Families’ Job Characteristics and Economic Self-Sufficiency: Differences by Income, Race-Ethnicity, and Nativity

WORKING FAMILIES’ JOB CHARACTERISTICS

Though parents’ jobs have financial (such as wages and benefits) and nonfinancial (such as schedule stability) factors that affect the health and well-being of all family members, wages are the primary resource that determines whether families achieve economic self-sufficiency. Yet over the past four decades, wages have not kept up with inflation for workers outside the top echelon of the wage distribution due to structural changes in the labor market and policy choices (Donovan and Bradley 2020; Mishel and Bivens 2021). Median hourly wages in 2020 (BLS 2021a) are effectively lower than the minimum wage in 1968, had wages kept up with inflation and productivity growth (Baker 2020). Declining or stagnant wages decrease purchasing power and lower the chances that workers in the middle and lower end of the wage distribution can attain economic self-sufficiency from earnings alone. At the same time, access to employer-provided benefits, such as health insurance and pensions, which can defray lower real wages and increasing health-care costs, have decreased over time for the median worker (Schmitt, Gould, and Bivens 2018). Access to employer-provided work-family benefits are even more rare. A minority of workers have access to subsidized childcare (11 percent) or paid family and medical leave (23 percent), and access to these benefits for low-wage workers is much lower (BLS 2021b). Without work-family benefits to supplement low wages and subsidize childcare costs or the cost of maternity and paternity leave, families face greater challenges to meet a family budget and maintain stable employment around childbirth and when children are young (Hill et al. 2017).

Why should policymakers be concerned about declining resources provided by working families’ jobs? Economic and psychological theories suggest that work has benefits and costs for children (Becker 1981; Repetti and Wang 2014). Parents’ earnings and benefits directly benefit children by providing financial and health resources, whereas other job characteristics, such as work schedules, affect children through their parents’ health and well-being or their childcare arrangements (Luhr, Schneider, and Harknett 2022, this issue). Exposure to lower earnings and benefits can decrease family economic resources and increase family stress, with detrimental consequences for families’ and children’s well-being (Parcel and Menaghan 1997). Higher earnings and benefits are expected to have the opposite effect and lead to more parental investments. A growing evidence base confirms that parents’ low-quality jobs are negatively associated with parents’ health and well-being and children’s developmental outcomes, especially in low-income families (Heinrich 2014; McPherran Lombardi and Coley 2013).

THIS STUDY

To help inform policy responses to declining wages and benefits available to support children, this study focuses on families and not individual workers. This approach estimates whether up to two adults in a family earn enough to cover a basic family budget. We estimate the extent to which two employer-provided benefits, health insurance, and pension plans are available to families.

We address five research questions: What proportion of working families with children earn enough to achieve economic self-sufficiency thresholds (poverty and family budget)? What proportion of a family budget is covered by labor-market earnings? How much more additional hourly wages are needed to cover a family budget? What proportion of working families with children have jobs that provide access to health insurance and pensions? What proportion of working families do not earn enough to attain a family budget and have no access to employer-provided benefits?

For each of these questions, we examine how the results vary for low-income families and by race-ethnicity and nativity. We also compare how the estimates of economic self-sufficiency and access to benefits differ for families with earners who work full time year round and all working families with any combination of hours and weeks worked.

METHODS

This study draws on the 2015–2019 Annual Social and Economic Supplement (ASEC) to the Current Population Survey (CPS). The annual ASEC sample size is about ninety-eight thousand households, which includes an oversample of Hispanic households. To ensure adequate sample sizes by race-ethnicity and nativity, we pooled five years of cross-sectional data.

To estimate earnings and access to employer-provided health insurance and pensions for families with children, we use the Supplemental Poverty Measure (SPM) unit, which includes all related family members living in the same household and assumes that all family members share resources. The SPM family unit is different from the household unit in the CPS ASEC because multiple SPM families can exist within the same household. This analysis restricts the sample to SPM family units where the head of the family unit is a parent and has at least one child (biological, stepchild, or adopted) under age eighteen. Because of small sample sizes, we excluded Native American, Alaskan Native, and other race respondents. We excluded families with non-working-age parents (outside the ages of eighteen through sixty-nine), unpaid family or self-employed workers, workers in noncivilian occupations, or cases with missing information on job outcomes or nativity.

