Low-Wage Job Growth a Major Factor in Income Inequality. Patience is Not the Answer.

In response to the New York Times’ Jan. 27 Upshot piece, “Gains From Economic Recovery Still Limited to Top One Percent,” we appreciate the effort to report on the historic, staggering and blatant income inequality that has taken hold of America. This piece made some excellent points around the continuing inequality crisis. However, we have an answer to the question about the recent employment growth that has occurred in middle-class occupations:

“The puzzle is why robust employment growth over recent years — much of it concentrated in middle-class occupations — has not translated into larger income gains for the broader population. Perhaps we need to be patient, and the recent pickup in employment is yielding more broadly shared growth that will become evident when the data for 2014 are released.”

Yes, the unemployment rate is down from its Great Recession peaks. But it is still significantly higher than pre-recession levels. And, importantly, that job growth we hear so much about is primarily coming in low-wage occupations. Read more

A Full-Time Job Should Lead to Financial Stability, Not to Poverty

WASHINGTON – Half of all new jobs nationwide don’t pay enough for a full-time worker to live on – much less a single parent with a child. And there are long lines of job-seekers for the few jobs that do pay a living wage.

“Low Wage Nation,” released today, is the newest report in the Job Gap Economic Prosperity Series produced by the Alliance for a Just Society. The report paints a sobering picture of just how hard it is to find a living wage job.

“This new report clearly illustrates the low-wage crisis in our country,” said LeeAnn Hall, executive director of Alliance for a Just Society. “A full-time job should lead to financial stability, not to poverty.”

The top four occupations with the greatest number of projected job openings are in retail and food service. Those jobs pay between $8.81 and $10.16 an hour.

The Alliance was joined by executive directors from Good Jobs First and Washington Community Action Network for a live webinar today to discuss the findings of the report. A recorded version of the webinar is available here.

“The reality is that we are living in a low wage nation, a country of workers putting in long hours, but still failing to make ends meet. And this report is the evidence,” said Ben Henry, senior policy associate and one of the report authors.

Some of the report findings:

  • Nationwide, 48 percent of job openings pay less than $15 an hour. (That percent ranges from 35 percent in Massachusetts to 61 percent in South Dakota.)
  • Nationally, there are seven times more job seekers than jobs that pay enough for a worker to make ends meet.
  • Two of the top five occupations with the most projected job openings are also in the top five in lowest pay.

What Is a Living Wage?

A living wage is one that pays high enough for a full-time worker to cover basic living needs for herself and her family, without having to rely on public assistance to get by.

“A living wage is not a poverty wage, and it is not simply ‘scraping by.’ A living wage provides a modest living, with a little left to set aside for emergencies,” said Allyson Fredericksen, policy associate and co-author of the Alliance report.

It’s a Jobs Crisis, Not a Worker Crisis

“This is about workers who show up every day and put in a full day so that their employer can make a profit,” said Jill Reese, associate director of the Alliance. “These workers should not be living in poverty, they should be able to afford – at the very least – to cover their basic needs.”

Recommendations from the “Low Wage Nation” Report

  • Increase minimum wage to a living wage
  • Eliminate the tipped minimum wage (stuck at $2.13 an hour for 24 years)
  • Establish work supports, like paid sick days and paid maternity leave.
  • Strengthen federal and state safety net programs
  • Increase federal and state revenue
  • Invest in good paying jobs, like those in the health care industry

“Jobs that once were good family-wage jobs are becoming poverty-wage jobs, and economic development programs are too often indifferent,” said Greg LeRoy, executive director of Good Jobs First.  “States giving out tax breaks usually fail to even disclose actual jobs created or actual wages paid.

“Low Wage Nation reveals the tremendous cost of those policies to our workers and their families,” said LeRoy.

The full report is available at thejobgap.org

 # # #

Alliance for a Just Society is a national policy, research and organizing network with 15 state affiliates that focuses on health, racial and economic justice. The Alliance has produced Job Gap studies since 1999.

