September 25, 2000
FIVE YEARS CLOSER TO ECONOMIC JUSTICE: A Proposal by the National Jobs for All Coalition
Imagine a society without poverty. Imagine a society in which all people who want and need to work have jobs that enable them to earn a living adequate for health and well-being. Imagine a society in which recession and periodic loss of job and income no longer threaten. Imagine a society in which all people can sit under their own vine and fig tree and none is afraid!
Such a society could be ours. In the richest country in the world, povertyâof income, vital goods and services, and time for family and communityâmakes no sense. It makes no sense that among advanced nations, the United States ranks tops in wealth and tops in many indicators of poverty. It makes no sense that over one-fourth of black and Hispanic people are poor and that nearly 40 percent of single-mothers and their children are poor. It makes no sense that , according to an international study in 1999, “every other nation has produced better results in fighting child poverty than has the United States.” It makes no sense that many people have trouble finding affordable housing, that too many rob themselves of other necessary goods in order to pay rent, and that some lack any address. It makes no sense that 45 million people lack basic health care when countries far less wealthy provide health care for all. It makes no sense that millions of children lack proper care or nurture when their parents go to work. It makes no sense that billions go into keeping young men and women in prison when they could go to college for one-third the price. It makes no sense that working people have to sacrifice time with their families or for their communities just to stay even, while the top 5% of the population live in luxury that far surpasses anything known to the kings and emperors of old.
Our nation has the resources and the know-how to end poverty, disease and hunger. Such a society is envisioned in most of the international human rights treaties and covenants that our government has signed. All that is lacking is the political and popular will. To mobilize that will is our task.
Churches have the moral force to hold accountable the institutions that wield power in economic lifeâgovernment, organized labor, and the corporate and financial entities that have acquired levels of power and influence unmatched since the early decades of the twentieth century. Churches can “speak truth to power.”
In the past quarter century, it is said, the American social contract has been broken. That contract was never fully realized, particularly for minorities and women, but recent years have seen the breach of components of the contract that were in place for many years. One indication of this reduced commitment or breach of contract is in progress against poverty. Between 1959 and 1973, poverty was cut in halfâfrom 22.1 percent of the population to 11.1 percent. The poverty of children and of blacks fell similarly. In 1998, overall poverty was above the 1973 mark despite the fact that the nationâs resources (GDP per capita) had risen more than 40 percent. Amidst economic boom, child poverty was 30 percent higher in 1998 than in 1973, and the poverty of African-Americans and Hispanics was still more than three times that of whites.
The governmental responsibilities that have lapsed in the last two decades are consistent with traditions and mandates of contemporary religious institutions. To regain lost ground and to repair and complete the social contract, it will be necessary to engage the institutions and interests that have attacked affirmative government and undermined peopleâs belief in its ability to promote justice. The proposals that follow largely pertain to governmental policy in the United States, but to play a role in achieving them, churches will not only need to direct their attention to the public sector but to the private interests whose transgressions are not to have grown rich but to have denied others a fair share.
Jobs for All at Decent Wages: The Basic Stragegy
The basic strategy to abolish poverty and reduce inequality is to assure living-wage jobs for all. There will always be ill and disabled men and women who will be unable to support themselves and their families through employment. A just society can do no less than to meet those needs through some form of public income support. Some others should be compensated for work in the home–for providing vital care to very young or the very old or disabled members of their families. It makes no sense to “count” and compensate child and elder care only when it is done by strangers. And many working families need help in paying for housing, health care, child care, and other essential goods and services. Other rich countries, though all with less wealth than the U. S. have achieved much lower poverty rates and largely because of the anti-poverty effects of their social welfare system. However, such programs, though a vital component of a strategy to end poverty, should remain complementary to the primary thrust of public policyâ living-wage jobs for all.
In this choice of strategies, the NCCC reaffirms traditional Christian values, as expressed in its support of the Humphrey-Hawkins bill in the 1970s: “Full employment should be the nationâs first priority â¦. Our position is rooted in the Christian conviction that oneâs sense of identity and worth is clearly related to the feeling of contributing creatively and responsibly to meeting the needs of society.” Similarly, the Pastoral Letter on Catholic Social Teaching and the U. S. Economy states, “Full employment is the foundation of a just society.” International human rights agreements also affirm the right to employment and to a decent income.
