Why A 'Living' Wage Doesn't Add Up

Dec 9, 2013
Originally published on December 9, 2013 12:44 pm



This is TELL ME MORE from NPR News. I'm Celeste Headlee. Michel Martin is away. Coming up, the average American spends about $900 on gifts every holiday. But does all that money buy happiness? We'll check in with NPR business editor Marilyn Geewax to see which gifts get the biggest smiles and happiness rewards. But first, the latest figures show unemployment fell to 7 percent last month. The economy added 230,000 jobs - still high, but that's the good news. But as it becomes easier to find a job, the pay rates may not be what job seekers have in mind. President Obama addressed that issue last Thursday.


PRESIDENT BARACK OBAMA: We know that there are airport workers and fast food workers and nurse assistants and retail salespeople who work their tails off and are still living at or barely above poverty.

HEADLEE: A new study suggests finding a job with a living wage - one where you can meet baseline household and personal expenses - is becoming increasingly difficult. We wanted to talk more about this, so we called on Ben Henry. He's a senior policy associate at the Alliance for a Just Society. That's an organization concerned with addressing economic, racial and social inequities. And also joining us, Steven Greenhouse. He's the labor and workplace reporter for the New York Times, and he's been reporting on these issues for many years. Steven and Ben, welcome.

BEN HENRY: Good morning, Celeste.

STEVEN GREENHOUSE: Nice to be here.

HEADLEE: Ben, let's just get the basics out of the way here. Your report makes the distinction between a low-wage job and living-wage jobs. What is the difference?

HENRY: So let me just say right off the bat, this is - it's kind of a big deal. Like, we're in these changing times, and the challenges that we're seeing challenges a very fundamental American notion that a full-time job should be enough to provide for a family. That seems like a fair deal. But what we're seeing today is that these jobs - and that is if you can find one - do not provide enough to make basic ends meet. And so that is the definition of a living-wage job. It's a job that can provide enough to make a living. And what we're seeing is, you know, we've gone from making a living to just scraping by.

HEADLEE: And then of course, what a living wage is depends to a large extent on where you live and the cost of living there. But, Steven, based on the reporting that you've done, who are the low-wage workers, in other words, these workers who are not making a living wage? Are they the unemployed? Are they the poor?

GREENHOUSE: Many of them are in this growing service sector - restaurants, retail, security guards, nursing home workers, you know, the fast-growing profession of home care aides, you know, groundskeepers, maintenance workers, janitors - you know, the millions and millions of workers around us who do these non-prestigious but essential jobs, jobs that we often overlook. And there are, you know, 50 million workers in America who earn less than $15 an hour. And many of them really have poverty wages, just $7, $8, $9 an hour.

HEADLEE: So, Ben, where does 15 - where is $15 an hour a living wage, and where is it not? I mean, are there - I have to assume there's places like New York City where $15 does not pay for your rent and groceries.

HENRY: Right, and so you're right that, you know, the living wages, they fluctuate based on where you're looking. So in our study, we looked in about 10 or so states, and we also looked in New York City. And there is no, like, one-size-fits-all living wage. It really depends on, you know, the type of household. You know, are you a parent? Are you a single individual? How many children do you have? You know, childcare, that's a huge contributor to living cost and keeping living wages high.

What I can say is, you know, $15, people think it's a lot. But when you actually look at what it costs to make ends meet, it's actually a quite conservative approach to setting, you know, wage thresholds. For a household with a single individual - single adult - the living wage in all of the states that we looked at was above $15 an hour. In New York City, which obviously is going to have a much higher living wage than most states, the living wage for that same type of household, single individual, is $22.66 an hour.

HEADLEE: Which makes the minimum wage sound incredibly low. If you're just joining us, we're talking about living-wage versus low-wage jobs. You just heard Ben Henry of the Alliance for a Just Society. We're also joined by Steven Greenhouse of the New York Times. And, Steven, what would this mean - say, for example, somebody who's working at a fast food restaurant - what does increasing wages mean? And one of the - the context for this question is we hear complaints all the time, at least politically, that they see people work - asking for more money, but these are the same people driving a brand-new Ford pickup truck, right, or having a 72-inch flat screen TV. So this living-wage, what does it mean in terms of what does it pay for?

GREENHOUSE: Well, as Ben said, it provides the basics to get by - rent, enough food to put on the table, perhaps a little to save up and do some planning. Celeste, I don't think we see many people earning the minimum wage of $7.25 an hour who are driving new pickup trucks. If they are, they must be doing something illegal on the side or must have a rich sugar daddy. I really don't - you know, when I interview people earning, you know, $7.25, $8, $8.50, $9 an hour, they're, you know, one step away from being homeless. Some of them - I was interviewing a gentleman in Kansas City who works at a Burger King and a Pizza Hut.

