Ron Leach, a Democrat running for Congress in Kentucky, decided to see for himself what the working conditions are like for blue collar workers. He worked an entry-level job at UPS loading packages into aircrafts in Louisville, Kentucky for a couple of months and has recently written about his experience. You can find his full account here. To sum up, he says that without his wife’s benefits and salary:
I could not have survived the past couple months at the “entry level” of America’s economy in which an increasing majority find themselves trapped.
He describes working conditions common to many in the US. The job is physical and involves some risk, although he says that UPS tried to mitigate that risk where possible. However, the job only paid $8.50 per hour and workers weren’t eligible for employer-based benefits for a year. The 2013 BEST wage for Louisville, Kentucky for a single worker with benefits is $13.31 per hour. Without benefits, that worker needs to earn $14.98 per hour just to cover basic expenses. The lack of employer-based benefits leaves workers to find their own insurance. The wages paid barely keep workers off of Medicaid, assuming full time work. They will all be eligible for heavy subsidies under the Affordable Care Act. The need for health insurance is clear, as Leach notes several serious injuries among his coworkers, all new hires.
NELP estimates that more than one quarter of American workers make less than $10 per hour and EPI estimates that 28% of workers will be low-wage workers into the next decade.
We no longer have an economy that rewards hard work or playing by the rules. We are increasingly becoming a nation of declining fortunes for the majority and a nation in which the American dream is increasingly beyond reach and social mobility is one direction – down – for a growing majority.
While we are reassured that the budget deal doesn’t contain any new taxes and rolls back some of the sequester cuts, it’s clear that the long-term unemployed will be left out in the cold. Emergency Unemployment Compensation (EUC) expires on the 28th. While the unemployment rate continues to tick down, more than 37% of those currently unemployed and looking for work have been out of a job for at least six months. While the economy has picked up there are still three job applicants for every job opening.
The EUC is vitally important to the long-term unemployed- over 1/3 live in households below the poverty line. These are also the households that are the most likely to spend any money they receive in benefits quickly, giving a boost to the economy. Cutting these benefits will not only impoverish American families, but hurt the economic recovery.
Two weeks ago, I wrote about the health impacts that income inequality has on poorer Americans. The congressional witnesses at that hearing specifically noted that children who are hungry have long-term health impacts, including higher risks of learning disabilities, anemia, asthma and higher rates of hospitalization. Twenty percent of households with children in the US don’t have enough to eat.
The Supplemental Nutrition Assistance Program (SNAP) is the nation’s best anti-hunger program. SNAP benefits helped 47 million people afford food last year and 72% of SNAP participants are in families with children. However, at the beginning of November of this year, Congress allowed the Recovery Act’s boost to the program to expire- cutting $5 billion from the program. As I wrote then, the cut to a three person family was the equivalent of losing 15 meals a month.
The cuts today will have repercussions to the economic security of today’s children and tomorrow’s workers for decades. The health impacts will negatively affect how well the future workers can hold full time jobs and the heightened learning disabilities will keep the future workers from the educations they need to get ahead. We should not balance the budget on the backs of hungry children.
This past week, Senator Sanders (I-VT) convened a hearing on the connection between physical health and material wealth. The Nation has an article up describing the testimony and the conclusions of the hearing:
“The lower people’s income, the earlier they die and the sicker they live,” testified Dr. Steven Woolf, who directs the Center on Society and Health at Virginia Commonwealth University. In America, people in the top 5 percent of the income gradient live about nine years longer than those in the bottom 10 percent. It isn’t just access to care that poor Americans lack: first, they are more likely to get sick. Poor Americans are at greater risk for virtually every major cause of death, including cancer, heart disease and diabetes. As Woolf put it, “Economic policy is not just economic policy—it’s health policy.”
The experts highlighted a need for a more robust safety net to help shield people from the worst health effects of poverty. The article noted the long-term health effects of hunger, especially for children, in the US, where 1 in 6 families are food insecure.
As if to prove the point, McDonald’s has new suggestions out for how to survive on their low wage- they released a sample budget earlier in the year that didn’t include heating costs. The company recommends its workers take smaller bites when eating to feel fuller. Apparently, the low-cost restaurant didn’t seem to consider paying their employees enough to buy the food they sell.
Income inequality is killing Americans. It’s past time for our government to step in.
Wonkblog has an interesting piece up on the financial health of Macy’s and Wal-Mart and what that indicates for the larger economy. Macy’s took a big hit when the housing bubble burst in 2006 and continued to struggle through 2009, but has since recovered and is doing well. Wal-Mart did not see a big hit at any point- people always need the basics, after all- but has just posted its third straight decline in “comp sales,” “revenue from established stores compared to a year ago.”
The author posits that the divergence is explained by clientele; Macy’s attracts wealthier buyers, most of whom have fully recovered from the economic recession, while Wal-Mart attracts low and middle-class buyers, most of whom are still struggling. Wal-Mart executives hope that its new urban locations will attract wealthier buyers. Meanwhile, Wal-Mart’s low-paid workers continue to stage strikes and demonstrations for higher wages and more full-time positions.
Perhaps if Wal-Mart is feeling the pinch from lower-wage workers not having enough discretionary spending money, they could increase the pay of their low-wage workers? Businesses that rely on spending from low-wage workers would do well to remember that their own workers buy from them and can buy more if they are paid more.
