Classism

In November of last year, only last semester, I hosted an event about classism and living on minimum wage in the U.S. Classism is a very important topic to me, as I have personally felt the effects of it in my life and seen the effects of it in the lives of others. We live in a country with a huge wealth divide, where the top 1% of Americans own 40% of the wealth, and the bottom 90% only own 20% of it. That is ridiculous. There are many Americans who are struggling to make ends meet, like my family, and yet we as a society are taught that class and money is not something we should talk about with others. We are taught that it’s impolite, that it makes us look bad, to be ashamed.

I’m not ashamed of my situation. I’m tired of it.

I am who I am today because of the hardships my family and I have had to go through. I know what it is like to be well-off. When I was a kid my dad had a great job that paid well and that took great care of us. We lived in houses that were too big for us, we traveled, we had good cars and good food. But my parents did not forget what it was like before the good times. We let struggling friends and family live in our house. We shared our food and our home with others. I remember the warmth and the love in our home, a feeling that comes with comfort and with sharing.

When my parents got divorced our family began the slow decline into poverty. The struggles of the divorce took a tole on my parents, and my dad lost his job. Now with two unemployed parents, cancer was the icing on the cake to drain our finances and savings. Within a few years, my family was evicted, got our car repossessed, had to move in with family, and declared bankruptcy. While things are better now, we still continue to struggle.

My families hardships happened at a critical age for me. I was 10 years old when my parents separated, 12 when my dad got cancer, and 15 when they declared bankruptcy. High school was a very difficult time for me, as I began to really understand the differences to my peers that came from lack of money. Friends always wanted to go out to eat, go do fun activities, and take expensive trips. I never had the money to do that all the time. I was getting free lunches and textbooks from the school because of our situation. I got my own job, because I couldn’t ask my parents for money to go out, they didn’t have any to spare. I couldn’t go to all the fun activities, because my family shared a car and couldn’t afford for me to have my own. I felt different than my friends. Less carefree. Less oblivious to life’s difficulties. Less privileged.

Now, I hope it doesn’t sound like I’m complaining too much. Because though it sucked, I lived through it. I am glad that I dealt with those experiences because I am a better person because of it. I feel more prepared to handle my own finances, to understand that sometimes good, hardworking people will have to struggle to make ends meet.

But I share these stories because there are many people who have gone through these experiences and who are still going through these experiences here at DePauw. We are struggling, and don’t feel like we can talk about it on a predominately well-off campus. We can’t afford to go to fancy dinners, we can’t afford to go on expensive spring break vacations, we can’t even afford to be at this expensive school.

It is important to share these experiences. I know it is often not the fault of well-off students to know to be sensitive regarding financial conversations and situations, because that is not a concern they have had to worry about,and because our society teaches us that talking about money is rude. I disagree. Learning about the income inequality is vital in order to begin addressing it.

After my living on minimum wage event last semester, I had a friend come up to me and thank me for not only sharing the specific statistics and figures about income inequality and the struggles of the most economically disadvantaged, but she also thanked me for telling my own personal story of struggle because it really showed her a perspective she never really got the chance to see before, and from a person who is close to home. If my friend didn’t realize the extent of the issues, how many other people still don’t realize that this is a problem, even in the lives of the people closest to them?

I want to share some of the most important figures from my event last semester. I took these facts and figures from a variety of sources, which I list at the end. These facts are startling, proves the full extent of the issues, and are unacceptable for the future. I hope that after reading these figures you remember the struggles of others and the realities behind classim, because there are a lot of misconceptions, which lead to invalid facts and stereotyping.

 

 

Facts:

The minimum wage is meant to be a living wage. These days, it’s anything but a living wage. Someone working full-time at the federal minimum earns an annual paycheck of just $15,080 – below the poverty line for even a family of two. For the minimum-wage earner with a family of four, a full-time paycheck falls almost $9,000 below the poverty line, which is $23,850. Even a $10.10/hour full-time job – an annual $21,008 – falls short.

