FacebookTwitterRedditEmail

We All Pay for Low Wages

When you are paid starvation wages, it’s up to public-assistance programs to make up the difference. That government assistance, costing treasuries billions of dollars per year, is part of the high cost of low wages.

Raising the federal minimum wage to $12 an hour would save an estimated $17 billion per year for U.S. taxpayers, according to a study by the Economic Policy Institute. The EPI’s study, “Balancing paychecks and public assistance,” found that, not surprisingly, low wages equal government help. A majority of United Statesians who earn less than $10 an hour receive public assistance, either directly or through a family member.

The study’s author, David Cooper, examined participation in eight federal and state means-tested programs for low-income families — the earned income tax credit; the refundable portion of the Child Tax Credit; the Supplemental Nutrition Assistance Program (what used to be known as food stamps); the Low Income Home Energy Assistance Program; the Supplemental Nutrition Program for Women, Infants and Children, commonly known as WIC; Section 8 housing vouchers; Medicaid; and the Temporary Assistance for Needy Families program and its state and local equivalents.

Working people with low wages use these programs heavily. One-third of Supplemental Nutrition Assistance Program recipients are full-time workers and one-half of WIC recipients are full-time workers.

Contrary to right-wing propaganda, most recipients of public assistance work, a large number of them full time. The EPI study reports:

*Among families or individuals receiving public assistance, two-thirds (67 percent) work or are members of working families (families in which at least one adult works). When focusing on non-elderly recipient families and individuals under age 65, this percentage is 72 percent.

*About 69 percent of all public-assistance benefits received by non-elderly families or individuals go to those who work.

*About 47 percent of all working recipients of public assistance work full time (at least 1,990 hours per year).

Nearly $53 billion of public-assistance money is paid annually to people who work full time, the EPI study reports. And, full- or part-time, money going to working people is concentrated in specific industries. More than half goes to workers in three sectors: educational, health and social services; arts, entertainment, recreation, accommodation and food services; and retail trade.

Screen Shot 2016-05-09 at 9.15.13 AM

Privatizing profits, socializing costs

Although not addressed in the EPI study, a big conclusion to be drawn from this data is that these billions of dollars of public-assistance money constitutes a massive subsidy of business. Often highly profitable businesses. Take War-Mart, for example. Wal-Mart reported net income of $14.7 billion for 2015 and nearly $80 billion for its last five fiscal years. Yet the company pays it employees so little that employees organize food drives for themselves while it dodges billions of dollars of taxes and receives further billions of dollars in government subsidies.

Currently, the federal minimum wage is $7.25 an hour. Adjusted for inflation, the U.S. minimum wage peaked in 1968 when the then $1.60 rate would be worth $10.95 in 2016 money. So although that peak total is itself low, the federal minimum wage has lost more than one-third of its value.

Or, to put this in another perspective, one of the demands of the March on Washington in 1963 was a minimum wage of $2 an hour. Adjusted for inflation, $2 an hour in 1963 would be worth $15.56 today. So today’s activists demanding a $15 minimum wage are simply asking for the same thing that was asked a half-century ago. Nothing outlandish.

It is no secret that wages have badly lagged productivity, nowhere more in the global North than in the United States. Wages for U.S. workers have fallen behind productivity gains since the 1970s, to the point that the average U.S. household receives$18,000 per year less than it would had wages kept pace. Canadian households are about $10,000 behind. Differentials between wages and productivity are also found, albeit in less drastic form, across Europe and in Japan.

We can’t order a return to Keynesianism

So what conclusion should we draw from all this? Unfortunately, the EPI study concludes with what can only be termed weak-tea liberalism. Wishing for a return to Keynesianism, the author writes:

“[W]e can raise wages by eliminating the lower subminimum wage for for tipped workers, updating overtime protections, strengthening workers’ ability to organize and negotiate with employers collectively, improving enforcement of labor laws, providing undocumented immigrant workers a path to citizenship, and ensuring monetary policy prioritizes full employment.”

There is nothing wrong with any of these prescriptions. Such reforms would be quite welcome. But these goals can not simply be conjured into existence. Nobody decreed we shall now have neoliberalism and nobody can decree we shall now go back to Keynesianism. We haven’t gotten to the disastrous state we are in by accident or simply because of the personal decisions of corporate executives and financiers.

Rather, the neoliberalism we experience today is the logical result of capitalist development; “logical” in the sense that the relentless scramble to survive competition eventually closed the brief window when rising wages were tolerated and government investment encouraged. The Keynesian policies of the mid-20th century were a product of a specific set of circumstances that no longer exist and can’t be replicated.

