Live the Wage Challenge Offers Bare Glimpse of Minimum Wage Workers’ Struggles

July 29, 2014

Not long after I started this blog, I raised questions about the value of the Food Stamp Challenge. This exercise, as you may know, calls on participants to feed themselves — and if they choose, their families — on the cash equivalent of the average SNAP (food stamp) benefit.

This week, we’re in the midst of a different sort of challenge. Elected officials, community leaders, congregations and the likes of thee and me are urged to live, for a week, on what a full-time minimum wage worker has to spend, less housing costs and taxes. (But see below.)

The minimum wage here is $7.25 per hour — the federal minimum that fully phased in five years ago. It remains the minimum in 28 states and the U.S. territories.

The challenge sponsors obviously want Congress to raise the wage, which it surely won’t unless and until Democrats gain a majority in the House and a larger majority in the Senate. Either that or a very different sort of Republican leadership to work with.

But this in itself doesn’t argue against the challenge. The aim, I take it, is to call attention in a new, social-media-oriented way to how far the minimum wage falls short of daily living costs.

We’re encouraged to tweet our experience and/or share it in other ways. Some of the handful of Democrats in Congress who said they’d participate have done just that. None of them, as I’m sure you’ve guessed, needs the experience to support the minimum wage increase that’s still stuck in the Senate.

Congressman Tim Ryan of Ohio says, “[I]t’s important for those of us in leadership positions … to make sure … we really understand the deep challenges people face.”

But Live the Wage, as the week-long challenge is called, will do no such thing — something the guidance generally acknowledges, but understates.

The minimum wage budget for the week is $77. The organizers arrive at this by deducting average taxes that are roughly double the worker’s share of payroll taxes and $176.48, which is said to be the average for housing.

The average housing cost then is about $706 a month. I’m told this figure comes from the Economic Policy Institute and represents the average rent for a one-bedroom apartment.

It still seems to me very low — and way too low in many parts of the country. And of course, the apartment would be awfully crowded for a minimum wage worker with children.

More importantly, the $77 doesn’t exclude only housing and taxes. Challenge-takers don’t have to deal with any other “long-term and inflexible costs,” as the Center for American Progress Action Fund’s alert to the challenge reassuringly notes.

So loan payments, healthcare and childcare costs are all explicitly off-budget. So, for obvious reasons, are fees many low-income workers incur because they don’t have bank accounts — or in some cases do, but get paid with debit cards.

Bottom line, according to the guidance, is that the $77 must cover only meals, groceries, recreation and transportation. But recall that transportation doesn’t include car payments or insurance.

As with the Food Stamp Challenge, however, the most important limit is that it’s very brief — and can end whenever the going gets too tough.

Congressman Ryan has stocked up on diapers, but if the baby needs more, he’ll surely buy them — just as he snagged a pork chop after airport security officers took his jars of peanut butter and jelly during his Food Stamp Challenge.

That’s okay, the challenge guidance says. The point is “to give a glimpse of how little the minimum wage provides a working family in this country.”

But, it adds, no one is “expected or encouraged to default on any legal, financial, work or family obligations.” And surely no participant will.

So no one’s going to glimpse the decisions about which bills to pay and not, the acute pressures when the car breaks down or the kid gets sick — or the breadwinner, for that matter. No one’s going to feel despair when there’s not enough money for diapers.

If the Live the Wage challenge actually raises awareness among the friends, relatives, Twitter followers and the like that participants are to share their glimpses with, then perhaps it’s all to the good.

But I’ve got a hard time believing that anyone who’d support a minimum wage increase doesn’t already know that $7.25 an hour isn’t enough to live on, since a large majority of voters do.

And the glimpses aren’t going to make a whit of difference to Republican leaders in Congress.

If they had the slightest interest in what life below the poverty line is like, they’d be better off listening to what the real experts like Witnesses for Hunger Tianna Gaines Turner and Barbie Izquierdo have to say.


Less Known, But More Urgent Social Security Shortfall

July 17, 2014

I supposed you’ve read that the Social Security Trust Fund will run out of money long about 2035. This date applies to the Old-Age and Survivors Insurance Trust Fund — that one that helps pay for workers’ retirement benefits and the benefits their dependent family members may ultimately receive.

The Trust Fund for SSDI (Social Security Disability Insurance) is in far worse shape. The latest report from the trustees projects insolvency in 2016. Unless Congress does something PDQ, the so-called DI Trust Fund will be able to pay only about 80% of benefits.

They’re already far from generous — currently, on average, about $1,146 a month for disabled workers themselves or less than $1,000 if eligible spouses and children are included. Yet they’re a major source of income for most recipients and their families.

In 2010, for example, they accounted for more than half of total family income for 78.5% of beneficiaries. For nearly one in three, they were the only income source.

Benefits notwithstanding, nearly one in five lived in poverty. And well over a third (37.4%) were poor or near-poor, i.e., living below 150% of the federal poverty line.

These are hardly families who can afford a 20% cut.

Congress could avert it, at least temporarily, by shifting funds from the OASI Trust Fund to the DI Trust Fund, as it did in 1994. But this Congress isn’t that Congress.

