Rent’s Still Too Damn High for Lower-Income DC Residents

May 28, 2015

About 41,000 District of Columbia households are currently on the DC Housing Authority’s waiting list. Nearly half said they were homeless when they signed up for housing assistance.

Very disheartening, since there’s no way that all those households will get vouchers to cover what they can’t afford for rent or a chance to live in public housing. It’s even more disheartening when we consider how many additional households would be on the list if it weren’t still closed to new applicants.

The District’s budget for the upcoming fiscal year will fund more vouchers, as well as more construction and/or preservation of housing that’s affordable for the lowest-income residents.

Yet these investments will just make a dent in one of the District’s acute and growing problems — the shrinking supply of rental housing that’s affordable for those residents and for some with too much income to get on the DCHA waiting list, even if it were open.

The latest annual report from the National Low Income Housing Coalition gives us diverse perspectives on how “out of reach” rental housing is for low-income District residents, as well as some we wouldn’t ordinarily consider low-income.

Our point of reference here is the monthly cost of an available, modestly-priced two-bedroom apartment, plus basic utilities — technically, the U.S. Department of Housing and Urban Development’s fair market rent. Here in the District, the FMR for the apartment is $1,458.

To afford it, based on the usual 30% of income standard, a worker would have to earn at least $28.04 an hour — $58,320 for the year.

Renters in the District, however, earn, on average, an estimated $26.08 an hour. So the apartment is roughly $100 a month more than what they can afford. Doesn’t seem so bad until we consider that we’ve got some very high earners who bump up the average because they prefer, at least for the time being, to rent.

Income shortfalls are much larger as we drill down. For example, an extremely low-income household could afford to pay only $819 for rent, plus those utilities. Or so the NLIHC report tells us.

We need to recall that many households have incomes far below what NLIHC uses for its affordability figure — the maximum for the ELI category, i.e., 30% of the median for the area. That’s true everywhere, of course.

What’s not is the basis for the figure. As I’ve said before, the median income that HUD — and hence NLIHC — use for the District is inflated because the area includes some very well-off suburbs. So the apartment is almost surely further out of reach for even the highest-income ELIs.

One would need to do some fancy number-crunching to say how much further. The DC Fiscal Policy Institute, which did something of the sort two years ago, found that the District’s own median income was 23% lower than the area median.

No such caveats needed as we move down the income scale. We learn, for example, that a District resident with a full-time minimum wage job could afford to pay $494 a month for rent — roughly a third of the FMR for the two-bedroom apartment.

In other words, a household would have to have three full-time minimum wage workers to afford it. Looked at another way, as NLIHC always does, a minimum wage worker would have to work 118 hours.

Residents with severe disabilities who rely on SSI (Supplemental Security Income) benefits are, as always, in the worst shape of the groups NLIHC reports on. Those who receive the maximum benefit could afford no more than $220 a month for rent.

Moving beyond the report itself, I’ll note that the maximum monthly benefit a parent with two children can receive from the District’s Temporary Assistance for Needy Families program falls short of the FMR for the apartment by more than $1,000.

Don’t need to add, I suppose, that the apartment is even more absurdly out of reach for the 6,300 or so families who’ve had their benefits cut repeatedly and will have to manage somehow on what remains during the one-year cut-off delay the DC Council just approved.

As the NLIHC report indicates, measly public benefits alone don’t account for the gaps between what low-income renters could afford and what they’d have to pay — or in many cases, are paying by scrimping on other needs, juggling bills and/or resorting to high-interest loans.

Nor does the fact that inexpensive apartments are “going, going, gone” from the local market, as DCFPI recently reported. As it also documented, incomes for renters in the bottom two-fifths of the income scale have actually lost purchasing power since 2002 — or at least had, as of 2013.

These all enter into the mix, however. We’ve got a shortage of low-cost rental housing, a commensurate shortage of vouchers that would make moderate-cost units affordable, public benefits that don’t cover basic living costs, a minimum wage that’s still far less than a genuine living wage and too many residents without the education, training and/or job opportunities they’d have if our laws and programs achieved what policymakers intended.

