How the Low Minimum Wage Helps Rich Companies

This research comes as the incoming administration vows to more than double the federal minimum wage, to $15. Last week, President-elect Joe Biden said he hoped Democrats’ winning control of the Senate would “raise the odds of prompt action,” adding that “no one who works 40 hours a week in […]

This research comes as the incoming administration vows to more than double the federal minimum wage, to $15. Last week, President-elect Joe Biden said he hoped Democrats’ winning control of the Senate would “raise the odds of prompt action,” adding that “no one who works 40 hours a week in America should still live below the poverty line.”

But many do. Full-time workers making the federal minimum wage bring home just $15,080 a year; all in all, 11 percent of American workers earn poverty wages. This is a straightforward product of policy, a chosen technocratic outcome. The federal minimum wage has languished at a measly $7.25 an hour since 2009. That leaves it roughly one-third lower than it was in 1968, in inflation-adjusted terms, despite the fact that the country is now much richer and the economy far bigger. The Economic Policy Institute has estimated that workers earning the minimum wage make $7,000 less each year than their grandparents did half a century ago, in real terms.

The low minimum wage is one reason so many Americans working full-time or close to full-time still need government assistance. The new Berkeley study shows that, in the 42 states that have not passed a $15 minimum wage, two-thirds of fast-food workers are enrolled in a safety-net program or have a family member enrolled in one. That is true for half of child-care workers and 62 percent of home-care workers, too. These jobs are held disproportionately by women, as well as by Black and Latino workers.

Taiwanna Milligan, a single mother who lives in rural South Carolina and makes $8.25 an hour at a fast-food restaurant, talked me through her financial situation. Even in an area with a low cost of living, her family just scrapes by. They do not always have enough to eat, and she skips meals to make sure her kids and her mother get enough.

She worked full-time until recently. But when her arthritis worsened, she pulled back on her hours, despite the financial strain she knew this would cause. As a consequence, she said, she had to get rid of her car, because she could no longer make the insurance and tax payments on it. “I have to get a friend to take me around or just get out and start walking until somebody stops,” she told me. “There’s no bus or transit service out here.” She qualifies for Medicaid, and her son, who has sickle-cell disease, has medical coverage through CHIP. Yet they still struggle to obtain adequate care. “Sometimes we have to put out co-pays just to be seen,” she told me. “I just can’t pay that, because I don’t earn enough.”

Raising the minimum wage to $15 would be life-changing for families like Milligan’s. And with more families able to live off their paychecks, the government would have more resources to address deep poverty, poverty among kids, and issues like homelessness. Indeed, the country’s safety net is more extensive than ever before, but it has become more and more geared toward income support and insurance coverage for the working poor, with fewer resources going to the country’s very poorest.

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