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.

 


Why We Should Care About Payroll Tax Holidays for High Earners

February 19, 2015

Last week, the top 1% of American workers finished paying their Social Security taxes for the year — an inflection point flagged and flogged by the Center for Economic and Policy Research. On the very same day, the Senate Budget Committee held a hearing on the impending depletion of the Social Security Disability Insurance trust fund.

These two events are related because the first provides a fresh perspective on the second, as well as a solution that’s not fresh, but seems sensible anyway.

As I’ve written before, the so-called DI trust fund will run out of reserves in 2016, unless Congress and the President agree on a solution. If they don’t, former workers with severe disabilities will receive only about 80% of their benefits — an average loss of nearly $244 per month.

That’s a real dent in the household budget. Average benefits now are $1,165 a month for disabled workers themselves and only $811 more for those with qualifying spouses and children.

The shortfall has been predicted for a long time, based mainly on demographic changes in the workforce, e.g., the aging of the baby boomer cohort, the large increase in the number of women working — and working long enough to qualify for SSDI.

Federal policy choices have contributed as well — specifically, the decision to take some pressure off the Old Age and Survivors trust fund by raising the eligibility age for full retirement benefits. But for that, many disabled baby boomers wouldn’t be receiving SSDI benefits any more.

All these factors explain why money is going out of the DI trust fund. The beginning of the payroll tax holiday for the very highest earners — and upcoming tax holidays for others who are doing quite well — explains why not as much money is flowing in.

As I’m sure you know, all of us who get paid for our work owe payroll taxes. If we’re employees, we pay 6.2% for Social Security. Our employers deduct it from our checks and pay the same amount. If we’re self-employed, we owe the whole 12.4%.

But the income subject to Social Security payroll taxes is capped — and always has been. For more than 30 years, the cap has been adjusted annually based on the average national wage index.

The index almost always rises, though rarely by a lot. The cap this year is $118,500 — up by $1,500 from last year.

But as everyone who hasn’t been living in a cave knows, more and more income is flowing to very high earners — those making a million or more a year. There were already six times as many of them in 2013 as in 1989, according to the Center for American Progress.

So more and more income escapes the Social Security tax. And it’s not only wage income enjoyed by the millionaires and billionaires, as this year’s cap indicates.

Class warfare alert! Not really. The point is that income inequality helps explain why the DI trust fund could soon run dry — and why the OASI trust fund will long about 2034 — unless our federal policymakers come up with a way to preserve the benefits that most workers and their families need.

A stopgap solution we already have — a relatively small increase in the share of payroll taxes going to the DI trust fund. But as I recently wrote, House Republicans have passed a rule to block any such shift, precedents notwithstanding.

They say they want a long-term solution to the whole solvency problem. Thus far, however, the most we can glimpse of what they have in mind comes from Senate Budget Committee Chairman Mike Enzi, who opened last week’s hearing.

He trashed on the President, of course — in part, for proposing the payroll tax shift. But he also suggested that more workers with disabilities severe enough to meet SSDI’s strict standards could actually work because technology enables people to work from home, start their own businesses, etc.

Michael Hiltzik at the Los Angeles Times perceives a move to distinguish deserving from undeserving SSDI recipients. Perhaps. Or perhaps it means something that one of Enzi’s friendly witnesses advocated “early intervention,” i.e., rehabilitation and other services to keep people with “work-limiting conditions” in the labor force.

Bottom line, however, is that enabling some additional workers with disabilities to remain gainfully employed won’t do a whole heck of a lot to keep the DI trust fund solvent — and nothing at all to preserve full benefits for retirees.

Uncapping the payroll tax cap would. If Congress had simply scrapped the cap four years ago, it could have closed about 90% of the projected funding gap for 75 years.

Other cap-scrapping scenarios could have closed roughly 70-80%. These, which seem more politically realistic, would have boosted benefits for higher earners, as well as capturing more of their income. We’ve had cap-lifting, as well as cap-scrapping proposals too.

So there’s more than one way to minimize the projected shortfall. But any solution that leaves the cap alone is bound to severely reduce retirement benefits — perhaps deny some severely disabled workers and their families any benefits at all.

Not much of a worry for those folks whose tax holiday has already begun. But for the rest of us ….