A web of problems underlying the seemingly straightforward “out of reach” update, but all within reach of solutions.

 

 


What Could Lift More Seniors Out of Poverty?

May 26, 2015

The senior poverty rate, according to the official measure, is lower than the rate for the U.S. population as a whole and considerably lower than the child poverty rate. It still translates into about 4.2 million people 65 and older whose incomes fell below the applicable poverty threshold last year — just $11,354 for those who live alone.

The more accurate Supplemental Poverty Measure boosts the senior poverty rate to 14.6% — about 2.3 million more people. But for Social Security benefits, the rate would have been a whopping 52.6%. This is why Social Security is justifiably called the most effective anti-poverty program we have.

Yet we do still have some 6.5 million seniors without enough income to live on. And our poverty prevention measures tend to focus on younger people, as Kevin Prindiville, the Executive Director of Justice in Aging, says.

We’ve got a battery of programs to support education and work-related training, for example. And we’ve got a spectrum of programs to prevent — or at the very least, reduce — poverty among those who find work, especially those with dependent family members. In other words, it’s not just younger people our measures focus on, but working families.

All too late, Prindiville observes, for someone in her 70s or 80s who’s struggling now after a lifetime of low-wage jobs. “We cannot just hold up our hands and say we should have helped … [seniors] 50 years ago, or helped their parents a century ago.”

So what would help them now? Prindiville proposes a five-step plan. He’s managed to get them into a single, compact post. I, as usual, want to flesh out the issues and solutions.

So I’ll deal here with the first two, overlapping steps and leave the remaining three for a followup.

Strengthen the Existing Safety Net and Social Insurance Programs*

Social Security, SSI (Supplemental Security Income), Medicare and Medicaid largely account for the 26% drop in the official senior poverty rate since 1960, Prindiville says. First and foremost, we need to protect them.

None of those proposed Social Security benefits cuts, increased Medicare cost-sharing, e.g., through a voucher plan, or tighter limits on Medicaid coverage, which we could expect to see under the Congressional Republicans’ upcoming block grant proposals.

On the strengthening side, I suppose Prindiville would endorse the latest version of what was originally the Strengthening Social Security Act of 2013.

It would change the benefits formula, providing an average of $65 a month more, and base annual adjustments on an as-yet-to-be-completed Consumer Price Index specifically for the elderly. And unlike the 2013 bill, it would ensure that formerly low-wage workers receive benefits at least big enough to lift them over the poverty line, provided they’d worked at least 10 years.

Of course, like its predecessor, the current bill would also keep the Social Security Trust Fund from coming up short on the money needed to pay full benefits past its projected insolvency in 2033.

Rather than simply scrapping the cap on payroll taxes, as some have proposed, it would trigger taxes on all income — not only wage income — over $250,000.

Improve Supplemental Security Income

Let’s just say proposals to boost Social Security retirement benefits won’t go anywhere in this Congress. So we’ll still have seniors in poverty.

We would anyway because not all seniors used to work — or have spouses that did. And even a work history often won’t yield a benefit anyone can live on unless it spans at least 35 years — this because of the way the Social Security Administration calculates benefits.

For the poorest 2.1 million seniors, SSI provides a safety net. But it’s in need of strengthening too. The maximum benefit — currently $733 a month — is nearly $250 less than would be needed to lift a single person over the poverty line.

No benefits at all for individuals whose savings and other “countable resources” are worth more than $2,000. Nor for couples who’ve more than $3,000. So seniors who’ve saved even a modest amount don’t qualify, though they surely need some stash they can draw on for expenses like Medicare deductibles and co-pays.

And as I’ve written before, the formula for SSI benefits adjusts them downward, based on other income beneficiaries receive. The adjustments kick in only if income exceeds a certain amount, however.

