Category Archives: Income

Blog: Today’s Poverty Data Release

Blog: Today’s Poverty Data Release

Marge Clark, BVM
Sep 16, 2015

No better, no worse! The U.S. Census Bureau released the poverty statistics for 2014. Compared with 2013, there were no significant differences in the percentages of people living in poverty. “No change” is NOT something to laud in our society!

Again, more than one in every five children (21.1%) lives below the poverty threshold.

Still, more women (16.1%) and more households headed by women (30.6%) live in poverty than is true for men (13.4% and 15.7%).

The median earnings of women who worked fulltime, year-round ($39,621) was 79% of that for men working fulltime, year-round ($50,383).

Generations of white privilege appear to continue to have an impact on the ability to move out of poverty. “White, not Hispanic” persons have a poverty rate of 10.1%, adding in White Hispanics, the total “White” level rises to 12.7%. This is still less than half the 26.2% poverty rate of Blacks.

Does this represent the nation we want? I grapple with this question.

Congress continues to be stuck! They are unable to even talk across the aisle about what our funding priorities need to be. Are we not committed to the belief that “all (men) are created equal, that they are endowed by their creator with certain unalienable Rights, that among these are Life, Liberty and the Pursuit of Happiness”? One side of the aisle seems dedicated to providing for instruments of war, death and destruction. The other side of the aisle leans toward protecting the rights to food, shelter, clothing, the ability to work, and other expenditures to enhance the quality of life for all of the people.

Poverty has not gotten a lot worse – on average – even though 46.7 million people (14.8% of the population) live below the official poverty level. This level itself is, in most parts of the nation, unlivable. In 2014:

  • 48.1 million Americans (15.4%) were living in food insecure households. (www.frac.org)
  • The national average housing wage for a two-bedroom apartment is two-and-a-half times the minimum wage of $7.25, or $4 more than the average wage of $15.16/hour earned by renters.

(http://nlihc.org/oor)

All of these numbers vary greatly when looked at by state. A visit to any of the websites noted will let you examine the conditions in your own state.

Not all the news is bad!! The U.S. Census Bureau study includes numbers and trends in those having health insurance – truly a huge expense to those who do not. There was a significant change in the numbers/rates of those without health insurance coverage for 2014, compared with 2013. The number of those without health insurance, for all of 2014 was 33.0 million (10.4%), down from 41.8 million (13.3%) in 2013.

A second method of measuring poverty (The Supplemental Poverty Measure: 2014) done in conjunction with the Bureau of Labor Statistics was also released today. This provides a deeper understanding of economic conditions. This supplemental measure adds the value of in-kind benefits, such as the Supplemental Nutrition Assistance Program, school lunches, housing assistance and refundable tax credits. It takes into consideration the impact of government assistance programs that help keep people from falling into poverty, or help lift them out of poverty. For example, the Earned Income Tax Credit (EITC) and the refundable portion of the Child Tax Credit kept an additional 3.1% of households with children above the poverty threshold.

The impact of these is amazingly wonderful – and most are in danger of again being cut. The improvements made to the EITC in 2012 are scheduled to go away in 2017. These have been significant in the impact of the EITC on poverty. While Congress continues to give tax dollars back to the very wealthy and to corporations, and to make many of them permanent, they refuse to make permanent improvements in the EITC and the Child Tax Credit.

Do we want, as a nation, to continue to have one in every five of our children living in poverty, in food insecure households, unable to afford excellent child care? Is remaining stagnant who we want to be?

Guest Blog: Reflection on NETWORK’s “Just Advocacy Week”

Reflection on NETWORK’s “Just Advocacy Week”

By Billy Critchley-Menor
July 13, 2015

Originally appeared on the Strength from the Cloud blog

 “We’re not about that polarization crap.”

To many millennials, the Catholic Church has become an outdated and irrelevant institution. Many in our parents’ generation have forgotten, watered down, or walked away from the Church. But what perhaps is even more tragic than the number of people leaving the church, is the divide we find inside it. Growing up in today’s Catholic landscape, millennials are exposed to a heartbreaking and toxic polarization between “liberal” and “conservative” Catholics and are often, it seems, pressured to choose a side, or get out. I am strengthened however, by the millennials I have met who refuse to choose a side and refuse to get out.

Recently, I flew from my home in Duluth, Minnesota, to Washington, D.C. to attend Just Advocacy Week, a week-long training on Catholic social justice and advocacy for college students. The event was put on by NETWORK, the Catholic Social Justice Lobby.  As a long-time fan, spending a week with the organization was almost a dream come true. Although, knowing that NETWORK and the institutional church have both publicly criticized each other on different occasions, I was skeptical of the crowd I would encounter. I expected to spend the week with people who were quick to correct “Catholic” to “liberal Catholic,” people who cared about social justice but demonized the Church and saw the sacraments as secondary. My expectations however, were shattered by the other young people I met.

I anticipated a week that would perpetuate polarization, but instead found beaming hope in millennials who said, “We’re not about that polarization crap.” I encountered a group of college students eager to salt the earth, to defy the stereotypes of their generation, and to serve their Church with the gospel as their guide and the sacraments as strength.

Our current culture tells us that we can’t have a conversation about abortion with differing opinions and still break bread together. It tells us that income inequality and canon law are conversations to be had with separate people, in separate occasions, and only with those who share your opinions on both of them. If we truly live out our Catholic faith however, we will be a paradox in the eyes of the world.

This radiant Catholic paradox is what gives me hope. Over the week the sixteen of us college students engaged in conversations about the Earned Income Tax Credit and women’s ordination. We shared the stories of our different confirmation saints and discussed the tragedy of such low tax rates on capital gains that allow the rich to get richer and the poor to get poorer. We spent time with Sr. Simone Campbell and learned from her witness to justice on Capitol Hill. We spent some time at the Poor Clares’ in Adoration of the Blessed Sacrament. We spoke with the same passion as we railed against for-profit prisons and lamented the death of innocent children and wrongly convicted men and women. We eagerly awaited, with the rest of the world, the release of Laudato Si and over breakfast and Metro rides, shared incredible wisdom as we read from and tweeted the papal encyclical with our smartphones.  We shed tears over our racist, sexist, and classist culture, but lifted each other up in joy, laughter, and especially in shared prayer. We refused to let our faith be put under a bushel basket.

Putting our faith into action, we closed the week on Capitol Hill lobbying our senators and representatives to make permanent the Earned Income Tax Credit and the Child Tax Credit. We were not lobbying as Democrats, or Republicans, we were lobbying as Catholics who understood their moral obligation to engage in the political sphere and work to end oppression of those who live on the margins in America.

On our last evening together, our group listened to a recording of Dr. King’s I Have a Dream speech and were reminded that so many of King’s lamentations in 1963 have been left unresolved. Though, as we shared our own dreams we were empowered with King, and the prophet Isaiah to “dream that one day every valley shall be exalted, and every hill and mountain shall be made low, the rough places will be made plain, and the crooked places will be made straight; and the glory of the Lord shall be revealed and all flesh shall see it together.” It became clear that our passion for justice was rooted in our immense love for God and God’s Church.

This generation of faith is falling in love with the right things. We are falling in love with the Catholic Church and its challenging and radically beautiful paradoxes in a new way. We are falling in love with Catholicism that preaches unity rather than one that requires labels. We are falling in love, and my prayer, like Father Arrupe’s, is that we stay in love and let it decide everything.

