More Homeless DC Families to Shelter, But Still Signs of Progress

September 22, 2016

I remarked last year that the DC Interagency Council on Homelessness produced a markedly better plan for how the District would full its obligation to shelter homeless families during the winter season.

This year’s plan is similar, though with different numbers. It’s interesting in a couple of ways that speak to progress in the District’s homeless services program — and to problems that it alone can’t solve.

More Homeless Families in Need of Shelter

The estimated number of families the District will have to shelter is considerably higher than last year’s. This might seem a no-brainer. Last January’s one-night count identified 1,491 of them, marking the latest high in a virtually unbroken trend.

The shelter plan doesn’t project that many for this coming January. Nor need it, since the annual counts include families in transitional housing.

It does, however, indicate a significant shortage of units at the DC General family shelter, plus the apartment-style units the Department of Human Services regularly contracts for to shelter families with special needs.

DHS, as the plan makes clear, has already acted on the expected shortage, knowing it would have a deuce of a time contracting for motel rooms in mid-winter, what with the influx of visitors drawn by the inauguration festivities.

I mention this mainly because it’s a refreshing contrast to plans issued during the former administration, especially the last, which merely assured us that DHS would use some combination of “resources” to comply with the law.

More Homeless Families in Shelter When Winter Begins

The explicit reference to motel rooms and the number already contracted for aren’t the only — or most significant — contrasts. We see, for example, more families in DC General when the winter season formally begins, in November.

This reflects the Bowser administration’s decision to let families with no safe place to stay into the shelter year round, rather than only on freezing-cold days, when it has no lawful choice.

That was the unwritten policy until the Gray administration whittled it back and then altogether abandoned it. Predictably, a crush of homeless families sought shelter when they first could, creating problems not of their making.

I’m reverting to history here because it shows that what one finds — and doesn’t — in the annual Winter Plan signals policy and other management decisions. We see two others in the monthly estimates of shelter units needed.

More Homeless Families Than Projected Units Needed

Though the new plan begins with more families in shelter, it estimates fewer total units needed than families likely to show up at the intake center. This is partly because it includes estimated exits, as the last several plans also did.

Some unspecified number are families expected to move from shelter to housing temporarily subsidized by the District’s rapid re-housing program.

DHS has had long-standing problems meeting its rapid re-housing targets for various reasons. One, which still applies, is the acute shortage of housing that homeless families could conceivably afford to rent when their subsidies expire.

Another, related, has been families’ understandable reluctance to accept rapid re-housing. That may be less common now because they know they can return to shelter whenever they must.

It’s nevertheless the case that the Winter Plan estimates considerably more monthly exits late in the season than the current rapid re-housing placement rate. That, I’m told, has improved to an average of 100 families per month.

The plan, however, projects 155 exits in March, when winter officially ends, making for a 667 total during the five months it covers. Where, one wonders, will DHS — or families themselves — find so many low-cost housing units available to rent in a city where they’re disappearing.

Such as remain are hardly all available or suitable for families that surely want to exit from DC General at least as much as DHS wants them out.

More than a third of the units that the lowest-income District households could afford are occupied by those with higher incomes, according to apparently updated figures from the Urban Institute.

Only 8% of all the units have more than three bedrooms. A special exit problem then for families with more than a couple of kids — just as it’s apparently a problem for well over 100 families who’re affordably housed now.

Families Saved (for Now) From Homelessness

There’s another reason for lower total unit estimates than families likely to ask intake center staff for help. Last year, the District launched a program to prevent family homelessness.

It’s somewhat like the long-standing (and always under-funded) Emergency Rental Assistance Program, but it’s for families only and can provide a wider range of resources, tailored to their needs.

The success rate is reportedly very high — 90% of families referred to the nonprofits the District has contracted with haven’t become homeless. Or so it seems. What we know is that they haven’t  asked for shelter.

These early results, combined with the additional $1 million the new budget will invest in the program led the working group that developed the plan to adjust last year’s monthly entrance figures down by 10%.