The United States has had partial entitlements to welfare, but it has never had an entitlement to workâa job for everyone who seeks employment. If men and women are to meet the obligation to work or to practice the work ethic, they must first have the opportunity to work.
The Poverty Standard and Anti-Poverty Goals
The U. S. poverty standard ($17,028 for a family of four in 1999) is both inadequate and outdated. A study made for the Joint Economic Committee of the Congress concluded that a standard 50 percent above the official U. S. poverty threshold would meet the criterion of minimal adequacy (Ruggles, 1990).
If the poverty standard were raised 50 percent, as proposed in the Congressional study, the poverty rate would have been 21.5 percent in 1998 or just over one-fifth of the population rather than 13 percent. Nonetheless, the income for a family of four–$24,990 at 150% of the current poverty threshold– is still below $28,031, one half the median income for a family of four, the poverty standard used by European countries and international organizations. Thus, to set a goal of eliminating official poverty in the next five years is not to rid the nation of want. Given the meagerness of the standard, we would really be reducing poverty by about 60 percent. A wealthy nation should set goals that are commensurate with its resources. We propose that the U. S. poverty threshold be raised to 150 percent of the present standard and that achievement in eliminating poverty be judged in the future by that criterion.
A poverty standard based solely on money income is limited, even if the amount is adequate. A United Nations poverty index for industrial countries measures the extent to which illiteracy, short life expectancy, social exclusion, and income poverty are still found in the midst of thriving societies. Among advanced, industrial nations the U. S. ranks first in GDP per capita and last on this expanded index of poverty. Consideration should also be given to the use of this UN measure or a similar expansive indexâbeyond the measurement of income poverty–to measure future progress toward social and economic justice.
Â Achieving Policy Goals
It is one thing to establish policy goals and quite another to gain their enactment. How many worthy and attainable goals remain just that. To achieve these goals, churches will have to work hard and well. As organizations with broad memberships of active and publicly-concerned citizens, churches have the ability to persuade some elected officials and business leaders to “do the right thing.” Included in the full statement are some general guidelines for Advocating the NCCâs Anti-Poverty Goals as well as ones pertaining to its specific components. Also included in the full statement but omitted from this Overview are another set of proposals for Measuring Progress toward each. For example, measuring progress toward meeting goals for reducing unemployment includes tracking the number of jobs needed to achieve the goal nationally and in each local communityâmany of which have considerably higher than national unemployment rates. To answer claims that adequate numbers of jobs are already available, job vacancy surveys which measure the number of vacant jobs available in a community in relation to the number of job seekers can also be used.
LIVING-WAGE JOBS FOR ALL
Reducing Unemployment in Good Times and Bad
Despite its recent and welcome reduction, unemployment remains a major problem for many people and many areas of the country. Further, the official unemployment rateâlike the official poverty standard–grossly underderestimates the problem. The official unemployment rate does not include 1. persons who work part time because they are unable to find full-time employment; and 2. those who want jobs but are not actively seeking them (often because they think none are available or have transportation or child care problems).
Using data from the Bureau of Labor Statistics and including these two categories, the National Jobs for All Coalition derived an adjusted unemployment rate of 9.2 percent in August 2000 or 13.4 million persons, more than double the official rate of 4.1 percent or 5.8 million. As unemployment has declined in recent years so has the number of involuntary part-timers and non-job seekers who want to work. Even this adjusted unemployment rate is a minimum that does not include many of those forced to retire early, inmates who might not be in prison had decent work been available, and many disabled persons who dare not even consider employment because it seems an impossible dream.
The relatively low rates of unemployment in the 1990s did not result from conscious government policy to achieve full employment, and in fact, there is no commitment to maintaining existing levels of unemployment], much less pushing them down further. The Federal Reserve Board raised interest rates five times between June 1999 and May 2000, each time without any clear indication of inflation. The Fed continually errs on the side of preemptive action against inflation rather than on the side of maintaining or increasing employment.
