Blog Post

AEIdeas

Many people in America think poverty is a constant state for those who experience it. Many also think most poor people hold steady jobs. A new working paper sheds light on the existence of persistent poverty and joblessness in America and suggests that both conditions are actually very uncommon.

According to the study, only 6.7 percent of households experienced poverty in three-quarters or more of the months from 2009–2011, while 9.7 percent were jobless for the same amount of time. But the study revealed a strong connection between joblessness and long-term poverty. Among those households that were persistently poor, 72.1 percent spent some time jobless and almost 40 percent spent at least three-quarters of the months without a job. This directly contradicts any belief that most poor households work consistently.

According to the paper:

The idea that consistently working people (that is, the “working poor”) make up a large share of those in persistent poverty was not borne out in the data. As mentioned above, only 6.7 percent of households experienced persistent poverty, and of those only 27.9 percent worked the entire time.

The study finds that the relationship between persistent poverty and long-term joblessness was similarly strong in earlier time periods, 2001–2004 and 2004–2006. In terms of policy solutions, the paper concludes:

This suggests that policies that increase labor force attachment would have a larger effect on reducing persistent poverty than policies to increase wages, unless they also increase steady employment. Better identifying why adults in persistently poor households experience joblessness and what policies can help them avoid joblessness more consistently should be the next step in reducing the persistence of poverty.