President Proposes Much-Needed Unemployment Insurance Reforms

February 12, 2015

The unemployment rate may be down from its recession peak. but we’ve still got jobless workers, as we always do. Unemployment insurance benefits are supposed to be their safety net. Yet only 27% of them received any UI benefits last year, the National Employment Law Project reports.

NELP offers about a dozen recommendations to avert a repetition. These are things states and the District of Columbia could do. But the report also flags several problems Congress can address, including one that only it can.

President Obama picks up on these in his proposed budget for next fiscal year. One proposal could make UI benefits available to more jobless workers, regardless of labor market conditions. It could also help them get back to work quicker.

Another proposal could, but wouldn’t necessarily restore benefit levels and weeks of coverage that some states reduced when they had to borrow from the federal government to meet their UI obligations — not a forced choice, as one of NELP’s senior staff attorneys notes.

The boldest of the proposals — and the one I’ll focus on here — would overhaul the Extended Benefits program.

How EB Fits Into the UI System

Unlike the Emergency Unemployment Compensation program that got so much attention when Congress dawdled over renewals and then let it die, the EB program is as permanent as anything federal legislation creates can be.

As its name suggests, it’s supposed to extend UI benefits beyond the period states’ regular programs cover when unemployment rates are unusually high.

But it doesn’t kick in fast enough to serve as a secure safety net for jobless workers — and as a boost, through their spending to state economies. Nor does it reliably deliver federal support for benefits as long as needed — a lesson driven home by the Great Recession.

How the EB Program Works

Under ordinary circumstances, states and the federal government share the costs of EB benefits. States “trigger on” when either the unemployment rate for their UI-eligible workers or their total unemployment rate reaches a specified percent and is a specified percent higher than the rate during the prior two years.

The UI-eligible worker provisions apply unless states have adopted the total unemployment alternative. The latter allows for a smaller percent increase over the so-called look-back period — 10%, instead of 20%. And it provides an additional seven weeks of benefits if the state unemployment rate is over 8%.

In either case, however, the unemployment rate must continuously rise or states will “trigger off.” So there’ll be no more benefits for workers still jobless at the end of the period their state’s regular UI program covers, even if the unemployment rate is still high. Or at least, there won’t be unless Congress enacts a temporary extension like EUC.

What the President Proposes

The President’s budget would convert EB to a federally-funded program, as it temporarily was under the Recovery Act. But eight states that retrenched their own programs would have to revert to 26 weeks or the pay half they do now.

The budget would also reform the problematic trigger system — and provide up to a year’s worth of benefits, in addition to the weeks state UI programs cover.

Basically, it sets up four employment rate triggers, beginning at 6.5% and continuing at 1% intervals up to 9.5%. Each of these produces an additional 13 weeks of benefits.

An alternative formula would trigger benefits if a state’s unemployment rate rose very rapidly. Instead of the usual 6.5%, for example, a state would qualify if its unemployment rate, plus the percent increase over the year equaled at least 6.5%.

This, as the White House budget summary says, “would ensure that the UI program responds quickly to dampen the effects of recessions and provides a critical safety net for unemployed workers in states where jobs are scarce.”

Not a critical safety net for all jobless workers, however. That shocking 27% NELP reports reflects, among other things, state eligibility criteria that deny UI benefits to many part-time workers and to others whose recent work history consists of temporary jobs, with lapses in between.

One of those other parts of the President’s UI packages would give states a financial incentive to expand eligibility in at least two specific ways. These, I’m told, will include those that states had time-limited incentives to adopt under the Recovery Act.

So new hope perhaps for jobless part-timers in nearly half the states that still deny them UI benefits if they can’t, in good faith, seek full-time employment. Also perhaps for some on-and-off-again workers in a dozen states.

What’s for anyone not to like? Well, for one thing, the way the proposed budget would offset the additional costs — two minor tax increases, one for employers and one for all but the lowest-earning employees. Are Republicans in Congress going to go for this? Are the associations that purport to represent employers?

The best the President can do at this point is to lay down a marker, says New Republic columnist Danny Vinik, echoing an unnamed administration official. “Now it’s up to Republican leaders to respond,” he adds. Interesting to see if they do.

 


Some College Education Not Enough in DC’s Economy

February 5, 2015

As you may have noticed, this recovery that’s suppose to be more than five years old now hasn’t been one of those rising tides that lifts all boats. We’ve had scads of reports, media features and the like showing how more and more income is flowing to the already-rich, leaving the rest with a shrinking share.