Cut official unemployment rate in half within five years. Â Two percent unemployment is achievable, well within our graspâas long as the Fed keeps its foot off the brakes. If we assume that the absolute labor-force growth from 2001 to 2006 is the same as from 1994 to 2000 (some 8.4 million), the goal of cutting unemployment in half requires about the same net job creation–roughly 11 million–as in the last half of the 1990s. Achieving this goal would increase rather than waste potential input and would cut in half the proportion of the labor force that is deprived of income, the opportunity to contribute to nation and community, and the self-respect that comes with that opportunity. Given the undercounting of unemployment, cutting the official rate in half is only an interim goal that would still leave many Americans without the opportunity for work.
This goal can be achieved without risking inflation. There is no reason to anticipate that going down two percentage points would trigger inflation. In the 1960s, Germany, Japan, Sweden, and France had average unemployment rates ranging from .6% to 2%, and Germany had both the lowest unemployment and inflation rates. Some types of inflation cannot be well controlled by unemployment anyway, for example, oil price increases. There are means of avoiding inflation other than raising interest rates and increasing unemploymentâefficient employment exchanges, education and training opportunities to increase the productivity of workers, targeted job creation (see Strategies, below), and targeted credit controls. The main thing is to commit ourselves to control inflation by other means than unemployment.
Change the Federal Reserve Boardâs policy of preventing further reductions in unemployment.
Initiate a targeted. public job-creation programs that would offer real jobs at no less than the minimum wage (see below) to unemployed individuals who are ineligible for unemployment insurance or who have exhausted their benefits.
A job-creation strategy allows government spending to do double duty in the fight against poverty. The spending not only provides income to persons in need. It also produces badly needed public goods and services. For example, a direct job creation program that focused on the rehabilitation of abandoned and substandard housing in poor communities would reduce poverty not only by increasing employment but also by increasing the quantity and quality of low-cost housing. A direct job creation is also the least inflationary way to achieve full employment because it does not over-heat the economy in areas where labor markets are already tight. It creates jobs only where they are needed.
Track the number of jobs needed to reduce unemployment to 2 percent both nationally and in each local communityâmany of which have considerably higher than national unemployment rates. Statistics on unemployment levels are available monthly for the nation and for a number of metropolitan areas in each state, as well as for all states, 50 large metropolitan areas and 17 central cities, along with selected demographic and economic characteristics of the unemployed.
Conduct Job Vacancy Surveys to answer claims that adequate numbers of jobs are already available. Job Vacancy Surveys measure the number of vacant jobs in a community in comparison to unemployment statistics that measure the number of job seekers in the community. To achieve full employment, it is necessary for the number of available jobs to at least equal the number of people seeking work. Roughly, this means the Job Vacancy Rate should equal or exceed the Unemployment Rate. Job Vacancy Surveys have been conducted in some communities. They should be conducted in all communities, so people will know rather than have to guess how many additional jobs are needed to provide work for everyone who needs it.
Demonstrate and publicize the idea that 4 percent unemployment is not full employment and that official unemployment figures underestimate joblessness. Nobel laureate and former President of the American Economic Association, William Vickrey, called for 1.5 percent unemploymentââchock full employmentââwhen the unemployment rate was in the 7 percent range.
Remind public officials that the Humphrey-Hawkins Full Employment and Balanced Growth Act of 1978 is still the law of the land and that the Act calls for further reduction of unemployment once the interim target of 4 percent is reached.
Expose and publicize the fact that the Federal Reserve Board has often created unemployment by raising interest rates before inflation threatens.
Encourage the AFL-CIO to adopt this interim goal of cutting unemployment in half from 4 percent to 2 percent, to make it a priority, and to lobby for it.
Encourage other organizations to adopt these goals and to make them priorities in their lobbying efforts.
Urge legislators to hold hearings on unemployment in their communities and volunteer to help in securing experts and witnesses.