We see a preference for income earned from work — understandable, since it encourages SSI recipients to enter (or reenter) the workforce. For other income, the exclusion — or disregard, as Prindiville calls it — is a mere $20 a month, plus the value of a few other public benefits.

The benefits reduction for other income is dollar-for-dollar — twice as much as for wage income. This isn’t a problem for seniors only. But it’s a big problem for them because they’ll lose as much as they gain from even a piddling increase in Social Security retirement benefits.

Congress hasn’t updated the exclusions since it created the program in 1972. If they’d been adjusted to reflect consumer price increases, the unearned income exclusion would be roughly $112 today.

Bills that died in the last Congress would have addressed these problems, as well as what can be large benefits reductions when a friend of relative helps out with food, housing costs and/or utility bills.

Prindiville says he expects the bills to be introduced again this spring. Nothing thus far, but they probably will be — whether to be better fate remains to be seen. Not holding my breath, folks.

* Prindiville’s top-line recommendation implies that Social Security retirement benefits and Medicare are safety net programs like SSI and Medicaid, but they’re insurance programs because workers pay premiums of a sort, as payroll taxes. I’ve modified the recommendation accordingly because I, among others, feel it’s important to preserve the distinction.


Who Should Decide What Poverty Is?

May 20, 2015

Let’s step back for a moment — oh, lets — from all the budget and other hot-button issues that will make life better or worse for people in poverty here in the U.S. Let’s consider how we decide who those people are.

As I suppose you know, we decide, for official purposes, by using a measure developed more than 50 years ago. This is the measure that becomes the basis for deciding who is poor enough to qualify for most of our major safety-net benefits.

Knowing it’s outdated — and was crude from the get-go — the Census Bureau has developed a “supplemental” measure, which some other analysts now use. Though more complex and sophisticated than the official measure, it still reflects needs experts have decided are essential, e.g., food, shelter and utilities, clothing, health insurance.

This, economist Stewart Lansley and coauthor Joanna Mack say, is a technocratic way of going at what’s essentially a philosophical question: what it means to be poor. What if we instead asked everyday people what they think necessary for an acceptable standard of living in our society?

The team ought to know because that’s what they’ve done for Great Britain, though thus far only as one of several alternatives to the official measure there. That measure, like ours, uses a straightforward income threshold. But unlike ours, it bases the threshold on median household income.

Below 60% of whatever the median happens to be at any given time means a household is officially poor. So the measure is relative, as it also is in other European Union countries, plus some additional countries in the OECD.

The threshold, however, still reflects a line experts and policymakers have drawn — in this case, to identify people whose resources are “so seriously below those commanded by the average individual or family that they are, in effect, excluded from ordinary living patterns, customs and activities.”

Lansley and Mack advocate a “consensual” poverty measure. It’s consensual in that it’s based on surveys that ask the public to identify items they think are necessities not merely for survival, but for living in their society.

So the surveys include not only food, “damp free” housing and the like, but some of those amenities the far-right Heritage Foundation cites to trash on our poverty measure — and our public benefits programs. The survey, in fact, goes beyond goods and services of any sort to include “social activities” no one should have to do without.

The researchers then take items and activities a majority of respondents have chosen as necessities of life. Adults who lack three or more fall into the poverty group, as do children who lack at least two. (Basing the counts on multiple lacks is intended to exclude adults who don’t have — or engage in — one thing or the other because they’ve chosen not to, even though they could afford it.)

A  basic premise here is that the deprivation we commonly view as poverty depends on cultural and social conditions. Whatever the type(s) or degree(s) of deprivation our poverty definition entails don’t properly apply everywhere and for always.

A second, related premise is that deprivation includes the experience of being marginalized due to the indirect consequences of not having enough income and/or sufficient public benefits. We see this in the fact that a majority of UK survey respondents view the ability to afford a school trip for one’s children as a necessity.

Beyond this, the method formally recognizes that “[p]overty is a value judgment,” as the inventor of our own official measure said.

