Low Wage Work Rebellion May Finally Bring Down Our Poverty Rate

minimum-wage-povertyCartoon from Political Gates


This has been the year of the low-wage worker rebellion. Fast food workers walking out for a day. Wal-Mart workers trying to unionize, only to face retaliation. Protesting workers taking their plight to the media. Part of inequality is the gross amassing of wealth in the hands of a tiny number of individuals comprising the overclass. But, the other major part of inequality is the mass of unemployed, underemployed, and low-wage workers who cling to the labor market precariously. The fact that the minimum wage has barely budged (in real dollars) in 45 years contributes to the fact that wages have fallen behind productivity. Tired of their constant struggle to survive and spurred by knowledge of the nation’s unprecedented inequality, minimum wage workers have been striking and protesting across the country. They know the corporations and businesses they work for are making record profits (e.g. Wal-Mart, McDonalds, etc.), yet these same employers falsely cry, “Bankruptcy,” whenever someone suggests that they pay their workers better. It’s not like these companies are unaware that their workers are struggling. McDonalds set up a website (related video) chock full of ideas and a hotline that encourages its workers to seek out government benefits or work two jobs. If all else fails, McDonalds suggests its employees sell their Christmas gifts. House Democrats have published a report estimating that Americans subsidize Wal-Mart wages at a rate of $5,815 per employee. A Wal-Mart store is asking their employees to donate canned goods to other Wal-Mart workers in need. So, even as the money-hoarding six members of the Walton family who inherited Wal-Mart’s profits have the same wealth as the bottom 30% of Americans, they pay their workers wages that require them to seek canned food donations. No matter what the answer to their employees’ inability to make ends meet, in their minds, it is not a living wage, despite evidence Wal-Mart could pay workers $25,000 a year without raising prices.

Walmart wage increase

Photo from Upworthy

Twenty-five years ago, William Julius Wilson introduced us to the term, “underclass,” to describe the 10% of people in poverty who were concentrated in urban areas in pockets of extreme poverty, tormented by entrenched social problems like drug/alcohol abuse, violence, damaged families, and poor educational prospects. Wilson explained that these communities were the result of economic forces including the loss of manufacturing jobs, the movement of middle and upper class people to the suburbs, and the loss of services in urban communities. Conservatives insisted their intergenerational poverty was a trap caused by welfare, so they hollered loudly that welfare must be reformed, and then the “underclass” would disappear. In 1996, the Personal Responsibility and Work Opportunity Act, or welfare reform went into effect. Thereafter, healthy people could not receive welfare benefits for more than two years at a time, and for no more than five years over their lifetime (notably, it is truly amazing how many conservatives still don’t know these rules two decades later).

For a brief period of time, employment rates went up and poverty rates went down, even among the “underclass.” But this short-lived situation, which seemed to bolster conservative arguments that welfare was holding people back, had an alternative and much more obvious explanation: the economy of the 1990s was remarkably strong. People who were forced off welfare were able to find jobs with relative ease. However, a new class of people was also created, or rather, expanded, the working poor. Despite working full-time, their jobs did not bring their families above the poverty line. The low-wage, no-benefit jobs former welfare recipients took could not sustain a family, yet conservatives lauded the fact they were employed, saying just having a job was sufficient. They were unconcerned about the swelling numbers of the working poor. The dilemma of the working poor was invisible, however, because they typically could receive the Earned Income Tax Credit (EITC), which effectively supplemented their wages by giving them tax-payer supported, annual checks that would give them a small boost, sometimes up over the poverty line.

As the nation moved into the 2000s, recessions pushed these low-level, typically low-skill, workers into unemployment and back into poverty, often without welfare as a safety net. While extreme poverty had declined in the 1990s, it went soaring back up in the 2000s, especially after the 2008 recession. Though it is surely bittersweet, Wilson can turn to his conservative policy opponents, and say, “I told you so.” Welfare was not causing people to be poor; their job prospects were. Poverty disproportionately affects people of color, and so too, do low wages. Although they are only 32% of the population, they comprise 42% of minimum wage workers. If the minimum wage was raised to $10.10, almost 6 million people would be brought out of poverty, 60% of whom would be people of color.

Millions of “expendable” employees occupy the temporary worker force, stuck with low wages, no benefits, and uncertain futures. People who used to have relatively decent-paying jobs working for the government, even in low-level positions, now work for private contractors that pay them minimum wage. This year, these workers went on strike not once, not twice, but three times as part of the Good Jobs Nation campaign. Most remarkable is the fact that 4 in 10 low wage contractor employees qualifies for and needs government benefits (e.g. Medicaid, food stamps) to get by.

If making staggering profits off of underpaying your workforce isn’t exploitation, it is difficult to find a more appropriate description. Raising the minimum wage is a popular idea; 4 in 5 Americans are in favor of doing so. Americans know there is a “wage crisis.” Robert Reich reminds us that Henry Ford paid a decent wage, because he knew his workers could not afford to buy his product without one. And in fact, Wal-Mart’s profits have decreased as our nation’s low wage workers struggle to even buy products from them. It’s time that corporations across the country remembered Ford’s economic lesson.

Deborah is a former social work professor who taught social policy, mental health policy, and human diversity. Proud to be called liberal, she happily pays her taxes after being raised in a home that needed long-term welfare. Contrary to the opinion of many, she is living proof that government investment in children leads them out of poverty having received services from Head Start to Pell Grants. Deborah works with low-income, first generation, and disabled college students who are at high-risk for dropping out of college in a program designed to help them graduate. She lives with her husband, stepson, and an aging cat.

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