Eliminating Disproportionate Unemployment among Minorities
Many groups and areas have much higher rates of unemployment than the national rate. When unemployment rates fall, members of disadvantaged population groups benefit disproportionately. Reducing the unemployment rate has a natural tendency to benefit disadvantaged population groups more, but this improvement does not eliminate differences in the relative size of the gap. The black unemployment rate was more than double the white rate in 1992 (14.2% compared to 6.6%), and it’s still more than double the white rate (8.6% compared to 3.6%).
For many groups, especially African-American men, African-American teens and persons with less than a high school education, the proportion who actually hold jobs (employment to population ratio) is significantly lower than for their white counterparts and much below the national rate. Even more troubling than the fact that unemployment among African American teens is more than twice that of their white counterparts is the fact than in a boom economy, only 27.7 percent of African American teens are employed, compared to a an employment rate of 49.3 percent among white teens.
Reduce the gap between the unemployment rates of disadvantaged groups and the rest of the population, and reduce the gap in percentages employed.Â
Create jobs in areas where disadvantaged groups live and in areas of higher-than-average unemployment.
Improve enforcement of anti-discrimination laws, improve information and transportation networks that link disadvantaged groups to job opportunities, and increase the availability of affordable child care (see below).
Mandate the United States Employment Service to increase outreach to disadvantaged populations (e.g., supplying high school counselors with job openings and listing of all jobs, not simply low-wage jobs in low-income areas).
Track the ratio of African American and Hispanic unemployment rates to white unemployment rates for different age and gender groups. Track gap between employment ratios of minority and white groups. Depending on availability, track ratios for geographic areas. (More data are available for large areas.)
Use Job Vacancy Surveys, where available, to track the relative availability and characteristics of jobs to which disadvantaged population groups have access.
Monitor implementation of Employment Service practices in local communities.
In addition to the advocacy approaches already emphasized, churches should work closely with civil-rights and other groups fighting discrimination.
Making Work Pay
Over 16 million full-time workers earned less than the poverty level for a family of four in 1999 ($17,028). Several important wage trends during the last three decades, at least until 1995, when tighter labor markets began to raise wages, have helped perpetuate poverty and undermine living standards:
- The real value (purchasing power) of the minimum wage declined substantially. A full-time worker receiving the today’s minimum wage of $5.15 earns only about 80% of the poverty line for a family of three, whereas in 1968, the same worker would have earned 120% of the three-person poverty level.
- Since the 1970s, there has been a general decline or stagnation in the inflation adjusted wages of non-management workers in the United States, and with the recovery of some losses, wages still lag behind the 1973 level. Fringe benefits like pensions and health insurance have also declined since the early 1970s. At the same time that workers’ wages have fallen, the pay of CEOs and other high-level corporate executives has soared to at least a hundred times that of production workers.
- The absolute number of persons living in poverty has actually increased since 1993, as has the proportion of full-time, full-year workers earning less than a poverty level income.
- A shift out of better-paying and middle-wage jobs to very low-wage employment has resulted in an increase in the proportion of people who earned poverty level wages.
- This problem of low wages is especially acute for women, since they are more likely to have children to support without the help of a partner and a second income. The gap between men’s and women’s wages has narrowed but is still significant.
- Since the 1970’s, there has been a widening gap between productivity increases and wages. Productivity increased by nearly 50 percent between 1973 and 1999, but compensation (which includes fringe benefits) rose by only 26. This gap between productivity and wages is one important explanation of widening inequality. It is reflected in a decline in labor’s share of total income (even though labor’s share includes, ironically, those vastly inflated executive salaries) and an increase in the share going to the corporate sector.
Increase the minimum wage to its peak level in 1968–about $7.50 in 2000–and index it to an economic indicator, such as average wages or consumer prices. This is equivalent to 120 percent of the three-person poverty level but still below the four-person standard. In 1968, our national resources were more than a third less than now.
Reduce wage gaps between women and men and between high and low-wage workers.
Increase union density, particularly among low-wage workers. When union density was at a peak its spillover effect on the wages of nonunionized workers was greater.
Raise the median wage. Workers, especially young workers with less than a college degree, have suffered an earnings collapse largely because of the sharp erosion of the minimum wage, the undermining of union power, globalization, and the dominance of market ideology.
