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
March 1, 2014
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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.
