Introduction: Work and Poverty During the Past Quarter Century

Any opinions, findings, conclusions, or recommendations expressed in this material are those of the author(s) and do not necessarily reflect the view of the National Poverty Center or any sponsoring agency. The economy is a key determinant of poverty and well-being among low-income families. Reductions in the level of economic demand during recessions can significantly increase the unemployment rate, as was the case in the early 1980s. At the same time, sustained strong economic growth can substantially reduce the unemployment rate and contribute to increased experience on-the-job and growth in wages, as occurred in the late 1990s. The employment of less-skilled workers has tended to fluctuate more across the business cycle than the employment of other workers. Longer-run developments in the economy such as labor-saving technological changes, declines in the degree of unionization, and the changing skill mix of the labor force also affect the economic well-being of less-skilled workers independent of the business cycle. For example, over the last quarter century, the wage rates of high school graduates and high school dropouts have fallen dramatically relative to those of college graduates. Improvements in employment opportunities and wage rates are important to low-income families, as less-skilled workers have more cyclical employment opportunities and their income fluctuates more with the economic cycle (Borjas, this volume). In 2004, 61 percent of families with income below the poverty line contained at least one worker Several chapters in this volume analyze the ways in which the business cycle and long-run changes in the economic environment since the late 1970s have affected the employment and earnings opportunities for less-skilled workers. Other chapters focus on the composition and material well-being of low-income families. Other chapters evaluate the effectiveness of social assistance policies and the federal and state tax systems and how they interact with the economy over the course of the business cycle. The key question that runs throughout the papers in this 3 volume is " How have economic changes and the economic cycle affected the well-being of less-skilled workers and low-income families? " An examination of changes in employment, earnings, and income among less-skilled workers and low-income families reveals that other trends have been as important – and in some cases more important – than those directly related to the economy. Thus, a second question is " How have long-term changes in the demographic composition of the population, work and family behaviors, and policy …