One can only hope that the lower estimates prove accurate — and more importantly, mean that families aided actually have safe, reasonably stable homes of their own.

 

 

 

 

 


Total DC Poverty Rate Ticks Down Again (Barely). Rates for Blacks Rise.

September 15, 2016

CORRECTION: The overall poverty rate change for DC falls within the margin of error. A preview table I saw indicated it didn’t. But I should have verified.

The Census Bureau has taken to blasting out all its major poverty reports in rapid-fire succession. So we now have the results of the American Community Survey — not a report in the usual sense, but a huge number of online tables.

They cover a wide range of topics. And the ACS sample is much larger than what the Bureau uses for its two other annual reports. So we can get reasonably reliable figures for states and smaller jurisdictions.

I’ve again dug into a few tables for the District of Columbia — mainly those most directly related to poverty. We could, I suppose, take heart from another year of progress. But it’s modest and mixed. Both the extent of poverty in the city — and related inequalities — remind us how much remains to be done.

Poverty and Deep Poverty Rates for DC Residents Still High

About 110,380 District residents — 17.3% — lived in poverty last year. The new rate is just 0.4%* lower than the rate reported for 2014. It’s 2.6% higher than the new ACS national rate — and rates for all but eight states.

It’s also nearly 1% higher than the local rate for 2007, just before the recession set in. The population has grown since then. So the seemingly small rate difference means that the District is now home to about 18,600 more poor people. And they’re very poor indeed, for reasons I’ll touch on below.

Roughly 58,700 District residents — 9.2% of the total — lived in deep poverty, i.e., had incomes less than half the maximum set by the poverty threshold the Census Bureau uses for a household like theirs.

The new rate is perhaps 0.1% lower than the rate for 2014 — in other words, basically the same. It too is higher than the rate for the nation as a whole.

Child Poverty Rate Still Far Higher Than Overall Rate

The child poverty rate has consistently exceeded the rate for the population as a whole, both in the District and nationwide. The local rate last year was 25.6%. Like the overall rate, it’s 0.4% lower than the 2014 rate.

But it still represents about 29,710 children — about 300 more than in 2014 because, again, the rate reflects a somewhat larger population. It too is higher than the disproportionately high national rate.

More than half the District’s poor children — 15,088 — were deeply poor. The new rate is higher than the 2014 rate — 13%, as compared to 12.4%.

Race/Ethnicity Gaps Still Large

Poverty is not an equal opportunity condition here in the District or anywhere else. As in the past, we see this writ in black and white in the ACS figures. Brown and tan also, though to a lesser extent.

Last year 26.6% of black District residents were officially poor, as compared to 6.9% of non-Hispanic whites. The deep poverty rate for the former was 13.3%, while only 4.5% for the latter.

Both rates for blacks were higher than in 2014. The plain vanilla rate for non-Hispanic whites was the same then, but their deep poverty rate somewhat higher.

For Hispanics, the poverty rate was 11.6% and the deep poverty rate 5.5%. The rates for Asians were 12.3% and 9.4%.

We see the same large disparities in the ACS figures for household incomes — a related, but broader indicator than the poverty rates.

The median household income for non-Hispanic whites was nearly three times the median for black households — $120,400, as compared to $41,520. Median incomes for Hispanic and Asian households fell in between.

The median for non-Hispanic white households was an eye-popping $63,400 more than the national median — an even larger difference than reported for 2014.

More Residents Suffering Hardships Than Poverty Rates Show

I always remark, at least in passing on the fact that the poverty thresholds the Census Bureau uses for analyses like these are very low.

They’re almost surely too low to accurately reflect the number of households without enough money for basic needs in communities nationwide. But they’re egregiously too low in high-cost communities like the District.

Consider, for example, a single mother with two children. They’re officially not poor if her income, before taxes was roughly $19,100 last year.

An affordable apartment for them would have had to cost no more than about $477.50 a month. But a modest two bedroom apartment, plus basic utilities cost roughly $980 more. It would have left the mom with about $1,580 for all her family’s other basic needs over the course of the year.