Hence a panel discussion hosted by the Center for American Progress Action Fund, whose parent organization concurrently released a fact-packed brief on SSDI.

The lead speaker, Senator Sherrod Brown, argued that Democrats should push for an expansion of Social Security, along the lines that he, among others, has proposed. The best defense is a good offense, as they say.

Unfortunately, as things stand now, SSDI needs a good defense too. Because it’s been subject to a barrage of negative media coverage.

Brown says that the attacks on SSDI are actually “backdoor attempts” to dismantle the whole social insurance system, which Republicans still want to privatize, i.e., convert into something like a compulsory IRA.

I’m not so sure. But some surely are casting aspersions on SSDI — and its beneficiaries. Though SSDI is basically an insurance policy that they and their employers have paid for, much of what we hear recalls attacks on safety net programs.

It’s rife with fraud. People perfectly able to work are gaming the system — in this case, with help from rapacious lawyers. Look at all those “squishy” diagnoses, e.g. some musculoskeletal disorder that’s allegedly excruciatingly painful.

The fuel for this fire, I think, is essentially the same as the source of the impending — but easily avertable — crisis.

Many more workers are now receiving SSDI than in the program’s earlier days — about 8.9 million, as compared to 1.4 million in 1970.

And we saw an uptick when the recession set in, though not nearly so large as the uptick in claims. (Notwithstanding alleged laxities, fewer than 40% of claims are ultimately approved.)

Social Security’s Chief Actuary, Stephen Goss, told the CAP Fund audience that the increase over time was predicted, even before the recession, because the largest drivers are demographic.

First, we’ve had a 43% increase in the working age population, i.e., adults between the ages of 20 and 64, since 1980.

Baby boomers are partly responsible for that, of course, And they’re now old enough to be at much higher risk for disabling conditions. A 50-year-old is twice as likely to be disabled as a 40-year-old and a 60-year-old twice as likely as a 50-year-old, according to another CAP brief.

At the same time, far more women are working — and for quite a long time, as they must to qualify for SSDI. So the pool of workers who’ve become eligible when disabilities make it impossible for them to continue doing the same kind of work — or any other kind they might qualify for — has increased for this reason as well.

Expansions in the potential pool tell only part of the story. Roughly half of the disabled workers receiving SSDI benefits have, at most, a high school education. They’re likely to have had jobs that required a lot of standing, walking, lifting and the like.

They’re not likely to have in-demand skills that would enable them to shift into more sedentary occupations — something the Social Security authorities would consider before approving their claims.

Policy changes also help explain why the SSDI rolls have grown. These include the phased-up increase in the age workers can qualify for full retirement benefits — at which point SSDI recipients are automatically shifted over to the OASI program.

Basically, we’ve still got baby boomers — and some younger disabled workers as well — who wouldn’t be receiving SSDI if Congress hadn’t raised their full retirement age to 67.

What this means is that the pressure on the SSDI program will eventually diminish because the boomers will all reach full retirement age.

This is why some recommend that a slightly larger percent of payroll taxes be allocated to SSDI. An initial shift from 1.8% to 2.8% of the total 12.4% collected, with smaller shifts thereafter would keep both trust funds wholly solvent until 2033, according to the Social Security actuaries.

Another option Goss has mentioned would be a small increase in the payroll tax. Or, he adds, Congress could just let the benefits cuts happen.

As if we don’t already have enough poor people in this country.

 


“Endless Weeks of False Hope and Promises,” As Jobless Workers Grow Desperate Without Unemployment Benefits

June 18, 2014

A fellow District of Columbia resident writes, “Where to start … the abrupt termination of emergency benefits, or the endless weeks of false hope and promises.

“I have no money to get to interviews…. I also have no money for phone, no money to even keep up my personal hygiene. For over 11 years, I was steadily employed at $40K-$55K, and now I’m soon to be homeless.”

This is one of well over 2,000 stories that struggling jobless workers have shared with the Center for Effective Government.

They speak of selling belongings, including a wedding ring. They speak of living without hot water, having electricity, phone service and/or internet connections cut off — of actually becoming homeless.

And they speak of ongoing, frustrating efforts to find employment — any job at all, some say, though like my fellow District resident, many used to earn a comfortable living.

Meanwhile, House Speaker John Boehner has run the clock out on the stop-gap bill to renew Emergency Unemployment Compensation that the Senate passed in early April.

The bill covered five months of EUC benefits, back-dated to when they expired at the end of last year. So the benefits it provided would have ended more than three weeks ago.

Supporters had hoped that the bill would buy time for negotiations on a further extension. Surely justified. Notwithstanding newsworthy job growth, there are still nearly 3.4 million people who’ve been job-seeking for more than 27 weeks.

Only two state unemployment insurance programs provide benefits for this long — and none for much longer.

So at this point, more than 3 million have lost their unemployment benefits since EUC expired, as the counter House Ways and Means Democrats have posted. Look at the numbers roll — about one more worker cut off every 8 seconds, 72,000 or so a week.