A new report from the DC Fiscal Policy Institute zeroes in on one angle of this nationwide story — employment and wages in the District of Columbia. It does so mainly by comparing Census data for 2007, just before the recession set in, to comparable data for 2013.

The report’s subtitle tells that “DC’s Economic Recovery Is Not Reaching All Residents.” That’s an understatement. For example:

  • Low-wage workers, i.e., those with earnings in the bottom fifth, actually got paid a bit less per hour in 2013 than in 2007.
  • The unemployment rate for black workers was 6% higher late last summer than in 2007, though the overall unemployment rate in the District was just 2.1% higher.
  • About two and a half times as many black workers were jobless for at least six months in 2013 as in 2007.
  • Higher percents of black and Hispanic workers, especially the former, were working part time, though they wanted full-time jobs.

The big message underlying many of the figures and related graphs is that residents without at least a four-year college degree are no better off than they were before the recession. In some respects, they’re worse off.

We’re used to seeing dismal wage figures and relatively high unemployment rates for workers without a high school diploma or the equivalent. And we’ve surely got them in DCFPI’s report.

But the figures for District residents with some college education, including those with an associate’s degree are an eye-opener. We learn, for example, that:

  • The median hourly wage for the some-college group fell more, in dollars, than the median for workers with no more than a high school diploma.
  • At the same time, the median for residents with at least a four-year college degree increased by $2.00 an hour — roughly the same as what the some-college workers lost.
  • The unemployment rate for the some-college group was close to 15% in 2013. This is nearly three times the rate in 2007 — and only about 4% higher lower than the rate for residents without a high school diploma.
  • About 22% of the some-college workers were involuntary part-timers, i.e., wanted full-time work, but couldn’t get it.

Yet when DCFPI turns to what needs to be done, it focuses largely on the District’s lowest-wage workers — and those who either can’t get jobs or could, but can’t afford the collateral costs.

Our some-college workers may benefit from most of the recommendations, but only to the extent they’re as disadvantaged in our labor market as workers and potential workers without their formal education credentials.

For example, DCFPI puts in another plug for career pathways that integrate basic literacy and job training programs — not, one hopes, an approach our some-college residents need.

It also recommends that the District take better advantage of federal funds available for job training and related supports, e.g., transportation subsidies, through SNAP  (the food stamp program). This, I take it, means invest more local dollars because the U.S. Department of Agriculture will reimburse half of what’s spent on an approved plan.

Two other recommendations would help ease conflicts between work and family obligations. One would enable a worker to take paid leave in order to care for a new baby or ill family member. Obviously preferable to quitting, getting fired or, in the best of cases, losing wages you and other family members need.

Another recommendation — oft made and still not fully funded — would increase the reimbursement rates the District pays providers that care for children with publicly-funded subsidies.

We know that some providers won’t accept such children and that others limit the number they’ll accept because, in at least some cases, the reimbursements don’t even cover the costs of care.

Some parents who don’t work could. Others could work more. Wouldn’t do a thing for their wage rates or job prospects. But there’d be more income to spend on other needs.

Still another oft-made recommendation could boost earnings for thousands of workers in the District’s growing “hospitality” sector, as well as some others, e.g., hairdressers, the folks who deliver our pizzas. These are workers whom employers can pay as little as $2.77 an hour because they regularly receive tips.

DCFPI suggests a 70% increase in the tip credit wage — borrowing, it seems, from the long-stalled minimum wage bill in Congress. But it also notes that seven states have no tip credit wage at all — a model the District could follow, if policymakers would stand up to the restaurant and hotel industry lobbyists.

Don’t look to me — or, I would guess, other progressives — to argue against any of these recommendations. But, so far as I can see, none of them gets to the heart of the problem DCFPI illuminates.

If you live in the District, you’ll have a tough time getting — and keeping — a job that will pay enough to support a reasonably secure, comfortable lifestyle unless you’ve got at least a four-year college degree.

What our local policymakers can do about this I’m hard put to say. And I’m certainly not faulting DCFPI for teeing up a handful of quite modest recommendations they could adopt right now — or as part of the budget the mayor’s people are already working on.

But I don’t think we should just shrug our shoulders either. An economy that works for only about half the adults in the city isn’t, to borrow from DCFPI, “enabling all residents to succeed.”