“A Full-Time Job Should Lead to Financial Stability, Not to Poverty”

For Immediate Release     January 27, 2015

“A Full-Time Job Should Lead to Financial Stability, Not to Poverty”

Most of America’s job growth is taking place in low-wage occupations

 WASHINGTON – Half of all new jobs nationwide don’t pay enough for a full-time worker to live on – much less a single parent with a child. And there are long lines of job-seekers for the few jobs that do pay a living wage.

“Low Wage Nation,” released today, is the newest report in the Job Gap Economic Prosperity Series produced by the Alliance for a Just Society. The report paints a sobering picture of just how hard it is to find a living wage job.

“This new report clearly illustrates the low-wage crisis in our country,” said LeeAnn Hall, executive director of Alliance for a Just Society. “A full-time job should lead to financial stability, not to poverty.”

The top four occupations with the greatest number of projected job openings are in retail and food service. Those jobs pay between $8.81 and $10.16 an hour.

The Alliance was joined by executive directors from Good Jobs First and Washington Community Action Network for a live webinar today to discuss the findings of the report. A recorded version of the webinar is available here. 

“The reality is that we are living in a low wage nation, a country of workers putting in long hours, but still failing to make ends meet. And this report is the evidence,” said Ben Henry, senior policy associate and one of the report authors.

Some of the report findings:

  • Nationwide, 48 percent of job openings pay less than $15 an hour. (That percent ranges from 35 percent in Massachusetts to 61 percent in South Dakota.)
  • Nationally, there are seven times more job seekers than jobs that pay enough for a worker to make ends meet.
  • Two of the top five occupations with the most projected job openings are also in the top five in lowest pay.

What Is a Living Wage?

A living wage is one that pays high enough for a full-time worker to cover basic living needs for herself and her family, without having to rely on public assistance to get by.

“A living wage is not a poverty wage, and it is not simply ‘scraping by.’ A living wage provides a modest living, with a little left to set aside for emergencies,” said Allyson Fredericksen, policy associate and co-author of the Alliance report.

It’s a Jobs Crisis, Not a Worker Crisis

“This is about workers who show up every day and put in a full day so that their employer can make a profit,” said Jill Reese, associate director of the Alliance. “These workers should not be living in poverty, they should be able to afford – at the very least – to cover their basic needs.”

Recommendations from the “Low Wage Nation” Report

  • Increase minimum wage to a living wage
  • Eliminate the tipped minimum wage (stuck at $2.13 an hour for 24 years)
  • Establish work supports, like paid sick days and paid maternity leave.
  • Strengthen federal and state safety net programs
  • Increase federal and state revenue
  • Invest in good paying jobs, like those in the health care industry

“Jobs that once were good family-wage jobs are becoming poverty-wage jobs, and economic development programs are too often indifferent,” said Greg LeRoy, executive director of Good Jobs First.  “States giving out tax breaks usually fail to even disclose actual jobs created or actual wages paid.

“Low Wage Nation reveals the tremendous cost of those policies to our workers and their families,” said LeRoy.

The full report is available at thejobgap.org

 # # #

Alliance for a Just Society is a national policy, research and organizing network with 15 state affiliates that focuses on health, racial and economic justice. The Alliance has produced Job Gap studies since 1999.

Minimum Wage Shouldn’t Force Workers to Live in Poverty

On New Year’s Day, 20 states raised their minimum wages. That leaves a lot of states that aren’t increasing the minimum wage — along with the federal government.

Even some of those employees who are getting increases don’t have much to celebrate. Workers in Florida might barely notice their 12-cents-an-hour raise. And the extra 15 cents an hour in Montana, Arizona, and Missouri will be wiped out with inflation and climbing costs before the first paycheck is deposited.

U.S. legislators have refused since 2009 to raise the federal minimum wage from $7.25 an hour — not even close to enough for full-time workers to make ends meet.

To put it bluntly, minimum wage is a poverty wage. Yet only 29 states have minimum wage rates higher than the federal rate — and some just barely.

In last year’s State of the Union address, President Barack Obama called on Congress to increase the federal minimum wage to $10.10 an hour.

