A living wage is more than the minimum

The minimum wage debate too often gets mired in a discussion of immediate cost to small business. Groups like the Chamber of Commerce frame the issue within this context: Businesses have a limited amount to spend. Increasing the cost of a hour of work, therefore, means they will be able to pay for fewer hours. This, they say, will lead to fewer jobs and fewer working hours for those who are working.

It’s a neat argument — based to a degree on reality — but it’s also a sham. It attempts to recast business owners self-interest in an altruistic light. The poor, low-wage worker. She’s the one who will suffer. What else can I do?

It’s also counter-productive, as David Dayen points out in The L.A. Times. Raising the wage floor — i.e.., the minimum — is “not harmful, but actually critical in the current economy,” he writes.

Fast food restaurants have been engaged in what Dayen calls a price war, pushing menu items designed to attract low-wage consumers but that generate almost no profit. Restaurants say they need these “value”deals to be competitive, which “suggests that purchasing power at the low end of the economy has become so corroded that sellers must fall over themselves to offer prices that barely enable them to make a profit,” he writes.

So businesses cut costs — which makes investors happy, but leads to stagnant wages, especially at the low end of the spectrum.

Wall Street investors encourage companies to cut labor costs; record profits have resulted, with more national income going to the ownership class. Most of the gains since the recession have come at the high end. While low-wage workers are finally seeing some boosts — mostly from minimum wage increaseslack of housing affordability and cost of living rises in areas like health care continue to put them behind.

We can call this the WalMart conundrum. WalMart and other low-price retailers are affordable options — often the only affordable options —for low-income and working class families, but this affordability comes at the cost of their own incomes. WalMart and its ilk keep prices low by suppressing wages and by limiting hours. The bulk of its workforce is made up of part-timers, meaning the company does not have to provide healthcare. His leaves many of these workers seeking public benefits — which essentially is a socialization of low-wage work.

Dayan, again:

The clear solution, both for workers and the businesses they frequent, is to raise wages. Henry Ford figured this out more than 100 years ago. Reckoning that consumers and the workforce were one and the same, Ford sought to cycle more money through the economy, increasing the likelihood that people would purchase his cars. He also wanted to lower labor turnover and retraining costs by giving workers an attractive These aims doubly resonate for minimum-wage jobs. Turnover costs are enormous in fast food and other low-wage sectors. And the correlation between higher salaries and sales is arguably greater in restaurants and retail than for auto assembly lines. Paying people more becomes practically an imperative in an economy so dependent on consumer spending.

In New Jersey, the minimum wage is now indexed to inflation, which means it ticks up annually. But its base was far too low to make the kind of economic impact needed. As New Jersey Policy Perspective pointed out in December,

The new minimum wage still falls very short of what it takes to get by. In fact, it covers just 41-57% of the basic household budget for a single adult full-time worker with no children.

And make no mistake, he bulk of workers earning the minimum are not high school kids. NJPP reports that four of five minimum wage workers are 20 or older, nearly half work full time and another third work 20 to 35 hours a week. More than half are women and one in five are parents.

I’ve interviewed a lot of workers, a lot of businesses, labor unions, the Chamber, and others over the years in an effort to get a better understanding of the wage issue. There is merit in both sides’ arguments, I think, but only if you severely proscribe the terms of your argument. In this case, the public debate over the wage has been narrowly framed to exclude human rights questions and to embed the rights of profit over all else. Small business owners are just as much at the whim of corporate America as low-wage workers, are being sacrificed in similar ways to ensure that the record profits we’ve been witnessing continue their growth unabated and without any real effort to share the wealth.

Minimum wages, as they’ve been conceived to this point, only nibble at the edges. Even $15 an hour is too low in a state like New Jersey. Housing costs alone will eat almost half of the $30,000 a year the $15 wage would generate.

One potential solution is a guaranteed minimum income –or essentially paying people for being citizens. We have a form of this in place, if you think about the array of social safety net programs designed to offset economic deprivation — various forms of welfare (WIC and TANF, general assistance), food supports (SNAP), utility aid, healthcare, etc. These are based on the idea that government can (should) soften the blow for those chewed up and spit out by capital. A guaranteed minimum income takes these disparate aid programs, simplifies them and makes them universal.

I don’t pretend to have the details or to view basic income as a panacea. But it is worth discussing — which I invite readers of this post to do in the comments or on Twitter. Just make sure you tag me (@newspoet41).


Poverty at record rates in NJ, report says

Cross-posted from Channel Surfing:

Legal Services of New Jersey issued its annual poverty report, which found that more people in the state had trouble making ends meet in 2011 than at any time since the late 1950s.

The report‘s top findings were:Benchmarks2013

1. Record Poverty.

In 2011, poverty in New Jersey reached a record high not seen for the past 50 years. Census data going back to 1959 show that the official poverty rate of 10.4 percent in 2011 has not been surpassed in the last fifty years.

2. Nearly One-Third Face Significant Deprivation.

Using the Real Cost of Living, the portion of the state struggling to meet basic needs is dire — 31.5% were below 250% FPL in 2011. More than 2.7 million residents, or about 31.5 percent of the total population, were living in true or actual poverty in 2011; they were grappling to meet basic necessities.