If the minimum wage had kept pace with average wages—i.e., if minimum-wage workers’ paychecks had expanded at the same rate as average workers’—it would be about $10.50 today. If the minimum wage had kept pace with productivity—i.e., the economy’s overall capacity to generate income—it would be almost $18.75 today. Finally, if the minimum wage had increased at the same rate as wages of the top 1.0 percent, it would be over $28 per hour.

According to the CBO, based on Census Bureau data, 88% of minimum wage earners are adults 20 or older; 55% are women. For these adults and their families, proper housing is unaffordable, as a February 2015 report from the National Low Income Housing Coalition (based on federal data) shows: A minimum-wage earner would need to work, on average, 2.6 full-time jobs to rent a decent two-bedroom apartment for less than 30% of her or his income. All of this helps explain why so many minimum-wage workers are also on some kind of public assistance.

Who’s Affected

Raising the minimum wage is a women’s issue. While increasing the minimum wage would have a sizable impact on both men and women, it would disproportionately affect women. Women comprise 49.4 percent of U.S. workers, yet 56.0 percent of workers who would be affected by a potential minimum-wage increase

88.3 percent of workers who would be affected by increasing the federal minimum wage to $10.10 are at least 20 years old. In every state, more than three-fourths of workers who would be affected are at least 20 years old.

Increasing the minimum wage would substantially benefit both minority and non-minority workers. 54.1 percent of workers who would be affected are non-Hispanic white workers. Nearly a quarter (24.6 percent) are Hispanic, 14.1 percent are black, and 7.1 percent are Asian or of another race or ethnicity. As one would expect given the country’s diverse social and cultural makeup, the racial and ethnic composition of workers affected by increasing the federal minimum wage to $10.10 varies considerably by state.

Data on educational attainment of those who would be affected by a minimum-wage increase further dispel the misconception of minimum-wage workers as high school students. In fact, nationally just 21.3 percent of those who would be affected have less than a high school degree, while fully 43.8 percent have some college education, an associate degree, or a bachelor’s degree or higher.

Among those who would be affected by increasing the minimum wage to $10.10, only 14.2 percent are part-time workers (defined as those who work less than 20 hours per week). More than half (54.5 percent) work full time (35 or more hours per week), while 31.3 percent work mid-time, between 20 and 34 hours per week.

Family income

The family income of those who would be affected by a minimum-wage increase is generally low to moderate. As shown in Figure J, 70.0 percent of affected families have a total family income of less than $60,000, and nearly a quarter (23.2 percent) have total family income of less than $20,000. Among all U.S. families, the median family income in 2011 was $61,455 (according to data from the American Community Survey). Those who would be affected by increasing the minimum wage to $10.10 are vital contributors to their families’ earnings. Nationally, the average affected worker earns half (49.9 percent) of his or her family’s total income.

Pay and Hours

At 40 hours per week, a full-time worker at $7.25 per hour makes $290 per week in gross pay (before taxes and other payroll deductions). That annual pay of $15,080 puts an individual above the poverty line by $3,310. Add just one dependent (a non-working spouse or a child), and that worker falls into the federal classification for poverty. This does not account for the fact that many workers (especially the majority in the fast food industry) cannot get a full-time schedule. Many have to make due with 25 hours or less a week.

Pay is not the only problem with minimum wage jobs, either. Many don’t offer full-time hours, even when workers want them. And new shift-scheduling software which is cost-efficient for the employer (booking employees only at highest traffic times) can be hell for the employee. Ever-changing and on-call schedules, split shifts and the dreaded “clopening” (closing up the store at night and having to report early the next morning for opening) make it hard to take a second job or attend college classes or arrange for child care. Minimum-wage employees are also vulnerable to so-called wage theft, reducing their pay even further, a spate of recent lawsuits has revealed: everything from no overtime pay and erased time cards, to off-the-clock time employees are forced to spend checking schedules or going through lengthy security bag-checks.