Well, I don’t suppose I need to convince you of the mounting crisis — not only for jobless workers themselves, but for their families.

The question is, what will convince Speaker Boehner to let the House vote on an EUC bill? Not apparently some bipartisan job-creating measures to go with it, since he shrugged off the Secretary of Labor’s invitation to discuss what those might be.

The campaign I wrote about earlier hasn’t let up. We’ve been tweeting House Republicans weekly, urging them to tell their leader it’s time — past time actually — for a vote.

Not only the Center for Effective Government, but House Ways and Means Democrats have been collecting stories — many begging Congress for help.

Last Wednesday marked a new phase in the campaign — the first of what will be seven weekly events on the grassy triangle in front of the House side of the Capitol.

Witness Wednesdays they’re called because they center on readings of stories collected — all participants bearing witness to the suffering of our fellow Americans, who, as one of them says, are “swimming as hard as … [they] can, yet … still drowning.”

I joined the crowd for the first event. It was a heart-wrenching — and at the same time, rousing — experience, as you can see.

Thankfully, the organizers and the many other groups supporting the cause aren’t counting on touching Boehner’s heart — or if you prefer, pricking his conscience. Nor, I think, are they counting on pressure from his colleagues to get a standalone bill on the floor.

We perhaps see a glimpse of the Democrats’ strategy in a recent donnybrook in the Senate. Senator Jack Reed, who’d partnered with Senator Dean Heller to negotiate the five-month EUC bill, planned to attach a year-long renewal to the bill extending expiring tax breaks.

Republicans blocked a substantive vote on the bill because House Majority Leader Harry Reid wouldn’t allow them to add amendments.

But the tax extender bill is one of those so-called must-pass pieces of legislation. And there are others — a bill of some sort to avert a government shutdown at the end of the fiscal year, for example, and another to keep funds flowing to road and public transit projects.

So we may see an EUC extension after all. Senators Reed and Heller are reportedly working on a new bill — this time, prospective only. No compensation for benefits already lost, though that might avert some further emergencies.

The challenge again is to find an offset that would satisfy most Democrats and enough Republicans to get the bill — or amendment — passed.

Because we know that Senate Republicans, as well as their House counterparts, will insist the benefits be fully paid for though they’re willing enough to extend tax breaks with no offset whatever.

Meanwhile, the clock is ticking — and the number of jobless workers with no source of cash income rising. Members of Congress will go home in about six weeks and stay there until after Labor Day.

So even if EUC is ultimately resurrected, jobless workers who’ve already said they’re facing foreclosure or eviction may be homeless. And who knows how many more will find their job searches frustrated because they can’t afford gas or public transportation to get to interviews?

This is all so pathetically unnecessary. No wonder that two-thirds of American voters have a higher opinion of lice than of Congress.


Welfare Spending Up? Not So, Another Expert Says.

June 2, 2014

The welfare spending study I recently wrote about makes two main points. Spending on “social safety net” programs has increased. And it’s shifted from the neediest toward more “deserving” working families.

Policy analyst Shawn Fremstad says the first point is “overstated.” He also argues that it’s too narrow because it ignores the erosion of core unemployment programs that aren’t means-tested, i.e., limited to people below a certain income level.

He demonstrates the former by measuring spending on what he calls income security programs as a percent of GDP, i.e. the value of all the goods and services our economy produces, rather than on a per-person basis, as the study’s author, Professor Robert Moffitt, did.

Looked at this way, spending on what are what are mostly means-tested programs has risen and fallen between the mid-1970s and 2007, in synch with recessions and labor market recoveries.

Spending during recessions has trended down. And spending in 2007 — our latest relatively low-unemployment year — is a small fraction of a percent higher than it was in 1979.

What may seem like a technical debate on how to measure safety net spending really isn’t. Because Fremstad aims in part to show that our so-called welfare state has become “less generous.”

Not only that. Spending on a broader range of employment-related programs, i.e., education, training, employment and social services, is lower, as a percent of GDP, than it was in the mid-1970s. “[T]he story is more about retrenchment than expansion,” Fremstad says.

And not only that. The skewing upward is actually much more pronounced than Moffitt’s analysis finds because we have a whole lot of spending through the individual income tax code. And most of the costliest deductions, exclusions and the like disproportionately benefit the top fifth on the income scale.

Even the Earned Income Tax Credit and the Child Tax Credit, Fremstad suggests, aren’t straightforward benefits for lower-income workers because they “subsidize poorly compensated employment.”

In other words, they enable employers to get away with paying less than they could if the tax credits didn’t supplement their workers’ incomes. The EITC may actually drive wages down, according to research by a prominent labor economist.

Underlying all this is a point Fremstad doesn’t specifically state in his post, but indicated in one of his tweets as @inclusionist: Wages and benefits for working families with children hardly show we view them as deserving.

Though these are beyond the scope of a federal spending analysis, they’re federal policy issues nonetheless.

Not much hope on the horizon for improvements. We seemingly can’t even get a renewal of federal unemployment benefits, let alone a minimum wage increase or any sort of paid leave mandate.

But we blog on.


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