Tighten labor markets, particularly at the bottom, through full-employment policies.
Enforce the full range of labor legislation, including the right to organize unions and protection of unionizing workers from retaliation.
Support anti-discrimination measures, including pay equity laws, that would raise the wages of minorities and reduce the poverty of our poorest families–those headed by women alone.
Support living-wage campaigns. Enacted in 2,000 jurisdictions, living wage ordinances require local governments and employers doing business with government to pay wages in the $7.50 range or higher.
Push for corporate accountability— to the communities in which they are located and to their employees and including acceptance of their fair share of taxes.
Track those who are poor despite full-time jobs.
Track the minimum wage for its progress toward the 1968 peak.
Measure the fraction of all jobs that achieve the living wage in the community and in the country.
Track the ratio of CEO pay to that of production workers, both locally and nationally.
Track the ratio of median female to male wages.
Compare the rate of wage increases with productivity measures.
Publicize Measurement Results. Work closely with organized labor and with women and minority workers and their advocates.
PUBLIC INCOME SUPPORT OR SOCIAL WELFARE
Market measures alone are never sufficient to overcome poverty. A major difference between the United States and countries that have achieved substantially lower rates of poverty is the inadequacy of its social welfare system. Prior to the payment of cash benefits, Canada, France, Germany, Sweden, and the UK had higher relative poverty rates (less than half the median income, adjusted for family size) than the U. S. However, these other countries, all with per capita resources substantially lower than the United States, did considerably more to offset the inequality of market income. After the payment of cash benefits, their relative poverty rates in the mid-1990s were between 8 and 11 percent, compared to 18 percent for the United States. These countries reduced poverty through cash benefits by 70 percent or more, compared to 47 percent for the U. S. Moreover, much of U. S reduction is in the poverty of the elderly which is still higher than the median for the 17 nations in the OECD. When children or single-mother families are considered, there is much greater disparity between the poverty- reduction rates of the U. S. and these other countries. For example, childhood poverty ranged from 3.7 percent in Sweden to 26.3 percent in the United States. If we use the U. S. poverty threshold instead of the relative standard used by the OECD and in most international comparisons, rates of poverty in the early nineties were: Japan 3.7 percent, Sweden 4.6 percent, and Canada 5.9 percent, compared to almost 15 percent in the U. S.
We propose two sets of income-support goals, one to raise incomes above the poverty level and the other to alleviate the financial burden of high-cost goods and services–housing, health care, child care, transportation, banking and credit, and utilities.
RAISING INCOMES OF THE ELDERLY AND DISABLED
Social Security, which is not means-tested, benefits all age groups–young workers who have insurance during their working years, retired and disabled workers and their dependents, and the survivors of deceased workers. Some 45 million people receive Social Security benefits, including 9 million who are not elderly. They are workers with disabilities, children of retired, disabled and deceased workers, and caretaker parents. Social Security is the nation’s largest and most effective anti-poverty program, and its impact on the elderly has been dramatic. The rate of elderly poverty–9.7 percent in 1999–is less than one-third what it was in 1959, and over half of all seniors and about six in ten African American and Hispanic elderly would be in poverty without Social Security. Thanks largely to Social Security, the elderly are now the age group with the lowest poverty rate.
Despite this progress, the United States does less well by older people than most developed nations. Using the relative international poverty standard (less than one half the median income, adjusted for family size), the rate of poverty for the elderly in 17 of these countries averaged 11.7 percent, compared to 19.6 percent for the US. Only the United Kingdom and Australia had higher rates.
Millions of elderly Americans are poor, and certain groups of the US elderly are still very vulnerable to poverty. Over three million elderly Americans were poor in 1999. And for women 75 and older, the poverty rate (13.4 percent) is double the men’s rate (6.6 percent). Poverty rates for African Americans and Hispanics 65 and over are considerably higher (22.7 percent and 20.4 percent, respectively). For other groups of the elderly, especially those living alone-predominantly women-the overall rate–18.6 percent–is higher still, and it escalates to 41.8 percent for African Americans, and 46.8 percent for Hispanics.