So the question becomes who should make the value judgment — experts who define some set of minimal needs and the compute the costs or the public, whose views and everyday living activities set norms that, as Lansley and Mack have said, cause people who can’t afford to meet them “to be regarded as deprived and to feel deprived.”

The team argues that the public opinion methods is “the nearest we have to a democratic definition of poverty.” In the UK, at least, it’s a standard that has support from “all social groups,” they say, cutting across classes, age groups, gender and “very importantly, political affiliation.”

They view it hopefully as an approach that could “refocus the discussion” — heated debate actually — about the safety net and the government’s proper role in fighting poverty.

Whether such broad support for a poverty definition would make a difference in our public policies is, to my mind, doubtful. We know from polls, for example, that a large majority of American voters view SNAP (the food stamp program) as important for our country.

Has this protected the program from cuts, let alone produced the needed benefits boost and other changes I tend to harp on?

The notion of a poverty definition grounded in the public’s view of the necessities of life in our country is nevertheless intriguing. If nothing else, it gives us insights into rarely surfaced assumptions underlying our poverty measures.

That, in itself, is, I think, worthwhile as the debate over who’s truly poor, why and what’s appropriate for our government to do rages on.


DC Moves Forward on Affordable Housing. House Republicans Pull Back.

May 18, 2015

Here in the District of Columbia, we’re hopeful about prospects for more affordable housing, especially for our very lowest-income neighbors — both those homeless now and those at high risk because they’re paying at least half their income for rent.

The Mayor’s proposed budget largely accounts for these hopes. Meanwhile, our Republican neighbors on Capitol Hill have decided to put a damper on our progress — and the progress of communities nationwide.

National Housing Trust Fund Defunded

The Mayor’s proposed budget would dedicate $100 million to the Housing Production Trust Fund — our largest source of public financial support for projects to build and renovate affordable housing.

This would double the amount the Fund has for the current fiscal year and probably expand the District’s affordable housing stock by 1,000 or more units, the DC Fiscal Policy Institute reports.

The District could have counted on a share of the revenues that at long last were to flow to the National Housing Trust Fund. But the House subcommittee responsible for the U.S. Department of Housing and Urban Development’s appropriations raided those revenues.

A bit of budgetary legerdemain here. Basically, the subcommittee cut funds for the HOME program, which provides grants to state and local governments for a wide variety of activities related to housing and home ownership.

But it then partially offset the cut by allocating to HOME all the funds that were supposed to go to the Trust Fund. And for reasons not altogether clear to me, it tucked into its bill a provision prohibiting any other funding for the NHTF.

The defunding — and the under-funding I’ll discuss below — were approved by the full Appropriations Committee last week, on a straight party-line vote.

So much then, so far as the majority’s concerned, for funds intensively targeted to rental housing for extremely low-income households, as only 40% of the District’s Trust Fund resources must be.

Federally-Funded Housing Vouchers at Risk

The Mayor’s proposed budget would expand the Local Rent Supplement Program — the District’s locally-funded version of the federal Housing Choice (formerly Section 8) voucher program.

LRSP would get an additional $6.1 million — $3.7 million for tenant-based vouchers, which go directly to extremely low-income households so that they can afford to rent at market rates, and $2.4 million for project/sponsor-based vouchers, which help cover the operating costs of housing that’s affordable for these households.

But it’s doubtful the DC Housing Authority, which administers both LRSP and Housing Choice, will have more vouchers to award.

The House HUD appropriation reduces the funding local housing authorities will have to renew Housing Choice vouchers. They’d be shy a total of $183 million of what HUD estimates they’d need to sustain all vouchers now in use.

Here in the District, about 280 fewer families would receive Housing Choice vouchers, according to a White House fact sheet. If accurate, this means that DCHA would have to retire even more vouchers than it did after the across-the-board cuts known as sequestration.

DCHA and other housing authorities may face similar problems with the contracts they’ve awarded to affordable housing projects. The President’s proposed budget included HUD’s best estimate of the cost of renewing all such contracts. The House HUD appropriations bill falls $106 million short of that.