Although Congress turned a deaf ear, activists took up the challenge. “Fight for $15” movements across the country won among the most powerful progressive victories of 2014.

Cheers to cities like Seattle and San Francisco with minimum wage plans that will increase rates to $15 an hour in the next few years. Huge congratulations to voters in Oakland, California, as well in Arkansas, South Dakota, Nebraska, and others who voted for significant minimum wage increases.

But the truth is, while it’s a great start, none of these increases goes far enough, or lifts workers out of poverty fast enough. What’s needed is a living wage that allows full-time workers to cover their basic needs and have a little savings left over in case of an emergency.

The Job Gap Economic Prosperity series — a collection of research reports by theAlliance for a Just Society — shows that a living wage comes to over $15 an hour for a single adult in most states studied. A parent supporting a child needs to earn closer to $22 or $23 an hour.

Women and people of color are least likely to earn a living wage, with half or more working full-time and not making enough to make ends meet.

Poverty-level pay is taken for granted at restaurant chains like McDonald’s and Dunkin’ Donuts, and major retailers like Wal-Mart, that would rather invest in government lobbyists to keep wages low than in their employees.

“If you truly believe you could work full-time and support a family on less than $15,000 a year, go try it,” Obama implored Congress in his latest State of the Union address. “If not, vote to give millions of the hardest-working people in America a raise.”

The sub-minimum wage for tipped workers has been stuck at $2.13 an hour for 24 long years. Imagine going to work every day, hoping beyond hope that the tips will make up for the tiny hourly wage. No worker should be a second-class employee.

Refusing to pay employees a wage they can live on isn’t a business plan. Paying employees enough so they can shop or dine at your business or neighboring businesses and grow the local economy — now that’s smart.

A full-time job should lead to financial stability, not poverty. We must continue to push Congress to raise the federal minimum wage and abolish the separate tipped minimum wage.

In the meantime, keep up the “Fight for $15.” We know that we can motivate our mayors, city councils, and state legislators by speaking out, sharing our stories, and presenting the facts. Most importantly, we have to vote.

Let’s make 2015 the year for $15 — and really have something to celebrate next New Year.

LeeAnn Hall is the executive director of Alliance for a Just Society, a national research, policy, and organizing network striving for economic and social equity. AllianceforaJustSociety.org
Distributed via OtherWords.org

Making Ends Meet: Unaffordable Housing

Last month, we showed just how difficult it is for working parents to afford to pay for child care and cover other living expenses. One of those other major living expenses that all workers must account for is the cost of housing and utilities.

Housing is considered affordable if it costs no more than 30 percent of a family’s income. For workers earning minimum wage, though, finding housing at 30 percent or less of their income can be impossible.

The cost of housing and utilities (including basic home phone service) for a one-bedroom apartment takes more than 50 percent of a full-time worker’s income at minimum wage in 6 of the 10 states studied in the Alliance’s 2014-2015 Job Gap Economic Prosperity Series. Housing and utilities take more than 40 percent of their income in the other 4 states. In New York City, those expenses can easily top 100 percent of a single minimum wage earner’s income.

For a working parent who needs a two-bedroom apartment, the cost of rent and utilities is more than two-thirds of a single minimum wage earner’s income in 6 of the 10 states studied, and is more than half of that earner’s income in the remaining 4 states.

In the 10 states studied, annualized fair market rents (which include utilities) plus basic phone service for a one-bedroom apartment range from $6,672 in Montana to $15,192 in New York City. Annual costs for a two-bedroom apartment range from $8,504 in Montana to $17,964 in New York City. Additionally, because fair market rent is based at the 40th percentile, 60 percent of units actually cost more than that amount.

As the National Low-Income Housing Coalition notes, “A family with one full-time worker earning the minimum wage cannot afford the local fair-market rent for a two-bedroom apartment anywhere in the United States.” That is, there is no place in the United States where the fair market rent for a two-bedroom apartment costs less than 30 percent of minimum wage earnings.