The total universe of employed families with children working any combination of hours and weeks is 90,275. About 66 percent of families have only full-time full-year workers, 22 percent have a combination of full- and part-time workers, and 12 percent have only part-time or part-year workers. Because family budget thresholds assume that expenses like childcare are based on full-time work, our primary analytical sample includes families with only full-time year-round workers. This sample excludes dual-earner couples that have one full-time earner and one part-time earner. We define full-time work using the Bureau of Labor Statistics definitions of full-time (at least thirty-five hours) and full-year (fifty to fifty-two weeks) work (BLS 2020). The resulting analytical sample is 59,225 working families with full-time year-round workers.

To generate the sample of low-income working families, we further restrict the full sample of working families with children to SPM units where the total family resources was no more than two times the SPM family resources threshold. The resulting sample is 39,781 low-income working families with children. The analytical sample for low-income families where all working adults worked full time and year round is 23,231.

RESULTS

Our research questions focus on whether families’ earnings from full-time work cover basic needs, what proportion of a family budget is covered by earnings, whether jobs provide access to benefits, and whether there are differences by income, race-ethnicity, and nativity status. Descriptive analyses show that wages from working full time cover minimum levels of basic needs, as measured by the official poverty line, for most working families (94 percent of all full-time working families and 87 percent of all full-time low-income working families). A lower proportion of full-time working families earn a family budget (65 percent of all working families and 23 percent of all full-time low-income working families). The degree to which families’ wages fall short varies by income, race-ethnicity, and nativity. Black, Hispanic, and immigrant families (including all families and low-income families) have the lowest hourly wages and access to benefits, which highlights the need for equitable work-family policies that supplement low wages and benefits and reduce caregiving costs.

Table 1 shows that almost 65 percent of families working full time earn enough to meet a family budget and that an additional 10 percent of families are close to earning a family budget (could cover 80 to 99 percent of a family budget). The racial-ethnic differences in families working full time and earning less than a family budget are large. Only 48 percent of black and 41 percent of Hispanic families earn a family budget, versus 75 percent of white families and 77 percent of Asian. A 34-percentage point gap separates Hispanic and white families earning a family budget and a 27-percentage point gap separates black and white families. The 12-percentage point gap between nonimmigrant (68 percent) and immigrant (56 percent) families is smaller yet still significant.

The picture looks very different for low-income families. Table 2 shows that fewer than 25 percent of low-income families working full time earn enough to cover a family budget and most earn far less than is needed. Another 17 percent are relatively close to making the budget wage (80 to 99 percent). More than 25 percent earn less than half. The pattern of racial-ethnic differences is similar, but the magnitude is smaller relative to the total population of working families. Fewer than one in five low-income black families (16 percent) and low-income Hispanic families (16 percent) could cover a family budget versus the 30 percent of white families and 36 percent of Asian. A 14-percentage point gap separates both black and white families and Hispanic and white families. A much greater proportion of black and Hispanic families are further away from earning a family budget. About 35 percent of black and Hispanic families earn less than half of the income needed to cover family expenses. The difference between the proportion of low-income immigrant (24 percent) and nonimmigrant (22 percent) families is much smaller.

Policymakers are interested in how much wages would need to be raised or supplemented to attain family budget wages. Figure 1 presents the family budget wage gap—the additional hourly wages that low-income full-time working families need to live within a family budget. The extent of additional wages needed to supplement wages from full-time work varies widely. Full-time low-income working families need between a little more than $1.91 to more than $23 per hour for self-sufficiency. The median low-income family would need to earn $11.02 more hourly. The median low-income black family and Hispanic family need to earn $12.30 and $12.49, versus $9.10 for low-income white families. The median low-income nonimmigrant family would need to earn an additional $10.43 in hourly wages, versus $11.93 for the median low-income immigrant family.

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Figure 1.

Additional Hourly Wages Needed by Low-Income Working Families to Earn a Family Budget at the 10th, 50th, and 90th percentiles

Source: Authors’ calculations based on Current Population Survey, 2015–2019 (Flood et al. 2021).

Note: Wages presented in 2019 constant dollars. Estimates are for low-income, full-time, year-round working families who earn less than a family budget.