Further Losses in Habitable Public Housing

A nationwide study conducted for HUD five years ago found a $26 billion shortfall in the funds needed to repair and renovate public housing units. DCHA alone figured it would need $1.3 billion to preserve and redevelop all the units it manages.

That was about a year ago, not long before Congress level-funded the public housing capital fund, leaving it with $625 million less than it had when the HUD study produced its shortfall estimate. And level-funding doesn’t translate into the same level and quality of goods and services, as all of us with personal and household expenses know.

The House Appropriations Committee has nevertheless cut funding for the capital fund by $194 million. Hard to see how this wouldn’t further increase the number of public housing units left vacant — or demolished — because they’re egregiously substandard or so damaged by fire, flooding and the like that repair costs exceed available resources.

Squeeze on Homeless Services

The Mayor’s proposed budget includes a range of investments to move the District forward toward the goal of making homelessness in the District “rare, brief, and non-recurring,” as the new Interagency Council on Homelessness strategic plan envisions.

Her budget also includes a more realistic estimate of the costs of providing emergency shelter for families during the winter months — a refreshing change from the past few years, when the Gray administration minimized family shelter needs and then had to shift funds from other human services programs to cover the costs of motel rooms.

As in the past, local funds would supply most of the homeless services budget. But the District also expects a small increase in homeless assistance funding from HUD.

The House Appropriations Committee would, in fact, provide a small, increase for the grants — $50 million more than approved for this fiscal year. For all intents and purposes, however, the grants would, at best, preserve the status quo.

No additional money to help communities achieve the goals set by the U.S. Interagency Council on Homelessness — a source for the District’s own ICH goals.

And lest I haven’t rained on this parade enough, the Mayor’s plan to expand permanent supportive housing includes an as-yet unreported number of Housing Choice vouchers supplied by DCHA. So we could be looking here at a robbing Peter to pay Paul.

Not the District’s fault. It’s what the Republican Congressional majority chose when it decided not to lift the caps imposed by the 2011 Budget Control Act, but instead to boost defense spending through another bit of budgetary legerdemain.

None of this is yet a cause for hand-wringing, though teeth-gnashing seems appropriate. A bill passed by one appropriations committee is a long way from becoming an agency’s budget.

But we’re a long, long way from a HUD budget that would meaningfully support the District’s commitments to more affordable housing and a lot less homelessness.

 

 

 


DC Homeless Count Shows Some Progress, Still Big Unmet Needs

May 13, 2015

On a single night late last January, nearly 7,300 people were counted as homeless in the District of Columbia, according to the Metropolitan Council of Government’s just-released report. Nearly half of them were adults and children together as families.

Both these figures are moderately lower than those reported for 2014. But over the longer haul, we see an upward trend in the homeless total, driven entirely by the sharp spike in family homelessness.

Nearly Twice as Many Homeless Families as in 2008

The count identified 1,131 homeless families, i.e. those in shelters or transitional housing. None reported on the streets, in bus stations or other places “not meant for human habitation.” And as I say virtually every time I report count figures, they don’t include nearly all families (or individuals) without a home of their own.

The latest family total is 100 fewer than in January 2014. But it’s nearly double the number counted in 2008, when the recession had just set in. Looked at another way, family homelessness has increased by well over 92%, despite the 2014 dip down.

High Percent of Homeless Families With Very Young Parents

The MCOG report includes a first-time-ever breakout of “transition age youth,” i.e., 18-24 year olds. For this we can thank the U.S. Department of Housing and Urban Development, which sets the data collection rules.

Here in the District, the count identified 1,103 TAY — all but 193 of them in families, i.e., as parents who had at least one child with them, but no parent or guardian of their own in the group. This means that nearly 64% of all adults in families counted were in their late teens or early twenties.

Now, this doesn’t mean that such a large percent of all homeless young adults in the District were parents who had babies and/or toddlers to tend and, insofar as they could, protect.