Even with SNAP (food stamp) benefits, she’d have been hard pressed to put enough food on the table in part because groceries here cost far more than the nationwide average, according to a cost-of-living database.

And the benefits assume she’ll spend 30% of her own adjusted income. So there goes a quite a bit of the money she’d have left after paying the rent. Probably more than her expected share, in fact. If not, then some hungry days for her.

She’d still have to pay for a host of other things, of course, e.g., clothes, soap, toothpaste and cleaning supplies, transportation. These aren’t necessarily costlier in the District than elsewhere. But we know daycare is.

She’d have to pay some part, even with a subsidy. The subsidy’s not a sure thing for a working woman like her, however. Without it, the average of cost even just after-school care for her kids would exceed her total income.

I don’t think I need to flog this point further. But we do need to put the new District poverty figures in perspective. [Your policy message here.]

* All the ACS tables include margins of error, i.e., how much the raw numbers and percents could be too high or too low. For readability, I’m reporting both as given. The overall poverty rate beats the statistical text, but others Small year-over-year changes may mean no real differences.


One Thumb Up for Washington Post Piece on TANF Benefits Cut-Offs

August 24, 2016

The Washington Post celebrated the 20th anniversary of Temporary Assistance for Needy Families with a well-meaning, but disappointing article on District of Columbia families who may soon lose what remains of their benefits.

It’s well-meaning because it focuses on what will happen unless the DC Council passes a bill to extend benefits for at least some of them. And it includes some potent warnings about costs the District will incur if it cuts off their cash assistance, thinking to save money.

But it doesn’t make the best case it could have for the extensions the Council is considering. And it leaves out an important piece of the cost issue.

First off, the TANF mom it chooses to focus on isn’t “the typical District welfare client,” as it claims. She and her partner live in a subsidized apartment. So her family’s receiving far more in safety net benefits than most who’ll lose what they get from TANF.

We don’t know how many TANF families are living with accommodating friends or relatives because they don’t have subsidized housing. But we do know that TANF was recently the most common source of reported income for homeless families the District counted, i.e., those in shelters or limited-term transitional housing.

More importantly, the profiled mother has worked in a series of jobs and has a certificate in emergency medicine technology. She says the couldn’t keep working because she couldn’t afford child care for the toddler she then had.

But if I understand correctly, she could have a childcare subsidy now — and for at least awhile longer if she found a new job. Both her work history and the unpaid work she’s doing now to comply with her TANF work activity requirement strongly suggest she could.

Many TANF parents have what are commonly referred to as severe barriers to work. We don’t have current public information on those who’ve exceeded — or will soon exceed — the rigid time limit the District imposes.

But a study of the caseload before the District set the time limit identified a range of barriers — some not swiftly (if ever) overcome, e.g., physical and mental health problems. At least one — learning disabilities — will last until the affected parents’ children are too old for the families to qualify for TANF.

Others, as I remarked before, could prove temporary if the parents have more time and the opportunities they need — a chance to complete high school or a GED program, for example, or to keep looking for a job so they won’t have to divert their energies and perhaps endanger their health the way some adults in extreme poverty must.

These are among the “hardship” cases that would gain extensions of their TANF benefits under the bill awaiting Council action — and, I should add, a formal response from the Bowser administration.

By far and away the largest number of District residents who’ll suffer extraordinary hardships if they lose their benefits have a work barrier they can’t possibly surmount in the near term because they’re children.

Plunging them into the deepest depths of poverty will put them at high risk of lasting mental and/or physical health damages.  So they’re like to have severe barriers when they’re old enough to work.

There’s a reason to refer to the potentially reprieved parents and children as hardship cases — one the Post article fails to mention.

The District could extend benefits for a fifth of its total caseload, based on a combination of domestic violence and “hardship,” however it defines that, and still use its federal funds for the families’ benefits. Benefits here include not only the cash assistance the article focuses on, but all the work-related services the program provides.