 

 

 


House GOP Puts Disabled Workers at Needless Risk

January 26, 2015

Seems when minds are made up, they won’t be confused by facts. Consider, for example, Senator (and Presidential-hopeful) Rand Paul (R-KY) on the subject of SSDI (Social Security Disability Insurance).

“[W]hen you look like me and hop out of your truck, you shouldn’t be getting your disability check. Over half the people on disability are either anxious or their back hurts. Join the club.”

Blogger Steve Benen refutes Paul’s “over half” and the barely-submerged allegation of fraud with hard data from the Social Security Administration’s Inspector General, which, as he says, are basically the same as findings by the Government Accountability Office.

What’s so depressing is that we’ve been round this barn over and over again. Someone — an NPR reporter, for example, or a Fox News talking head — asserts that a lot of SSDI recipients could work if they wanted to, but instead have managed to get disability benefits based on “squishy” diagnoses or out-in-out fraud.

Analysts, advocates and responsible bloggers cite data showing, among other things, how stringent SSDI eligibility standards are, how few recipients can work at all, let alone ever earn enough to support themselves again, and how modest the benefits are — far too low for someone to choose them over gainful work.

Rebecca Vallas, whose post I linked to above, has written substantially the same thing so often I believe she could probably do it in her sleep.

What’s even more depressing is that the House Republican majority has now put SSDI recipients in unnecessary peril, relying, it seems, on the oft-debunked claims.

As I’ve written before, the trust fund that helps pay for SSDI benefits will run out of reserves in 2016. This has long been expected. And it has nothing to do with freeloaders, fraudsters or the difficulties jobless workers have had finding new employment due to the Great Recession.

Instead, the number of SSDI beneficiaries has grown in part because baby boomers are getting to the age where disabilities become more common and in part because more women are working — and working enough — to qualify.

A third factor — ironic in this context — is that Congress raised the eligibility age for full retirement benefits to help stave off a shortfall in the Old Age and Survivors Insurance trust fund, i.e., the one intended to ensure those benefits get paid in full.

In ordinary times, Congress would simply shift some payroll taxes that go to the OASI trust fund to the DI trust fund. It’s made such shifts 11 times — sometimes in one direction, sometimes the other.

Doing that now to protect disability benefits would have little effect on the OASI trust fund. It would merely run out of reserves one year earlier, while the DI trust fund would have enough to pay full benefits until the same year — this assuming Congress adopted the Social Security actuaries’ solvency scheme.

None of this matters a whit to Congressman Tom Reed (R-NY), who cosponsored a change in the House rules that effectively prevents any such shoring up of what he calls “a failing federal program.” You see how these unfounded attacks take hold in receptive minds?

No one, I think, questions the need to ensure that the OASI trust fund doesn’t run dry in about 20 years. But the long-term solution for both trust funds, which Reed claims he wants to force, will surely not emerge as law before 2016.

So the House rule, in effect, sets the stage for SSDI benefit cuts estimated at 19% in less than two years. These benefits now average $1,165 a month — less than $200 above the poverty level for a one-person household. Benefits for disabled workers’ spouses and children are far less.

Not surprising then that 44% of younger SSDI recipients, i.e., those 31-49 years old, are poor or near-poor, mostly the former. These are hardly people who can afford to lose close to a fifth of what’s probably their only source of cash income. And they’re many years away from eligibility for retirement benefits — even the reduced benefits they could get at 62.

Monique Morrissey at the Economic Policy Institute views the House rule as “largely symbolic,” since a simple majority can overturn it. And indeed it may if the benefit cuts become an immediate reality — in an election year too, she adds.

But in the meantime, the Republicans have leverage for any of a range of Social Security “reforms.” Morrissey notes recent references to such old warhorses as raising the retirement age (again), replacing social insurance altogether with private investment accounts and/or further means testing — perhaps a phase-out to zero for high-income seniors.

Will seniors, workers who hope they’ll live to be and organizations representing them take kindly to any of these? Faced with the possibilities, will they be told that the only alternative is to keep those other folks from draining the trust fund, as Morrissey predicts?

We’ve already got framing that pits the old against the young. Last thing we need is a spin-off into a conflict between the legitimate needs of seniors and those of younger people with severe disabilities.

And as I, joining many others, have said, it’s wholly unnecessary.

UPDATE: Shortly after I posted this, I came, somewhat belatedly, upon a post by Josh Marshall, the top dog at Talking Points Memo. He foresees the sort of conflict I refer to and calls it a deliberate “plan to set different classes of Social Security recipients against each other in a zero sum for scarce dollars when in fact the scarcity is manufactured.”