Results show that families have variable access to employer-provided benefits through full-time work. More families have employer-provided health insurance (75 percent for all families, 59 percent for low-income families) than pension benefits (50 percent for all families, 33 percent for low-income families). A full 31 percent of low-income families did not earn enough to cover a basic family budget and did not have access to any employer-provided benefits relative to 14 percent of all working families. These jobs, which do not pay family budget wages and provide no benefits to wage and salary employees for full-time work, are the most concerning in terms of providing adequate resources for families with children.

We find significant heterogeneity in the employer benefits of families working full time by race-ethnicity and nativity. Confirming other research studies, Hispanic families, low-income or not, have the least access to employer-provided benefits. Low-income Hispanic families have extremely limited access (48 percent have health insurance and 24 percent have pensions). Almost twice the number of low-income Hispanic families do not earn a family budget or have access to employer benefits (43 percent) than their white counterparts (24 percent) (see table 2). Immigrant working families have lower wages and less access to benefits than nonimmigrant families. Two in five low-income immigrant families have jobs that do not provide enough earnings to cover a family budget or employer-provided benefits. Although many families need access to public benefits to supplement these shortfalls in job resources, low-income Hispanic and immigrant families are particularly in need because they disproportionately work for employers that do not offer benefits.

The number of families covering their budgets and having access to employer-provided benefits decreases in the context of the full sample of working families, both part-time and part-year working families. Table A.1 shows that the proportion decreases from 65 to 59 percent when part-time and part-year working families are included. The proportion of low-income families that earn enough to cover a family budget also decreases from 23 to 19 percent (table A.2). These results are consistent with the literature demonstrating that part-time work is associated with lower wages and benefits.

The purpose of these descriptive analyses is to identify differences in families’ job characteristics and to document the need for work-family supports that could supplement wages needed to earn a family budget and benefits. Research shows that family, human capital, and employment characteristics account for some of the variation in wages and benefits by race-ethnicity and nativity, though there remains unexplained variation generally attributed to structural factors and discrimination. Table A.3 confirms well-documented racial-ethnic and nativity differences in characteristics such as education, occupation, industry, public sector, and firm size that can help explain some of the differences. Having two earners reduces the wages that each family member needs to make and increases the likelihood of employer-provided benefits, whereas single-earner families face more economic risks if the working parent needs to take family leave or loses a job. Black, Hispanic, Asian, and immigrant working families are more likely to be single-earner families, and white and nonimmigrant working families are more likely to have two earners.

DISCUSSION

Policy debates about improving children’s well-being by closing opportunity gaps and addressing racial-ethnic inequities in health and education outcomes often do not address the declining wages and benefits available from parents’ jobs. To help bring parental job quality into these child policy deliberations, we estimate the resources that employment provides to a working family relative to two thresholds of economic self-sufficiency used in policy debates. We rate family earnings against a minimal standard of living, family poverty, and family budget, which includes the costs of basic needs such as housing and food and of work-related expenses such as transportation and childcare. We expand the research on the quality of wages and benefits by examining families rather than individual workers, using the family budget threshold as an indicator of economic self-sufficiency, and examining differences by income, race-ethnicity, and nativity.

Most families with children working full time earn wages over the official poverty line. This finding is not surprising given the decline in child poverty, which is largely attributed to increasing maternal employment (Chen and Corak 2008). Still, more than one in ten low-income families who work full time earn poverty-level wages. Because the official poverty threshold is a statistical yardstick rather than a measure of family needs (U.S. Census Bureau 2021), we compare the resources from full-time employment with a family budget. Almost 65 percent of families earn enough and about 10 percent could cover 80 to 99 percent. For low-income families, the results are discouraging. Only 25 percent working full time earn enough for economic self-sufficiency; 18 percent could earn between 80 and 99 percent; and almost 25 percent earn less than 50 percent. This shortfall highlights that many low-income families cannot attain economic self-sufficiency, defined by covering the costs of basic needs, from full-time work alone. Instead, they need resources from other sources. If they do not, income-based child opportunity gaps will persist.