The economic situation of the disabled is dismal. Official data are rarely collected. However, according to a Harris Survey, in 1998 one in three disabled persons of working age were in households with less than $15,000 annual income, compared to about one in eight of the non-disabled.
There is a widespread misperception that Supplementary Security Income (SSI), a means-tested program for the elderly and disabled poor, is an anti-poverty program. But the federal SSI benefit is only about 75 percent of the poverty standard for individuals and 90 percent for a couple. The median state supplement to the federal benefit still leaves both individuals and couples below the poverty level. Indeed, 1.5 million older persons who received means-tested assistance were living in poverty in 1998. (Means-tested programs for able-bodied people of working age and their children are even more meager.) Another problem with SSI is that some people who are eligible do not apply for it.
Social Security is the nation’s main important bulwark against poverty. It is crucial for low-wage workers, who are less likely to have additional sources of retirement income. The significance of Social Security is enhanced now that workers are less likely to have private pension coverage than in the past.
Despite the enormous benefits of Social Security, problems remain. Although there is a special minimum benefit, it is only for workers who have earned low wages for many decades. Very few are able to qualify for it. Further, the maximum special benefit for these low-wage workers is currently somewhat below the poverty standard for a single person. Widows and divorcees often receive low benefits and some of the latter may not even qualify for benefits. It is often difficult for disabled persons to qualify for disability insurance. Persons who are receiving Disability Insurance are eligible for Medicare but only after two years. The age at which a person qualifies for full Social Security benefits is being increased gradually from 65 to 67, which amounts to a benefit cut. (Workers can still start receiving retirement benefits at 62 but checks will be smaller.)
Legislation enacted several decades ago has reduced the proportion of prior earnings replaced by Social Security for all retirees. Between 1981 and 2000, the replacement rate for low-wage workers fell from 54 to 43 percent.
Finally, the payroll tax that finances Social Security is more burdensome for lower-wage than for high-wage workers. In 2001, no Social Security taxes are paid on wage and salary income above $80,400. (Medicare taxes are paid on all wage and salary income.)
Social Security could provide even more security to workers and their families, but many policy makers and Wall Streeters are pointing in the opposite direction. They claim there is a Social Security “crisis.” In fact, Social Security is fiscally sound. If the U.S. economy grows as little as 2.4 percent a year in the 21st century, well below the 3 percent, 75-year average, the Social Security Trust Funds, according to their Trustees, will continue to expand indefinitely. The Wall Street solution, privatization-putting our Social Security money into the stock market-would create a real Social Security “crisis” for millions of Americans, and benefits would have to be cut substantially if part of the payroll tax is used for individual accounts. Millions could be impoverished. [See the Coalition’s Social Security packet,
Eliminate poverty of the elderly and disabled.
- Expand eligibility for the Special Minimum Benefit under Social Security for life-time low-wage workers, and increase it to at least the poverty level.
- Restore 65 as the age for full Social Security retirement benefits.
- Restore 1981 Social Security wage replacement rates (they were reduced at that time by changed benefit formulas).
- Raise federal SSI benefits for individuals and couples to the poverty level. Since SSI is also for the disabled, this would be an anti-poverty strategy for the disabled as well. Of course, achievement of the primary goal of Jobs for All at Decent Wages, including anti-discrimination objectives, would cover the elderly and disabled who are able to work.
- Provide funds in the legislation for publicizing the availability of benefits and conduct public education campaigns to make potential beneficiaries aware of their entitlement to SSI. This is particularly important because higher benefits would mean that many elderly and disabled persons not currently receiving benefits would be eligible.
- Reduce payroll taxes that burden low-wage workers, and either tax larger proportions of the wages of higher-paid workers or use some general revenues to finance Social Security.
- Expand protection of surviving and divorced spouses and young, disabled widows.
- Develop a method for counting family care in determining Social Security benefits.
- Maintain protection against inflation by providing automatic full, cost-of-living adjustments (COLA) for Social Security and SSI.
- In addition to the COLA, adjust Social Security and SSI benefits periodically to reflect rising standards of living of the rest of the population.
