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

Making Ends Meet: The High Cost of Child Care

What does it take to make ends meet?

For workers making less than $15 an hour – which is about 40 percent of all workers in the United States – housing, food, and transportation are all major expenses. But for a working parent with young children, one of the biggest expenses is likely to be child care.

For minimum wage workers, the cost of child care is an impossible burden.

The cost of child care for a school age child and a toddler is equal to more than 65 percent of a full-time minimum wage worker’s earnings in the 10 states included in the Alliance’s November 2014 report, “Equity in the Balance,” and is over 100 percent of their earnings in Colorado, Virginia, Connecticut, and New York.

When working parents don’t have a family member or friend who can look after their children for free or low cost, they have to pay for reliable child care. Although child care workers are among the lowest paid workers, earning a median wage of only $9.38 per hour in 2012, the cost of child care for parents is significant.

In the 10 states included in the Alliance’s 2014-2015 Job Gap Economic Prosperity Series, child care costs make up a large portion of the cost of living. In states we studied, paying for before-and-after- school and summer care for a 6-8 year old ranges from $3,440 per year in Idaho to $8,347 per year in Connecticut.

For a toddler, the cost of full-time child care ranges from $6,430 per year in Idaho to $13,844 in Connecticut. When parents have two children, nearly every state studied has a cost of over $10,000 per year, with New York (not including New York City) and Connecticut costing over $20,000 per year. (See chart at end of article).

While it’s true that many minimum wage workers are eligible for subsidized child care, a 2012 brief by the U.S. Department of Health & Human Services estimated that only 18 percent of children from eligible families actually received subsidies.

Further, only one state in the country currently has child care subsidy rates set at the recommended 75 percentile of market rates in 2014. Only three more have their rates set to the 75 percentile of 2013 market rates.

Because the most states allow providers to charge parents the difference between the subsidy rate and their standard rate, many parents who receive subsidies still must pay more than the subsidy co-pay, cutting deep into the already meager budgets of minimum wage workers.

In addition to the struggle minimum wage workers have affording child care, many states have restrictions on receiving subsidies when a worker loses their job or when they are unemployed and looking for work.

As the National Women’s Law Center shows, five states cut off subsidies after a parent loses their job, and another seven provide less than one month of subsidy after job loss. Further, 35 states and the District of Columbia do not provide any subsidies when a parent is unemployed, but actively searching for work.

When parents lose a job or only earn minimum wage, the cost of child care can be an insurmountable obstacle to making ends meet. A higher minimum wage can help workers across the country better afford the cost of child care. At the same time, addressing the high cost of care – while also ensuring that child care workers earn enough to support themselves and their families – would help families across the country.

Over the next few months, the Alliance for a Just Society will be taking a 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.

Child care chart

Testimony: A Living Wage Is about Family Prosperity

Yesterday I got the chance to testify to the Washington state House Labor and Workforce Development Committee.

Our living wage research findings set a standard, that mere survival is not an adequate measure of a healthy society, and not an expectation we should be striving to set. It’s about a living wage that positions families to build for the future and realize their dreams. Continue reading “Testimony: A Living Wage Is about Family Prosperity”

I Give Thanks to Workers Standing Up to Injustice

The holiday season — a time of counting your blessings, spending time with your family, and abundance.

It is also a time for a huge portion of workers — unable to make basic ends meet — to be made painfully aware of how they are falling short.

About half of all full-time workers of color in the United States do not make $15 a or more an hour, a figure that actually is not a living wage for a single adult in most places. Continue reading “I Give Thanks to Workers Standing Up to Injustice”

Voter Support Spreading Nationwide for Higher Minimum Wage

Workers deserve to earn enough to support themselves and their families.

This concept has helped guide the work of the Alliance for a Just Society for years. And, in the recent midterm elections, voters in five states and two cities showed that this is an issue that is important to people of all backgrounds, in all parts of the country.

In this November election, voters in Arkansas, Alaska, South Dakota, and Nebraska voted to increase the minimum wage in their state, and voters in Oakland and San Francisco, California, voted to increase the wage in their cities. (Voters in Illinois and in some counties in Wisconsin also supported nonbinding initiatives to increase their minimum wage.) While Oakland and San Francisco may come as little surprise to many, the votes in the four “red” states show that increasing wages is an issue that cuts across party lines and the urban/rural divide.

In fact, when minimum wage initiatives are placed on the ballot rather than being left up to elected officials, they historically receive overwhelming support. In 2004, 70 percent of voters in Florida and Nevada supported increases in those states, and in 2006, voters in Ohio, Nevada, Montana, Missouri, Colorado, and Arizona supported increases. In 2012, in San Jose, Calif., voters easily approved a $2 minimum wage increase to $10.15.

Additionally, opinion polls show that Americans want an increase to the federal minimum wage, too. Workers across the country recognize the importance of making work pay, and that a full-time job should allow a worker to provide for herself and her family.

While these minimum wage increases fall short of providing a living wage for workers, they are an important step in helping working families make ends meet.

The next installment in the Alliance’s Job Gap Economic Prosperity Series, to be released next week, will show that workers across the country fall short of making ends meet and that women and people of color are especially likely to earn low wages. For these workers at the bottom end of the pay scale, an increase in the minimum wage can mean the ability to pay rent and provide food for their family.