Similar to studies of individual workers, this study finds significant differences in full-time working families’ compensation by race-ethnicity and nativity. More than half of black and Hispanic families working full time, versus a quarter of their white and Asian counterparts, do not earn enough to meet a family budget. Declining real wages, policy choices, and structural racism in the labor market have disproportionately harmed black and Hispanic working families and created significantly greater financial hurdles in supporting children. For low-income families, the pattern of racial-ethnic differences in family budget wages is similar, but the racial gaps are smaller. Immigrant families are also less likely to earn a family budget wage than their nonimmigrant counterparts. These results underscore the need to consider race-ethnicity and immigrant status together to identify the most economically vulnerable groups for policy assistance.

This study pushes the field forward by taking a family-level approach to measuring wage quality and access to benefits. However, some of its limitations can be addressed in future research. First, like other studies of wage quality, we do not fully account for part-time and part-year work and how work hours affect gaps in family budget wages. Current measures of family budgets assume full-time year-round work by at least one working parent, and costs such as childcare are not prorated for part-time work hours. Some low-wage workers have trouble getting enough hours to work full time, despite wanting to do so (Golden 2020). Other workers are limited to working part time because of family responsibilities or their own health issues (Dunn 2018). Assuming that all working families can cover a family budget through full-time work does not reflect the realities of some families’ caregiving and health needs or low-wage sectors where involuntary part-time work is more prevalent. More research in establishing economic self-sufficiency standards for part-time and part-year workers is needed. Second, this study does not address within-state differences in the costs of living between counties or rural, suburban, and urban communities. Accounting for the geographic variation in the costs that make up family budget thresholds may reveal even larger racial-ethnic inequities, given that previous research has documented geographic and racial-ethnic inequities in costs of living, that is, housing and transportation costs (Acevedo-Garcia et al. 2016). To more accurately estimate families’ earnings sufficiency, future research should account for within-state differences. Third, given limitations in the questions asked about employer-provided benefits and work schedules in the Current Population Survey, this study focuses on employer-provided health insurance and pensions but does not measure the quality of these benefits. The CPS also excludes other job quality factors that affect resources available to children such as childcare benefits, paid leave, or schedule stability. To adequately monitor job quality, additional measures of employer-provided benefits and work schedules should be added to national surveys. Finally, our study does not address the diversity of immigrants’ labor-market experiences and wages depending on race-ethnicity, country-of-origin, occupational enclave, or length of time in the United States (Hamilton 2019). Further study is needed to unpack the variation in job characteristics for families based on disaggregated categories of race-ethnicity and nativity.

Families face a significant gap between the costs of raising children and wages and benefits that their employers provide. These gaps are particularly problematic for low-income families whose private safety nets, including family and friend networks, provide much smaller cash transfers to supplement low wages (Garfinkel and Pilkauskas 2016). To make ends meet, low-income families reduce expenses by using informal childcare or doubling up on housing, and by increasing family income by receiving help from local community groups, working informal jobs, or taking on debt (Abraham and Houseman 2019; Edin and Lein 1997; Halpern-Meekin et al. 2015; Seefeldt and Sandstrom 2015).

The social safety net provides income support and in-kind assistance that helps to cover the cost of basic expenses. Income support programs such as the Earned Income Tax Credit (EITC) that target low-income working families supplement low wages, reduce child poverty, and positively affect child health (National Academies 2019). However, not all low-income working families can access this support. Because of restrictive eligibility requirements based on immigration status and living arrangements, the EITC underserves some working families. It also excludes low-income immigrant working families with U.S. citizen children if one parent does not have a Social Security number (Acevedo-Garcia et al. 2021a, 2021b). Thus the EITC does not serve about 17 percent of U.S. citizen children in poverty because they live in families who file their taxes without a Social Security number (National Academies 2019). As Katherine Michelmore and Natasha Pilkauskas (2022, this issue) note, not all eligible families apply for the EITC, and black working families may have less access due to differences in family living arrangements, further exacerbating differential access to resources by race-ethnicity.