Any discussion of the cost of extensions should include this significant fact, as well as the costs of sweeping all the time-limited families out of TANF. Roughly 5,800 of them, including nearly 10,400 children will get swept out in October unless the Council and Mayor agree to reprieve at least some of them.*

But more families will reach the time limit every month unless and until the District adopts an extensions policy, as virtually every state already has. The cumulative impact is something else I’d like to have seen mentioned.

Ah well, that’s what blogs are for.

* These are figures the Department of Human Service recently provided, not to me or for public consumption. They are substantially lower than figures the department has reported earlier, for reasons as yet undetermined.

 

 


Safety Net Programs Lift Many Thousands of DC Residents Out of Poverty

August 4, 2016

I’ve recently blogged on several pieces of the safety net — in all cases, what they do and/or could do for low-income people nationwide. The Center on Budget and Policy Priorities drills down to state-level anti-poverty effects for six major federal programs.

Here’s what we learn for the District of Columbia, plus a bonus on the presumptive health effects of two related programs that the federal measure the Center adapts doesn’t count as part of household income.

The federal programs, plus what the District funds lift roughly 82,000 residents over the poverty line each year. Without them, nearly a third would fall below it, as would an eye-popping 47% of children.

Social Security reportedly accounts for an estimated 32,000 fewer poor residents — and a nearly 24% drop in the senior poverty rate.

This probably understates the program’s anti-poverty impacts because it doesn’t capture the number of children who don’t themselves receive Social Security benefits, but live in households where at least one other member does.

The report I recently summarized includes them. If its findings apply in the District, the total number of residents lifted out of poverty would increase by roughly 17%.

The Census Bureau’s better poverty measure consistently shows that Social Security lifts more people out of poverty than any safety net program. The Center, however, finds that housing assistance has a greater anti-poverty impact in the District.*

An estimated 43,000 more residents would count as poor without it, the fact sheet says. A random check of state fact sheets suggests that housing assistance has a far greater relative impact here.

Much as we want more local funds committed to housing for poor and near-poor residents, we can, I think, credit the District’s own housing voucher program for at least part of the difference — not only from individual states, but nationwide.

SNAP (the food stamp program) has the next largest anti-poverty impact in the District. It lifts an estimated 28,000 residents over the poverty line — and benefits roughly five times as many.

Here too, we can partly credit local policies. The District, for example, has opted for broad-based categorical eligibility, which makes more people potentially eligible. It’s also eliminated the cap on assets like money in the bank.

And it boosted Low Income Heating and Energy Assistance benefits when Congress raised the minimum required for a standard deduction from gross income, thus protecting some residents from benefits cuts.

Moving down the list, we learn that Supplemental Security Income lifts an estimated 17,000 residents over the poverty line. They’re all very low-income seniors and younger people with severe disabilities.

But SSI alone wouldn’t lift even a single person over the poverty line. The maximum benefit this year, like last totals $8,796 — $3,084 less than the applicable poverty line.

Last and (to me) surprisingly least, the refundable Earned Income Tax Credit and Child Tax Credit lift an estimated 14,000 District residents out of poverty. The former almost surely has the greater impact, for reasons I’ve recently explained.

And its impact may be greater than the figure that enters into the Center’s total because the source it pulls from apparently includes only the federal EITC. The District, like 22 states supplements that with its own refundable version.

You’ll note that the Center’s analysis omits a well-known safety net program. Good reason fro that. Cash benefits from Temporary Assistance for Needy Families wouldn’t lift any participant over the poverty line.

The District, which recently increased its TANF benefits, will soon provide a three-person family with a maximum of $504 per month — or 30% of the applicable poverty line.

I’m stressing, as I often do, the over-limited cash and near-cash assistance our major safety net programs provide. But we’ve got two brighter spots in the picture.

One is the bonus I mentioned. That’s the health insurance the District provides through Medicaid and the Children’s Health Insurance Program, which it’s converted to part of its Medicaid expansion.

