NYT: Picking Up the Tab for Low Wages

Camille Saunders and her daughter Kaitlyn, 11. Camile works as a security guard in Washington, but needs additional help to get by. Credit Gabriella Demczuk for The New York Times

It is hard to overstate the extent to which work no longer results in a decent paycheck and a rising standard of living in this country. The portion of the economic pie that goes to working people is currently near the smallest on record, in data going back to 1947. Similarly, the gap between worker pay and labor productivity has widened since the 1970s. In a healthy economy, wages and productivity would rise in tandem, but in recent decades, productivity gains have flowed increasingly to executive compensation and shareholder returns, rather than wages.

These dynamics are not inevitable. Low-wage employers, in particular, pay low wages because they can and the main reason they can is that Congress has failed, over decades, to adequately update the minimum wage and other labor standards, including rules for overtime pay, employee benefits and union organizing.

That failure has had deep and perverse repercussions, extending beyond harming low-wage workers. As a recent report in The Times by Patricia Cohen explained, when work does not pay workers enough to get by, they are forced to rely on public assistance programs, mainly Medicaid, food stamps and low-earner tax credits.

Nearly three-fourths of the people helped by public aid for the poor are members of families headed by someone who works, according to a new study by the Berkeley Center for Labor Research and Education at the University of California. It estimates that state and federal governments spend more than $150 billion a year on such aid.

In one respect, this shows that the safety net, though strained and inadequate, is functioning. Low-earner tax credits, for instance, create an incentive to work by tying cash assistance to earnings. Other programs enable people to work by subsidizing health care, child care and transportation.

The problem is that as labor standards have eroded, allowing profitable corporations to pay chronically low wages, taxpayers are not only supporting the working poor, as intended, but also providing a huge subsidy for employers by picking up the difference between what workers earn and what they need to meet basic living costs. The low-wage business model has essentially turned public aid into a form of corporate welfare.

The best corrective is to raise the federal minimum wage. A new bill introduced on Thursday by congressional Democrats would lift the minimum from its current level of $7.25 an hour to $12 an hour by 2020. At that level, there would still be a need for public aid to ensure that some working families are kept out of poverty. But that aid would decline as take-home pay increases, leaving workers — and taxpayers — better off. If a higher minimum wage were coupled with increased tax credits for low earners, the poverty fighting effects of the higher minimum would be amplified, further reducing the need for workers to use public aid for food and health care.

A handful of states are considering ways to recover public funds from low-wage employers, say, by requiring payment of a fee to the state for each worker who makes less than $15 an hour. In 2016, California will start publishing the names of employers that have more than 100 employees on Medicaid and how much these companies cost the state in public aid.

Depressed wages are the result of outdated policies and lack of public awareness, that may, at long last, be changing for the better.

Whether or not you support a minimum wage, it makes zero sense for the New York Times to also support mass illegal immigration of unskilled labour under these circumstances.

  • Drunk_by_Noon

    Had we not flooded our borders with cheap Mexican labor, there would actually be a slight labor shortage and wages would rise accordingly and these two would have higher wages, more public assistance (if needed), and more future opportunity.
    Now they will have none of those things, forever.

    Until this is fixed, there is always a crush of in-rushing labor to keep wages at starvation levels for some time to come, likely forever.
    This is what happens when you allow some countries to export their poverty to your country.
    We are finding out that their poverty is as contagious and as infectious as their Measles as it is demanded that the North American worker subs it on the wages of a Mexican laborer.

    • In Canada our Conservative government has flooded the nation with record setting annual immigration numbers.

      Add to this the Temporary Foreign Workers program and voila – wage suppression.

      This was an attack on Canadians by their own government and corporate elite.

      That sounds wildly leftist but it’s simply true.

      We were lied to about the need for immigration as an economic panacea. As a guarantor of future economic prosperity.

      The only prosperity ensured by mass immigration is that of the political class. They are shielded from the economic chaos they’ve inflicted on the rest of us by theft of taxation.

      • Drunk_by_Noon

        I don’t know what I can say and still be in compliance with Canadian law, but these people that have no ECONOMIC fear, must be made fearful in some other way.
        It does not necessarily have to entail violence, but instead a determined effort to make them, and their family’s lives as unpleasant as possible. Even if that is nothing more than pointing your finger at them and screaming at the top of your lungs in public, that is something.

