Number of Poor Fulltime Workers is Growing
Fair Use Statement
Source: Christian Science Monitor
06/30/2000
The unsolved mystery of the gilded economy
by David R. Francis, Staff writer of The Christian Science Monitor
Donna Chambers works at a job that sounds decent enough: assistant
manager
at the Broadway 99 Cent store in Harlem, N.Y. She puts in long hours -
often six days a week.
Yet the mother of two doesn't earn enough that she can always put food
on
the table: She frequently gets free groceries from food pantries. She
has
no health insurance. She's struggling to pay an outstanding medical
bill.
Her story highlights a troubling anomaly of an economic expansion now
stretching into its 10th year: The number of full-time workers in
America
that remain poor by official measures has risen - not fallen.
In fact, while working poverty fell significantly in the late 1960s and
early '70s, almost 3 percent of full-time employees were poor in 1998 -
a
share not seen since the severe slump at the start of Reagan years in
the
early 1980s.
The numbers are contained in the first-ever study of poverty among
Americans working more than 35 hours a week. The
report, released yesterday by the Conference Board, a business-funded
research group in New York, suggests that even as record numbers of
Americans enjoy six-figure salaries, the trickle-down effect of economic
prosperity isn't reaching many at the bottom of the pay scale.
Experts cite several reasons. Perhaps chief is that, despite a focus on
the
New Economy's high-paying technology jobs, the current expansion has
actually produced more low-skill, low-productivity jobs than existed two
decades ago.
The retail and service sectors - encompassing workers such as Ms.
Chambers
who staff check-out lines or clean offices at the end of the day -
account
for a growing share of nonmanagerial jobs: 48 percent today versus 30
percent in 1965. Those industries are the lowest-paying in the economy.
Meanwhile, the minimum wage over that period has fallen, relative to
inflation.
The decline of trade unions has also decreased workers' bargaining power
across the board. And manufacturers have gone global with their
production,
increasingly putting US factory workers in competition with those in
lower-wage nations.
"The integration into the US economy of billions of unskilled people
abroad has driven down the wages of low-skilled Americans," says Joel
Slemrod, an economist at the University of Michigan Business School in
Ann
Arbor.
Another factor is the demographics of the workforce. Linda Barrington, a
labor economist who helped conduct the Conference Board study, notes
that
the percentage of Americans working full time has risen dramatically.
In the late 1960s, 38 percent of people were working full time; now it
is
just over 46 percent. Thus, she suggests more people with lower skills
are
able to find full-time positions and, because of wage trends, not climb
above poverty.
Information technology, meanwhile, has boosted living standards more for
the talented and educated in the US than for those at the bottom of the
pay
scale. A lawyer, for example, may use computers to do his legal research
10
times faster than he could by combing through bound volumes of earlier
cases. But computers do little to add to the productivity of the ditch
digger.
Another obstacle is the cost of living. Housing alone consumes most of
Chambers's income, which averages $1,000 a month. "The rent is
horrendous,"
she says. Her boss, David Sadat, says he, too, has barely enough to live
on
after paying rent. "It doesn't matter if you work full time. It's still
not
enough."
The number of full-time workers that don't make enough to rise above
poverty has risen from 1.5 million in the 1970s to almost 3 million in
1998. (The official poverty line for a family of three is $13,290 a
year.)
Add in children and other dependents, and the number of working poor
could
"easily" add up to 4 million to 5 million Americans, says Ms.
Barrington.
Many mothers leaving welfare for full-time jobs remain poor.
There are some signs of progress.
Hourly wages for those at the bottom of the income ladder have risen
since
1996. Jared Bernstein, an economist at the Economic Policy Institute,
notes
that controlled for inflation, hourly pay was $5.49 on average in 1996
and
$6.05 in 1999 for those in the bottom 10 percent of incomes. Many of
these
people work part time.
Overall poverty, at 12.7 percent of US households in 1998, stands at the
lowest level since 1979, according to the Census Bureau. Yet even as
overall poverty has been falling, the proportion of full-time workers
that
are poor rose from 2.5 percent in 1997 to almost 3 percent in 1998.
The problem of growing income inequality is being persistently raised by
Green Party presidential candidate Ralph Nader. Democratic candidate Al
Gore is dealing with the issue less directly through his retirement
savings
plan and his support of a boost in the minimum wage. Both measures would
reduce poverty.
Mr. Bernstein says one key factor lies outside the realm of presidential
politics: Federal Reserve policy. If the Fed allows unemployment to
remain
low, through low interest rates, it helps the working poor bargain for
better wages. The Fed Wednesday left interest rates unchanged, after a
succession of increases aimed at preventing inflation.
The working poor would also be helped if Congress undertook a
minimum-wage
hike, improvements in the Earned Income Tax Credit, and child-care
subsidies, Bernstein says.
For her part, Chambers agrees that raising the minimum wage would be a
nice
start. But she'd also like to see a politician try raising two girls in
a
one-bedroom apartment while working 50 hours a week. To know what's
really
going on, she says, policymakers "have to go into the belly of the
beast."
*Kim Masibay contributed to this report from New York.
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