Medicaid or CHIP cover an estimated 270,000 District residents, including roughly 58,000 children. That’s slightly over half of all under-18 year olds.

What’s missing here are the low-income residents covered, though with fewer benefits by the DC Healthcare Alliance, a program funded solely by the District.

Alliance participants are mostly undocumented immigrants now, plus some who’ve got the paperwork, but haven’t lived in the country long enough to qualify for Medicaid. Including them would add roughly 14,500 to the total in the healthcare safety net.

The second bright spot is that the safety net programs do more than relieve specific hardships — hunger, for example, and homelessness. They provide a modicum of the stability that everyone needs to focus their minds and energies on gainful work, job searches, training or education.

At the same time, they give children a better start in life. Kids in families with benefits do better in school. They’re more likely to go on to college, some studies show, and for this and others reasons are less likely to join the ranks of poor adults.

Research and advocacy organizations have made this case for a long time. What’s new, to my knowledge, are the state-specific figures that provide a basis for defending Social Security and our major safety-net programs as demonstrably effective anti-poverty measures.

The Center didn’t crunch all those numbers now just because it’s got the expert staff to do it. “We’re in the midst of big policy debates,” as a letter I got from its president says. He’s referring to the upcoming elections — for state-level offices, as well as national.

I’ll resist the temptation to elaborate. Will just note what the Center’s fact sheets drive home. There’s a lot at stake for poor and near-poor people in America this November. Some very progressive folks would do well to consider them.

* The fact sheet says that Social Security lifts more District residents above the poverty line than any other program. This is boilerplate that apparently escaped the editor’s eye.

 

 

 


Beefs Against Eliminating the Tip Credit Wage Need Heavy Dose of Salt

July 14, 2016

The restaurant industry, less its large fast food component has led the charge against any increase in the tip credit wage — and so, of course, against proposals to eliminate it.

We saw this again — and its relative success — when the DC Council, with the Mayor’s consent decided to raise the tip credit wage to just $5.00 an hour by 2020, rather than run the high risk that voters would approve $15 an hour for all District workers local labor laws can cover.

Seems that the Council hearkened, as it has in the past to the metro area restaurant association, the members it rallied and some tipped workers they’d panicked, if not coerced into testifying.

We’ve been round this barn before. And we’ll go round it again — perhaps as soon as next year in the District and almost surely elsewhere. Perhaps even in Congress, given the draft Democratic party platform, though a wipe-out of the tip credit wage nationwide seems a distant prospect.

Here then, as promised, are the tip credit supporters’ major arguments — and why we should take them with a heavy dose of salt.

Supporters of the extremely low tip credit wage claim that restaurant workers are already doing just fine. The National Restaurant Association, for example, says that median wait server earnings range from $16 to $22 an hour.

No doubt some servers make a pretty good living. Here in the District, we’ve got a restaurant where a meal costs as much as $275 per person, drinks not included.

Even a teetotaling party of four would conventionally add $220 to the bill. Assuming the person who waited on them got the whole tip, as we shouldn’t, s/he’d earn many times the minimum wage.

Servers at pricey restaurants are obviously not typical. The median hourly wage for tipped wait servers in the District was $9.58 an hour, according tothe latest Bureau of Labor Statistics estimate.

This, say the National Employment Law Project and Restaurant Opportunities Council United, includes tips. If so, nearly half the tipped wait servers earned less than needed to lift a three-person family over the federal poverty line, assuming (again, as we shouldn’t) a full-time, year round job.

Restaurant spokespersons also claim that employees will earn less if not paid the tip credit wage because customers won’t leave tips anymore — the old “harm those intended to help” argument we usually hear when the issue is a minimum wage increase.

Yet wait servers and bartenders in states that have no tip credit wage still generally receive tips, NELP and ROC United report. They, in fact, earn 20% more than those in states with the lowest federally-permissible tip credit wage — and 12.5% more in states that, like the District, have a higher tip credit wage.

