Wednesday, September 04, 2013

Low-Wage Employers Have Fought Hard to Keep Their Workers Poor

September 4, 2013
by Joshua Holland


Between 1973 and 2011, the top 10 percent of American households saw their inflation-adjusted incomes rise by almost $100,000, while the bottom 90 percent – the vast majority of us –actually saw their incomes drop by $4,425 per year, according to economists Emmanuel Saez and Thomas Piketty (XLS). During that time, pensions largely disappeared, and the costs of health care and education shot through the roof.


But it’s not just companies like Wal-mart and McDonald’s paying their employees too little. According to a study by Demos, the federal government, indirectly, is the nation’s largest low-wage employer. A coalition called Good Jobs Nation began a campaign earlier this year urging President Obama to sign an executive order requiring federal contractors to pay their employees a living wage. With the stroke of a pen, Obama could lift the living standards of two million American workers.

These campaigns are filling a gap left by Congress, which hasn’t raised the federal minimum wage fast enough to keep up with the cost of living. Poverty wages represent a type of “market failure.” Like selling widgets for less than what it costs to make them, low-wage workers are selling their labor for less than what it costs to cover the basic necessities of life, which is why taxpayers end up subsidizing the profits of low-wage employers with various public benefits. “In today’s economy, the math simply doesn’t make sense,” says Basta. “If you’re paying workers between $10,000 and $18,000 a year, it’s impossible to live in a place like New York City without receiving public assistance.”


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