He works two jobs, 55 hours a week. His hours were cut back for a while. He, his wife and three daughters were forced to be homeless for a while. Now, thankfully, they found a place because his wife finished her program to become a certified nurse's assistant. So with two jobs they're able to afford an apartment again. But a lot of these people are really just scraping by. A lot of them go to food banks. You know, I spoke to one low-wage worker who said he really hasn't gone to see a doctor in 15 years since he had the chickenpox many, many years ago. A lot of these people are hurting.

HEADLEE: So, I mean, I know that recent studies have shown that, in fact, Ben, people in low-wage jobs pay a higher rate of taxes when you add in sales tax and all those other things than, say, those at the top of the earnings income. So what's the solution here? Maybe it's tax reform. Maybe we're only talking about a minimum wage. How do you solve this gap between earning a low wage and earning a living wage?

HENRY: So we see there's sort of two sides to the coin here when you talk about living wages. There is, you know, the wage floor aspect. You know, folks need to be making better wages. I mean, just quite frankly, like if...

HEADLEE: That's the minimum wage aspect, right?

HENRY: Right. When I say wage floor, that's another word for minimum wage. And, you know, if the minimum wage had kept up with inflation, you know, today it would be over $12 an hour. If it had kept up with productivity, it'd be over $18 an hour. And so what we're seeing is, you know, again, that erosion of the value of a good-paying job, a full-time job that just is not a reality anymore. And so, you know, we do need to have a serious conversation about increasing, you know, better wages.

There's a Fair Minimum Wage Act in the Senate right now that would increase the minimum wage - the federal minimum wage, which hasn't been increased since the Bush administration. So that's 2009, which means four straight years of pay cuts, you know, if you factor in inflation in real dollars for the minimum wage worker. And is that the direction we want to be headed? But, you know, to your point, there is the other side of the coin. And that's, you know, keeping living wages low. So things like, you know, health care reform and Medicaid expansion, what that does, it has a direct bearing on the cost of living for these low-wage workers. It keeps those costs down, which sets - you know, keeps the bar lower. And that's a good thing.

HEADLEE: So, Steven, I'm going to ask the impossible of you, which is to answer this following question in two minutes or so - which is, where - what happened to the disconnect that Ben is talking about? Following the crash of the stock market in the 1920s and then the New Deal, there was a balance between the workers movement and the capitalist movement, right? The unions had a certain amount of power. They didn't get everything they wanted. They got some of what they wanted. The business owners got some of what they wanted. And there was kind of a balance. What tipped the scales so that workers have less pull to get a living wage? While CEO salaries are going up, you know, skyrocketing, workers are not.

GREENHOUSE: That's the $64 million question, Celeste.


GREENHOUSE: You know...

HEADLEE: Two minutes.

GREENHOUSE: ...Part of it is that unions are weaker. Part of it is that there's much more - you know, we lost a lot of our middle-class manufacturing jobs, which you didn't need a college degree to make a good living. You could come out of high school and work hard and make a good living. Part of it is competition from abroad, where now, you know, American workers are competing directly with workers in China and India and the Philippines, and that's pulling down wages. You know, what's happening - what we've been seeing in the past few weeks - we saw these big protests at Walmart on Black Friday.


GREENHOUSE: Last Thursday, we saw fast food strikes - you know, strikes by fast food workers in a hundred different cities. And they're demanding - the Walmart workers are demanding $25,000 a year. The fast food workers are demanding at least $15 an hour. They're saying that $7.25, $8, $8.50, $9 an hour doesn't cut it. And they say something has to be done. The businesses say, we can't afford that. That would make us uncompetitive. You know, some liberals, some progressives say, well, let's then raise the minimum wage. There's a bill in Congress to raise the minimum wage to $10.10 an hour. Republicans, conservatives say, if we raise the minimum wage, that would be bad.

That would reduce the number of jobs. Let's raise the Earned Income Tax Credit instead. It doesn't seem likely that these - you know, the Republicans in the House who are busy cutting food stamps are also going to raise the Earned Income Tax Credit. So now there's people saying, again, we need to raise the minimum wage, or we need to persuade these big, you know, retailers, these big restaurant companies to raise wages because so many millions of Americans are really struggling to make ends meet.

HEADLEE: Good luck having that happen, at least anytime in the foreseeable future.

GREENHOUSE: Well, what's unusual now, Celeste, is, you know, we've really never seen, you know, such pressure, such activism by low-wage workers in the United States, at least not since the Great Depression.


GREENHOUSE: So whether, you know, these big movements against Walmart, against McDonald's and Taco Bell and Subway - you know, they've certainly gained traction...


GREENHOUSE: ...Whether they've gained enough traction to really pressure the companies to pay more, that's a very big question.

HEADLEE: Another $64 million question. Steven Greenhouse, the labor and workplace reporter for the New York Times. He joined us from the studios of the New York Times in New York City. And Ben Henry is a senior policy associate at the Alliance for a Just Society - an organization concerned with these issues of economics, race and social inequities - kind enough to join us from KUOW in Seattle. Thanks to both of you.

HENRY: Thanks, Celeste.

GREENHOUSE: Thank you. Transcript provided by NPR, Copyright NPR.