Housing

According to the National Low Income Housing Coalition, if a family needs to rent just a modest two-bedroom apartment anywhere in America, the lowest compatible wage would be $12.95 in Arkansas. An overview of this report shows that in 2015, the two-bedroom national housing hourly wage requirement is to earn at least $19.35 per hour and to not spend more than 30 percent of that income on the rent. Otherwise they wouldn’t be able to afford other basic livelihood necessities! The report also shows that in no state can a minimum wage worker afford a one-bedroom rental unit at Fair Market Rent by working a standard 40-hour work week without paying more than 30 percent of their income.

The median household income in the US is $50,502. This is some extremely useful data given that it is exploring over 114 million US households.  If you want to know how most Americans are living this is a good figure to base your assumptions.  $50,000 does not go a long way in our economy today given the cost of food, energy, housing, education, and healthcare.

Food

People living off the current federal minimum wage sometimes can’t pay for food. According to the National Center for Childhood Poverty, some 22 percent of American children live below the poverty level of $23,550 a year for a family of four. However, research shows that to cover basic expenses, a family of four needs at least $44,700 a year, nearly twice the poverty level. When considering this, approximately 45 percent of children live in low income families. Such high levels of children living in poverty or low income families is frankly hard to explain in such a wealthy country.

A Department of Labor study concluded that if the minimum wage had been raised to only $8.20 — less than a full dollar — in 2013, it would have enabled 7 million Americans to no longer face food insecurity. And if it was raised to $10.10 in 2015, 12 million Americans would no longer have to worry about feeding themselves and their families at nutritionally sufficient levels.

Government Expenditures

Raising the minimum wage to even $10.10 would reduce government expenditures on current income-support programs by at least $7.6 billion per year, according to analyst David Cooper of the Economic Policy Institute. “Essentially, low-wage employers are being subsidized by the taxpayer. Prices are going up, but paychecks are not, and taxpayers are making up the difference.”

Low income working families make up 60% of those receiving food stamps and 47% on Temporary Assistance for Needy Families (TANF), according to a 2014 report “Local Minimum Wage Laws: Impacts on Workers, Families and Businesses” from University of California, Berkeley’s Institute for Research on Labor and Employment (IRLE). The authors conclude that enrollment in public assistance programs coincides with the federal poverty level and that increasing the minimum wage reduces public assistance program participation. They suggest that a “10 percent increase in minimum wage reduces food stamp program enrollment by between 2.4 and 3.2 percent, and reduces program expenditures by 1.9 percent.” Currently, public assistance for the lowest wage earners totals billions of dollars.

On top of all of this, because the minimum wage is currently so low, many workers earning the minimum wage receive public assistance from the federal government in order to support themselves and their families. Therefore, according to the Economic Policy Institute, raising the minimum wage by just a few dollars would cause 1.7 million Americans to no longer rely on public assistance and “reduce government expenditures on current income-support programs by $7.6 billion per year”.

American taxpayers should not be picking up the tab on providing Medicaid and food stamps to fellow Americans because the wealthiest corporations are intentionally paying their employees so little.

Reactions to Opposition Opinions

Some business and conservative groups – the National Retail Federation, National Federation of Independent Business, American Legislative Exchange Council (ALEC), to name a few – oppose any increase to the minimum wage, calling it a job killer and anti-job tax. They argue that it will force businesses to hire fewer people, cut back on their growth plans, or raise their prices (which would lower demand and therefore be bad for the economy).

Many conservatives and some economists say that raising the cost of employing workers results in fewer workers. “What happens when you take away the first couple of rungs on the economic ladder, you make it harder for people to get on,” John A. Boehner, the House speaker, has said. Mr. Krueger disagrees. His work with David Card of the University of California, Berkeley (later replicated by others) demonstrated in a real-life experiment that raising the minimum wage did not result in businesses shedding workers, perhaps in part because it helped reduce turnover.

