When the Month is Longer Than the Money

Published on AlterNet, by Sasha Abramsky, July 4, 2009.

… That the minimum wage became so diluted hinted at profound changes within the nation’s political culture. In 1938, Franklin Roosevelt signed the minimum wage into law, calling for a “fair day’s pay for a fair day’s work” and declaring that goods produced in workplaces that did not pay a minimum wage “should be regarded as contraband.” Seventy years on, the minimum wage had lost close to half its real value and was seen as a political punching bag, attacked by conservative critics as impeding the workings of the free market.

By the early twenty-first century, reformers questing after Roosevelt’s vision had come to accept that any minimum wage passed at the federal level was likely to be inadequate to meet the needs of its recipients; instead, they opted to push for local and state living-wage ordinances. 

The living-wage movement, however, has had only limited impact. While many states enacted a higher minimum wage than that mandated by the federal government in the years since 1997, none implemented one that genuinely met living-wage criteria. As a result, low-end wages continued to stagnate in a process exacerbated by the systemic underestimation of inflation, which allowed employers to minimize the pay raises they gave to employees. Thus, in a period of unprecedented corporate profits and rising worker productivity— up 2.5 percent per year during the 2000s— most working Americans experienced either stagnant real income or a fall in real income during the Bush presidency. Census Bureau numbers showed that the median household income for working-age households fell, in 2007 dollars, by $2,010 in the years from 2000 to 2007, the only economic cycle on record in which real income for American workers has fallen. For racial minorities, the trend was even worse: median income for blacks declined by over 5 percent during these years; for Hispanics the decline was 3.1 percent.

At the same time, the percentage of Americans, many of them employed, living below the poverty line steadily rose. In the absence of strong wage-protection laws, many employers continued to grievously underpay their employees. Indeed, Bob Pollin came up with a disturbing estimate of the extent of this problem: by the end of the Bush presidency, fully one in three American workers was earning below his living-wage benchmark.

These were the people— described by Princeton University sociologist Katherine Newman as “the missing class”— most impacted by soaring gas and food costs, people who in the best of times spent a higher proportion of their incomes on basic necessities than did any other part of the population. They were deemed by the government too affluent to qualify for food stamps, Medicaid, and the other welfare programs that collectively constituted the country’s frayed safety net. And yet, once oil prices doubled and then doubled again, once the cost of a gallon of milk, a dozen eggs, a pound of rice ballooned, these men, women, and children were the ones left most exposed to destitution. By trying to keep their jobs, low-wage earners and their families were in many ways rendering themselves worse off than those who never had, or couldn’t keep, paid employment and who therefore qualified for the maximum food stamp allotment and various other government subsidies. (full long 3 pages text).

Comments are closed.