2013
is the year many Americans discovered the crisis of the working poor. It
turns out it’s also the crisis of the welfare poor. That’s tough for
us: Americans notoriously hate welfare, unless it’s called something
else and/or benefits us personally. We think it’s for slackers and
moochers and people who won’t pull their weight.
,
or welfare – a proportion that’s much higher in some of the fastest
growing sectors of the workforce. Or that 60 percent of able-bodied
adult food-stamp recipients are employed.
Fully 52 percent of
fast-food workers’ families receive public assistance – most of it
coming from Medicaid, food stamps and the Earned Income Tax Credit — to
the tune of $7 billion annually,
from the University of California-Berkeley’s Labor Center and the University of Illinois.
McDonald’s
workers alone receive $1.2 billion in public aid, the study found. This
is an industry, by the way, that last year earned $7.44 billion in
profits, paid their top execs $52.7 million and distributed $7.7 billion
in dividends and stock buyback. Still, “public benefits receipt is the
rule, rather than the exception, for this workforce,” the study
concluded.
,
boasted to a Goldman Sachs conference that “over 475K” of its 1.3
million workers make more than $25,000 a year – which lets us infer that
almost 60 percent make less.
Democrats on the House Committee on
Education and the Workforce estimated that the giant low-cost retail
chain benefits from many billions in public-assistance funding; one
Wisconsin “superstore” costs taxpayers at least $1 million a year in
public assistance to workers’ families. Remember, too, that six members
of the Walton family own as much wealth as 48 million Americans
combined.
But it’s not just fast food and Wal-Mart:
One in three bank tellers receives public assistance,
the Committee for Better Banks revealed last week, at a cost of almost a
billion dollars annually in federal, state and local assistance. That’s
right: One of the nation’s most profitable, privileged and
high-prestige industries, banking, pays a sector of its workers
shockingly low wages and relies on taxpayers to lift them out of
poverty. In New York alone, 40 percent of bank tellers and their family
members receive public assistance, costing $112 million in state and
federal benefits.
Bank CEOs get multi-million dollar bonuses as
profits soar, while millions of tellers are so poor they get welfare.
Something’s wrong with that.
Revulsion at subsidizing profitable
corporations that pay poverty-level wages is helping fuel a wave of
long-overdue organizing and protest on behalf of low-wage workers, from
the fast-food strikes that have swept the country to Wal-Mart protests
this holiday season. Taxpayers recoil at the notion, but so do many
workers themselves. “I thought I could make it on my own. That didn’t
happen,”
Wal-Mart worker Aubretia Edick,
who makes $11.70 an hour and still gets public assistance, told the
Huffington Post. That’s why she joined a one-day strike. “Wal-Mart
doesn’t pay my salary,” she said. “You pay my salary.”
The U.S. now has the highest proportion of low-wage workers in the developed world,
according to the Organization for Economic Cooperation and Development.
One in four make less than two-thirds of the median wage, which is the
same proportion that rely on public aid. It’s becoming more widely
accepted that the spread and persistence of low-wage work is behind
rising income inequality and reduced social mobility. What’s less well
known is the role Democrats have played in creating this trap.
…
In his widely admired speech on income inequality Dec. 4, President Obama seemed to share all of these concerns.
“We
know that there are airport workers, and fast-food workers, and nurse
assistants, and retail salespeople who work their tails off and are
still living at or barely above poverty,” he said.
Based largely on that speech, and some West Wing whispers, Politico announced Friday “
President Obama turns left.”
But outside of saying again that it’s time to raise the minimum wage,
the president hasn’t yet put much meat on a “left” agenda for low wage
workers.
It would also be nice for Obama to recognize: The fact
that so many Americans “work their tails off and are still living at or
barely above poverty,” receiving public assistance, is not just an
unhappy accident. It’s the result of public policy supported by many
Democrats — and he hasn’t done much to change or challenge it. In fact,
the chair of Obama’s Council of Economic Advisors has made the most
spirited defense of it.
The truth is, a bipartisan consensus
emerged in the 1990s, that a job, practically any job, was better than
long-term public assistance for so-called “able-bodied” adults,
including mothers with young children. It led to controversial 1996
welfare reform legislation that had ramifications way beyond the realm
of welfare.
Republicans demanded work from welfare recipients;
(most) Democrats went along, but demanded new support for low-wage
workers: an expanded Earned Income Tax Credit, wider Medicaid and food
stamp eligibility, new (though not nearly sufficient) child care
subsidies. (As an Illinois state senator, Obama was critical, but later
endorsed the deal.) The new support programs also helped millions of
low-wage workers who never relied on welfare; as wages continued to
stagnate and even decline, more people became eligible.
But as
labor advocates began to realize and protest the extent to which
employers were relying on taxpayers to support their workforce a decade
ago, some liberals told them not to worry about it. Responding to an
earlier wave of organizing against Wal-Mart’s labor practices, President
Obama’s Council of Economic Advisors chair, Jason Furman, wrote a
hugely influential 2005 paper, “Wal-Mart: A Progressive Success Story.”
(Eight years later, it sounds like he was trolling us.) The former
Clinton economic advisor argued that the big box chain’s low prices
helped poor people, and that its employees’ reliance on public
assistance wasn’t a bug but a feature of progressive social policy.
Furman
credited President Clinton with presiding over “the transformation of
our social safety net from a support for the indigent to a system that
makes work pay… expansions in support for low-income workers, including a
more generous Earned Income Tax Credit (EITC) and efforts to ensure
that children did not lose their Medicaid if their parents took a
low-paid job.” Essentially, Wal-Mart employees’ reliance on such
programs represented good social democratic policy, Furman argued.
