Tag Archives: wages

Let’s Be Clear: A Universal Basic Income Does Not Ensure Basic Economic Security

Sparked by a proposed ballot referendum in Switzerland, the prospect of ensuring all Americans a basic income has been resurrected.

A universal basic income (UBI) is one of those rare policy ideas which has support on both sides of the aisle. Progressive, anti-poverty advocates are excited about ending extreme poverty,  increasing workers’ bargaining power and bolstering the safety net. And as Bruce Bartlett summarizes, the idea of a direct cash payment has earned support from more conservative and libertarian-minded critics of government bureaucracy and an extensive ‘welfare state’.

There’s still a sizable leap from opinion pages to the floor of Congress for policy ideas like this, of course. Even advocates acknowledge the proposal is unlikely to be adopted any time soon. But so far as these debates shape the political conversation about how to address low wages, poverty and inequality, it is important that its benefits and limitations be well-investigated and understood.

Proponents have argued that a universal basic income could “replace all other government benefit programs.” Whether this is possible depends on the value of the basic income. Generally, those who make this argument assume it would be somewhere between $5 and 10,000 a year, much lower than the value a family in poverty might gain from access to housing vouchers, SNAP, child care assistance, and Medicaid or CHIP. The value of these benefits would far exceed ten thousand dollars – as well they should! A basic income of $10,000 is far, far below what families need to be secure.

WOW has long advocated that eligibility and benefit levels for income support programs be determined using our Basic Economic Security Tables and Elder Economic Security Standard Index. Compared to the federal poverty levels on which eligibility for these programs is usually based, these Indexes are much more accurate measurements of families’ income needs. Comparing the BEST to local median wages demonstrates how poorly today’s wages and even standard public assistance cover the cost of basic expenses, such as rent, groceries and child care. A UBI can, however, be used to increase family economic security if it is added to the current array of support programs. Such an income can help families on the edges of poverty become more financially stable as they work towards economic security.

And this is not to mention the additional financial challenges faced by families with unique issues, including mental or physical illnesses and disabilities. The institution of a UBI should not take back housing assistance or health services that help families meet these challenges.

However burdened by bureaucratic inefficiencies, our patchwork of welfare programs still have the potential of delivering the level of support that families need to achieve basic economic security. A universal basic income offers some important benefits, but it should work with current programs, not be sold as a replacement for them.

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Job Creators

The Economic Policy Institute (EPI) recently released a report investigating the rise in CEO compensation compared to that of non-supervisory workers. In light of the holiday on Monday, I wondered what that compensation would look like if the robust growth in CEO pay between 1978 and 2012 was shared by workers, or if the anemic worker wage growth was shared by CEOs.

The following table looks at both of those assumptions as well as what it would look like if the ratio between workers and CEOs remained constant. Due to the nature of CEO compensation, there are two columns for each category: given compensation is what the compensation package was worth when the firm granted the compensation package to the CEO, actual compensation is what the CEO took home according to W-2 forms. The numbers in the following chart include both salary or bonuses and employer-based benefits, such as health insurance.

CEO Compensation Table

If workers had shared in the compensation growth that CEOs have enjoyed over the past 34 years, the total worker compensation package would currently be worth $425,736. The BLS reports that the average worker sees roughly 70% of her total compensation in wages, meaning that she would be taking home an annual pay of $299,292.

Or, if the ratio between CEO pay and worker pay remained constant, CEOs would be making a little under $1.5 million a year (about a million of that in take-home pay). The other nearly $12.6 million currently spent on CEO compensation is enough for the average firm to hire another 245 workers at the 2012 average worker compensation level.

I guess that answers where the jobs recovery has gone.

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Paycheck Fairness Does Not Have to be an Oxymoron

With the ever widening gender wage gap between men and women in the U.S., it is now more critical than ever to grant hard-working American women the same opportunity as men in this country to maintain basic economic security today, and over the course of their lifetimes.

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Unequal Pay and Women’s Economic Security

Today marks Equal Pay Day—“the date symbolizes how far into 2012 women must work to earn what men earned in 2011.” The wage gap women experience during their working-age years, in addition to occupational segregation and time out of the labor force caring for children and other family members, all contribute to women’s reduced lifetime earnings and diminished capacity for savings. Unequal pay is inextricably connected to the higher rates of economic security women experience across their working-age years and into retirement.

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Job Growth and Economic Insecurity for Workers without 4-year Degrees

The figure at left uses US BEST incomes to evaluate the average wages of projected jobs resulting from job growth through 2020 (rather than jobs resulting from replacing workers who quit, retire or are fired). A small majority of new jobs available to workers without 4-year degrees will pay economic security wages. Approximately 56% of new jobs will pay economic security wages for a single, childless worker. However, fewer than 41% of the new jobs will pay economic security wages for 2 workers raising a preschooler and a schoolchild. Approximately 12% of these new jobs will provide economic security to a single parent raising two or more children. The number of future jobs paying security wages will be even smaller if in the coming decade, as in the prior decade, prices of basic needs increase and wages stagnate.

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Will Growing Occupations Offer Economic Security?

The figure above compares some of the nation’s faster growing occupations which do not require 4-year college degrees to selected US BEST incomes (for workers with employment-based benefits) by family type. Through 2020, openings due to growth will be greatest among registered nurses, retail sales persons, home health aides and customer service representations. Such occupations represent the diversity of wages the country will see in coming years if anticipated economic development trends are realized. Nationwide, registered nurses earned an average of $32.56 per hour in 2010; retail sales persons earned just over a third of that, $12.02 per hour on average. Home health aides earned an average of $10.46 per hour.

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Tipped Over the Edge: Gender Inequity in the Restaurant Industry

What does it say about us as a nation that we pay some of our hardest workers, most of whom are women, little more than $2.00 an hour? When the restaurant industry—one of the largest and fastest growing industries in the country—keeps women and mothers in the lowest paid positions, it’s an injustice to our families and our communities, and it depresses our whole economy. Today Wider Opportunities for Women (WOW) joins the Restaurant Opportunities Center and other national women’s interest organizations to release the report “Tipped Over the Edge: Gender Inequity in the Restaurant Industry,” detailing the precarious situation for our nation’s waitresses.

 

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