Blog: NETWORK Participates in Historic Conference on Poverty

Blog: NETWORK Participates in Historic Conference on Poverty

Sarah Spengemen
May 15, 2015

In Washington, we hear politicians on both the left and the right talking every day about “the middle class,” but seldom do they mention the term “poverty.” Political consultants tell candidates that talking about the middle class inspires hope, while talking about poverty sounds too gloomy—people just don’t want to hear it they say.  At NETWORK, we know that the political consultants are wrong, people are hungry for change in this country and they are looking for leaders. This week we were able to participate in a conference held at Georgetown University on “Overcoming Poverty,” which aimed to change the national conversation so that we can begin to address our current reality—45 million Americans living in poverty today.

What was unique about this conference was that it intentionally brought together over one hundred Catholic and Evangelical faith leaders from around the country to talk about how to get poverty on the national agenda, and also to identify real solutions to poverty that all of us, progressives and conservatives alike, could support.  NETWORK was privileged to be invited to this unique conference and to contribute to the dialogue about how we can end the scandal of millions of Americans who remain in poverty despite living in the wealthiest nation on earth.

The conference was organized by Georgetown’s Initiative on Catholic Social Thought and Public Life and the National Association of Evangelicals and was inspired by the recent book by social scientist Robert Putnam on child poverty and social mobility in America entitled Our Kids: The American Dream in Crisis. Putnam spoke to us the first night of the conference, and he described an America today that is dramatically changed from the America of his youth.

Americans, Putnam argues, used to think of all of the kids in the community as “our kids,” and our public investments showed that. We invested in after-school programs, in public parks and recreation centers, in our elementary schools and in our universities. We knew that the success of the whole community depended on the success of every child.  And in the years between World War II and the early 1970s it was entirely possible to be born into a poor family, but to grow up to find a job that would pay you enough to join the ranks of the middle class and to support your family. Children born in the 1950s and 60s were able to break out of poverty and to achieve the “American Dream.” Not so today.  In his book and at the conference, Putnam says that the statistics and the stories tell us that kids today born into poverty are likely to remain in poverty. We as a community have stopped investing in them as young people, and as wages have stagnated and unions have declined, there very few opportunities for them to escape poverty as adults.

The next morning Robert Putnam was joined by President Barack Obama and Arthur Brooks for a conversation about poverty facilitated by E.J. Dionne. First of all, it is highly unusual for a sitting president to participate in a panel discussion, but for those of us who have been watching Obama closely for the past decade, we also know that it is unusual for the President to speak out so boldly about poverty. Hearing him do so was very encouraging.

The President called out an “anti-government ideology” for disinvesting in our communities and for consistently blocking new investments. He said that our current budgets show our unwillingness to make the investments that are proven to lift people out of poverty: “You look at state budgets, you look at city budgets, and you look at federal budgets, and we don’t make those same common investments that we used to.  And it’s had an impact.  And we shouldn’t pretend that somehow we have been making those same investments.  We haven’t been.  And there’s been a very specific ideological push not to make those investments.”

He went on to say that until we are willing to talk seriously about raising revenues, about making sure the wealthiest Americans pay their fair share, until then, we are not serious about addressing poverty in this nation: “That’s where the question of compassion and ‘I’m my brother’s keeper’ comes into play.  And if we can’t ask from society’s lottery winners to just make that modest investment, then, really, this conversation is for show.” Also encouraging was hearing Arthur Brooks of the American Enterprise Institute, who was also on the panel, call on conservatives to “declare peace on the safety net.”  But as Obama pointed out, we need to be able to pay for those programs and the only way is through a more equitable tax system.

Later that same evening we were privileged to hear from Senator Cory Booker (D-NJ), who spoke with passion about mass incarceration in the United States. We are not the land of the free, he declared, when we have only 5% of the world’s population but 25% of the world’s prisoners. He said he is making it his mission while he is a Senator to end mass incarceration as we know it in the United States. He is hopeful that we can do this and we can do this soon, but he asked for the support of the faith leaders present at the conference and for us to reach out to our networks. He challenged us by affirming that it is people of faith who should be the leaders of the movement to end a racist institution that destroys lives and breaks up families.

The following day’s sessions were an opportunity for participants to dialogue about what we, as leaders coming from the Catholic and Evangelical traditions and as progressives and conservatives, could agree on in terms of a common agenda. Everyone at the conference agreed that the visit of Pope Francis to the United States and his speech to Congress will be a watershed moment and will create more opportunity than we have had in a decade to talk about poverty at the national level. We also all agreed to use the 2016 election to get candidates to debate solutions to poverty. We as people of faith need to insist that candidates explain specifically how they plan to reduce the poverty rate by half during their term in office. We also agreed on a legislative agenda, knowing that even in this very partisan climate, we can get representatives on both side of the aisle to agree on a plan to expand the Earned Income Tax Credit and the Child Tax Credit.

Our time hearing from and being able to dialogue with faith leaders on the issue of poverty at the Georgetown conference gave us at NETWORK great hope that we will make progress and that there is a brighter future for the most vulnerable members of our nation. We know that it will not be easy, but we also know that people of faith have historically been leaders of all the great reform movements in our history from abolition, to the Progressive Era, to civil rights. We can do it again and we will.

Blog: Raise the Wage Act a Good First Step

Raise the Wage Act a Good First Step

Carolyn Burstein
May 13, 2015

Senator Patty Murray (D-WA) and Representative Bobby Scott (D-VA) introduced legislation on April 30 that would raise the minimum wage to $12 an hour. Their bill would phase out the sub-minimum wage (usually given to “tipped” workers) and would set regular increases to the minimum wage to keep up with the median wage (not indexed with the cost-of-living, as some have demanded).

They introduced the bill to help nearly 38 million workers by lifting them and their families out of poverty, and to increase their earnings by more than $100 billion over the next five years.

This bill refreshes the debate on the issue. While President Obama called for an increase in the minimum wage to $10.10 an hour in the 2014 State of the Union address and the legislation was introduced in the 113th Congress, the bill, as we all know, never became law. Nor is there much likelihood that this Congress will pass such legislation, especially in light of House Speaker John Boehner’s comment that he’d “commit suicide before [voting] on a clean minimum wage bill” (Fortune, 4/29/2015).

Let’s hope the bill was introduced seriously as a good first step toward offering minimum wage workers a “living wage,” fighting the wage stagnation that has been holding back economic growth. Skeptics are already saying that the bill is intended to score political points as the 2016 presidential election cycle gets underway. The problem with this criticism is that nearly everything takes on political coloration during any election cycle.

The real problem with a $12 minimum wage is that from a social justice viewpoint it is still inadequate. A full-time $12-an-hour worker would still earn only slightly more than $24,000 per year, which is about the equivalent of the 2015 national federal poverty level for a family of four, but below the poverty line and far less than adequate in many urban jurisdictions. Despite these facts, let’s concede that, if passed, millions of workers would benefit and that such an increase would be a favorable step in the right direction.

Reasons for Passing the “Raise the Wage Act”

In 2014, about 75% of Americans – including 53% of Republicans – approved raising the $7.25 per hour minimum wage to $10.10 an hour, so there is broad support for a raise. As yet, we have no polls at the $12 figure, but in a significant number of states we do have a ballot measures supporting an increase as well as a referendum recommending an increase.