Far more single, i.e., lone, TAY than counted had probably found friends or relatives to give them a temporary alternative to the streets or the nasty singles shelters. It’s obviously one thing to let a young person sleep on your couch. Quite another to bring a mom and her newborn or understandably fretful two-year-old into your home.

It’s also likely that many single TAY who had no shelter of any sort didn’t get counted because unaccompanied youth generally don’t spend their nights where they’re reasonably easy to find — and often won’t admit they’re homeless when found.

The high percent of youth-headed homeless families is nonetheless striking. The TAY count isn’t the only indicator. MCOG, relying on facts and figures from last year’s count, says the median age for homeless D.C. adults in families is 25.

Fewer Homeless Singles, But More Unsheltered

The latest count found 3,821 homeless single adults, i.e., those who didn’t have children with them and thus didn’t qualify as family members, though some undoubtedly had spouses or partners sharing their plight.

The new figure is a tad lower than last year’s, which was somewhat higher than the figure for 2013. We don’t see a clear long-term trend. The latest figure, however, represents a decrease of about 9.2%, as compared to 2008.

Though the vast majority of homeless singles were in shelters or transitional housing, 544 were exposed to the elements or spending their nights in cars, vacant buildings, stairwells and the like. The unsheltered figure is nearly 150 higher than last year’s — and even a bit higher than in 2008.

With such (happily) small numbers, it’s hard to know whether we’re seeing a real uptick or merely the results of a more effective count. The District’s chapter in the MCOG report suggests the latter.

Fewer Chronically Homeless Residents

We do see what seems a genuine downward trend in the number of homeless singles identified as chronically homeless, i.e., those who’d been homeless for quite a long time or recurrently and had at least one disabling condition.

The January count found 1,593 of these singles — only 16 fewer than in 2014. But it’s the fifth year the number dropped, making for a 27% decrease since 2008.

The count also found fewer chronically homeless families, i.e. those in which at least one adult met the HUD definition I’ve linked to above. The latest figure — 66 — represents a marked drop from 2014, but that was a marked increase over 2013.

MCOG didn’t start reporting chronically homeless families as a separate group until 2011, presumably because HUD didn’t require grantees to do so. Looking back as far as we can then, we see a decrease of roughly 51%.

More Residents Not Homeless Because of Permanent Supportive Housing

Singles and families living in permanent supportive housing are rightly not counted as homeless, though most probably would be without PSH. They are, however, accounted for in the MCOG report and its members’ reports to HUD.

And here’s where we see the explanation for the relatively low chronically homeless figures, especially for singles. In January, 4,230 singles were living in PSH units in the Distric — an increase of 730 over 2014. This represents a whopping 115.5% increase since 2008.

We also find more families who’d like as not have been chronically homeless were it not for PSH. The District reported 1,128 of them, somewhat over three times as many as in 2008.

Not Just More Data Points

At this very moment, the DC Council is chewing over the Mayor’s proposed budget for the upcoming fiscal year. Both the progress and the challenges the new count indicates should persuade it to support her proposed investments in both homeless services and affordable housing, including PSH — indeed, to make at least some of them bigger.

And I, getting back on my hobbyhorse, see yet further justification for her proposal to extend a lifeline, though thin to the 6,300 families who’ll otherwise lose what remains of their Temporary Assistance for Needy Families benefits.

If they’re not already homeless, they’re likely to be. And as things stand now, a goodly number will have to fend for themselves until the next severe cold snap because the Mayor’s budget won’t cover the costs of sheltering all with no safe place to stay when the multifarious harms they’re exposed to don’t include the risk of freezing to death.

Like I said, some bigger investments needed.

 

 

 


What Raise the Wage Would (and Might) Do at State and Local Levels

May 11, 2015

As I said the other day, Senator Patty Murray and Congressman Bobby Scott have introduced an ambitious bill to at long last raise the federal minimum wage — and at longer last, do away with the sub-minimum tip credit wage.