While 75% of Americans rate the state of the economy poorly, households in the wealthiest 10% are feeling more positively about it since before the recession began. The economic sentiment index is up 22 points since spring, the highest it’s been since fall of 2007. Wonkblog points out that it’s hardly surprising that the wealthy believe the economy is doing well- the stock market is up 24% and unemployment among those with at least a bachelor’s degree is less than 4%- nearly half the overall unemployment rate. Here on WOW’s economic security blog, I wrote about how those with the most economic security had the smallest financial drop in the recession and the fastest recovery.
This is important because the top 10% includes many members of Congress. Nearly half of Congress is made up of millionaires- those with a net worth of at least $1 million. Months ago, Jim Tankersley at the Washington Post wrote about how Congress seemed to be slowing down on economic recovery because they and their friends weren’t feeling any economic pain.
From that perspective, it makes sense that Congress would cost the economy $24 billion in a government shutdown. It makes sense that Congress is arguing over how much to cut from SNAP- when economic analyses show that every $1 spent on SNAP benefits sees a return of about $1.70. It makes sense that Congress has spent the last month worrying about the Affordable Care Act rather than the economy.
The wealthy think the economy has mostly recovered and Congress is wealthy.
Those at the bottom of the economic ladder are still hurting with an unemployment rate over 7% and the poverty rate stuck at 15% and it’s about to get harder. ARRA’s boost to SNAP benefits expires on November 1st and SNAP benefits will decrease. The maximum benefit will decrease by $29 per month for a family of three, $319 per year.
The decrease comes while Congress debates how much more to cut from the program and after a recent Census report stated that SNAP kept 4 million people out of poverty last year. SNAP benefits are a vital resource to families trying to make ends meet. This cut in benefits means that a single parent with two children receiving the maximum benefit has $1.92 per person per meal in October and will have $1.82 per person per meal in November. Eighty-three percent of SNAP benefits go towards vulnerable families- those with children, elderly, or disabled members.
This is the largest across the board benefits cut SNAP has ever had. The cut is the equivalent of the three person family losing 15 meals each month- 5 days with nothing to eat. This is on top of a recent report finding that the SNAP benefit calculation is based on out-dated assumptions, resulting in inadequate benefits, even before the cuts. When Cory Book famously took the “SNAP Challenge,” the Huffington Post ran the comments of people who were using food stamps:
Jennifer Waldron of Louisiana wrote: “I get the full amount of food stamps for my state and they are usually gone in two weeks. That’s with me eating beans and rice twice a week. It is nowhere near enough for those of us with very low incomes.”
Regardless of what Congress decides for the program, struggling families are going to have a lean winter.
Standard & Poor’s estimates that the government shutdown cost the economy $24 billion. ThinkProgress has a list of other big government expenditure we could have spent the money on, such as the Child Tax Credit at $22.1 billion or Head Start, the State Children’s Health Insurance Program (SCHIP) and the Women, Infants and Children (WIC) program at $25.2 billion.
The budget deal couldn’t come too soon for those who rely on federal spending- one week ago, the Community Action Agency in Kent County, Michigan had advised seniors reliant on the USDA’s Commodity Supplemental Food Program to water down their milk. However, this shock to the economy will still be felt in family budgets for weeks, if not months. While federal workers will get back pay for the 2 ½ weeks they spent out of work, contractors won’t. One study estimates that the reliance on crises to drive the government has cost the economy nearly 1 million jobs.
Some news outlets are saying that the budget deal proves that Obama ‘won.’ Republicans are putting out messages on why they “won.” One this is clear, however: In this fiscal showdown, family budgets lost.
It’s important to remember the impact the minimum wage has on families. Nearly one half (49.4%) of minimum wage workers are 25 or older; 64% of workers who earn the minimum wage or below are women. More than 35% of minimum wage workers work full time hours. Raising the minimum wage in Seattle would help Seattle women and children get closer to economic security, starting a virtuous cycle of inter-generational security.
The suggested minimum wage is only slightly lower than Seattle’s BEST wage for one worker of $15.86 per hour, $33,504 per year, for a worker with employment-sponsored benefits. While the dollar amount is higher for those without, the newly opened health care exchanges and tax credits will help to make up that difference. Poverty research has shown that the best way to combat poverty and increase economic security is to give unrestricted funds to those in poverty. The EITC has been a great example and I’m hopeful that Seattle’s pay raise will be another.
WOW’s demographic analyses have found that women are much more likely to be economically insecure or in poverty than men are across their life spans. As a result, women tend to use more government services. Mother Jones has a list of services that will be affected by the shutdown, among them:
WIC payments will stop. This is a program that only gives nutritious food to small children, infants, pregnant women and nursing mothers. Women are much more likely to be single caregivers of children- 36% of single women live with children while only 10% of single men do.
Head Start programs will shut down. Head start offers free preschool to low-income families. Child care for a single preschooler takes up nearly 17% of the BEST budget for a single worker with a preschool aged child.
Funding for the Low Income Home Energy Assistance Program (LIHEAP) is uncertain. LIHEAP gives once annual grants to low income households for heating or cooling as well as emergency funding for those facing a shut off during dangerous temperatures. Single elder women are more likely to live alone (56% of retired elder women vs. 33% of retired elder men) and more likely to be low income (the median income for retired elder women is just over $14,200, for men it’s nearly $24,800). Women are likely to bear the brunt of the cost if LIHEAP goes unfunded.
The CDC may not have the funding needed to perform its annual flu vaccination program- a particular risk for young children and elders.
Payments for student loans and Pell grants may be slowed down as furloughs take effect. Women make up the majority of college students and may have trouble making ends meet during the extra days or weeks it takes to get their loan disbursements or grants.
The longer the government shutdown continues, the higher the cost to women and their families.
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