An Economic Policy Institute (EPI) research paper entitled “The Economy Can Afford to Raise the Minimum Wage to $12 by 2020” indicated that a minimum wage increase to $12 an hour would roughly restore the relationship between the minimum wage and workers in the middle relative to 1968 levels when the minimum wage was at its historic peak. EPI makes clear that the value of the minimum wage today is 24% less than it was in 1968 despite the fact that workers today are twice as productive as they were back then. Thus, $12 an hour is a very modest proposal. If the minimum wage had kept up with productivity, it would be $18.30 today.

It is not only productivity that has increased substantially since 1968, but also the education and experience of minimum-wage workers. As EPI’s research paper illustrates: “Significant increases in the productivity, education, and experience of low-wage workers mean that not only should wages be higher, but also that the economy can afford to pay those wages. In 1968 only 17% of workers in the bottom fifth of the wage distribution had some college education or more. By 2012, the percent of workers in the bottom fifth with at least some college education had risen to 46%. And the productivity of low-wage workers has also doubled since 1968.”

As the UC Berkeley Labor Center notes: “Real hourly wages of the median American worker were just 5% higher in 2013 than they were in 1979, while the wages of the bottom decile of earners were 5% lower in 2013 than in 1979. Trends since the early 2000s are even more pronounced. Inflation-adjusted wage growth from 2003 to 2013 was either flat or negative for the entire bottom 70 percent of the wage distribution.” And this problem of stagnating wages is compounded by the decline in employer-based health insurance as well as the prevalence of employees with health insurance paying more for it.

Nearly three-quarters of those enrolled in major public support programs (such as food stamps, – Supplemental Nutrition Assistance Program, SNAP – Temporary Assistance for Needy Families, TANF – Medicaid and Children’s Health Insurance Program, CHIP) are members of working families.

Data compiled by UC Berkeley Labor Center indicates that combined federal/state spending on public assistance amounts to $152 billion per year. Thus, American taxpayers are subsidizing businesses which pay poverty-level wages to their workers!

Raising the minimum wage to $12 per hour would have the greatest impact on women because they constitute about two-thirds of those receiving a minimum wage. And these women are not teenagers, as they may have been in the past. CAP research shows that less than 5% of teenage girls under the age of 18 constitute minimum-wage workers, whereas all the rest are over 18 and one-third are working mothers. Women of color would especially benefit from the “Raise the Wage Act,” since they constitute the largest segment of minimum-wage workers.

Senator Baldwin’s Letter to the SEC

If workers’ wages are nearly stagnant and growing at the slowest pace since the 1960s despite healthy corporate profits and increasing worker productivity, then a major question is exactly how companies are spending their profits. The major disconnection between profits and wages is due to companies’ expending a prominent part of their profits on stock buybacks and dividends, which enrich shareholders to the detriment of workers and other long-term investments. These facts partly explain Senator Tammy Baldwin’s (D-WI) letter at the end of April to the Security and Exchange Commission (SEC).

In her letter, Senator Baldwin called attention to the growing trend of stock buybacks, which corporate executives are increasingly using for shareholder profits instead of making investments in their workers. Specifically, Senator Baldwin requested any analysis that the agency has done about the impact of a rule it issued about stock buybacks and its influence in driving up the price of a company’s stock. Baldwin noted the negative effect stock buybacks have on jobs, wages and investment, which, in turn, have negative impacts on innovation and long-term economic growth and competitiveness.

William Lazonick, a professor of economics at the University of Massachusetts who has studied the issue of stock buybacks for years, called Baldwin’s letter unique because “no one has ever asked the SEC anything about stock buybacks and the rules that are supposed to regulate it.” Lazonick says that getting this kind of information about the monitoring of market manipulation is an important step in bringing about change. Whether that change would translate into a living wage for all workers is a question.

Conclusions

Even though the latest economic data show that overall economic growth is rising, the pace and scale of this growth is not translating into real gains for working families, the majority of whom remain economically vulnerable. As a CAP Issue Brief stated on April 29, “Long-term unemployment is still high, as is poverty and economic inequality. And wages are growing very slowly, while employers are offering few benefits to their employees. The result is that American middle-class families of all stripes – but especially communities of color, single women, and households with less education – continue to struggle economically in this expanding economy.”

Despite these facts, this current Congress has focused on repealing the estate tax for millionaires and billionaires as well as passed a budget that would wreak havoc on the public safety-net programs on which most of the economically vulnerable depend.

The Raise the Wage Act is an important step in the struggle for a living wage. Companies should foster a sense of social responsibility so that those benefiting from a business’ growth perceive the relationship between a healthy economy and the public goods/services that enable it to thrive. This sense of social responsibility should translate into a positive view of the taxes that are needed to maintain these public goods/services. Eventually, it is hoped that a sense of social responsibility will progress into a strong belief in social justice, whereby the good of the community (or the “common good”) supplants rampant individualism. Only then will current economic imbalances be replaced with greater economic equity and a steady diminution of poverty.

Blog: Work Needs to Pay; Work Needs to Work

Work Needs to Pay; Work Needs to Work

By Marge Clark, BVM
May 1, 2015

No household with a person working fulltime should be living below the poverty threshold. Yet, that is the case for millions of Americans. Work needs to pay! The current federal minimum wage of $7.25 per hour provides a fulltime employee $15,080 annually. In 2014, the poverty threshold for a single person was $12,316; for a family of four it is over $24,000, leaving families in severe poverty although they are working fulltime. When the minimum wage went into effect, a household could meet all their needs – including mortgage payments. This is far from the case today.

The recently proposed rise in the minimum wage to $10.10 per hour would still leave millions of households in dire poverty. This would yield $21,008 annually – before taxes!

NETWORK strongly supports the newest proposal for raising the minimum wage to $12.00 per hour by 2020. Two added benefits are that it would apply to tip workers, and that the base would increase with inflation each year.

Work needs to work for workers, families and households. Additional legislation is critical for this: equal pay for equal work, paid sick days, paid leave, and reasonable accommodations for women who are pregnant and with young children.

Therefore, NETWORK strongly supports a package of bills:

 

  • Raise the Wage Act: U.S. Senator Patty Murray (Wash.) and Representative Robert “Bobby” Scott (Va.) introduced the Raise the Wage Act, which would benefit 37.7 million workers—and the businesses that serve them—by gradually raising the minimum wage to $12 by 2020. (S.115)
  • Healthy Families Act: U.S. Senator Patty Murray (Wash.) and Representative Rosa DeLauro (CT) introduced (Feb. 12, 2015) this bill allowing workers to earn paid sick days.
  • Family and Medical Leave Act (FMLA): provides an important job protection for lower-wage workers, expected and provided in higher-paying jobs. This would allow a food service worker with the flu to stay home, protecting you and other customers.
  • Pregnant Workers Fairness Act: Many states have legislation going beyond the Pregnancy Discrimination Act (1978); however, gaps continue in many states, and the protections afforded vary greatly. Federal legislation would be most assistive.
  • Paycheck Fairness Act: Amends the portion of the Fair Labor Standards Act of 1938 known as theEqual Pay Act to revise remedies for, enforcement of, and exceptions to prohibitions against sex discrimination in the payment of wages.

 

The above areas are among pieces of legislation that support workers – for many, making it possible to work and to care for family.