One might wonder why we need the bill when so many states, plus some local governments have already raised their minimums. The answer lies in part in the higher and uniform wage floor the Murray-Scott Raise the Wage bill would set.

The other part — more speculative — has to do with how the bill could affect further state and local minimum wage initiatives. Assuming, as seems reasonable, that Congress won’t pass it, we’re likely to see such initiatives as we approach the sixth year since a federal minimum wage increase.

And the more we see, the more we could see the bar raised for employers’ quasi-voluntary initiatives to raise the wage floor for their lowest-paid workers. “Quasi” because they’re clearly responding to well-publicized campaigns they rightly view as threats to their brands — and bottom lines.

Direct Effects on State and Local Minimum Wage Rates

As in the past, state and local governments have grown increasingly impatient at the federal government’s failure to raise the minimum wage. Fourteen states and the District of Columbia passed their own increases last year.

None of them, however, now mandates a wage as high as $12 an hour, though minimums in a few major cities will eventually exceed it. And only four of the new state laws, plus the District’s provide for annual cost-of-living adjustments once their new rates are fully phased in.

Eyeballing the rates they’ve set and the full phase-in dates, I doubt that any, except perhaps the District’s will match $12 in 2020. More importantly, we still have 19 states that peg their minimum wage to the federal or have no minimum wage law of their own.

And only seven states require employers to pay their workers the full minimum wage, even those who often earn tips. Not that we haven’t seen efforts to eliminate tip credit wages in other states — and in the District.

All steamrollered by the National Restaurant Association’s state affiliates, allied groups purporting to represent small businesses and the restaurant industry’s hired gun, the Employment Policies Institute (not to be confused with the Economic Policy Institute).

What the Rates Tell Us

The varying minimum wage rates themselves tell us a couple of things. First — and most obviously — workers in some states will be stuck with the current federal minimum and significantly lower sub-minimum unless the federal law is changes.

Second, also obviously, many millions of workers in most, if not all other states would also get paid more under the Murray-Scott bill. As I mentioned earlier, the Economic Policy Institute estimates 37.7 million by 2020, not counting workers paid the $2.13 federal tip credit wage — or as in the District, a slightly higher sub-minimum.

How Raise the Wage Could Raise Wages Without Changing Federal Law

Much as we might wish, Congress won’t raise wages for those 37.7 million workers and the additional uncounted tip credit workers — not at least, until new elections dramatically shift the party balance. Raise the Wage could nevertheless have near-term, real-world effects.

These would arise from the way the bill may alter the framework within which policymakers and we, the voter/consumer public, assess current and reasonable minimum wages.

Essentially, the proposed minimum could become a new reference point, of sorts, for initiatives to raise state and local minimum wages. The proposed tip credit wage phase-out might become a reference point too.

We already see how the fast-food worker strikes — and more recently, some broader strikes — have made $15 an hour seem just and reasonable for more than an outlier city like Seattle.

The movers and shakers behind San Francisco’s recent ballot measure didn’t just pull their $15 an hour minimum out of a hat. Nor, I think, was the overwhelming voter support for the measure unrelated to the fact that $15 no longer seems like mere pie in the sky.

In fact, it’s made $12 an hour five years from now seem like a quite modest proposal — as indeed, it is. Recall that $12 in 2020 won’t be worth as much as it is today. If it were effective today, a full-time, year round minimum wage worker’s take-home pay would still be less than needed to lift a four-person family above the poverty line.

So Raise the Wage is by no means the be-all-and-end-all. Nor would the sponsors and many cosponsors say otherwise. But it would ease the budget crunch for poor and near-poor working families, narrow the yawning gap between them and the highest earns — and perhaps, as some who ought to know say, also prove a benefit to employers who’d have to pay it.

As I’ve suggested, it may do all of these good things in the not-distant future, even if, as expected, the Republican leaders in Congress let it die because they want to spare their members what could be a troublesome vote.

