These figures address one of the most common misperceptions about poverty: that poor people do not work. Regional rates of unemployment illustrate further the falsity of this assumption. The unemployment rate in sub-Saharan Africa, the overall poorest region in the world, with 751 million people, was 10.9% in 2003; in South Asia, which contains some of the poorest and most populous countries in the world, the unemployment rate was 4.8%; and in Latin America and the Caribbean the rate was 8%. Since most of the world's population is concentrated in poor countries, one would perhaps expect a greater percentage of the populations of these poor regions to be unemployed, but considering the large number of people living there, these percentages actually are rather low. By comparison, the unemployment rate in the United States, with 149.3 million people in the labor force, was 5.1% in 2005; out of Canada's labor force of 17.35 million people, 6.8% were unemployed in 2005; and in the European Union 9.4% of 218.5 million people in the labor force were unemployed.
The International Labor Organization defines "working poor" as those people whose earnings leave them unable to afford to lift themselves and their families above the poverty threshold (either the international line of one or two dollars a day or the poverty threshold of their individual country). The ILO also makes other distinctions regarding what it calls "working poverty":
It is important to note that, by definition, a person is counted as working poor only if that person is unable to lift himself or herself and his or her family above the poverty threshold. This means that somebody who earns only 50 cents a day would not be considered as working poor if somebody else in the family earns enough to make sure that each family member lives on more than US$1 a day. Conversely, somebody might earn as much as, for example, US$5 a day but with a family consisting of, say, 10 members (9 of them not working) each member would be living on less than US$1 a day. Such a person would still be counted as working poor. Finally, including the whole family in the concept of working poverty ensures that a rich young person in the developing world who has just started work life and works without remuneration in order to gain work experience is not considered to be working poor.
In the United States the working poor are defined as those people who work at least twenty-seven weeks per year in the labor force, either working or actively looking for work, but still live below the U.S. poverty threshold. According to the U.S. Bureau of Labor Statistics (BLS) publication A Profile of the Working Poor, 2003 (March 2005), 7.4 million Americans could be classified as working poor in 2003. Furthermore, about three out of every five working poor Americans worked full time. As in the rest of the world, women (3.9 million) outnumbered men (3.5 million) in the working poor category. Unlike the working poor in developing countries, however, fewer working poor in the United States were employed in the informal economy, although informal work does exist in the United States. Most U.S. working poor are employed in service jobs; sales and office work; or production, transportation, and material moving. American working women who are heads of households are the most likely to be among the working poor, at a rate of 18.4%.
For most of the working poor around the world—including the United States—low wages, rather than unemployment, are a main cause of their situation. The BLS estimated that this was the case for about 62% of the working poor in the Unites States in 2003. In Working Hard, Falling Short: America's Working Families and the Pursuit of Economic Security (Working Poor Families Project, October 2004), Tom Waldron, Brandon Roberts, and Andrew Reamer reported that 9.2 million working families in the United States have low incomes, and 2.5 million of those families live below the poverty threshold. Although there is a link between low income and education level, the authors note that low wages leading to poverty do affect the well educated: 3.9 million working poor families had a parent with some post-secondary education.
The Working Poor in the Informal Economy
The International Labor Organization suggests that a large number of the world's working poor are employed in the informal labor sector, or informal economy. The term "informal economy" refers to the exchange of goods and services outside of national and international regulatory guidelines, meaning that the people who work in the informal economy receive no legal protection or employer-sponsored benefits, and have no official means by which to better their working situations. Unregistered self-employment and wage employment in informal work are the most common types of jobs in the informal economy, with self-employment accounting for about 33% of all nonagricultural employment in the world. Self-employment in the developing world typically refers to work that is home based (for example, garment workers, cigarette rollers, and embroiderers) or such enterprises as street vending and garbage collecting.
