The Prevalence and Demography of Insufficient Earnings

Abstract

This research measures the prevalence and demography of full-year full-time workers whose earnings in 2018 or 2019 were insufficient to exceed the Supplemental Poverty Measure (SPM) poverty thresholds. Earnings sufficiency is then recalculated by subtracting the FICA taxes (Social Security and Medicare), adding the Earned Income Tax Credit, and subtracting work expenses to generate a measure of “expendable earnings.” This recalculation changes the prevalence of earnings insufficiency more for some demographic groups than others. The demographic breakdown examines racial/ethnic groups, separates immigrant workers from the native born, divides gender groups by marital status and the presence of children and examines three age groups, four educational attainment groups, and three groups divided by metropolitan status. The wage rates of workers with insufficient earnings are assigned to wage bins tailored to current debates about minimum wages, finding that almost 25% of full-year full-time workers with insufficient expendable earnings have wages that exceed $15 per hour, and that allocations into wage bins differ substantially among demographic groups.