Less Poverty, Greater Income Inequality in DC

January 5, 2015

The new year seems a fitting time to check on how the District of Columbia is progressing toward two related goals — reducing poverty and achieving shared prosperity. A true good-news, bad-news story, according to indicators the Half in Ten campaign published last month.

As I’ve written before, Half in Ten created the indicators in 2011, when it restarted the clock on cutting poverty in half in ten years.

They’re organized under four main headings — poverty reduction (of course), good jobs, strong families and communities and economic security.

But they yield a fragmentary picture — in part, because Half in Ten has to use numbers already available for both the U.S. as a whole and states, plus the District. And for other reasons beyond its control, they’re not all current.

I’ve tried in the past to follow Half in Ten’s framework. A different approach this year, based on what I found most striking, especially when I looked back to the original indicator set.

Long story short: The District has a lower poverty rate than in 2010. But shared prosperity still seems a will o’ the wisp.

Poverty Reduction

The District’s poverty rate last year was 0.3% lower than in 2010 — 18.9%, as compared to 19.2%. The new rate is still higher than rates for all but five Deep South and Southwestern states.

The race/ethnicity breakout is one way we see income inequality in the District. For example, as I reported when the figures were released, the 2012 poverty rate for black residents is more than three times the rate for non-Hispanic whites.

Income Inequality

Half in Ten’s indicator is the ratio between the shares of income that went to households in the top and bottom fifths of the income scale last year, according to the American Community Survey. By this measure, income inequality in the District is extraordinarily high — 30.3. It’s far larger than any state’s — and more importantly, larger than in 2010.

But the ratio is, to me, a tad abstract. So let me translate it into actual shares. Of all the household income in the District, the top fifth enjoyed nearly 55.4%. The bottom fifth had to make do with slightly more than 1.8%.

Some Contributing Factors

On the one hand, 70.2% of young adults in the District have at least a two-year college degree — a slight uptick since 2010. As you’d expect, this is far higher than the percent in any state.

On the other hand, only 59% of teens who started high school graduated four years later, as of the 2011-12 school year. This is a slightly lower percent than the rate for the prior school year — and the lowest reported for 2011-12.

Not surprisingly, the District has a relatively high percent of “disconnected” youth, i.e., 16-24 year olds who were neither working nor in school in 2012. This latest “disconnected” rate — 17% — is exactly the same as in 2010, which again puts the District roughly mid-way in the state rankings.

No such flat-lining for the unemployment rate, which declined from 9.9% in 2010 to 8.3% last year. Pretty obvious who’s getting the jobs — and not — in our burgeoning local economy.

On the upside, the teen birthrate declined quite a lot. In 2012, there were 38.6 births for every 1,000 women between the ages of 15 and 19. This is 6.8 fewer than in 2010. And though still high, it’s nowhere near rates in the bottom-ranked states.

Teen birthrates are often correlated to poverty — as cause, effect or some combination of both. Recent research suggests that income inequality is an additional factor because poor young women see little chance of improving their economic situation if they postpone motherhood.

The percent of children in foster care also has bearing on the poverty rate — again, as cause, effect or both. It’s still high in the District — 11 children per 1,000, as of 2012. But it was 20 per 1,000 in 2010.

Further Progress Possible

Some state and local governments are adopting policies that can reduce poverty and enable low-income people to gain a greater share of prosperity, as the report that includes and provides context for the indicators selectively shows.

Here in the District, for example, the minimum wage will step up to $11.50 in July 2016 — $4.25 more than the federal minimum. Ten states also raised their minimum wage last year, making 29 that now have minimums above the federal.

Proposals to raise the federal minimum have gone nowhere in Congress — and most surely won’t during the next two years. The same seems likely for other legislation that would boost low incomes and strengthen both work supports and safety net programs for people who can’t earn enough to meet basic needs.

So, as the report concludes, “the momentum for national change” of a progressive sort has to build at state and local levels. A call to action for advocates and grassroots organizers.

And, I suppose, a hopeful note to end on, since it implies that we’ll have a renewed federal commitment to reducing poverty and income inequality sooner or later. But in the meantime, we’ll have inequities at least as large as those we have now based on where people live.


Follow

Get every new post delivered to your Inbox.

Join 200 other followers