Increases to state minimum wages are significant, and impact working families in real ways. However, the federal minimum wage falls well short of providing a living wage for working parents, as shown in the 10 states included in “Families Out of Balance,” released in August. Workers need action not only at the ballot box, but at the federal level, too.

Some members of Congress are urging President Obama to use an executive order to increase wages for federal contractors to $15 per hour; while this would be an important step, millions of working families will still fall short of making ends meet until the federal minimum wage is increased for all workers.

Workers across the country, in red states and blue states, are demanding a raise; it seems about time that their elected officials listen.

“While We Celebrate a $15 Minimum Wage, Let’s Remember It’s Not Enough”

There has been a lot of buzz around the Seattle City Council’s historic adoption of a $15 minimum wage, the highest in the nation. Now there’s also excitement over last week’s passage of a living wage ordinance by the King County Council that sets the same wage floor for county employees and contractors.

Yes, $15 is more than twice the federal minimum wage, which stands at a paltry $7.25 an hour and that Congress has failed to increase for five years and counting.

But despite the recent local victories, let’s not hang up a “Mission Accomplished” banner just yet; we still have a long way to go. In this debate, some have argued that $15 is too big of a jump. On the contrary, it does not go far enough.

First and foremost, $15 is not enough for King County families to meet basic needs.

In August, the Alliance for a Just Society and Washington Community Action Network jointly released “Families Out of Balance,” which calculates basic expenses for King County residents.

The report finds that the hourly wage full-time workers in King County need to make basic ends meet, ranges from $17.37 an hour for a single individual to $34.46 for a single adult with two children. These calculations include food, housing, utilities, transportation, health care, household, small savings, child care and tax costs. They assume a 40-hour workweek. (See http://www.thejobgap.org.)

Meanwhile, if you can’t make ends meet, it’s not as simple as just finding another job. Another study the Alliance released last year found that, for every living wage job for a single individual in Washington state, there are eight job-seekers.

For a single parent with two kids, there are 21 job seekers for every living wage job. Seventy-eight percent of all job openings in Washington don’t pay enough for that parent to survive.

Quite simply, many King County families aren’t making ends meet, and $15 is not a living wage.

Our improved minimum wage falls short by other measures as well. A Center for Economic and Policy Research report finds that, had the federal minimum wage kept up with economic productivity, it should have been $21.72 an hour in 2012, about three times the current minimum wage.

It is also worth noting that several exceptions have watered down the policy. The Seattle minimum wage is phased-in, getting to $15 an hour gradually between 2017 and 2021, depending on the size of the business and whether it offers health care.

The Seattle wage schedule gets us closer to an actual living wage than we’ve been in the history of our living wage study, which goes back to 1999. But in reality, it remains a modest step in the right direction.

In the end, the triumph of $15 is that it was a bottom-up approach to progressive policy change that succeeded. After all, it was Seattle’s low-wage workers who first had the courage to demand a $15 minimum wage — and they got it.

Many families face impossible balance sheets, paying living costs, maybe student loan debt or medical bills, and are having excruciating kitchen table conversations.

A $15 minimum wage is a huge step in the right direction, but we must remember that this is only the beginning in the movement for a more prosperous Washington and America.

This article originally appeared at the South Seattle Emerald.

King County Council Approves One of Toughest Living Wage Ordinances in the Country

SEATTLE — The King County Council yesterday approved a living wage ordinance, which, when signed by County Executive Dow Constantine, would be among the stronger county-level ordinances in the country.

The Alliance for a Just Society and Washington Community Action Network have supported the legislation, which includes language citing Alliance living wage research. The legislation sets a wage floor for King County employees and service contractors for contracts worth $100,000 or more. Continue reading “King County Council Approves One of Toughest Living Wage Ordinances in the Country”

King County Living Wage Ordinance a Modest Step to Address Inequalities

On the heels of the historic passage of Seattle’s $15 minimum wage, a King County Council committee will be voting next week on a living wage ordinance that would apply to county employees and contractors for broader King County.

The Alliance testified at a Council committee hearing on Sept. 2 calling for adoption of the legislation, which cites Alliance living wage data. King County has 2 million residents and includes the city of Seattle. Continue reading “King County Living Wage Ordinance a Modest Step to Address Inequalities”

Fair Wages Aren’t Enough, Workers Need Hours, Predictability, too

Fast-Food-EmployeesThere’s no question that working families across the country are struggling to get by; wages for most income levels have been stagnant or declining over the past decade, while the cost of living has continued to increase.

One key to helping working families is increasing wages so that there are more living wage jobs available. However, increasing the minimum wage is only part of the solution for helping families whose low-wage jobs do not always include steady work.

Living wage calculations, like those produced by the Alliance for a Just Society, must make assumptions to remain consistent year after year. One of those assumptions is that workers have jobs where they can actually work 40 hours per week, year-round (for 2,080 hours per year). For many workers, this assumption doesn’t match their reality.

For retail and restaurant workers, a steady schedule with enough hours can be hard to come by. Retail salespersons and food preparation and service workers are two of the top five occupations with the greatest projected job growth between 2012 and 2022, but are also low-wage occupations, with 2013 median annual wage of $21,140 and $18,330, respectively. These jobs are also often shift work, without set schedules. Continue reading “Fair Wages Aren’t Enough, Workers Need Hours, Predictability, too”