Those who reported the highest median tips worked in San Francisco, which hasn’t had a tip credit wage in at least 25 years. So customers clearly don’t give up tipping — or even, it would seem, scrimp on tips — when they know that all the extra they pay goes to the people who serve them.

Business interests don’t dwell overmuch on how eliminating — or even raising — the tip credit wage would erode workers’ bottom lines, however. It’s their own bottom lines they focus on.

Policymakers get an earful about very low profit margins — how restaurant owners barely make out as it is, how small businesses (which many sit-down restaurants aren’t) will fold if their labor costs rise.

Here again, we can look to states with no tip credit — assuming, as I think we can, that employment indicates industry growth.

Restaurants and other businesses in what the Bureau of Labor Statistics terms the leisure and hospitality sector have expanded more in non-tip credit states than others, the Economic Policy Institute reports.

The National Restaurant Association sees no reversal of the trend ahead. On the contrary, it projects a 10.1% increase in California’s restaurant employment over the next 10 years. The Nevada industry can look forward to needing 12.9% more workers, lack of a tip credit wage notwithstanding.

Here in the District, elected officials got another warning. Businesses that can’t pay sub-minimum wages anymore will move to Virginia, where they still can — and pay only $7.25 an hour to non-tipped workers too.

How likely does that seem for restaurants, bars, hair salons and the like? They believe their customers will travel long distances, rather than patronize conveniently-located competitors? They believe they won’t have to compete with suburban business that have developed loyal customers?

But I suppose it’s fair to imagine that some businesses couldn’t turn a profit if they had to pay all workers at least the minimum wage. Perhaps they need to change their business model — charge somewhat higher prices, for example, or tack on a service charge, as some restaurants already do.

Or they could automate functions now performed by human beings. Industry spokespersons say that’s exactly what restaurants will do — another harm to those intended to help. But they’ll invest in labor-reducing technologies anyway if they can afford to.

Chili’s, often cited as a warning, has put tablets on tables for customers to place their orders in nearly all the restaurants it operates, not only those in the relatively few states with no tip credit wage.

But say some businesses truly can’t survive if they have to pay workers more.That would mean job losses, as industry spokespersons say. But it could also mean new job openings.

Customers, after all, won’t start cooking all their meals that home because the restaurant they’ve frequented closed — or start cutting their own hair. And former tip credit workers in businesses that cope will have more to spend. That could mean job openings in other retail businesses.

In any event, we’ve got a matter of principle here — the same that applies to all labor standards, e.g., workplace safety rules, prohibitions against wage theft.

Speaking of minimum wage increases generally, Professor David Howell refers to “[t]he moral, social, economic, and political benefits of a much higher standard of living from work.”

We should, he argues, weigh these against prospective job losses — even if we know for sure that a higher wage floor would cause them, as in this case we don’t.

And if some businesses fold because they can’t turn a profit if they have to pay workers $15 an hour, we ought, I think, to ask ourselves how much that matters when the alternative is a policy that enables exploitation.

 


DC Mayor and Council Preempt One Fair Wage for All

July 11, 2016

We in the District of Columbia like to pride ourselves on how progressive our community is. But it’s behind the curve now on an issue that directly affects nearly 29,000 local workers — those whom employers can pay far less than the minimum wage.

The draft Democratic Party platform supports an end to the sub-minimum, i.e., tip credit, wage. That would extend nationwide a policy already in force in seven states. The DC Council instead chose to merely increase the wage to $5.00 by 2020 — even less than the Mayor had proposed.

All our elected officials knowingly preempted our chance as constituents to decide whether all workers our labor laws can cover* should get paid at least $15 an hour — one fair wage, as it’s commonly called.

Let’s just say they know not only which side their bread is buttered on, but who butters it — restaurant owners represented by the local affiliate of the National Restaurant Association and other business owners for whom the Chamber of Commerce purports to speak.

I’ve written about the tip credit wage before, but for those new to the issue, here’s what it is and a summary of what’s wrong with it.

