Majority of public assistance goes to working families, report finds

"20111110-OC-AMW-0050 - Flickr - USDAgov" by U.S. Department of Agriculture - 20111110-OC-AMW-0050. Licensed under CC BY 2.0 via Wikimedia Commons.
U.S. Government Food Stamps, 1941. Image via the United States Department of Agriculture (public domain).

State and federal public assistance programs pay $153 billion to low-wage workers who can’t make ends meet

The majority of American families on public assistance or Medicaid are headed by at least one full-time worker, according to a report released Monday by the University of California at Berkeley’s Center for Labor Research and Education.

Researchers who analyzed annual state and federal spending on public assistance programs — including food stamps, Medicaid, Temporary Aid to Needy Families and the earned income tax credit — found that more than 56 percent of that spending goes to working families.

In other words, employers, such fast-food restaurants, are paying their employees so little that they must rely on government assistance to make ends meet. In total, these employees seek an estimated $153 billion in public assistance each year, according to the report.

“When companies pay too little for workers to provide for their families, workers rely on public assistance programs to meet their basic needs,” Ken Jacobs, chair of the Center for Labor Research and Education and co-author of the report, said in a release. “This creates significant cost to the states.”

Read more at Al Jazeera America

7 Bipartisan Reasons to Raise the Minimum Wage

The minimum wage debate is back. Since last year, historically unorganized workers at fast food and big-box retailers across the country have been demanding a higher minimum wage and better working conditions. They are gaining popular support as they become more visible, rallying in big cities and during attention-getting events such as Black Friday.

President Obama, liberals in Congress, and liberals seeking office are making the federal minimum wage a central plank in the effort to combat runaway inequality—now at levels unseen since the 1920s—and push back poverty. Obama has called for increasing the minimum wage from $7.25 per hour to $10.10, with a built-in cost-of-living adjustment tied to inflation. He later announced an executive order requiring federal contractors to observe the $10.10 minimum. And activists at the state and local levels have gone further. California may vote this year on raising its minimum wage to $12.

Increases enjoy wide public support. Recent polls find 76 percent of Americans support a $9 minimum wage. Republicans are split, with 50 percent backing an increase.

There are at least seven reasons voters, if not politicians, in both parties favor a higher minimum wage. They involve concerns about inequality and poverty, about responses to poor wage growth, and about the status of work as well as community. These reasons sometimes conflict, but overall they explain why the minimum wage will continue to play an important role in politics and policy.

Read more at the Boston Review

The “middle class” myth: Here’s why wages are really so low today

(Credit: AP/Darron Cummings)

Let me tell you the story of an “unskilled” worker in America who lived better than most of today’s college graduates. In the winter of 1965, Rob Stanley graduated from Chicago Vocational High School, on the city’s Far South Side. Pay rent, his father told him, or get out of the house. So Stanley walked over to Interlake Steel, where he was immediately hired to shovel taconite into the blast furnace on the midnight shift. It was the crummiest job in the mill, mindless grunt work, but it paid $2.32 an hour — enough for an apartment and a car. That was enough for Stanley, whose main ambition was playing football with the local sandlot all-stars, the Bonivirs.

Stanley’s wages would be the equivalent of $17.17 today — more than the “Fight For 15” movement is demanding for fast-food workers. Stanley’s job was more difficult, more dangerous and more unpleasant than working the fryer at KFC (the blast furnace could heat up to 2,000 degrees). According to the laws of the free market, though, none of that is supposed to matter. All that is supposed to matter is how many people are capable of doing your job. And anyone with two arms could shovel taconite. It required even less skill than preparing dozens of finger lickin’ good menu items, or keeping straight the orders of 10 customers waiting at the counter. Shovelers didn’t need to speak English. In the early days of the steel industry, the job was often assigned to immigrants off the boat from Poland or Bohemia.

“You’d just sort of go on automatic pilot, shoveling ore balls all night,” is how Stanley remembers the work.

So why did Rob Stanley, an unskilled high school graduate, live so much better than someone with similar qualifications could even dream of today? Because the workers at Interlake Steel were represented by the United Steelworkers of America, who demanded a decent salary for all jobs. The workers at KFC are represented by nobody but themselves, so they have to accept a wage a few cents above what Congress has decided is criminal.

