Wednesday, May 20, 2015

By Derek Thomas and Kevin Rogozinski

As concerns over racial disparity emerge around the nation, a timely report from the Working Poor Families Project finds a sharp divide among low-income working families. According to the research, working families headed by racial and ethnic minorities were twice as likely to be poor or low-income as working families headed by whites.

Racial and ethnic minorities will make up a majority of the U.S. population and workforce in little more than a generation, and a disproportionately high percentage of them will be low-income. These persistent trends pose critical challenges for Indiana and the nation – challenges that should be addressed by lawmakers.

Kathy Young's slide illustrates one of the ironies of Indiana's celebrated economic recovery. As the state economy grows and state leaders say pro-business policies have created more than 57,000 new jobs last year alone, poverty is on the rise. That's right. More jobs, yet more poverty. And a disproportionate number of those new poor are black and Hispanic.”
Read more on the ‘Economic gaps growing among Hoosiers’ – Indy Star, April 2015

Low-income working families with total income less than 200% of the federal poverty line (FPL) – $48,500 for a family of four – now constitute a third of all U.S. working families and 34% of all working families in Indiana. That’s 10,572,700 families nationally and 237,295 families just in Indiana. Within those low-income working families in Indiana, there are 541,480 children, equal to 39.2% of all Indiana children in working families – a larger share than all neighbor states and the U.S. average.

Minorities already make up a majority of low-income working families, and their disproportionate representation in the ranks of low-wage workers is growing in Indiana. According to WPFP’s data, 22.1% of working minority families are below the official poverty line ($24,250 for a family of four). That number – like overall poverty in Indiana – continues to swell, even as families in peer states experience improvements. 

Source: Working Poor Families Project
As above, the share of working minority families that are low-income (less than 200% FPL) is higher than surrounding states; 53.4% of working minority families in Indiana are low-income compared to 28.2% of working white families. 

                                                                               Source: Working Poor Families Project
The split isn't surprising: in 2013 38.1% of minorities are in low wage jobs compared to 22.4% of whites. 

This stark and growing racial and ethnic divide among working families weakens not only Indiana and national economies, but also the social fabric of communities everywhere.

The gap is likely to persist unless lawmakers take a
two-pronged approach towards reducing economic inequities, the research concludes. This approach includes simultaneously increasing access to education and training for low-income workers and enacting policies that make work pay.

By increasing access to financial aid for part-time and adult students, and extending access to Medicaid to 350,000 Hoosiers, Indiana has taken a step in the right direction. Nevertheless, the research warns that for an Indiana in which “younger workers and their families are able to move into the middle class and replace retiring baby boomers”, meaningful progress is required. Among the recommendations for state lawmakers:

- Raise the minimum wage
- Provide guaranteed paid sick leave
- Strengthen the state Earned Income Tax Credit
- Increase access to affordable childcare


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