Blog: Update on the Minimum Wage around the Nation

Update on the Minimum Wage around the Nation

By Carolyn Burstein
April 13, 2015

Senator Patty Murray (D-WA) and Congressman Bobby Scott (D-VA) are prepared to introduce a federal minimum wage (MW) bill in both the Senate and House that would attempt to raise the current MW in five steps to $12 per hour, gradually eliminate the subminimum wage for tipped workers, and index those wages to the median wage (not the rate of inflation).

This plan follows a flurry of activity over the past several months, including numerous state-level and municipal-level jurisdictions passing MW laws in the latter part of 2014, several states increasing their MW as a result of referenda submitted to voters in the November general election, as well as several well-known national retail chains – The Gap, Ikea, Walmart, Target, and McDonald’s – raising their MW rates. We thought that this might be an appropriate time to share an update with our NETWORK members about these momentous events.

The spate of state and local MW laws can also be attributed to congressional gridlock that buried any chance of passing an earlier White House-approved and Democratic-sponsored bill in Congress; to an improving national economy that no longer had excess workers who would agree to work for minimum wage; and to widespread union-backed (especially the Service Employees International Union – S.E.I.U.) protests, often featuring MW employees themselves. State and local jurisdictions have frequently been impelled by their own citizens to tackle the problem through laws – at the state level, and ordinances – at the city level, to substantially raise the wage floor for low-paid workers in their states and communities.

The first thing to note about all MW changes is that they are complex laws. Some result in a single increase, others in multiple increases over a number of years; some are indexed to the rate of inflation, others are not; most affect a substantial number of employees, but exempt others (of course, all employee affected by the Federal Labor Standards Act – FLSA — are exempt); some issue changes for certain types of businesses before others; some take health benefits into account, others do not, and so on. Our discussion will not try to parse out each of these changes, so the complexity of these laws must be borne in mind in the information that follows.

State-level Changes in the MW

Let’s start with state-level MW changes. Currently, some 29 states and the District of Columbia have minimum wage rates above the federal minimum of $7.25 per hour, and 10 of them enacted their increases in 2014, the “Year of the Minimum Wage,” as Littler Publications dubbed it in its briefing paper of November 13, 2014. However, because of major MW changes at large retail chains in 2015, that appellation may no longer be appropriate.

Here are the 29 in early 2015, thanks to Littler Publications and an online job search article, Minimum Wage Rates for 2015:

  • Alaska: $8.75 effective February 24, 2015 ($9.75 effective January 1, 2016)
  • Arizona: $8.05 (tipped workers $5.05)
  • Arkansas: $7.50 ($8.00 effective January 1, 2016; $8.50 effective January 1, 2017)
  • California: $9.00 ($10.00 on January 1, 2016)
  • Colorado: $8.23 (tipped workers $5.21)
  • Connecticut: $9.15 ($9.60 on January 1, 2016; $10.10 on January 1, 2017)
  • Delaware: $8.25
  • District of Columbia: $10.50 on July 1, 2015 ($11.50 in 2016)
  • Florida: $8.05 (tipped workers $5.03)
  • Hawaii: $7.75 ($8.50 in 2016; $9.25 in 2017; 10.10 in 2018
  • Illinois: $8.25
  • Maine: $7.50
  • Maryland: $8.00 ($8.25 on July 1, 2015; $8.75 July1, 2016; $9.25 July 1, 2017; $10.10 July 1, 2018)
  • Massachusetts: $9.00 ( $10.10 on January 1, 2016; $11.00 on January 1, 2017)
  • Michigan: $8.15 ($8.50 in January 2016, then annual increases to $9.25 per hour by 2018)
  • Minnesota: $8.00 (effective August 1, 2015, large employers are required to pay workers $9.00 per hour and small employers $7.25 with $9.50 by August 2016, but exceptions based on worker age and company size)
  • Missouri: $7.65
  • Montana: $8.05
  • Nebraska: $8.00 ($9.00 on January 1, 2016)
  • New Jersey: $8.38
  • New Mexico: $7.50
  • Nevada: $7.25 for employees who receive qualifying health benefits; $8.25 for those who do not
  • New York: $8.75 ($9.00 on December 31, 2015; tipped workers $7.50 on December 31, 2015)
  • Ohio: $8.10
  • Oregon: $9.25
  • Rhode Island: $9.00
  • South Dakota: $8.50
  • Vermont: $9.15 ($9.60 in 2016; $10.00 in 2017; $10.50 in 2018)
  • Washington: $9.47
  • West Virginia: $8.00 ($8.75 in 2016)

A recent article by the National Employment Law Project (NELP) provides clear evidence, if any were still needed, that raising pay and  improving job quality does not reduce employment or encourage businesses to leave urban areas. Raising local minimum wages is now considered a mainstream policy tool for fighting income inequality at the local level.

The NELP article summarizes the most rigorous research – most completed by universities, but a major study done by the Center for Economic and Policy Research (CEPR) is also included – to demonstrate that job growth is not slowed nor does business relocate outside municipal boundaries. And these findings are consistent with the bulk of research on higher state minimum wages.

Municipal-level Changes in the MW

Boosting local minimum wages gives urban areas distinct advantages, which cannot be overlooked, such as allowing higher-cost cities to set a MW to better correspond to living costs, and giving localities the power to address the problem if their state legislature refuses or is slow to address the issue.

In addition to its presentation on the economic evidence of raising local minimum wages, the NELP article also lists the affected municipalities that have passed MW ordinances since 2012, although most of the activity has been in the last year or two. The non-state areas that have (or intend to) raised their MW are:

Albuquerque, NM                   $8.60

Berkeley, CA                           $12.53 (by 2016)

Bernalillo County, NM            $8.50

Chicago, IL                              $13.00 (by 2019)

Las Cruces, NM                       $10.10

Los Angeles, CA                       $13.25 (by 2017 – mayor)

$15.25 (by 2019 – city council)

Louisville, KY                           $10.10 (by 2017)

Montgomery County, MD       $11.50 (BY 2017)

Mountain View, CA                 $10.30 (in 2015)

New York, NY                          $13.13 (by 2016)

Oakland, CA                            $12.25 (in 2015)

Portland, ME                           $10.68 (by 2017)

Prince Georges County, MD   $11.50 (by 2017)

Richmond, CA                         $13.00 (by 2018)

San Diego, CA                         $11.50 (by 2017 – will be reviewed by voters in 2016)

San Francisco, CA                    $15.00 (by 2018)

Santa Fe County, NM              $10.66

San Jose, CA                            $10.15

Seattle, WA                             $15.00 (by 2018 – 21, depending on type of business)

Sunnyvale, CA                         $10.30 (in 2015)

Since Seattle’s MW – on-the-way-to-$15.00 per hour (the highest in the nation) – is such groundbreaking legislation and it just went into effect, we should consider what they have accomplished, especially since their MW is more than double the federal MW and nearly double that of Washington State.

Seattle’s MW is initially $11.00 per hour (as of April 1), and this will be followed by incremental increases over the next two-and-a-half years (for most large businesses and depending on healthcare benefits involved – remember it is complicated) and over the next four-and-a-half years for smaller ones, after which the MW is tied to the cost of living in the area.