3. Record Child Poverty.

Record number of children were living in poverty in 2011. About 780,000, or 38.5 percent of all children, were below 250% of FPL in 2011. Of these, 31.2 percent were below 200% of FPL and 14.7% were below 100% of FPL, all record highs for the state.

4. Extreme Poverty In Certain Municipalities.

Municipal poverty was highest in Camden, where 64.5 percent of the total population lived in households with incomes below 200 percent of FPL, followed by Passaic with a poverty rate of 59.5 percent, Lakewood at 55.9 percent, Paterson at 53.3 percent, Trenton at 51.5 percent, and Newark at 50.4 percent.

5. Child Poverty In Extreme Poverty Municipalities.

Child poverty rates were highest in Camden — 79 percent of all children were below 200 percent of the FPL in 2011. In another six places – Passaic, Lakewood, Paterson, Trenton, Newark, and Union City — more than 60 percent of children were below 200 percent of the FPL.

6. Continued High Unemployment.

In July 2013, the unemployment rate in New Jersey was 8.6 percent, substantially higher than the 4.6 percent at the onset of the Great Recession, and even higher than the current national average of 7.4 percent. The most recent data for July 2013 shows that New Jersey had the seventh highest unemployment rate in the nation.

7. Record Food Insecurity.

Food insecurity reached another all-time high in 2011. A sizeable portion of New Jersey households did not have enough food for all their members in 2011. Data from a three-year period (2009-11) show that 12.3 percent of New Jersey households were food insecure at some point during that period, and 4.5 percent had very low food security, meaning that the food intake of one or more household member was reduced or their eating pattern disrupted due to lack of resources. This represents a record high for the fifth consecutive year.

8. High Level of Medically Uninsured.

Working-age population below 200% FPL had very high rates of uninsurance in 2011. Working adults with low incomes were much more likely than either children or the elderly to be without health insurance coverage. In 2011, a sizeable proportion of working adults with incomes below 200 percent of the FPL were without health insurance — 41.7 percent of working adults below 50% FPL, 38.2 percent between 50-99% FPL, and 42.4 percent with incomes between 100-200% FPL.

9.Poverty Correlates with School Districts Needing Improvement.

School districts failing to make adequate progress were more likely to be located in high poverty areas. During 2011-12, 19 category “A” school districts (poorest in the state) were identified as needing improvement. The “J” districts (considered the most affluent in the state) did not have any schools identified as needing improvement. In addition, the number of “A” district schools needing improvement has increased significantly in the past three years. During the 2009-10 school year, 13 failing districts fell under the “A” classification. By 2011-12 school year, the number rose to 19, a 46 percent increase. In all three years, no “J” district schools were identified as needing improvement.

Officials with Legal Services said about a quarter of the state’s residents were considered poor in 2011″nearly 1 percent
higher than the previous year and 3.8 percent more than pre-recession
levels,” according to NJ.com.

“This is not just a one-year or five-year or 10-year variation,” said Melville D. Miller Jr., the president of LSNJ, which gives free legal help to low-income residents in civil cases. “This is the worst that it’s been since the 1960 Census.”

The numbers could get worse, LSNJ said (according to NJ.com):

The report warned Census figures for 2012 to be released this month may be higher. Those numbers are expected to show some of the impact from Hurricane Sandy, which took a bite out of the state’s economy and destroyed a large amount of affordable housing.

New Jersey is not alone, Miller said.

In 2011, the federal poverty rate was the largest it had been in 18 years, according to the Congressional Research Service.

“The Great Recession was the worst major economic event since the early ’30s,” Miller said. “It’s taken longer for the U.S. to come out of it.”

Nearly 1 in 8 have earn less than needed in New Jersey

One million New Jerseyans do not earn enough to meet basic needs, according to a study issued today by the Poverty Research Institute.

The report, called The Real Cost of Living in New Jersey, measures what it says are the actual costs incurred to live in the state. It puts the figure for a typical four-person family living at between $64,000 and $74,000 annually.

“The percentage of families with incomes below the RCL in 2010 ranges from a low of 20 percent for a two adult–two school-age children family to a high of 74 percent for a one adult–two school-age children family,” according to the report.

Housing is the largest component of the cost for most demographics looked at in the report.

According to the report:

New Jersey’s regrettable position as one of the highest cost (usually first, second, or third) of the contiguous 48 states obviously affects all residents, but disproportionately has a negative impact on those in the middle and lower income groups. They are the ones most likely to have fewer or no reserves, to have fewer or no other places to turn, and to spend all or nearly all of their income on the most basic necessities, especially housing. See LSNJ’s 2011 study, “Food, Clothing, Health or a Home? The Terrible Choices and Deprivations—and Great Courage—of New Jerseyans Who Live in Poverty,” for a detailed analysis of the spending patterns and hardships of those with lower and middle incomes.

In addition, much evidence points to an upward-pushing price spiral phenomenon in higher cost states. Comparatively higher costs tend to push (or pull) prices generally higher, especially in fixed-supply areas such as real estate. When such an effect occurs, it may (depending upon the status of wages) tend to increase the wage gap—the distance between average wages and average costs.

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