The Economic Consequences of Homelessness in The US

Using the US Census Bureau's definition of poverty, the working poverty rate seems to
have remained relatively stable since 1978. However, many scholars have argued that
the official poverty threshold is too low, and that real wages and working conditions
have actually declined for many workers over the past three or four decades. Social
scientists like Arne Kalleberg have found that the decline in US manufacturing and the
subsequent polarization of the labor market has led to an overall worsening of wages,
job stability, and working conditions for people with lower skill levels and less formal
education. From the mid-1940s to the mid-1970s, manufacturing jobs offered many lowskilled
and medium-skilled workers stable, well-paying jobs. Due to global competition,
technological advances, and other factors, US manufacturing jobs have been
disappearing for decades. (From 1970 to 2008, the percentage of the labor force
employed in the manufacturing sector shrank from 23.4% to 9.1%.) During this period of
decline, job growth became polarized on either end of the labor market. That is, the jobs
that replaced medium-pay, low- to medium-skill manufacturing jobs were high-paying,
high-skill jobs and low-paying, low-skill jobs. Therefore, many low- to medium-skilled
workers who would have been able to work in the manufacturing sector in 1970 must
now take low-paying, precarious jobs in the service sector.
US Compared To
Europe
Other high-income
countries have also
experienced
declining
manufacturing
sectors over the past
four decades, but
most of them have
not experienced as
much labor market
polarization as the United States. Labor market polarization has been the most severe
in liberal market economies like the US, Britain, and Australia. Countries like Denmark
and France have been subject to the same economic pressures, but due to their more
"inclusive" (or "egalitarian") labor market institutions, such as centralized and solidaristic
collective bargaining and strong minimum wage laws, they have experienced less
polarization.
Cross-national studies have found that European countries' working poverty rates are
much lower than the US's. Most of this difference can be explained by the fact that
European countries' welfare states are more generous than the US's. The relationship
between generous welfare states and low rates of working poverty is elaborated upon in
the "Risk Factors" and "Anti-Poverty Policies" sections.
The following graph uses data from Brady, Fullerton, and Cross (2010) to show the
working poverty rates for a small sample of countries. Brady, Fullerton, and Cross
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