        • Frau Katze

          Both left and right are complicit in the mass migration scam, albeit for different reasons.

          • Drunk_by_Noon

            Absolutely true Katze!

          • Norman_In_New_York

            I can’t emphasize often enough that the Mexican invaders and other low wage earners work off the books, which means that taxes are not taken out of their pay and they get the money whole. Employers like it that way rather than face hefty tax bills every three months or even monthly. In addition, employers could evade compensation and disability insurance and a load of safety regulations. The whole package of expenses and record keeping requirements are an intolerable burden, especially to small businesses. We know that this goes on all the time, but Congress and state legislators don’t have a clue about straightening out this situation and just continue to pile on more regulation until businesses are strangled.

          • mauser 98


        • It’s not a surprise the NDP is polling so well in Alberta.

          Ontario is a different case, the province is run by the public service unions who have no qualms demanding that the less well off, and that’s the every-man not on the government tit, support their unearned, undeserved entitlements.

    • mauser 98

      “Now, if you’re a border jumper, and you’re a queer, the magic words are, “I have HIV.’”
      That’s the password INTO the country.

      Read more at http://iotwreport.com/?p=284408#Svq6LE4Pr0Wy4UlO.99

  • Dana Garcia

    It’s like the NYT never heard of supply and demand.

  • I wish these people would get a clue.

    The reason why many people struggle is because Big Government takes their money and funnels it back to them in crappy or non-existent services. Let them keep the money and do as they wish/must.

    • dance…dancetotheradio

      And let us have our own kids instead of subsidizing others who don’t share our values like hard work.

  • mauser 98

    illegal alien cheap labour hurts blacks first and worst

  • mauser 98

    ……….chickens home to roost
    ….lefty bookstore hit hard by new minimum wage
    “I’m hearing from a lot of customers, ‘I voted for that, and I didn’t realize it would affect you.’”


  • bob e

    nothing you can pay these people will be enough ..
    “you brought us here.. now deal with it ..”

    i tell ya .. don’t make me king .. sheeesh

  • Hard Little Machine

    Except that in many US cities, you would be homeless and hungry with a $25/hr wage. Overall it’s certainly the case that minwage should be higher but we have to accept that for millions upon millions of people it would still have little to no effect.

    • Justin St.Denis

      If you are only capable of earning the minimum wage, why choose to live in an urban centre known for its high cost of living? I learned that before I was 15. Summer employment was SO MUCH MORE WORTHWHILE if I was working elsewhere than the urban centre I lived in during the academic year. I made LOTS of money working summers logging in the NWT, northern Quebec, Ontario and B.C. Later, when I had a couple years studies under my belt, I worked in remote labs for government projects as well as private industry which paid me very well. Then again, I found $$ to be very motivating, and I was quite willing to work hard and productively for my employer to get more of it. That’s how it works. If you don’t understand that, then understand this: You are too stupid to be fixed. Sorry, NEXT!

  • Justin St.Denis

    The SJW types – not noted for their deep thinking – seem to confuse the concepts of “living wage” and “minimum wage”. The latter is fixed by the value the tasks being outsourced to the “hired employee” hold for th employer. “Shop floor sweeper” – for example – largely consists of pushing a broom along long corridors/aisles. This does not require a rocket scientist. Many forward-thinking firms hire the disabled for these jobs as part of larger social service programs to support a measure of independant living by their clientele. But the jobs themselves are not worth more than minimum wage salaries to the Employer. Ditto “McJobs” at fast-for franchises. These were never intended as “career paths” which would lead to living wages to support a family of four. Gimme a break? Hamburger flippers that argue that, after 17 years of flipping burgers at the same franchise they deserve better pay, need to be reminded that WHAT they do is unchanged, so their ‘salary’ is tied to government minimum wages. That is what some jobs are worth.

    Get a clue, or a brain, or a rich spouse, or a sense of motivation, or an education, or a backbone, but PLEASE STFU and stop bitching about reality. We all deal with reality every day. Your reality is the same reality as our reality.

    • dance…dancetotheradio

      You can’t reason with living wage people.
      I have stupidly tried.
      I said people don’t need pizza and the only way to guarantee the employees of a pizza joint a living wage is to force everyone to buy pizza they don’t need or want.
      But, they said, if more people had a living wage they might be able to buy more pizza.
      Squaring the circle once again.