a greater chance of getting promotions, education and training, and consequently, the ability to achieve upward mobility.

While Fremstad focuses on intra-generational mobility, considerable, better-known research on inter-generational mobility has found that upward mobility is less attainable in the United States than in other developed countries due to advantages conferred by parents’ relative well-being and reinforced by policies that hinder children’s opportunities for advancement.

Robert Putnam, the Harvard political scientist and author of the influential book, Bowling Alone (2000), writes in his new book, Our Kids: The American Dream in Crisis: “As income inequality expands, kids from more privileged backgrounds start and probably finish further and further ahead of their less privileged peers, even if the rate of socioeconomic mobility is unchanged.”

Raising the minimum wage is not the only solution to America’s low-wage economy and low social mobility, but it could set in motion a virtuous cycle of stronger families, children who are better cared for, and healthier workers—thus helping hard-working Americans get and keep still better-paying jobs.


[Editor’s Note: For more information, check out this related post, 6 Things to Know About Economic Mobility.]

Labor and Employment
low wages
minimum wage