Seattle’s changes have been followed closely by other cities, especially as labor groups and workers bring pressure on retailers and fast-food companies to pay a “living wage,” which in their literature, at this point in time, is about $15.00 per hour. Interestingly, Seattle’s new ordinance was passed unanimously by its nine-member City Council and immediately endorsed by Seattle’s mayor.

MW Changes in Nationwide Retail Establishments

While the decision of The Gap and IKEA are significant, three of the largest retailers and fast-food businesses have introduced pay hikes within the last few months and the first few in 2015 – Walmart, Target and McDonald’s. There is little doubt that the impact of these companies moving on the MW issue has influenced Capitol Hill and has moved the MW debate to a different level in our thinking. After all, Walmart is considered a trend-setter in the retail industry and its move alone affects the lives of an estimated 500,000 workers, according to the Huffington Post.

Starting this month, annual MW rates at Walmart will be raised to $9.00 per hour and next February 1, pay will go up to at least $10.00 per hour. In addition, employees have been promised greater control over their schedules, a problematic issue that finally has management’s attention. McMillon, the CEO of Walmart, has suggested that an improving economy – unemployment has fallen from a peak of 10% to 5.6% recently – has pressured Walmart to raise wages.

However, OUR Walmart, the union-backed group organizing protests at Walmart, took credit for the company’s announcement. “We are so proud that by standing together we won raises for 500,000 Walmart workers, whose families desperately need better pay and regular hours from the company,” claimed Emily Wells, a leader of the group. But she said that the improved wage package still fell short of what was needed. “With $16 billion in profits, Walmart can afford to provide the good jobs that America needs – and that means $15 an hour, full-time, consistent hours and respect for our hard work,” quoted CNN’s Money.

Even with a $10 hourly wage, workers and their families would still fall below the poverty line, but it’s far better than the current federal MW of $7.25, which numerous states still consider the norm.

The Wall Street Journal reported that without explicitly announcing an increase, Target plans to ensure that all employees will see at least $9 per hour in their first April paycheck. Of course, this follows their retail rival Walmart (as well as TJX, owner of T. J. Maxx, Marshalls and Home Goods), which made its announcement in February. With 347,000 employees in the U.S., along with hundreds of thousands of others at Walmart and TJX stores, the major retail hold-out was McDonald’s and similar nationwide fast-food chains.

At last, on April 1, McDonald’s joined the preceding group of retail outlets in raising their MW, but the world’s largest restaurant group agreed only to pay $1 more than the local MW beginning July 1, 2015 and only at the 1,500 stores the company owns, not at the approximately 13,000 stores owned by its franchisees. This increase will be followed by another of the same size by the end of 2016 and will allow employees starting July 1, 2015 to accrue paid time-off.

The April 2edition of the Financial Times notes that the franchisee employees would be eligible for a new education financial aid program starting July 1, 2015. Critics, of course, are angry that so many thousands of employees are ignored in the pay raise as well as the fact that McDonald’s has insufficiently responded to the national campaign that advocates for a $15 hourly MW and union rights for all employees.

According to the March 30 online issue of the New York Times, the SEIU has been increasing pressure on McDonald’s. It was the SEIU that helped persuade the National Labor Relations Board (NLRB) to accuse McDonald’s of being a joint employer with its franchisees, a move fraught with many repercussions for the chain, not the least of which is the wage issue. The president of the SEIU said, “This movement is changing our political debate [and what] employers think they can get away with… This movement is way beyond fast food. We aren’t going to stop until the service sector in the U.S. becomes the foundation for the next American middle class.”

There is a wave of actions planned for McDonald’s stores for April 15, including strikes, walk-outs and protests in more than 200 cities nationwide. These and similar but smaller protests have been occurring for more than two years and while not wholly successful at McDonald’s, has prompted a national debate about economic inequality with low-wage workers at its core.  And surely, it has influenced many of the cities and states listed above to raise their MW.

The Economic Policy Institute (EPI), in a report issued on April 1, indicated the key reason why raising the MW is such a significant issue. Their research data demonstrates that in the late 1960s the MW was equal to about 53% of the average middle-class wage. Yet by 2014, after infrequent and inadequate increases, the MW now is equal to only 35% of the average production worker’s wage. (Perhaps this accounts for that aspect of the current Murray/Scott bill referred to above). That gap has been particularly demeaning to and difficult for women workers, who constitute a larger percentage of MW workers than their male counterparts.

Conclusion

NETWORK has consistently supported raising the MW to the level of a “living wage,” which should provide for a life of human dignity, will lift families out of poverty, will meet basic human needs in a sustainable way, and will place those needs before accumulation of profits. A “living wage” should allow wage earners to provide adequate housing, quality healthcare, child care, education and transportation for their families.

The recent activity described above, in the form of cities and states as well as major retail corporations agreeing to raise their MW could provide the impetus for another federal push, which we applaud. We will continue to promote upgrading the MW to a living wage.

Social Security: A Baseline Older Adults Need to Count On

Social Security: A Baseline Older Adults Need to Count On

By Shantha Ready Alonso
March 13, 2015

Ben and his wife Marce were raised in California but spent much of their working years in Texas where Ben rose up through the ranks to become Vice President of two separate oil companies.

As many parents do, they loaned money to their two sons by withdrawing funds from their retirement account to start businesses. Unfortunately, the loans were not repaid and by the time the couple moved back to Orange County, California to be closer to one son, their resources were close to being depleted.

By the time Ben’s health declined and he died at 80, his wife Marce had little left. A long-time diabetic, Marce developed a cardiac condition and could not remain independent. Fortunately with her Social Security widow’s benefit and access to a VA benefit from her husband, she was able to remain near her friends and family until she passed away at 81.

NETWORK believes that Social Security should not be means-tested because wealth comes and goes, and no one can predict what their financial future holds. For their whole lives, Ben and Marce paid into Social Security so that if they were to experience a time of need, they could count on it as a baseline of support. Older adults like Marce deserve to live in dignity.

Our Social Security system was created so that people could avoid falling into poverty after a life-long career. Contributions to our Social Security system are capped at $118,500 this year, which means that our nation’s top earners finished paying their share on February 12.

A just tax system requires that all people pay their fair share to help raise reasonable revenue for responsible programs, like Social Security, which is proven to help keep people over age 65 out of poverty. This week: Make three phone calls to support Social Security— one call to each member of your congressional delegation.

Call your Representative at 1-888-897-9753

Call your Senior Senator at 1-888-410-0619

Call your Junior Senator at 1-888-738-3058

Here is what you might say when you call:

“My name is (NAME) and I am a constituent from (CITY, STATE) and a member of (FAITH COMMUNITY). I’m calling because I support Social Security as a minimum baseline that ensures all older adults live in dignity. Many older adults experience poverty, even if they were well-off in their working years, so I do not believe means-testing Social Security is good policy. A just system requires all workers pay their fair share, which is why I also believe our nation’s top earners should invest in Social Security at the same rate as everyone else. Thank you.” 

Blog: How to Respond to Implausible Claims about “Welfare”

How to Respond to Implausible Claims about “Welfare”

By Colleen Ross
February 13, 2015

We’ve all heard the claim — at the Thanksgiving dinner table, in the church social hall, at the water cooler, or even in our own email inboxes — that government programs are too generous and are disincentives to work. Last week, we were contacted by a NETWORK friend looking for guidance on how to respond to such an argument. Frustrated with the persistence of this claim and its popularity in our political discourse, I thought a succinct but thorough response may be useful to have on hand.

