From the U.S. Government Accountability Office, www.gao.gov Transcript for: Low-Wage Workforce Description: U.S. unemployment has hit a 16-year low, and much of this decline is due to the rise of low-wage occupations. So what exactly is classified as a low-wage job? Related GAO Work: GAO-17-677: Low-Wage Workers: Poverty and Use of Selected Federal Social Safety Net Programs Persist among Working Families Released: October 2017 [ Background Music ] [ Cindy Brown Barnes: ] Some workers make face difficulty earning enough just to meet their family basic needs. [ Jacques Arsenault: ] Welcome to GAO's Watchdog Report, your source for news and information from the U.S. Government Accountability Office. I'm Jacques Arsenault. Since the most recent recession in 2009, private-sector companies have contributed millions of jobs to the U.S. economy. With unemployment down and millions of Americans back to work, the fact remains that many of the jobs being created are in low-wage occupations. I recently sat down with Cindy Brown Barnes, a director in our Education, Workforce and Income Security team, and Oliver Richard, a director in our Applied Research and Methods team, to talk about GAO's new report on low-wage workers. First, I asked Cindy, what exactly is classified as a low-wage occupation? [ Cindy Brown Barnes: ] First, I just want to explain that low-wage workers, the way we defined it, are those that earn $16 an hour or less, and we defined six occupations where the majority of low-wage workers are concentrated. And, I can give you some examples of those; food service industry, such as fast-food workers; sales, which would include cashiers, office assistants; building grounds, such as janitors; personal care services, such as home-health aides, child-care workers; and the transportation occupation, which would include taxicab drivers and bus drivers and parking lot attendants. [ Jacques Arsenault: ] Oliver, how many workers are we talking about, and have the characteristics of these workers in these occupations changed over time? [ Oliver Richard: ] So, according to the Bureau of Labor Statistics, the total number of employed workers ages 25 to 64 is about 123 million in our economy. In our report, we find that about 40 percent of these workers earn a low wage, which is $16 or less. So if you do the math, that's about 49 million Americans ages 25 to 64 who are earning a low wage. They are also working few hours, so they're really facing an income disadvantage. Not only do they have low wages, they work few hours, and as you can see from the numbers, this is a large number of people we are talking about. [ Jacques Arsenault: ] It sounds like a large number of people. Have those numbers changed over time? [ Oliver Richard: ] Those numbers have been fairly steady over time, and they've been also, the occupations in which these workers are have changed little. It's mostly a lot of hospitality and services occupations. [ Jacques Arsenault: ] So, when we look at these types of low-wage occupations and workers with their families, to what extent are they living in poverty? [ Oliver Richard: ] So, about 20 percent of families with a worker earning the federal minimum wage are in poverty. If you look at families with a worker earning from, let's say, $12 to $16, that percentage is 13 percent. Now, what's important here to keep in mind is that to be in poverty as an individual, you must, at most, earn $12,000. If you are a family of four, you are in poverty if you earn $24,000 or less, as an income. Those are very low thresholds, I mean, so just because, you know, one may say it's only 20 percent of families, which is a real large number, with a worker in the federal minimum wage, there are a lot of other families that may be earning slightly above the poverty thresholds that may not be any better off. [ Jacques Arsenault: ] So, since these wages are fairly low, does inflation pay a role in the numbers? [ Oliver Richard: ] So, our numbers in our reports are controlled for inflation, but what we have noticed there is, for instance, a lot of these wages have really not increased much over time, once you control for inflation. You know, median wages in the U.S. for a lot of our families have been pretty flat, even declining, over the past 15 years. [ Background Music ] [ Jacques Arsenault: ] Given this idea of stagnating wages and the expected rise of U.S. inflation in the coming years, I wondered, to what extent do low-wage workers' families use federal and state public assistance programs? [ Cindy Brown Barnes: ] What we've found is families that have a wage earner of $16 or less use one or more federal social safety net programs. We looked at five of these programs; Medicaid, TANF, SNAP, earned income tax credit, additional child tax credit, and they provide food assistance, medical benefits, cash assistance in some cases. And, we found that families were relying on these programs over a decade, at least one or more of the programs. One key point is that the family structure really depended on how much the families were using these programs. For example, single-parent family structures were using these programs at a much higher rate. Half or more used three over the time period that we looked at, whereas married-family households used these programs at a much lower incidence of the rate. [ Jacques Arsenault: ] And lastly, what do you each believe is the key takeaway from this report? [ Cindy Brown Barnes: ] For me, the key takeaway is that, while private-sector employees have added millions of jobs since the last recession that ended in 2009, much of this job growth has been concentrated in low-wage occupations that are less likely to provide full-time hours or benefits, and what this means is that some workers may face difficulty earning enough just to meet their family basic needs. The family structure is key in determining whether there is use of the federal social safety net programs. [ Oliver Richard: ] Yeah, along these lines, I mean, you know, Cindy, you hit it right. Look, our stock market is at all-time high. Our economy is producing more than it's ever produced. Our unemployment rate is at a 16-year low, and yet we have tens of millions of Americans who are earning very low wages, and those are the ones that are working. I mean, we've got about seven million unemployed Americans, and then we've got tens of million more that are out of the labor force altogether, not even looking for work, in part because they just, they've given up. And so, we've got some serious issues, here, in our economy. We may already be at two speeds, depending upon who you are and where you are in the spectrum of jobs. [ Background Music ] [ Jacques Arsenault: ] Thanks for listening to the Watchdog Report. To hear more podcasts, subscribe to us on iTunes. [ Background Music ] [ Jacques Arsenault: ] For more from the Congressional Watchdog, the U.S. Government Accountability Office, visit us at gao.gov.