And in a memorable exchange with Barbara Ehrenreich in Slate,
he chided Wal-Mart’s progressive critics for “playing on the atavistic
anti-welfare, anti-government, anti-tax instincts of some
conservatives.” (Leave it to a Clinton-era Democrat to blame
progressives for the well-established “atavistic anti-welfare instincts”
of the right.)
Although Furman’s Wal-Mart paper is eight years
old, it was widely cited as a reason for progressives to question his
appointment as CEA chair earlier this year (though progressive
economists from Jared Bernstein to Paul Krugman endorsed his selection).
Just a few months ago, when the Washington, D.C., City Council passed a
bill requiring non-union big-box retailers to pay a $12.50 minimum
wage,
Wal-Mart emailed reporters Furman’s piece in defense.
Interestingly,
I’ve never seen Furman defend or qualify or update the paper, even in
the face of a new wave of anti-Wal-Mart organizing. I wasn’t entirely
comfortable using an eight-year-old paper to stand in for his views, so I
asked White House communications officials if he would talk to me about
it. I got no reply.
As a social democrat, I don’t think Furman is
wrong to defend the role of social programs in making life better for
low-wage workers. Lots of progressives believe we should detach health
insurance from employment entirely, for instance, and make it a
universal benefit supported by higher corporate and top-rate taxes plus
sliding-scale individual contributions. Throughout the developed world,
workers at almost every level can rely on government-funded health care,
childcare, job training and retraining, and even (at lower wage levels)
wage supplements.
But it’s not punitive Calvinism or
welfare-shaming to question the extent to which it’s now a given that
low-wage workers are going to have to rely on food stamps and other
public assistance, often for a long time, perhaps permanently. By not
also demanding regular minimum wage hikes or putting muscle behind union
organizing, Democrats have helped create a vast low-wage labor pool
that hovers just above the poverty line, and sometimes still below it,
thanks to public assistance, and lacks the economic and political muscle
to improve their wages and working conditions. This can’t be good for
anyone.
In fact, the notion that so many millions of people work
so hard and are still poor enough to receive public aid is galvanizing:
it helps make vivid that low wages, not lack of effort or “dependency,”
are part of what’s shrinking the middle class. Not just taxpayers but
low-wage workers themselves think rising out of poverty with the help of
food stamps and Medicaid and the EITC should only be a temporary
victory on the way to a solid place in the labor market where work is
fairly compensated.
I’m certainly not demonizing public
assistance. We still spend a pittance helping low-wage workers compared
to the social support enjoyed by their counterparts in other prosperous
nations. Progressives are rightly proud of a recent study that found
anti-poverty programs do indeed lift people out of poverty – roughly a
quarter of Americans would live below the poverty line without social
support, as opposed to a still dismal 16 percent today. That should
obliterate Reagan’s ugly canard that “We fought a war on poverty, and
poverty won.”
But every dollar taxpayers spend subsidizing
corporations paying poverty wages is a dollar not spent on early
childhood programs, building universities or funding college education.
Yes we need safety nets, but we also need ladders of opportunity. The
government spending that built the post WWII middle class invested in
education and research, and it was backed by the New Deal’s most
effective anti-poverty initiative: the Wagner Act, which eased labor
union organizing.
Today, we’ve got a threadbare safety net, but
those ladders of opportunity are even more rickety and unreliable. We’re
just not building them anymore – and that’s why we’re facing a crisis
of income inequality and a stalling of the social mobility that used to
be the heart of the American dream.
…
President Obama seemed
to recognize at least some connection between the proliferation of
low-wage work and the crisis of income inequality in his landmark Dec. 4
speech. Decrying the rising number of jobs paying poverty-level wages,
he declared “it’s well past the time to raise a minimum wage that in
real terms right now is below where it was when Harry Truman was in
office,” and added that “it’s time to ensure our collective bargaining
laws function as they’re supposed to so unions have a level playing
field to organize for a better deal for workers and better wages for the
middle class.” He also pledged to rebuild the “ladders of opportunity”
that launched his family and millions of others, including mine, from
the working to the middle class. Given the far-right swing of the
Republican party, however, he’s not likely to be able to make much of
that happen.
Which brings me to the other problem with low-wage
workers being forced to depend on public assistance: they’re sadly
vulnerable to political scapegoating and backlash politics. Rep. Paul
Ryan calls the safety net a “hammock,” which is horrifying when we know
so many people are working at least one and maybe two jobs and still
remaining poor. Mitt Romney inveighed against the 47 percent of
Americans who pay no federal income taxes, which includes millions of
low-wage workers on the earned income tax credit, even though the EITC
was a Republican idea, signed into law by President Gerald Ford and
expanded by both Presidents Bush.
But Republicans aren’t pushing
to raise the minimum wage or make it easier for low-wage workers to
organize unions. Their answer is to pull the safety net out from under
these workers without building ladders that let them climb. And with
sequestration and food stamp cuts, they’re getting their way.
Right
now the best answer is an invigorated labor movement on behalf of
low-wage workers, and it’s bracing to see it develop. On one level, it’s
surprising it’s taken so long. Many low-wage jobs have the advantage of
being place-based; they can’t move to the developing world. Drones are
not going to deliver your McDonald’s hamburgers any time soon, and
Wal-Mart can’t sell everything online, or else it would. The ranks of
bank tellers have already been decimated by ATMs and online banking;
those who still have jobs are needed.
But it would also be
important for more people – more Democrats – to acknowledge the role
policy has played in creating this swamp of low-wage work made slightly
less miserable with public aid. As income inequality has widened,
America’s trademark social mobility has declined. The crisis of low-wage
work is increasingly recognized as part of what’s widening inequality
and slowing social mobility. In the fifth year of his presidency, Obama
is getting better at describing the problem, but he needs to do more to
back the workers who are trying to press for solutions.
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