- Make it less difficult for disabled workers to qualify for Social Security Disability Insurance.
- Make Medicare immediately available to recipients of Social Security Disability Insurance.
- Establish a National Commission to Improve Social Security Benefits. Representation should include the low-income, elderly, disabled, minority, labor, and women.
- Monitor annual Census Bureau statistics on poverty, particularly with respect to sub-groups among the elderly who have higher poverty rates (those 75 and older, women, and minorities).
- Encourage the Census Bureau to collect data on the poverty of the disabled on a regular basis.
- Track SSI rolls to determine whether more persons are applying for SSI and receiving benefits.
- Analyze “take-up” rates in SSI. Advertise availability of the program where needed and determine what kinds of assistance in applying for benefits are needed.
- Publicize and explain why there is no Social Security “crisis.”
- Expose the idea that privatization will “save” Social Security. Show how it will jeopardize. the security of millions of Americans and could leave many impoverished.
- Start local groups to oppose privatization and to preserve and expand Social Security benefits and work with existing coalitions.
- Work with organizations of the disabled and those that advocate for the elderly poor like the Gray Panthers, senior centers and service-provider groups in local communities to raise consciousness of the problems and to persuade public officials to support these goals.
- Visit members of Congress and let them know that you oppose privatization.
- Write letters to the editor.
Raising Incomes of People of Working Age
Living-wage jobs supplemented by the Earned Income Tax Credit would raise the incomes of fully-employed people above the poverty level but would still leave unsolved the problems of unemployment and family care.
Unemployment: The Problem
Benefits are low, averaging only $211 a week in 1999 (equivalent to $10,972 annual income), and only about one-third of the unemployed get benefits. Among the causes of the coverage problem are strict rules for prior employment, disqualification of re-entrants to the labor market (a provision that is particularly disadvantaging to women), virtual elimination of the Extended Benefit program, and the fact that many of the unemployed left the last job voluntarily, Our basic proposal envisions less unemployment and the solution of the long-long-term problem through the job-creation program for all whose unemployment exceeds the duration of unemployment benefits. This proposal therefore is directed to short-term unemployment.
Cover all the unemployed for 26 weeks in non-recession times and 65 weeks during recession.
Provide benefits equal to at least half their former income up to a maximum of two-thirds of the state’s average weekly.
Publicize availability of unemployment insurance under the new regulations through the United States Employment Service. Make this service more user- friendly, a measure that would require staff training.
Conduct periodic surveys to determine the proportion of those eligible who apply and receive benefits.
In addition to general advocacy measures, work with local affiliates of the AFL-CIO and with the unemployed and their advocates.
Family Care: The Problem
In contrast to most other countries the United States has no federal program for paid family leave, only the right to unpaid leave without penalty in establishments employing more than 50 persons. Most European countries provide paid parental leave, for example, three years in the case of Germany.
Enable workers to provide care for their own family members if they wish to do so.
Establish an entitlement to family leave to cover at least 50 percent of former earnings up to a maximum of two-thirds of the state ‘s average weekly wage and to last for one year. Funds for advertising availability of the benefit and assuring employer compliance should be included in the enabling legislation.
Conduct periodic surveys to determine what proportions of eligible parents are using the leave and reasons for non-use.
In addition to general advocacy measures, work with organizations concerned with child care, children’s rights, and workers’ rights.
Paying for Essential Goods and Services
The high cost of housing, health care, child care, transportation, banking and credit, and utilities makes it hard for low-income persons to meet other needs, much less to save.
Ensure that essential goods and services are affordable for low-income people and those living in poverty.
Use a combination of market-based mechanisms, regulation, universal service programs, and targeted subsidies.
Provide a greater voice for consumers of goods and services in government and the private sector.
Housing: The Problem
Affordable rental housing is unavailable to millions of working Americans. Federal guidelines are that low-income households should not have to pay more than 30% of their gross income for housing and utility costs, but in many cities these households are paying over 50%. The problem is as severe for
rural as for urban renters. The economic boom enjoyed by some has only exacerbated the affordable housing problem for many by driving up rents. Low-income Americans pay the highest rent burdens in the industrialized world.