According to the National Federation of Independent Business (NFIB), small businesses do not have the resources to absorb an increase in the minimum wage since most earnings go back into a small company. As a result, they argue, hiring and promoting employees will slow down substantially in that sector. However, the United States Department of Labor reviewed 64 studies on the effects of minimum wage increases and unemployment, finding no correlation between the two. The studies suggest that an increase in the minimum wage decreases employee turnover along with the expenses associated with hiring and training new workers.

Over the last 15 years, a growing body of economic research has studied the impact of the minimum wage. Economists no longer see job losses as the inevitable result of raising the minimum wage. And research backs up New York City’s Mayor Bloomberg’s statement in 2012: “Raising the minimum wage will put much-needed cash in the pockets of more than 1.2 million New Yorkers, who will spend those extra dollars in local stores.”

In fact, throughout the nation, a minimum-wage increase under current labor market conditions would create jobs. Like unemployment insurance benefits or tax breaks for low- and middle-income workers, raising the minimum wage puts more money in the pockets of working families when they need it most, thereby augmenting their spending power. Economists generally recognize that low-wage workers are more likely than any other income group to spend any extra earnings immediately on previously unaffordable basic needs or services.

Raising the minimum wage means shifting profits from an entity (the employer) that is much less likely to spend immediately to one (the low-wage worker) that is more likely to spend immediately. Thus, increasing the minimum wage stimulates demand for goods and services, leading employers in the broader economy to bring on new staff to keep up with this increased demand. The effects of low wages can be viewed as a ripple effect throughout the economic and social spheres. As wages decrease, there is a consequential decrease in real purchasing power and workers are inclined to take on more work in order to subsist. Nearly 40 percent of hourly-paid workers are now working over 40 hours a week. A family struggling to subsist on a lower income will also have greater difficulty adequately caring for its children.

Distribution of Wealth

Meanwhile, CEO pay is up nearly 1000 percent since 1978 — a figure that is double the stock market growth over the same period. In other words, all of the new wealth created in the last 25 years or so has gone straight to the top one percent, leaving most workers behind. Despite the fact that productivity has risen, wages have not risen with them. Which means that all the new growth and revenue is going straight to the top.

Consequences

This can include struggles such as putting away savings toward higher education, feeding the children a healthy diet, having the leisure time and money to accompany a child during play or take them to extracurricular activities, and being unable to clothe or house them adequately — all important factors in the future outcomes of children. These negative consequences on child outcomes create a cyclical effect, and children born in poverty are more likely to continue to be poor. In short, the effects of a non-living wage are not only felt by individuals who receive it, but by all sectors of society.

Wanting Change

The broad American public supports an increase, polls show. A November 2013 Gallup poll found that more than three-quarters of Americans favored a hike in the minimum wage to $9 an hour. By January 2015, when Hart Research did a nationwide survey, 75% of Americans supported raising the federal minimum wage to $12.50 per hour by 2020, with even a majority of Republicans (53%) favoring it. The poll further showed that 63% of those surveyed favored hiking the minimum to $15 by 2020.

 

Works Cited

Can A Family Survive On The U.S. Minimum Wage? (WMT,COST,TCS,GPS) http://www.investopedia.com/articles/personal-finance/022615/can-family-survive-us-minimum-wage.asp#ixzz3qSPmCFtu

How Minimum Wage Impacts Unemployment http://www.investopedia.com/articles/personal-finance/013015/how-minimum-wage-impacts-unemployment.asp#ixzz3qSSQ7Py7

http://www.moneycrashers.com/living-on-minimum-wage-possible/

http://www.nytimes.com/interactive/2013/06/15/business/living-on-minimum-wage.html

http://www.usatoday.com/story/money/nation-now/2015/10/16/hear-stories-people-living-minimum-wage/73525412/

http://feelthebern.org/bernie-sanders-on-minimum-wage/

http://www.mybudget360.com/how-much-do-americans-earn-what-is-the-average-us-income/

http://www.epi.org/publication/bp357-federal-minimum-wage-increase/

 

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