But we won’t see those good things everywhere and for everyone without changes in the federal law.


If at First You Don’t Succeed, Try, Try Again to Raise the Minimum Wage

May 7, 2015

As you may have read, Senator Patty Murray and Congressman Bobby Scott have introduced a bill to raise the federal minimum wage. It’s the latest in an ongoing, going-nowhere-now series of Democratic efforts to raise the wage.

The Murray-Scott bill has several major features in common with its recent predecessors, but also several that are somewhat different. What foreseeably won’t be different are the cavils opponents will raise, not to mention the fate of the bill in Congress — this Congress, at least.

But Raise the Wage — the name of the bill, as well as its main thrust — is hardly a futile gesture. For one thing, it gives Democrats a popular, differentiating issue to campaign on.

For another, the bill can further focus attention on the shrinking value of the current minimum wage, the plight of workers who receive it and the safety-net costs higher-income taxpayers cover to keep those workers and their families from utter deprivation.

What the Bill Would Do for the Federal Minimum Wage

The bill would gradually raise the federal minimum wage from $7.25, where it’s been stuck since mid-2009, to $12.00 in 2020. The first phase of the increase — 75 cents — would kick in at the beginning of next year. The wage would then rise by $1.00 each year thereafter.

After 2020, the wage would be adjusted annually by the same percent as the national median hourly wage increased. This is one of the differences from the earlier bills, which provided for annual adjustments based on consumer price inflation.

The Economic Policy Institute, which provided analytic support for the new approach, argues that benchmarking to the median wage is fairer because adjusting merely for inflation “assumes that minimum-wage workers should not expect their standard of living to improve relative to the standard achieved by workers 50 years ago.”

In 1968, when the federal minimum wage was worth $10.79 in today’s dollars, it was slightly over half the median. It’s about 37% of the median now and would return to roughly the 1968 ratio, according to EPI estimates.

What the Bill Would Do About the Tip Credit Wage

The Murray-Scott bill would also very gradually phase out the tip credit wage, i.e., the minimum employers must pay employees who receive more than $30 a month in tips. The federal tip credit wage is currently $2.13 an hour, as it has been since 1991. And it’s still the legal sub-minimum in 17 states.

The bill would boost it to $3.15 next year and then increase by no more than $1.05 an hour until it equaled the regular federal minimum. The same adjustments based on the median wage increase would then apply.

This is more ambitious than bills introduced in the last several years, which would have gradually raised the tip credit wage until it reached 70% of the regular federal minimum and then preserved that ratio.

What Opponents Will Say

Quick out of the box, economist/blogger Jared Bernstein anticipates “the same tired arguments” we hear every time anyone floats the notion of a minimum wage increase. He heads his post with a graphic from EPI that dispatches with some of the myths.

No, minimum wage workers aren’t mostly teenagers. Only 11% are under 20 — many considerably older, since their average age is 36. No, they’re not earning some extra spending money for fancy cell phones and the like. On average, their earnings make up more than half their family’s income.

And despite what we will undoubtedly hear again, a minimum wage increase will not hurt those it’s intended to help. A recently-published analysis of more than 200 studies concludes that “increases in the minimum wage … have very modest or no effects on employment, hours, and other labor market outcomes.”

How Many Workers Helped

EPI estimates that the newly-proposed increase would benefit more than 37.7 million workers by 2020 — more than one in four of the entire workforce. This includes not only those who’d be legally entitled to increases, but about 7 million whose wages are somewhat higher. They’d get a bump-up as employers adjusted their pay scales to preserve a differential.

The projected impact is so broad because the Murray-Scott bill would lift minimum wages even in the majority of states and the District of Columbia that now have minimums higher than the federal. And I would assume it’s even broader because the vast majority still permit a sub-minimum tip credit wage — a factor EPI’s estimates apparently don’t fold in.

I’ll have more to say about these angles in a separate post.

In the interim, you can demonstrate support for the Raise the Wage bill by signing a petition EPI has launched.

 


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