Back to the economy stupid What recovery? Working poor struggle to pay bills
By Stephanie Armour, USA TODAY
6-9-04
Cathy Gardner faces difficult choices. With barely enough money to cover her bills and the rent on the home she shares with her brother, she sometimes can't afford to buy food. Other times, she goes without the prescription drugs she takes for her depression.
It's a constant struggle, even though Gardner holds a full-time job as a hospital food service worker, dishing up trays of pizza, pot roast and beef stroganoff for patients.
"There's a manufactured home selling for $7,500, and I can't even afford that," says Gardner, 54, of Salem, Ore., who earns $1,200 a month. "I have a good job, but I have to choose between buying gas or getting food. It's very hard."
Food server. Home health care worker. Grocery clerk. These are the kind of bread-and-butter jobs that once sustained a family with decent benefits and solid wages. Today, these jobs are more likely to bring a life of poverty.
The ranks of the working poor are swelling as more families slip into poverty, health benefits are lost and low-wage employees bear the brunt of many corporate cutbacks. That means more employees — many of them in service jobs that are essential to the economy — are working full-time, only to find they can barely support their families.
They wait tables at restaurants where they can't afford to eat, wash cars but can only take the bus and care for children but don't make enough to hire a babysitter. About 35 million Americans lived in poverty in 2002, which is 1.7 million more people than in 2001, according to Census data. The federal poverty threshold for a family of four in 2002 was $18,392 in annual income.
Nearly 40% of working-age poor people were employed, and the percentage working full time all year increased 45% from 1978 to 2002.
"There is a systematic ratcheting down of jobs that once could support a family," says Greg Denier, a spokesman with the United Food and Commercial Workers International Union. "The real question is, what does this mean for the future of the American worker?"
A new class of poor
The fate of the working poor is becoming a major issue for politicians, union groups and activists who are now calling for reform. Unions are launching membership drives and protests — part of an effort to preserve benefits and boost pay for service-sector jobs in much the same way that union muscle helped raise the standard of living for manufacturing workers in the mid-20th century.
The rise in low-wage workers is also a catalyst for activists who are waging campaigns to pass living-wage ordinances, which are local laws that require some businesses to pay employees more than the federal minimum wage of $5.15 an hour. The grass-roots effort is having an impact. So far, more than 120 ordinances mandating living wages have been passed. In San Francisco, a citywide wage of $8.50 an hour went into effect in February.
New debate
The increase is shaping new public dialogue about poverty in America. Philip Coltoff, who is chief executive of the philanthropic Children's Aid Society, looks out of the window of his Park Avenue South office in New York. Bike messengers, taxi drivers and street vendors hawking hot dogs and ball caps populate the street. These people, he says, are the new faces of the working poor.
"This is a very interesting sociological change. We've created a new class of poor. There is this huge group of people who want to work, who are working, but it's a form of being indentured," Coltoff says. "America has always been built on the belief that you can do better, but we have shut down the ladder to the middle class."
Sherry Byrum, 48, feels there is no way up. The Spokane Valley, Wash., woman works full time at a day care, earning about $9 an hour, and earns $8.43 an hour providing home care for a disabled girl. The number of hours she works each week varies; health insurance costs $71 a week.
The work is emotionally fulfilling, she says.
"When a child gives you a hug or draws you a little scribble, it means everything in the world," Byrum says. "These are important jobs. You're dealing with people's lives."
But it's financially frustrating. Her husband just had open heart surgery and doesn't work, so she brings in the only income. They live in a 30-year-old mobile home and get their groceries at a local food bank. They also have medical costs because both are diabetic.
"Last week, we went several days without really eating. We've got to pay our bills," Byrum says. "I can't buy us the things we should eat because of the diabetes. There are some times I go to bed in tears thinking I just can't do it all."
Wages have eroded
There are a host of reasons why jobs that once paid decent wages today provide an impoverished lifestyle, economists say.
The value of the minimum wage, in real dollars, peaked in the late 1960s. That means workers today who earn minimum wage have less buying power than in years before. The inflation-adjusted value of the $5.15-an-hour minimum wage is at least 24% lower today than it was in 1979, according to the Economic Policy Institute, a non-profit Washington-based think tank. A full-time worker earning minimum wage would earn $10,712 a year, below the 2002 federal poverty line of $11,756 for a family of two.
"Wages have eroded and haven't risen with productivity," says Jared Bernstein, an economist with the Economic Policy Institute. "Many occupations that a decade ago afforded a living wage are now low wage."
In addition, global competition has intensified profit pressures, causing companies to squeeze wages to cut costs. Unions are not as pervasive as they used to be, which means workers have less clout. Some economists say immigration has added to the labor force supply, causing downward pressure on wages. Immigration has reduced the average annual earnings of male workers born in the USA by $1,700 over the last 20 years, according to new research by the Center for Immigration Studies. The research indicates that immigration increases the supply of labor, which reduces wages.
While welfare rolls have dropped by more than 50% since 1994, many of these former recipients have moved into jobs that pay low wages — compelled by welfare reform in the 1990s that required many of those who received welfare to work. These are employees who hold jobs as security guards, hotel workers, home health care aides, receptionists, food processors, data-entry clerks, call-center operators, telemarketers. Many are also in home health care or child care workers.
"Those are jobs that used to be unpaid labor done by women who stayed home. They took care of the children and the elderly," says Marnie Goodfriend, with the Service Employees International Union. "They have transferred to the marketplace, but people can't survive on those jobs."
Danielle DaSilva, 25, believes change is needed. She works part time as a restaurant hostess, earning $6.65 an hour, although she wants to work full time. She is also raising two daughters, Jade, 5, and Alana, 2. She owns her own home, but is struggling to make her monthly mortgage payments of $815. Her mother often watches her children while she works, and her children get health insurance through Medicaid.
"It's awful, it's really awful," says DaSilva, of Kissimmee, Fla. "I work very hard, nine-hour shifts a day. I'm not one of those people who wants to leech off the system. But my children have to live off macaroni and cheese and bologna. It's ridiculous. My kids suffer."
Many challenges
There are other challenges. For low-wage workers, many of the benefits available to higher earners are out of reach. Consider paid time off. More than half of poor workers, working welfare recipients and workers who recently left welfare are unable to take paid leave from their jobs because it's not offered, according to research by the Urban Institute.
While lower interest rates have made homeownership more affordable for many, runaway prices have put homes out of reach for working poor. In the past 12 years, home prices have risen 30% faster than wages and salaries for low-to-moderate-income families, according to an April report by the Milken Institute.
While the economy has created nearly a million jobs since March, the pace of job creation has previously been slow — taking a toll on lower-wage workers who often lack college degrees.
"There's no way of rationalizing a CEO making millions of dollars when workers don't get enough to support themselves. Something seems wrong," says Beth Shulman, author of The Betrayal of Work: How Low-Wage Jobs Fail 30 Million Americans and their Families. "Low-wage workers are subsidizing our lives. We can make better choices that really improve these jobs."
Latwanda Manson, 35, says change could bring her better and more affordable health insurance or wages — a lifestyle where she wouldn't have to live paycheck to paycheck anymore.
Manson, a secretary, earns $30,000. She is a single mother in New York raising her daughters, Taia Bell, 5, and Timara, 13. Health insurance for her family costs her $75 every two weeks.
"I struggle constantly," she says. "Your children come to you and want things, and you can't give it to them. That's hard. I have to say, 'Give Mommy another two weeks.' "
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