The first thing to understand is that the basis of this argument and the source of any numbers cited to support it  are in a report published by the Cato Institute, The Work vs. Welfare Trade-Off. Originally written in 1995, the report was updated and re-released last year, prompting another wave of attention to its claims as well as robust criticism of its research methods and conclusions by numerous economists.

If you, like me, have heard about this argument, I hope the response I sent out (below) is helpful to you.

It can be tempting to believe that others are receiving undeserved assistance, but numerous sources have addressed and disproved the data compiled in the two Cato reports published in 1995 and 2013 that many cite as proof that safety-net programs disincentivize work. (1, 2, 3) Furthermore, the vast majority of safety-net entitlements and mandatory programs are not given to people who choose not to work, but instead go to the “elderly, seriously disabled, or members of working households” (4)

Two fundamental errors in the reports are an assumption that families receive all possible forms of assistance simultaneously – and that they are not working. Actually, as pointed out by the Center on Budget and Policy Priorities, a family receiving numerous kinds of assistance is relatively rare, and many eligible families don’t receive any benefits at all. In addition, a significant percentage of families receiving some kinds of assistance include people with jobs who, because of very low wages, fall below the poverty line and thus qualify for help.

We at NETWORK base our analysis on reports from reputable, bipartisan sources as well as the shared lived experiences of our Catholic sisters who work on the ground every day with those at the margins. After more than four decades, what we have found emphatically refutes the narrative that safety-net programs are so generous that they dissuade men and women from entering the workforce, or from working full-time jobs. Sister Simone Campbell’s testimony to the U.S. House of Representatives Budget Committee is a concise summary of NETWORK’s position on this topic. (5)

The United States has the largest economy in the world, yet the most recent report from the Census Bureau found that 45.3 million people were living in poverty last year in our nation. (6) The Children’s Defense Fund recently released a report on the state of child poverty in the United States, studying the situation of the 12.2 million children who fell under the poverty line in 2013, even with federal safety-net programs taken into account. (7) These excessive numbers of our brothers and sisters who are struggling with poverty should be morally impermissible to us living in the wealthiest country in the world. Catholic Social Teaching principles call on us to judge our society by how our most vulnerable fare, and when so many people in our society live below the poverty line we must take action communally to change that.

Safety-net programs are intended as a last resort, social insurance program to care for those who are struggling. Too often, these programs are left to survive on inadequate funding or cut entirely, making it very difficult to serve everyone who needs their vital assistance. This is especially problematic for housing and energy assistance programs.

Finally, the safety-net programs that our government administers are investments in our families, our nation, and our future and have proven effectiveness. The Earned Income Tax Credit and the Child Tax Credit are two such programs that have been found to increase employment rates of parents, reduce child poverty, and have a positive impact on children’s school performance. (8) Similarly, increasing SNAP benefits is one of the most effective strategies for boosting a weak economy, generating about $1.70 in economic activity for each additional dollar invested. (9) Safety-net programs are not disincentives to work; they are positive drivers of the economy and moral investments in our nation’s greatest strength: people.

Resources used:

  1. http://www.cbpp.org/cms/?fa=view&id=4004
  2. http://www.epi.org/blog/cato-study-distorts-truth-welfare-work/
  3. http://www.forbes.com/sites/rickungar/2013/09/03/the-conservative-case-for-welfare-reform-suffers-massive-blow-via-cato-institute-study/
  4. http://www.cbpp.org/cms/?fa=view&id=3677
  5. https://www.networklobby.org/files/Final%20Written–Sr%20%20Simone%20Campbell%20(2)_1.pdf
  6. http://www.chn.org/wp-content/uploads/2014/09/National-Final-Poverty-Day-Report-2013-Data.pdf
  7. http://www.childrensdefense.org/library/PovertyReport/EndingChildPovertyNow.html
  8. http://www.nber.org/papers/w11729
  9. http://www.ers.usda.gov/media/227714/foodsecuritysnap_1_.pdf

Blog: The Many Effects of Inequality

The Many Effects of Inequality

By Carolyn Burstein
October 15, 2014

Although there have been several blogs on this website on the topic of inequality, the issue is increasingly relevant for so many reasons, not the least of which is the fact that inequality is the source of so many economic ills. Wherever one looks the specter of inequality rears its head.

In my recent blog on the Census Bureau’s poverty data, I referred to a recent article in the Washington Post about the effects of the wealth gap on the inability of young people to purchase their first home. I referred as well to a recent study by Standard and Poor’s describing how states were experiencing a decrease in normal revenue from sales taxes due to wage stagnation and a lack of demand among the majority of their populations. Earlier I had written a blog about the use of “dark money” in political campaigns, thanks to the Supreme Court decisions (Citizens United v. FEC and McCutcheon v. FEC), which give the wealthy an outsize influence in elections. And the list goes on.

Let’s consider some of the effects of inequality on economic growth, various social issues, global trade, higher education, and even the Scottish vote. Naturally, the results of inequality are even more far-reaching (and damaging), than this disparate list suggests, but we will scrutinize these for starters. But first, let’s focus on a few issues related to inequality. Did you know that regressive payroll taxes, which cost people in poverty proportionately much more than the wealthy, are projected to raise about one-third of federal revenue in 2015? Or that the U.S. ranks highest among the high-income countries (according to a study by the Organization for Economic Cooperation and Development – OECD) in its share of relatively low-paying jobs? These are just two fascinating details in an October 1, 2014 article in the Financial Times by Martin Wolf, economics editor of the paper.

So, how much wealth do these rich people have? A very similar question has recently (mid-September 2014) been put to people in various countries. They were asked in a poll how much money top executives of major companies make relative to the average workers in their firms, and in the U.S. the median respondent believed it was about 30 times more. Unfortunately, chief executives earn more than 300 times as much as ordinary workers, an amount vastly underestimated by nearly all Americans and reflecting the concentration of wealth at the top of the financial pyramid. This situation is what Thomas Piketty in his bestselling Capital calls the super salaries of “supermanagers”.

Celebrities and sports/movie stars earn far less than many of the financial barons who dominate the upper strata of the wealthy. In 2013 the top 25 hedge fund managers received, on average, almost a billion dollars each, according to Paul Krugman. Ignorance about this problem may be one reason why income inequality hasn’t yet become a dominant issue in elections!

Data from Thomas Piketty and Emmanuel Saez, the academics who have made a specialty in documenting the rise of income inequality around the world, shows that during the first three years of the recovery from the Great Recession (2009-12), the top 1% of the population, took home 95% of the income gains, while incomes actually fell for the bottom 90%. Until the recessions of the 1970s, most income gains experienced during subsequent expansions accrued to most of the people, but with each expansion since that time, the bottom 90% captured a smaller and smaller part of income. Family net worth, a measure of accumulated wealth, showed a similar skewing upward.

Some say that the Federal Reserve’s policies of zero interest rates and quantitative easing (buying bonds with newly-printed money) are inadvertently responsible for the income inequality the nation is currently experiencing. Certainly, inequality could have been worse without these policies, since they helped to prevent massive joblessness in 2008-09. But there is no doubt that extremely low interest rates hurt small savers who were not able to diversify into higher-yielding investments. And Wall Street enjoyed the Fed’s “easy credit” and the profits of the bull market. Many couldn’t help noticing that years of an ultra-loose monetary policy might risk skewing the U.S. income distribution upward. However, most of the evidence for income inequality indicates that its rise started many decades before and its causation is multiple, not least of which is the fact that tax and spending policies are much less redistributive than they were even a few decades ago.