The argument given against paying a living wage in fast-food restaurants is that workers are paid according to their skills, and if the teenager cleaning the grease trap wants more money, he should get an education. Like most conservative arguments, it makes sense logically, but has little connection to economic reality. Workers are not simply paid according to their skills, they’re paid according to what they can negotiate with their employers. And in an era when only 6 percent of private-sector workers belong to a union, and when going on strike is almost certain to result in losing your job, low-skill workers have no negotiating power whatsoever.

Read more at Salon

The Magical World Where McDonald’s Pays $15 an Hour? It’s Australia

Even in countries with a high minimum wage, the golden arches manage to turn a profit. Here’s how.

Last week, fast-food workers around the United States yet again walked off the job to protest their low pay and demand a wage hike to $15 an hour, about double what many of them earn today. In doing so, they added another symbolic chapter to an eight-month-old campaign of one-day strikes that, so far, has yielded lots of news coverage, but not much in terms of tangible results.

So there’s a certain irony that in Australia, where the minimum wage for full-time adult workers already comes out to about $14.50 an hour, McDonald’s staffers were busy scoring an actual raise. On July 24, the country’s Fair Work Commission approved a new labor agreement between the company and its employees guaranteeing them up to a 15 percent pay increase by 2017.

And here’s the kicker: Many Australian McDonald’s workers were already making more than the minimum to begin with.

The land down under is, of course, not the only high-wage country in the world where McDonald’s does lucrative business. The company actually earns more revenue out of Europe than than it does from the United States. France, with its roughly $12.00 hourly minimum, has more than 1,200 locations. (Australia has about 900).

So how exactly do McDonald’s and other chains manage to turn a profit abroad while paying an hourly wage their American workers can only fantasize about while picketing? Part of the answer, as you might expect, boils down to higher prices. Academic estimates have suggested that, worldwide, worker pay accounts for at least 45 percent of a Big Mac’s cost. In the United States, industry analysts tend to peg the figure a bit lower—labor might make up anywhere from about a quarter of all expenses at your average franchise to about a third.* But generally speaking, in countries where pay is higher, so is the cost of two all-beef patties, as shown in the chart below by Princeton economist Orley Ashenfelter. Note Western Europe way out in the upper-right hand corner, with its high McWages and high Big Mac prices.

Read more at The Atlantic

Too many of America’s working poor have become victims of a bizarre kind of socioeconomic Stockholm Syndrome. I’m talking about poor people who vote the interests of rich people. They’re like dogs begging for scraps from the table of a master who has no intention of sharing anything. But I’m being unfair to dog owners. Most dog owners treat their pets better than some of America’s wealthiest treat their fellow citizens.

Republican Congressional Candidate Touts Progressive Minimum Wage Fix

GOP nominee in FL-13 David Jolly CREDIT: AP

An unlikely advocate for one of the most progressive minimum wage proposals emerged last week: Republican congressional candidate David Jolly.

Democratic nominee Alex Sink supports raising the minimum wage to $10.10, as is currently being considered in Congress, while Jolly opposes it. However, in explaining his position to the Tribune, Jolly actually advocated another progressive proposal: indexing the minimum wage so it automatically increases every year.

“Minimum wage should be indexed to inflation or subject to a cost-of-living adjustment like any other federal income program,” Jolly said. “That means some years it may go up, other years it may stay static. Barack Obama is not an economist, neither is the Congress.”

The purchasing power of the minimum wage has significantly lagged the rate of inflation over the past four decades. In 1968, the federal minimum wage was $1.60 per hour. Had it kept up with inflation since then, it would currently be set at $10.50, 45 percent higher than its current rate of $7.25.

In addition, if Jolly preferred tying the minimum wage to increases in worker productivity, it would currently be $18.30 per hour, according to a study from the Economic Policy Institute.

Indexing the minimum wage is a strongly progressive proposal because it would give low-income workers a raise every year without having to rely on Congress, which has only voted for an increase once in the last decade.

Read more at ThinkProgress

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