Across the country, there has been significant momentum in the movement for fair wages. The fast-food workers strikes continue to push for higher wages and unionization, and cities like Seattle are moving the conversation forward with passage of a citywide $15 minimum wage.

Even with this momentum, though, families continue to struggle, especially when they have debt to pay off in addition to their other monthly expenses. While total debt may be less for low-income families than for higher-wage earners, the debt that they do have represents a much greater part of their income. Low-income families must already make difficult decisions about how to spend their money, and those with debt in the mix must stretch their meager earnings even more.

Action to ensure that working families can move beyond living paycheck-to-paycheck must focus on both income supports like increased minimum wages and on addressing the structures that lead low-income families into debt, including the lack of investment in higher education and the lack of access to quality healthcare for millions of lower-income families. The following recommendations would help working families across the country to thrive:

Addressing Sky-High Debt

Reinvest in higher education: One of the driving forces behind increased student debt is disinvestment in higher education at the state level. Every state in our study has cut higher education funding, leading universities to raise tuition and leaving students and their families to pick up the cost. Reinvestment in higher education would allow colleges and universities to take some of the burden off of students.

Address outstanding medical debt acquired prior to the implementation of the Affordable Care Act: Before the implementation of the Affordable Care Act, health insurance companies could impose a lifetime maximum benefit, leaving many families who had faced serious medical events with no remaining insurance and outstanding debt. A clean slate would help families stuck paying off old debt and leave everyone on a more level playing field as the ACA gains momentum.

Expand Medicaid eligibility: Nearly half of the states in the country have not expanded Medicaid, leaving millions of workers without access to affordable health insurance. Expanding Medicaid would help to address medical debt for these lower-income families and ensure that they have access to quality medical care.

Restrict payday lending and address Internet-based lending companies: Many states have already used usury and other commerce laws to restrict and even prohibit store-front payday lending establishments, and other states should follow suit. With an increase in online payday lending, though, restrictions on such predatory lending must address not only storefront establishments but also those that are Internet-based.

Give banks the incentive to reset underwater mortgages: There are millions of homeowners across the country with underwater mortgages that are only an emergency away from missed payments and foreclosure. Pushing banks to reset these mortgages based on the current value of the home will help millions of families stay in their homes, where they are more likely to maintain financial stability.

Income and Work Supports

Increase the federal minimum wage: Wages should provide enough for workers to make ends meet. Seattle has set the bar for a minimum wage at $15 per hour. In the 10 states we look at in our study, a $15 wage would only cover the cost of living for single individuals in Idaho and Montana, and falls well short when factoring in families with children and households in debt. Meanwhile, it has been five years since the federal wage floor was last increased. Congress must keep pace with increasing wage demands.

Abolish the federal tipped minimum wage: The federal tipped minimum wage has been stagnant at $2.13 per hour for over 20 years, gradually losing more and more of its purchasing power. While businesses are supposed to ensure that tips bring workers’ wages up to the minimum wage for non-tipped workers, this is not always the case in practice. Additionally, this takes pressure off of employers to pay workers wages that allow them to support themselves, and instead leave customers to pick up the difference. Abolishing the tipped minimum wage would help millions of workers get closer to making ends meet, and put the responsibility on businesses to pay their workers’ wages — not customers who do not always tip consistently.

Invest in state and federal safety net programs: Until there are enough living wage jobs to go around for all household types, families will continue to make tough choices. Federal programs like the Supplemental Nutrition Assistance Program (SNAP) should be strengthened, not cut, and state supports like earned income tax credits and child care assistance should be bolstered.


Millions of working families are not making ends meet. When low-wage workers add debt to their monthly balance sheet, it can be impossible to get by without cutting back somewhere.

We’ve found that minimum wages aren’t keeping up with the cost of living, leaving low-wage workers with a gap between what they earn and the cost of their basic needs. We’ve also found that most low-income workers make debt payments on time, though, so for low-income families with debt, cutbacks happen in other areas like savings, utilities, or even food.

Without policy interventions to incentivize higher wages and support working families, though, debt and wages will continue to be impossible to balance for families across the country.

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