How the Tip Credit Wage Works

Employers in most states and the District may pay workers who regularly receive tips a much lower cash wage than the regular minimum. They must fill in any gap between the tip credit wage, plus tips a worker receives and the regular minimum.

So, for example, owners of sit-down restaurants in the District, along with hotel owners and other businesses like hair and nail salons must now pay their tipped employees $2.77 an hour, no matter what.

If their workers receive at least $8.73 an hour in tips, they’re home free. If not, they must add to paychecks enough to equal $11.50 an hour.

At best then, customers subsidize employers’ labor costs, though most believe they’re just rewarding workers who’ve served them.

Why the Tip Credit Wage Doesn’t Work

A common complaint — amply documented — is that most workers subject to the tip credit wage earn very little. That, in theory, is  a problem with the minimum wage itself. In practice, however, workers may not get as much as they’ve earned — or even know they’ve been shorted. Several reasons for this.

First off, workers may not know how much they’ve received in tips. Consider, for example, a wait server who’s rushing from one table to another. How’s she supposed to keep track of tips, when so many now are added to credit card bills?

Second, employers may legally do several things to deny workers the full amount they receive in tips. They may deduct processing charges for tips added to credit card bills. They may put all tips into a pool and divvy them up among tipped staff, based on some formula they’ve established.

Third, the tip credit system virtually invites abuse. For example, we know of cases where employers have siphoned off tips from the pool to ramp up pay for non-tipped workers. In other cases, employers have required tipped employees to do a lot of work they don’t receive tips for while still basing their whole pay on the sub-minimum.

In still others, employers simply don’t fill in the gap between the sub-minimum wage, plus tips and the regular minimum. More than one in ten workers in tipped occupations reported total hourly wages below the federal minimum, according to White House economists and the U.S. Department of Labor.

The Labor Department has said it knows of at least 1,500 recent cases of wage theft associated with the tip credit wage. But there are surely more.

The provision that requires employers to ensure that tipped workers earn at least the full minimum wage is difficult to enforce, the White House report says. And the Labor Department has nothing like the resources to investigate as broadly as seems warranted.

This seems also the case in the District, where a coalition of local and national organizations recently called for, among other things, “proactive, increased enforcement” of worker protection laws. But the office responsible for enforcing them won’t have enough staff.

As things stand now, both the federal and local wage and hour enforcement agencies depend largely or solely on complaints filed by workers and organizations representing them.

But workers hesitate to complain because managers can readily retaliate — if not by firing them, then by reducing their hours or putting them on shifts that yield paltry tips.

Wage theft isn’t the only thing tip credit workers could, but often don’t complain about. A survey of restaurant workers found very high rates of sexual harassment — and twice as many in tip credit states as others.

More than half felt they had to put up with it because they’d lose tips — and perhaps their jobs — if they didn’t.

In short, what’s to like if you’re not a business owner who profits, legally or otherwise, by paying your workers the tip credit wage?

The owners and associations that represent them say tipped workers should and do like it and that eliminating it would harm not only them, but the local economy.

I’ll take up their arguments in a followup post — in part because we may not have heard the last of them, whatever happens nationally in November.

* Only Congress and federal agencies can set wages for federal employees and workers employed by federal contractors. The draft Democratic Party platform addresses both — the former with a $15 an hour minimum wage and the latter with an executive order “or some other vehicle.”

 


Not Enough Money for Low-Income DC Residents, But Tax Cut for Wealthy Unchanged

May 26, 2016

As you local readers probably know, the DC Council passed a budget for the upcoming fiscal year last week. Some changes in what the Mayor had proposed for programs that serve low-income residents.

The DC Fiscal Policy Institute’s overview of the budget confirms what I’d expected. Mostly, a bit more here, a bit more there. No more for some critical priorities. And less for at least one. (The one large, new investment it cites — for new family shelters — isn’t part of the budget proper.)

I suppose we’ll be told that the Council did its best with what it had to work with. I don’t know because I don’t know nearly enough about the funding needs and prospective impacts of every program and service the budget covers.