It’s time to consider the effects of inequality on the various issues raised above. First, let’s look at inequality’s effects on economic growth. At an IMF seminar in mid-April 2014 there was a clear conviction that economic growth and inequality were mutually incompatible. The participants welcomed the growing consensus around the world on the need to address inequality and the IMF’s role in this process. The Deputy Managing Director of the IMF clarified that their advice to countries now always includes jobs, growth and employment in policy formation.

There is a strong belief that inequality today has reached levels that threaten economic stability and growth. As Joseph Stiglitz, the Nobel Prize-winning economist, has written in The Price of Inequality, “Widely unequal societies do not function efficiently, and their economies are neither stable nor sustainable in the long term. Taken to its extreme – and this is where we are now – this trend distorts a country and its economy as much as the quick and easy revenues of the extractive industry distort oil-or mineral-rich countries.”

In the U.S., the Great Recession illustrates how an excess of inequality can warp an economy. The housing boom crisis showed that a strong segment of the public was unwilling to accept their depressed spending power, and encouraged by those who, often illegally, eased credit standards, were able to sustain their purchasing power by borrowing using flimsy home mortgages. Marianne Bertrand and Adair Morse of the University of Chicago have found that legislators who represent constituencies with higher inequality are more likely to support the easing of credit. And credit splurges, they find, bring on instability in the financial sphere. The economy, propped up on shaky credit, becomes more vulnerable to shocks, so that when a recession comes, the economy virtually collapses as banks fail and consumer spending drops.

Income inequality also exerts a significant drag on demand, as people with low-incomes have been forced through credit contraction to spend less. This situation acts as a vicious circle, since business investment is curbed by weak growth in demand for products and services. Many companies have been encouraged to replace unskilled labor with machines, contributing further to downward wage pressure. It is this wage stagnation that is a major contributor to today’s weak recovery. So, income inequality comes full circle. The global trends are stark. Stefano Scarpetta, director for employment, labor and social affairs at the OECD, says’ almost all advanced economies have seen labor’s share of gross domestic product fall over the past 20 years.”

Income inequality causes a range of social problems by undermining social cohesion and increasing social divisions and placing greater importance on social hierarchy, status and class. Distinctions between rich and poor neighborhoods become paramount. Social relationships are severed and trust is lost. Indicators of women’s status are generally better in more equal societies. Rates of both property crimes and violence increase as income differences widen. Inequality drives status competition, which drives personal debt and consumerism, and the latter is a major threat to sustainability. Stronger community life in more equal societies also means that people are more willing to act for the common good – they recycle more, spend more on foreign aid, and focus more on peace. Business leaders in more equal countries rate international environmental agreements more highly. The social fabric of society allows populations to either flourish or fail.

What has been the impact of our global trade efforts on income inequality? Our trade agreements of the past 20 years have led to a massive decrease in tariffs from over 40% in the 1950s to less than 3% on most industrial goods today, and other barriers to trade have been radically reduced, with the result that prices for these goods over the past 10 or 20 years have been drastically reduced. But it is well to keep in mind that the U.S. comparative advantage is in capital and technology and our disadvantage is in labor, particularly unskilled labor. Thus, our lower-income people are competing with those whose wages are significantly depressed by American standards.

A recent study by the U.S. International Trade Commission has concluded that global trade in general has contributed to 10 to 20% of the wage gap between more skilled and less skilled workers, certainly not a majority of the difference, but a significant slice of it. In negotiating a free trade agreement with some developing countries, such as Vietnam and Malaysia, in the Trans-Pacific Partnership (TPP), the U.S. should bear in mind that a number of Asian countries have suppressed the value of their currencies (currency manipulation), which has severely hurt our economy and depressed the wages of U.S. workers. The TPP must address issues like currency manipulation so that income inequality does not become greater than it already is.

Also, the study points out that the U.S. needs a robust Trade Adjustment Assistance (TAA) program to provide funds to help workers who have been laid off to get the training and education they need to launch a new career and get unemployment benefits during their transition. The current TAA is considered worthless by many of the workers it has been intended to help because it either fails to provide the unemployment compensation for the jobs they have lost or fails to provide them with adequate training and skill levels needed to enable them to acquire jobs in new areas. The 113th Congress has not taken any action on this issue.

Although not the only concern of many Democrats regarding global trade – issues like labor rights, environmental protection and patents are others – income inequality is central for many. For example, Robert Reich writes: “This massive deal [TPP] would further erode the jobs and wages of working and middle-class Americans while delivering its biggest gains to corporate executives and shareholders.” Harold Meyerson, writing in the Washington Post earlier this year agrees with Reich but also notes that the U.S. trade deficit with Canada and Mexico rose from $27 billion in 1993 to $181 billion in 2012. Meyerson writes, “when the case for free trade is coupled with the case for raising workers’ incomes, it enters a zone where real numbers, and real American lives, matter…Such deals [referring to the TPP] increase the incomes of Americans investing abroad even as they diminish the incomes of Americans working at home.”

A Huffington Post article earlier this year noted that the Peterson Institute for International Economies – a strong supporter of global free trade – estimated that nearly 40% of the observed growth in U.S. labor inequality was attributable to trade trends. It isn’t difficult to understand why after calculating the employment effects of trade flows using the government’s own methodology for translating the U.S./Canada-Mexico trade deficit figures for 2012. This trade agreement alone has been responsible for the American loss of one million jobs and doesn’t include the loss of jobs associated with the U.S.-South Korea Free Trade Agreement, which have been substantial.

The Huffington Post article warned that one should not necessarily focus only on the number of jobs lost, but on their composition. The millions of workers who had belonged to the middle class but did not have a college degree were competing for non-offshorable, low-skill jobs in sectors such as food service and retail, where wage stagnation had already occurred, due in part, to the excess supply of laborers. According to the U.S. Bureau of Labor Statistics, two of every three displaced manufacturing workers who were rehired experienced a wage reduction, most of them more than 20%. Is it any wonder that Democrats in Congress are reluctant to grant the president “Fast Track Authority” which would enable trade agreements similar to those negotiated in the past 20 years, to be voted up or down in Congress without changes?

So, what are the chances of higher education coming to the rescue of income inequality?  If, as Alan Blinder (former Federal Reserve vice-chair, Princeton economist and NAFTA supporter) says, one out of every four American jobs could be offshored in the foreseeable future, then, it would seem, young, disadvantaged “millennials” must overcome barriers to a first-rate higher education. In a September 21, 2014 article in the New York Times, Vicki Madden, a former high school teacher, lamented the social isolation and alienation that most of the bottom 50% of Americans experience in the 200+ “top-tier” colleges across the country. Colleges now are more divided by wealth than ever, she writes. Many of these kids struggle academically and do not feel comfortable asking their professors for help or feel welcome in student study groups. These are among the prime reasons so many drop out.

In a recent paper, Anthony Carnavale and Jeff Strohl found that at 193 rather selective colleges, only 14% of students were from the bottom 50% of Americans in terms of socioeconomic status. And Martin Wolf, in his October 1, 2014 article in the Financial Times (referred to above) quotes a Standard and Poor’s report that for the poorest households college graduation rates increased by only about 4 percentage points between the generation born in the early 1960s and the early 1980s. The graduation rates for the wealthiest households increased by about 20 percentage points over the same period. Yet without a college degree, the chances of upward mobility remain dim. One can only hope that those born since the early 1980s fare better than their older brothers and sisters.

