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Poverty Nation: How America Created a Low-Wage Work Swamp

For decades, both parties supplanted a push for higher wages with well-intended public aid. The result: calamity.
 
 
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2013 is the year many Americans discovered the crisis of the working poor. It turns out it’s also the crisis of the welfare poor. That’s tough for us: Americans notoriously hate welfare, unless it’s called something else and/or benefits us personally. We think it’s for slackers and moochers and people who won’t pull their weight.

So we’re not sure how to handle the fact that a quarter of people who have jobs today make so little money that they also receive some form of public assistance , or welfare – a proportion that’s much higher in some of the fastest growing sectors of the workforce. Or that 60 percent of able-bodied adult food-stamp recipients are employed.

Fully 52 percent of fast-food workers’ families receive public assistance – most of it coming from Medicaid, food stamps and the Earned Income Tax Credit — to the tune of $7 billion annually, according to new research from the University of California-Berkeley’s Labor Center and the University of Illinois.

McDonald’s workers alone receive $1.2 billion in public aid, the study found. This is an industry, by the way, that last year earned $7.44 billion in profits, paid their top execs $52.7 million and distributed $7.7 billion in dividends and stock buyback. Still, “public benefits receipt is the rule, rather than the exception, for this workforce,” the study concluded.

Then there’s Wal-Mart, which as Salon’s Josh Eidelson recently reported , boasted to a Goldman Sachs conference that “over 475K” of its 1.3 million workers make more than $25,000 a year – which lets us infer that almost 60 percent make less.

Democrats on the House Committee on Education and the Workforce estimated that the giant low-cost retail chain benefits from many billions in public-assistance funding; one Wisconsin “superstore” costs taxpayers at least $1 million a year in public assistance to workers’ families. Remember, too, that six members of the Walton family own as much wealth as 48 million Americans combined.

But it’s not just fast food and Wal-Mart: One in three bank tellers receives public assistance , the Committee for Better Banks revealed last week, at a cost of almost a billion dollars annually in federal, state and local assistance. That’s right: One of the nation’s most profitable, privileged and high-prestige industries, banking, pays a sector of its workers shockingly low wages and relies on taxpayers to lift them out of poverty. In New York alone, 40 percent of bank tellers and their family members receive public assistance, costing $112 million in state and federal benefits.

Bank CEOs get multi-million dollar bonuses as profits soar, while millions of tellers are so poor they get welfare. Something’s wrong with that.

Revulsion at subsidizing profitable corporations that pay poverty-level wages is helping fuel a wave of long-overdue organizing and protest on behalf of low-wage workers, from the fast-food strikes that have swept the country to Wal-Mart protests this holiday season. Taxpayers recoil at the notion, but so do many workers themselves. “I thought I could make it on my own. That didn’t happen,” Wal-Mart worker Aubretia Edick , who makes $11.70 an hour and still gets public assistance, told the Huffington Post. That’s why she joined a one-day strike. “Wal-Mart doesn’t pay my salary,” she said. “You pay my salary.”

The U.S. now has the highest proportion of low-wage workers in the developed world, according to the Organization for Economic Cooperation and Development. One in four make less than two-thirds of the median wage, which is the same proportion that rely on public aid. It’s becoming more widely accepted that the spread and persistence of low-wage work is behind rising income inequality and reduced social mobility. What’s less well known is the role Democrats have played in creating this trap.

 
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