Other income and in-kind supports such as the Child Tax Credit and the Supplemental Nutrition Assistance Program (SNAP) increase family income and offset food expenses. Similar to the EITC, both the CTC and SNAP significantly reduce child poverty but underserve immigrant families. Relative to the EITC, the CTC and SNAP do better at serving U.S. citizen children in immigrant families because child eligibility does not depend on parents’ Social Security numbers or immigration status. But changes included in a 2017 tax law made approximately one million immigrant children ineligible for the CTC because they have Individual Tax Identification Numbers rather than Social Security numbers (Acevedo-Garcia et al. 2021a). U.S. citizen children in immigrant families also have reduced access to SNAP because of categorical eligibility restrictions based on parents’ immigration status, lower benefit amounts due to income deeming, and additional administrative burden often due to misunderstanding of rules by service agencies and families (Acevedo-Garcia et al. 2021b). These barriers to program participation based on immigration status disproportionately affect Hispanic children, since 54 percent live in immigrant families (Acevedo-Garcia et al. 2021a).

Across the income distribution, employers provide only limited work-family benefits such as childcare or paid family and medical leave, and Hispanic workers have much lower access (Bartel et al. 2019). Low-income working parents are less likely to be offered work-family benefits and may not earn enough to purchase childcare in the private market or have enough savings to take unpaid leave (Adelstein and Peters 2019). Two public work-family policies, childcare subsidies and paid family and medical leave, directly support parental employment and care for children, and offset low wages. Both also support healthy child development, although for childcare subsidies, positive effects depend on the quality of the care (Johnson, Martin, and Ryan 2014). Burgeoning research shows that paid family and medical leave programs and childcare subsidies reduce the high costs of unpaid leave and childcare, yet are not equally accessible for black, Hispanic, and immigrant families due to affordability constraints (Baldiga et al. 2018; Joshi et al. 2019), lower take-up rates (Acevedo-Garcia et al. 2021b; Rossin-Slater, Ruhm, and Waldfogel 2013), more limited knowledge about programs (Alvira-Hammond and Gennetian 2015; Goodman, Elser, and Dow 2020); eligibility rules (Acevedo-Garcia et al. 2021b; Joshi et al. 2020); and administrative burden like extensive application documentation, interim reporting, and benefit or leave reassessments (Adams and Matthews 2013; U.S. Department of Labor 1993). Recent studies document racialized administrative burden in the childcare subsidy system for black, Hispanic, and immigrant families, including disparate treatment by subsidy caseworkers (Barnes and Henly 2018), limited translation of paperwork and websites (Hill, Gennetian, and Mendez 2018), and caseworkers’ confusion about eligibility due to anti-immigrant policies (Barnes and Gennetian 2021). By addressing these access issues and making income and work-family support policies more inclusionary, the programs can be more equitable and more effective at serving all families.

In policy discussions about improving parents’ jobs and work-family policies to support low-income families, it is becoming more difficult to ignore the dramatic changes in the racial-ethnic and family nativity composition of the U.S. child population. By race-ethnicity, the proportion of U.S. children who are Hispanic increased from about 6 percent in 1970 to 26 percent today. By family nativity, the proportion of U.S. children in immigrant families also rose from about 6 percent to 26 percent during the same period (National Academies 2019). Low-income Hispanic and immigrant families have the lowest job quality and the least access to work-family policies. The implication of these demographic changes is that a growing number of children are living in families with fewer resources to promote their well-being. As federal agencies that serve low-income children seek to meet the new requirements included in the Executive Order on Advancing Racial Equity to document and design solutions to promote equitable policy access for underserved groups (White House 2021), estimating the magnitude of the racial-ethnic and nativity differences in job quality and access to work-family policies can help inform policy changes.

The gaps in each of these policy responses have become more consequential under the coronavirus pandemic because a high proportion of black, Hispanic, and immigrant workers are in frontline jobs and have disproportionately suffered related health and economic impacts. COVID-19 exacerbated and exposed inequities in working conditions of frontline workers, access to childcare, and paid leave. Going forward, recovery and long-term policy responses providing income support, educational, and human capital opportunities should address these inequities. Expanding paid family and medical leave and childcare subsidy policies that lower the cost of taking temporary leave and the high cost of childcare can decrease the earnings needed to cover a family budget. It is essential not only to increase access through program funding, but also to follow policy principles that create inclusive eligibility rules, especially for children in immigrant families (Acevedo-Garcia et al. 2021a), and to eliminate the administrative burden that prevents eligible families from accessing essential resources. Because the majority of low-income families and half of black and Hispanic full-time working families do not have the earnings that reach a basic family budget and have limited employer supports, these public policies are essential to ensure their well-being and to reduce inequities in child opportunity by race-ethnicity and nativity.