What in the world does the Scottish Vote for independence have to do with American income inequality? We Americans probably paid little heed to that all-important UK vote on September 18, 2014. This was the same week that the U.S. Census Bureau released data on U.S. poverty which divulged that so-called middle-income Americans made eight % less in 2013 than they did in 2007. What these facts have in common is that many millions of people in both Scotland and America (and many other countries, too) no longer trust their more wealthy governing bodies.

The Scots have little in common with our “Tea Party.” They are more left-wing than the majority in the British parliament and its ruling party, desire more social welfare spending rather than austerity, want greater efforts in the environmental area and oppose the British parliament’s emphasis on defense. Millions of Scots proved that their tolerance for their governing institutions had badly diminished. And London has heard the results of the vote (closer than many believed possible) and promised reform, although specifics were in short supply.

The U.S. poverty data are bleak and make clear that a middle-class American family is worse off financially today than it was 15 years ago. The fact that the system isn’t working for most American workers pervades public opinion polling as well as mid-term election results for the past few years. The causes are multiple, as the foregoing indicates. The issue in this country is whether tolerance of the current system will continue or what direction the opposition to it will take.

If the ability to tolerate our economic system wanes, we, at NETWORK, oppose the tools of violent conflict. We strongly believe in the power of the ballot box and legislation to right  grievances. Because we are a government of, by and for the people, we believe that people with a comprehensive vision, compassion, and real leadership qualities will run for office, be strongly supported by those who oppose the status quo and, if elected, will serve the common good by supporting all Americans, including especially poor and vulnerable families. Often this will mean supporting policies that require uncommon courage to change the status quo in ways that are innovative but desirable for those who have borne the scourge of injustice. All government leaders have a shared duty to all segments of society, but especially to ensure that no one is left behind. And that means that today’s level of income inequality requires a sizable level of moderation.

Blog: Shared Prosperity Remains Elusive According to Poverty Data Released by the Census Bureau

Blog: Shared Prosperity Remains Elusive According to Poverty Data Released by the Census Bureau

Carolyn Burstein
Sep 18, 2014

While the Census Bureau data shows that the official poverty rate fell from 15% in 2012 to 14.5% in 2013, that fact is little consolation to low and middle-income families whose wages and salaries have been largely stagnant, and in many cases, even declining since 2000. Median income for non-elderly households fell from $65,785 to $58,448, a decline of $7,337 or 11.2% from 2000 to 2013. The data is from the Census Bureau, but the idea of following wage trends to determine the path of income inequality is straight from the research and writing of the Economic Policy Institute (EPI). When one examines the data over a longer timeframe, the trends are deeply disappointing and the culprit is wage stagnation.

In the words of EPI, “Since 1973, the median man working full-time, full-year has seen no sustained growth, dropping from $52,421 in 1973 to $51, 055 in 2002 and falling even further over the 2002-07 recovery and the recession to $50, 033 in 2013.” Women’s wages have also stagnated, but for a shorter period of time, from $39,108 in 2002 to $39, 157 in 2013. As Jared Bernstein argues in his September 16 blog “On the Economy” these types of facts “contribute to the growing disconnect between growth and the economic well-being of most households.” The reality of a lack of shared prosperity is a fundamental challenge to Congress, many of whose members conveniently ignore the idea of the common good.

Before we congratulate ourselves on attaining a 14.5% poverty rate, let’s remember that that figure is the same amount of poverty we suffered in 1993, in 1982 and in 1966, according to Census Bureau charts. That 14.5% poverty rate is well above the 11.3% rate in 2000. Today’s median income is still 8% lower than in 2007 and is barely keeping up with inflation. There were 45.3 million people living in poverty in 2013, roughly the same as the year before and not a statistically significant change from 2012. The major reason for the decline in the official poverty rate is a perceptible increase in the number of full-time jobs, which allowed a gradual shift from what had become a trend toward part-time employment.

Using the Gini Index – the most common measure of household income inequality used by economists, with zero representing total income equality and one equivalent to total inequality – income inequality was .476 in 2013; the change from 2012 was not statistically significant. And changes in income inequality between 2012 and 2013 were not statistically significant as measured by the shares on aggregate household income by quintiles. It is worth noting, however, that income gains for the top 5% over the period from 2009 to 2013 was .5% or $1542, the only income group to experience any gains.

Robert Greenstein, President of the Center on Budget and Policy Priorities (CBPP) reminds us that federal austerity policies, such as the sequestration budget cuts as well as tax policies that took effect in 2013 reduced economic growth substantially. The Congressional Budget Office (CBO) projected at the time that these policies alone cost the economy more than one million jobs.  We could have enhanced economic growth and strengthened productivity if we had invested more in infrastructure and training people for jobs.

The poverty data released by the Census Bureau on September 16, 2014 doesn’t include the impact of many governmental programs on the poverty rate, such as non-cash benefits (e.g. Earned Income Tax Credit [EITC]) and expenses incurred (e.g. out-of-pocket medical expenses, child care). This rate is known as the Supplemental Poverty Measure (SPM) and is considered to be a more accurate measure, even though it does not replace the official poverty measure. Poverty estimates using the SPM were published by the Census Bureau in November 2011, 2012 and 2013. Supplemental poverty estimates for 2013 will be published in October 2014.

Researchers at Columbia University looked back with their own SPM-like measure in 2013 and concluded that government anti-poverty programs were a significant deterrent to poverty, especially among children, the group that is absolutely the worst-off in the poverty statistics again this year. If the poverty data looks high today, it would be even higher without these vital government programs.

In 2012, the Supplemental Poverty Rate was 16%, rather than the 15.1% that the official poverty rate indicated.  Without Social Security, the Supplemental Poverty Rate would have been 24.5%. The National School Lunch Program lowered the SPM by about .5%; housing subsidies lowered it by approximately another 1%.  It’s important to keep in mind that the official poverty rate does count Social Security, Supplemental Security Income, unemployment insurance, child support and Temporary Assistance for Needy Families (TANF), but does not capture other cash benefits (e.g. food stamps) and non-cash benefits, like the EITC and does not include many significant expenses of poor families. By failing to capture all benefits that are often vital to poor families as well as many of their key expenses, the official poverty statistics are inadequate.

The value of the safety net in the reduction of poverty cannot be overstated. The Census Bureau has provided the data that allows us to conclude that the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps) has lifted 3.7 million people above the poverty line in 2013, including 1.5 million children. And unemployment insurance also kept 1.2 million people out of poverty in 2013. Without these and other safety net programs the poverty rate would have been even higher.

In Pope Francis’s address to the UN Food and Agricultural Organization (FAO) on June 20, 2013, he made clear why groups like the FAO (and, by extension, all of us) must continue to work with low-income families: “A way has to be found to enable everyone to benefit from the fruits of the earth, and not simply to close the gap between the affluent and those who must be satisfied with the crumbs falling from the table, but above all to satisfy the demands of justice, fairness and respect for every human being.”

(There is much to say about how different age, gender, racial and ethnic groups fared in the poverty statistics. We will focus on these various groups next week.)