Work in the informal economy is more common in developing than developed countries, although informal labor does exist in wealthier countries, mostly in the form of self-employment and part-time and temporary work (the latter two are known as nonstandard wage employment). The ILO publication Women and Men in the Informal Economy: A Statistical Picture (2002) reports that 50% to 75% of nonagricultural workers in
FIGURE 2.4 U.S. cities in which forced labor incidences were reported, 1998–2003
Although women have less of a presence in the overall labor force, they account for a greater percentage of informal workers. In developing countries 60% of women who work are employed in the informal economy, while in the largest developed countries women made up at least 60% of part-time workers, including 68% in the United States. Children also make up a large proportion of the informal economy, especially in developing countries. While the informal economy is not necessarily equated with the criminal economy, children (most notably girls) working in informal employment are particularly vulnerable to the abuses and exploitation of unregulated work; millions of child laborers end up being sold or tricked into the world of human trafficking, prostitution, pornography, slavery, and debt bondage. This kind of forced labor is not limited to so-called third world countries; it exists in the United States as well. (See Figure 2.4 and Table 2.3.)
TABLE 2.3 Reported countries of origin of victims of forced labor, United States, 1998–2003
| TABLE 2.3 | ||
|---|---|---|
| Reported countries of origin of victims of forced labor, United States, 1998–2003 | ||
| Reported country of origin of victims of forced labor | Number of cases | Estimated number of individuals |
| SOURCE: "Reported Countries of Origin of Victims of Forced Labor," in Hidden Slaver: Forced Labor in the United States, Free the Slaves, and Human Rights Center, September 2004, http://www.hrcberkeley.org/download/hiddenslaves_report.pdf (accessed April 10, 2006> | ||
| Mexico | 25 | ca 1,500 |
| United States | 20 | ca 71 |
| China | 11 | ca 10,000 |
| Thailand | 9 | ca 150 |
| India | 9 | ca 70 |
| Bangladesh | 8 | ca 200 |
| Russia | 8 | ca 100 |
| Vietnam | 6 | ca 250 |
| Honduras | 5 | ca 70 |
| Philippines | 5 | ca 200 |
| Korea | 4 | ca 6 |
| Guatemala | 3 | ca 5 |
| Indonesia | 3 | 4 |
| Cambodia | 2 | 30 |
| Cameroon | 2 | 3 |
| Estonia | 2 | 15 |
| Ghana | 2 | 2 |
| Kenya | 2 | 2 |
| Malaysia | 2 | 5 |
| Zambia | 2 | 2 |
| Albania | 1 | 1 |
| Brazil | 1 | 1 |
| Czech Republic | 1 | 10 |
| Ecuador | 1 | 1 |
| Ethiopia | 1 | 3 |
| Guyana | 1 | 1 |
| Haiti | 1 | 1 |
| Hungary | 1 | 13 |
| Jamaica | 1 | 2 |
| Kryghistan | 1 | 1 |
| Latvia | 1 | 5 |
| Micronesia | 1 | 2 |
| Nigeria | 1 | 2 |
| Peru | 1 | 8 |
| Romania | 1 | 10 |
| Tonga | 1 | 4 |
| Ukraine | 1 | 29 |
| Uzbekistan | 1 | 1 |
| Yugoslavia | 1 | 1 |
| Specific nationality not reported | ||
| Asia | 6 | ca 10,000 |
| Southeast Asia | 4 | ca 30 |
| "Hispanic" | 2 | ca 70 |
| Eastern European | 1 | 1 |
Working conditions in the informal sector vary greatly. While some enterprises exist in the informal economy simply because they cannot afford to abide by the bureaucratic regulations of the formal economy, others deliberately avoid providing their workers with even the most reasonable legal protections. In Decent Work and the Informal Economy (2002) the ILO points out that working in the informal economy does not necessarily mean living in poverty or even earning low wages: "Many in the informal economy, especially the self-employed, in fact earn more than unskilled or low-skilled workers in the formal economy." However, the report also notes that 75% of the poor living in developing countries lived in rural areas and worked in both agricultural and nonagricultural informal work. In addition, incomes among those working informally do average significantly less than the incomes of those working formally; this is particularly true of women and children, who are far more likely to experience abuses at the hands of employers.
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