Intensified competition over private profits, and that “markets” should determine social outcomes, inexorably leads to a consolidation in which industries are dominated by a handful of giant corporations, and those corporations gain decisive power over governments and relentlessly reduce overhead (especially wages and benefits) in a scramble for survival.

Fighting back is surely what working people around the world need to do. But restoring a “golden age” of capitalism that never really existed (and definitely didn’t if you were a woman confined by limited options or an African-American facing officially sanctioned discrimination and/or state-endorsed terrorism) is a quixotic goal. Better to drive our energies into creating a better world, one in which the economy is geared toward human need rather than private profit.

More articles by:

Pete Dolack writes the Systemic Disorder blog and has been an activist with several groups. His book, It’s Not Over: Learning From the Socialist Experiment, is available from Zero Books.

bernie-the-sandernistas-cover-344x550

Weekend Edition
April 19, 2019
Friday - Sunday
Andrew Levine
What Will It Take For Trump to Get His Due?
Roy Eidelson
Is the American Psychological Association Addicted to Militarism and War?
Jeffrey St. Clair
Roaming Charges: Time is Blind, Man is Stupid
Joshua Frank
Top 20 Mueller Report “Findings”
Rob Urie
Why Russiagate Will Never Go Away
Paul Street
Stephen Moore Gets Something Right: It’s Capitalism vs. Democracy
Russell Mokhiber
Why Boeing and Its Executives Should be Prosecuted for Manslaughter
T.J. Coles
The Battle for Latin America: How the U.S. Helped Destroy the “Pink Tide”
Ron Jacobs
Ho Chi Minh City: Nguyen Thai Binh Street
Dean Baker
Fun Fictions in Economics
David Rosen
Trump’s One-Dimensional Gender Identity
Kenn Orphan
Notre Dame: We Have Always Belonged to Her
Robert Hunziker
The Blue Ocean Event and Collapsing Ecosystems
Theodore C. Van Alst, Jr.
Paddy Wagon
Brett Wilkins
Jimmy Carter: US ‘Most Warlike Nation in History of the World’
John W. Whitehead
From Jesus Christ to Julian Assange: When Dissidents Become Enemies of the State
Nick Pemberton
To Never Forget or Never Remember
Stephen Cooper
My Unforgettable College Stabbings
Louis Proyect
A Leftist Rejoinder to the “Capitalist Miracle”
Louisa Willcox
Aldo Leopold’s Land Ethic and the Need for a New Approach to Managing Wildlife
Brian Cloughley
Britain Shakes a Futile Fist and Germany Behaves Sensibly
Jessicah Pierre
A Revolutionary Idea to Close the Racial Wealth Divide
George Burchett
Revolutionary Journalism
Dan Bacher
U.S. Senate Confirms Oil Lobbyist David Bernhardt as Interior Secretary
Nicky Reid
The Strange Success of Russiagate
Chris Gilbert
Defending Venezuela: Two Approaches
Todd Larsen
The Planetary Cost of Amazon’s Convenience
Kelly Martin
How the White House is Spinning Earth Day
Nino Pagliccia
Cuba and Venezuela: Killing Two Birds With a Stone
Matthew Stevenson
Pacific Odyssey: Guadalcanal and Bloody Ridge, Solomon Islands
David Kattenburg
Trudeau’s Long Winter
Gary Olson
A Few Comments on the recent PBS Series: Reconstruction: America After the Civil War
Ellen Lindeen
What Does it Mean to Teach Peace?
Adewale Maye and Eileen Appelbaum
Paid Family and Medical Leave: a Bargain Even Low-Wage Workers Can Afford
Ramzy Baroud
War Versus Peace: Israel Has Decided and So Should We
Ann Garrison
Vets for Peace to Barbara Lee: Support Manning and Assange
Thomas Knapp
The Mueller Report Changed my Mind on Term Limits
Jill Richardson
Why is Going Green So Hard? Because the System Isn’t
Mallika Khanna
The Greenwashing of Earth Day
Arshad Khan
Do the Harmless Pangolins Have to Become Extinct?
Paul Armentano
Pushing Marijuana Legalization Across the Finish Line
B. R. Gowani
Surreal Realities: Pelosi, Maneka Gandhi, Pompeo, Trump
Paul Buhle
Using the Law to Build a Socialist Society
David Yearsley
Call Saul
Elliot Sperber
Ecology Over Economy 
FacebookTwitterRedditEmail