Jan's Corner: Better Wages for Better Opportunities

Janis Richter
March 26, 2013

Twenty years ago I had an eye-opening conversation with an in-law. In the course of a political discussion I mentioned that kids are the largest demographic group living in poverty in America. The response was a puzzled “How can that be? Don’t their parents take care of them?”

I’ve come to know my in-law better, and he is a compassionate, generous man.  This was a moment of cognitive dissonance, to be sure—but not an uncommon one.  Many of us reflexively think of children as a separate group from “the poor” or low-income working adults, forgetting that a significant number of poor adults are parents.

In fact, kids are over-represented among the poor; they are 24 percent of the total population, but 36 percent of the poor population, according to the National Center for Children in Poverty.

Most of these children have parents who work, but low wages and job instability are keeping them poor.

Instead of making sure workers get a living wage we make work pay by supplementing wages with public supports.

While the stock market has climbed to an all-time high, wages have been eroding. That leaves many working families relying on food stamps, child care assistance and housing subsidies.  

In fact, that’s the solution we’ve settled on over the last few decades – instead of making sure workers get a living wage we make work pay by supplementing wages with public supports. Even the welfare safety net is now tied to work. Public assistance benefits now come mainly in the form of work supports.

The biggest problem with this is that these work supports are not guaranteed. They are often underfunded so they are too little for too few, or they are under attack altogether, as now in the sequester and annual federal budget battle.

Some of the most effective wage supplements come via the tax code, especially the Earned Income Tax Credit and the Child Tax Credit. These are less vulnerable to attack during spending-cut debates, although not completely immune. It took some doing to keep them whole during recent budget fights.

So what can we do better to ensure that working parents can make it on their own pay?

Make sure wages keep up with inflation, with increases in the cost of living and gains in productivity.  (See this chart on impact.)

Take social security: When Congress elected to peg social security benefits to inflation, seniors got a big boost, making social security the most effective anti-poverty program for the elderly.

President Obama’s proposal to increase the minimum wage and tie it to inflation could do equally great things for parents in the workforce.CBPP chart

The last time we raised the federal minimum wage, children’s advocates cheered. The raise came in a 2007 appropriations bill, set to take effect in 2009. The estimate was that 6.4 million children whose parents earned minimum wage would benefit.

Actions to Watch (and Influence)

  • The Fair Minimum Wage Act of 2013, legislation that would raise the federal minimum wage to $10.10 per hour by 2015, and adjust it each year after that to keep up with the rising cost of living, was introduced in both the House and the Senate.

    Alas, this proposal was defeated last week in the House. The Senate bill is still pending.

Contrary to concerns that increasing the minimum wage would lead to more companies out-sourcing or laying off workers, economist Jared Bernstein with the Center on Policy and Budget Priorities said during Congressional testimony in February that this proposal would “potentially lift the earnings of 30 million low-wage workers, with little or no negative impact on the employment of affected workers."

There is good news in the states. Last week New York joined the 19 states and District of Columbia that already have raised their minimum wage rates about the current federal minimum of $7.25, and Congress may look to their approach as a model. Unfortunately, Indiana defeated such a measure.

In social policy there’s rarely a “silver bullet” that can fix a problem efficiently and effectively—but raising the minimum wage and pegging increases to inflation comes pretty close, in my opinion.

Jan Richter is a retired clinical social worker and child psychotherapist, and long-time children's advocate and writes the SparkAction Update. Read her bio here.