But I do know that the Council could have had more revenues to work with. It had only to postpone — or better yet, repeal — the tax cuts prior legislation has made automatic whenever revenues rise above the estimate used for the latest budget.

The triggers have already reduced otherwise available revenues by many millions of dollars — dollars the Council could have used to shore up under-funded programs.

So much water under the bridge. And as the Chairman, who likes those triggers says, the revenues lost from cuts not yet triggered couldn’t have been used for the new budget. But the Council could have had them to spend as early as next fiscal year — and thereafter.

All tax cuts are not created equal, of course. Some on the pending list will benefit residents who’ve got enough income to owe taxes, but not a lot.

The second cut on that list, however, is a higher threshold for the estate tax. The most recent revenue forecast indicates that it will lock in soon, DCFPI’s latest account of the trigger impacts says.

So henceforth, no assets a deceased resident leaves to heirs will be taxable until they’re worth $2 million — twice the current minimum.

As things stand now, this will be the first of two estate tax cuts. The second — and considerably larger — will raise the threshold to the same minimum as applies to the federal estate tax, currently $5.45 million.

Why the District should embrace a regressive measure gained in a crisis by Congressional Republicans who could never be elected here baffles me.

True, the Tax Revision Commission recommended parity with the federal threshold, including the ongoing upward adjustments for inflation. But the Council could have taken a pass, just as it has on the revenue-raisers in the Commission’s package.

The District will forfeit $18.8 million next fiscal year alone, according to DCFPI’s estimate. And for what?

Not so that more money can pass to charities tax free. Bequests to them are already exempt. Not so that surviving spouses will have more to live on, since what passes directly to them will also still reduce the value of what counts toward the threshold.

Not even necessarily what other heirs wind up with, since a will-maker can give them as much as $14,000* each or the equivalent every year while still alive — again reducing the value of what’s potentially taxable afterwards.

The estate tax giveaway won’t just make larger investments in programs that reduce hardships for poor and near-poor residents unnecessarily difficult. It will increase income inequality in the District by giving the rich more, as well as denying the poor supports and services that help close the income gap from the bottom.

And the gap will grow from one generation to the next in part because of the way the taxable value of assets is determined. Essentially, it’s set at their value when the person bequeathing them dies.

So heirs pay capital gains taxes when they sell the assets for more, but no tax on how much the assets’ value increased between the time they were purchased and the time inherited.

And, of course, heirs don’t have to sell them. They can pass them along to their heirs, compounding the revenue loss — and wealth at the top of the income scale.

The estate tax then is a way of partly recouping the loss and, at the same time, averting a rollback to the inordinate wealth concentration of the Robber Baron days.

The higher the threshold, the less an already-shaky control on income inequality can do. And the gap between the richest and poorest District households is already very large — larger, indeed, than the DCFPI analysis I’m linking to shows because it doesn’t drill down to the top 1%.

Their incomes averaged well over $1.9 million in 2012, the latest year I’ve found figures for. This, recall, is income for a single year, not also what could readily be converted to income.

Now, no one — not even Bernie Sanders — is talking about taking so much from the rich and giving it to the rest that incomes would be equal. Nor is anyone talking about taking all the wealth the rich have accumulated when they die.

The major focus — and DCFPI’s recommendations reflect it — is reducing the gap by lifting incomes at the bottom and making those incomes more sufficient for basic needs, e.g., by ramping up investments in housing they can afford.

Not all income-lifting measures would require the District to spend more public funds. But some surely will, including workforce development and (you knew I was going to go here) reforms in the rigid Temporary Assistance for Needy Families time limit policy.

Leaving the estate tax threshold where it is won’t give the District as much more tax revenue as it needs. But the giveaway isn’t chump change either.

And it’s got nothing going for it, except a hugely successful and duplicitous PR campaign. Surely Councilmembers know better. And I’d like to think their donors not only know better, but want better for our community.

* This is the current threshold for the federal gift tax, which will rise over time to keep pace with inflation. The District has no gift tax.