In fact, in 2012 there were only 16 available affordable units per 100 deeply low-income households who earn 15 percent or less of area median income. For these households, which include minimum wage earners, finding housing that is affordable is nearly impossible.

When rent is unaffordable, workers have few choices. Some families squeeze multiple people into a studio apartment or share a larger apartment with another family; some forego other necessities like health care or nutritious meals; and some must rely on affordable housing or other supports, if they can get in.

In our recent report, Equity in the Balance, Gaisha Velazquez, a working mom in Connecticut describes her struggle to find housing for herself and her young daughter on a low income.

“Our rent takes up almost half of our income, and we live in a pretty violent neighborhood with lower rent than some other areas,” said Velazquez. ” But it’s the best we can do right now.”

Like childcare, the high cost of housing can be an insurmountable obstacle to making ends meet for low-wage workers. Increasing wages through a higher minimum wage and investing in higher-wage industries will help more workers afford the cost of housing. Additionally, though, addressing the lack of affordable housing and overall high housing costs will help all workers be better able to make ends meet.

Over the next few months, the Alliance for a Just Society will look at some of the components that go into calculating a living wage, and show why it’s impossible to make ends meet working full-time at minimum wage.

Unaffordable Housing graph

Default on Student Debt and You Could Lose Your License

This guest blog post was contributed by Chris Hicks, campaign organizer for Jobs With Justice.

Did you know that in two states not paying your student loans could mean your driver’s license can be revoked?

That’s the harsh reality for those who have had to borrow to pay for college in both Montana and Iowa, where there are laws that allow the state to take away your driver’s license for failure to pay back your student loans.

For many working class families, losing the ability to drive can have dire consequences on employment, child care and other core pieces of their daily lives. Both states have had these laws on the books for years, with hundreds of workers who have lost their ability to drive and earn a living, but they’ve largely gone unnoticed.

The Montana Department of Justice defines the sanction for borrowers who default on their student loans as an “indefinite suspension until student loan association notifies Motor Vehicle Division of compliance.” Iowa’s Department of Motor Vehicles says much the same, requiring the state “to suspend a person’s driver’s license upon receiving a certificate of noncompliance from the College Student Aid Commission in regard to the person’s default on an obligation owed to or collected by the commission.”

This isn’t the first time in recent history that the inability to pay off a student loan has haunted borrowers long after finishing school. In October 2010, 42 nurses in Tennessee had their licenses suspended for falling behind on their student loans. The Tennessee Department of Health claimed the suspensions marked a renewed effort to uphold a statute passed in 1999, which states that license penalties can be implemented in the event of defaults on loans.

A troubling number of states, more than 15, have similar laws that allow states to suspend, revoke or refuse to certify professional or vocational licenses and, in some cases, impose a fine, when a worker defaults on student loans. These state laws can impact a wide range of workers, from teachers to attorneys.

These state laws are especially troubling in light of the December 2014 report by the Department of Education’s Inspector General, which found that the agency doesn’t have a comprehensive plan to prevent student loan defaults. In fact, they might be punishing debtors who otherwise didn’t know about loan repayment alternatives. The report indicated that the department “may have missed opportunities to identify risks, communicate with servicers, streamline activities and be more transparent,” among other shortcomings.

The irony, of course, is that punishing borrowers who get behind on their payments by revoking their ability to drive or preform their job just makes it harder for them to find full-time work or explore other debt solution options. The punishment actually makes it more difficult for borrowers to pay back their loans, perpetuating a cycle of poverty that could become impossible to escape.

If more states were to adopt laws like these, millions of student debtors could find themselves trapped. There are currently more than 40 million student loan borrowers, and more than 7 million of them are in default on their student loans (or 17.5 percent of all student debtors). It is now more imperative than ever that the Department of Education, and its servicers, find a way to curb student loan defaults as student debtors pay the price for their inaction.

This type of punishment is essentially creating modern debtors’ prisons for those who simply borrowed money to afford an education. Instead of offering retribution, our federal and state governments should be helping student debtors who are struggling with their debt burden find repayment options that prevent defaults that could cost them their livelihoods.