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Sunday, March 2, 2014

You Call This A Middle Class? “I’m Trying Not to Lose My House”



Welcome to the new America where good people with honest jobs are losing money each month — and scrambling to live.

Photo Credit: Shutterstock.com/JMiks
It took less than two years for Kim Brown to go from middle class to minimum wage.

In the fall of 2011, Brown was a Web support technician for an electronics distributor in Chicago, helping customers navigate the company’s website. She had been in the job for 11 years, earning a $45,000 salary, plus benefits.
“I wasn’t rich, but I felt like I had a life,” she said — as good a definition of middle class as any.

That November, the company announced it was moving its office to Cleveland. All the employees were invited to go along. All declined, including Brown, who had lived in Chicago her entire adult life, since arriving to attend college. Having been laid off, Brown was eligible for unemployment benefits — which she figured would last until she found a new job. The last time she’d looked, in 1999, she’d found work right away.

Despite sending out “hundreds of résumés each week,” Brown couldn’t land a full-time job. At age 46, with every month of unemployment making her less attractive to employers, she was wondering whether she ever would. She exhausted her 401K, and only a sympathetic landlord, who cut the rent to $800 a month, allowed Brown to hang on to her one-bedroom apartment.

Brown’s benefits were cut off in July 2013, as a result of the federal government sequester. Two months later, she took a job as a telephone survey interviewer, for $8.50 an hour — 25 cents above the Illinois minimum wage.

“They’re not very selective with the people they hire,” Brown said. “It doesn’t take a great skill. They just want to see if you can read. It was clear that most of the people who were applying for a job had never really had a real job. It’s a lot of young people. It might be their first job.”

The Bureau of Labor Statistics conducted a study of workers who were laid off during the Great Recession and found a new job. More than half are earning less money. During the recession, wage growth dropped from 3.5 percent a year to 1.5 percent, and has been stuck there ever since. The economic upheaval that began in 2007 was not a recession. It was a reordering. Employers used the downturn as an opportunity to ratchet down wages, which are likely to remain at their current levels.

Any reordering of society must be accompanied by a justification for the new arrangement. Conservatives loathe the term “economic justice,” because they see it as an indictment of the marketplace, which they consider a perfect mechanism for ensuring every worker gets what he or she deserves. If you earn $7.25 an hour, that must be all you’re worth. (Actually, the free market absolutists at the Wall Street Journal and the American Enterprise Institute believe minimum-wage workers are not even worth that much, but benefit from a government-imposed mechanism that inflates their paychecks.)

In order for this free market version of economic justice to make sense, wages can’t be low because the economy is not producing enough good jobs; they have to be low because employees lack the training and/or the work ethic to command more money.

“Income is a direct result of the effort put towards earning the income,” Ron Anari, a senior vice president of ICAP Plc, a broker of U.S. government debt, wrote in response to a Bloomberg Global Poll on inequality. “Our greatest shortcoming is not the income inequality of the top 2% from the bottom 2% but the systematic destruction of the middle class through handouts creating the entitled and complacent class.”

It’s Social Calvinism, a worldview that does not just see money as a reward for virtuous behavior, but as evidence of virtue itself. The 1 percent consider themselves an Economic Elect, whose wealth is a byproduct of self-discipline, intelligence, thriftiness and tolerance for risk. As inequality increases, so does the winners’ conviction that they are more equal than everyone else. French economist Thomas Piketty’s “Capital in the 21st Century” will not be published in English until March, but University of California professor Brad DeLong offered this preview, from a lecture Piketty delivered in Helsinki: “Sociologically, America may be the worst of both worlds for those who are neither top income earners nor top wealth successors: you are poor, and depicted as dumb and undeserving: ‘nobody was trying to depict Ancien Regime inequality as fair.’”
The Divine Right of Kings and contemporary American inequality both rest on a moral foundation. French aristocrats sat atop society because God so ordained; American aristocrats rule as a result of their superior character.

That helps explains why opponents of raising the minimum wage insist that being unable to afford food, clothing and shelter is a character-building experience. If unskilled workers earn enough to live on, the argument goes, they’ll have no motivation to better themselves. “Fast food…protestors claim minimum wage is not enough,” wrote former Republican congressman Ernest Istook, after strikes broke out at Burger Kings and KFCs, with workers demanding $15 an hour. “They’re right. It’s not and it’s not supposed to be. It’s intended as a starting point, leaving incentive to work harder and better.”
However, as the labor market contracts — only 63 percent of eligible workers are in the labor force, the lowest level since 1978 — more and more jobs are being classified as unworthy of a living wage, simply because employers can find people desperate enough to work for less. The concept of supporting a family with a full-time job has been downgraded from an element of the social compact to “nice work if you can get it.”

“Jobs that involve the minimum wage are overwhelmingly jobs for young people starting out in the workforce,” said Wisconsin Gov. Scott Walker, who wants to keep it at $7.25 an hour.

That may have been the case in the 1980s, when Walker worked at a McDonald’s in Delavan, but it is not the case today. According to the Economic Policy Institute, 88 percent of “low wage workers” — those earning less than the $10.10 minimum wage proposed by President Obama — are 20 or older. Their average age is 35, and more than half work full time.

