(Article changed on March 11, 2013 at 12:06)
The Minimum Wage Debate: Windows On A Naked Reality
F. Ivan Goldberg
In his State of the Union address a few weeks ago President Obama called for a raise in the federally mandated minimum wage from $7.25 to $9.00 an hour. The response of the Republican Party was as swift as it was predictable: any raise in the minimum wage would destroy jobs, especially low-income jobs, thus hurting the very people it was purportedly designed to help. Raising the minimum wage, they argued, would price low-income wage earners out of the market. Such is the unavoidable implication of the iron laws of economics.
The President's proposal was aimed at the "working poor," a phrase that should evoke shame in any society, but when applied to the world's richest economy it is nothing short of an obscenity. That a person working full time--eight hours a day, five days a week, fifty weeks a year--should find it impossible to put food on the table or clothes on the backs of his children, or is forced to choose between feeding her family or buying medicine for a sick child--can any word other than "obscene' describe such a reality?
And yet that is the reality in America today. According to the US Census Bureau 32% of all working families fall below the poverty line, which, for a family of four, is defined as earning $23,050 a year or less. In 2010 more than forty-six million Americans, or roughly 15% of the population, were taking home wages that fell below the official poverty line. That is the highest number recorded since the Labor Department began reporting this statistic in 1987. And according to the Center on Budget and Policy Priorities, the number of American households living in "extreme poverty"--earning an income of less than two dollars per person a day--more than doubled in the fifteen years from 1996 to 2011. One in every two Americans, or 146.4 million, was classified by the latest census report as either low-income or earning a wage below the poverty line. Half of all workers in the United States earn $500 a week or less. One out of every four wage earners has a job that pays less than $10 an hour. And since the triumph of supply side economics in the Reagan era, low-income jobs in this country have risen by a third, from 30% in 1980 to 40% today.
The degradation of material life is not confined to the lower class; the middle class too has been swept up in an unrelenting spiral of diminishing fortune. According to the Census Bureau the erstwhile middle class is taking home a smaller share of national income ever recorded in our nation's history. 20.2 million of our citizens spend more than half their incomes on housing. That represents a forty-six percent increase just since 2001. Add to this the fact that many of these families are caught in the vice of a debt peonage never seen in this country: in 1989 the debt to income ratio of the average American family was around 58%; today that number is 154%. This means that the debt load carried by the average American family is one and a half times its income for an entire year. And that is just the average; for many it is much higher, especially among the poor: for households earning $20,000 a year or less, their debt burden more than doubled between 2000 and 2010.