If age and experience actually make workers more valuable, wages should be increasing steadily as the American population becomes older and more educated. But check out these numbers: In 1980, 16 percent of Americans had college degrees, and the median age was 29. Today, 27 percent have college degrees, and the median age is 37. But since then, the inflation-adjusted “real wage” has increased only $4, from $290 to $294 per week.

Congress’s recent refusal to extend unemployment benefits will throw another 2 million workers into the labor pool — and a good number are likely to end up in minimum-wage jobs, just as Brown did. That was the whole point of cancelling their benefits. Driving wages down to “business-friendly” levels is an eternal goal of the conservative movement. A conservative activist in Indiana told me, “One of the biggest complaints I hear from businesses is that they want to hire, but that people don’t want to work because they’d rather receive government subsidy.”

Here’s why: Brown received $388 a week in unemployment benefits. Now, she takes home $250 for working 30 hours a week. The loss of income has forced her to borrow money from friends and family, and she is considering applying for Medicaid and food stamps.

“Because of the economy, they can take advantage of people, because it’s tightened so much,” Brown said. “I could have taken a minimum-wage job, but why would I when I had my unemployment? I felt like I was worth more. I’d been making twice as much. I’m scrambling to find another job, because I can’t live on this.”

In January, I was in Pittsburgh, where people are still talking about the death of Margaret Vojtko, an adjunct professor at Duquesne University. After Vojtko’s course load was cut, reducing her income from $25,000 to $10,000, the 83-year-old woman could no longer afford to heat her house, and took to passing nights in a fast food restaurant and sleeping in her office during the day. Eventually, the university decided Vojtko was no longer an effective instructor and let her go — with no pension. Shortly after, Vojtko died of cardiac arrest.
Vojtko’s death gave momentum to the adjuncts’ attempts to unionize, which Duquesne is fighting on the grounds that, as a Catholic university, it has a First Amendment exemption from federal labor laws. But not everyone was sympathetic to Vojtko, Pittsburghers told me, or to adjuncts in general — M.A.s and Ph.D.s who work long hours for low pay and no benefits.

“Adjunct positions were never intended to be vehicles for lifelong employment,” a commenter wrote after Vojtko’s story appeared on Inside Higher Ed. “Yes, there are some stuck in lecturer roles because of changes in the job market, but many made choices along the way that reduced or eliminated their eligibility for tenure-track positions — such as stopping at the Master’s level of education or not engaging in research.”

Perhaps. But as we’ve already seen, a more educated workforce has not resulted in better-paying jobs; it has resulted in more underemployment. More than half of college graduates under age 25 are unemployed or working jobs that don’t require a bachelor’s degree. And since higher levels of education have raised the bar for entry into the shrinking number of good jobs, those who can’t translate their academic achievement into full-time work are double losers, since they’re unable pay off their student loans with tips from pouring coffee or waiting tables. In the case of adjuncts, more master’s degrees and doctorates have not created more tenured professorships; they have created a larger pool of academics for universities to exploit.

If you try hard enough, you can usually come up with a reason a low-wage worker doesn’t deserve to earn a living. If Kim Brown had been willing to move to Cleveland, she would still have her Web support job; if she had chosen a more marketable major than creative writing, she might have found full-time work in Chicago. But no matter Brown’s life choices, her $8.50 an hour job would still exist, not providing a living for someone else.

Consider the case of Nadine Brooks (not her real name), an auto worker in Lordstown, Ohio. Brooks’s wages were reduced from $24.40 to $14 an hour, as a result of a 2007 deal between General Motors and the United Auto Workers to start new hires at half the rate of experienced workers. A “temporary worker,” even though she had been building Chevies for six years, Brooks was no longer eligible for the established wage. The auto industry experienced the recession before most other sectors, because nobody has to buy a new car. Brooks didn’t begin earning 40 percent less money because she suddenly became 40 percent less educated or intelligent, but because to keep its prices competitive, GM cut labor costs to the levels of non-union, foreign-owned plants in the South.
As a single woman, Brooks had no one at home to share expenses. So she canceled her cable and Internet, which left just enough to pay the mortgage on her house.

“I am living like I’m on unemployment or welfare,” Brooks said bitterly. “I’m struggling to make my mortgage payments, to live. I’m losing 500 to 700 dollars a week. I can’t afford to do anything. At work, it’s, ‘Oh, what are you doing on shutdown? I’m going to Florida.’ ‘Oh, great, I’m trying not to lose my house.’ I have nothing in common with people I work with. After I put gas in my car, pay late bills and late fees, I have 20 dollars left to eat for a week and a half. I still owe money on a foot surgery from over two years ago. It’s devastated my life. I’ve lost friends over it. I’ve lost family over it. I can’t socialize.”

It’s hard to tell people they deserve to be poor when they’ve done everything they were supposed to do to avoid poverty: gone to college, worked 40 hours a week. A free market that fails to reward honest toil and initiative must inevitably become less free. If Americans can’t get the money and benefits they need from their employers, they will turn to the government for help. And if the government won’t help them, perhaps they’ll vote in one that will.

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