According to the National Low Income Housing Coalition (NLIHC), a full-time minimum-wage worker can’t afford to pay the fair market rent for a two-bedroom apartment in any local jurisdiction in the U.S. In more than half of the nation’s cities, workers would have to earn at least twice the minimum wage to afford a two-bedroom apartment. Many individuals and families are forced to live under crowded and substandard conditions. Homelessness is another consequence. Estimates of the number of homeless vary from a low of 228,000 to as many as three million people in the early 1990s.
Never adequate, spending on low-income housing began to decline in the 1970s, and in the next decade, under the Reagan administration, the low-income housing budget was slashed by 75% even as poverty was rising. In addition, in 1981 Congress raised HUD tenants’ rents from 15 to 25% of
income (for large/small families) to 30%. In 1970, affordable housing units (costing less than 30% of an annual income at the three-person poverty level) exceeded the number of low-income renters. By 1995, there was an affordable housing gap of 4.4 million units. Further worsening the problem,
according to the National Alliance of HUD Tenants (NAHT), since April of 1996 more than 135,000 units of project-based units have been lost due to owner decisions to prepay mortgages or “opt-out” of expiring contracts. Currently an additional 1.6 million tenants in project-based housing face increasing insecurity as expiring long-tem contracts are subject to similar owner decisions and annual Congressional appropriations governed by mandatory “caps” imposed by the balanced budget of 1997.
Ensure that no low-income households pay more than 30% of their income for housing
- Cut the percentage of households that spend more than 30% of their income for housing half in three years and by 75% in five years.
- Preserve and produce enough affordable housing for all. Achieve the goal of the 1937 Housing Act: “that our Nation should promote the goal of providing decent and affordable housing for all citizens through the efforts and encouragement of Federal, State, and local governments, and by the independent and collective actions of private citizens, organizations, and the private sector.”
Increase the supply of affordable housing units–
- Save the affordable housing units currently in use. Support the current “Preservation Matching Grant” legislation which authorizes a two-for-one federal match to state and local government commitments to save affordable housing.
- Refurbish abandoned housing units in programs like Habitat for Humanity, but with payments to local labor.
- Create more affordable housing units. Support the National Housing Trust Fund Act which creates a permanent funding source to build more affordable housing.
- Support tenant-led national organizations such as the National Alliance of HUD Tenants (NAHT) and the National Public Housing National Residents Organizing Committee (PHRNOC) and their local affiliates
- Strengthen organizations that work on housing affordability issues and give tenants a voice in decisions that affect them.
- Revise the regulations to enable more low-income people to live affordably.
- Revisit the Nixon administration formula of requiring small families to pay 25% of their income for rent, large families to pay 15%, and very low income people to pay below 50% of the median; reclassify the income base for rent calculations from to gross to net; and/or increase the allowable deductions and utility allowances under existing programs.
Raise Wages and Income [see previous sections]
- Conduct job vacancy surveys to map locations of current livable wage jobs to low-income housing areas, along with public transportation and child care services.
- Raise the minimum wage to a living wage standard.
- Create more livable wage jobs while increasing affordable housing. Using a U.S. Department of Commerce model, the Home Sweet Home report by the Center for Community Change (September 2001) estimates that investing $5 billion in housing construction would result in 184,300 jobs. With local housing trust funds, an estimated average of $9 is leveraged from private, non-profit, and other government sources for every $1 spent by the housing trust fund. Using this leverage ratio, the proposed National Housing Trust Fund results in 1.8 million jobs and $50 billion in wages.
- Track the percentage of households that spend more than 30% of their income for rent.
- Track the number of households forced to double up.
- Encourage the Department of Housing and Urban Development to undertake a reliable survey of homelessness.
- Communicate to elected officials that the lack of affordable housing in your community is unsatisfactory and encourage them to vote for full funding for legislation which corrects these conditions.
- Encourage your congressional representative to support the right of low-income persons to organize to have HUD regulations enforced.
- Show your support for preserving and protecting affordable housing by demonstrating against local private owners who will not renew their project-based housing contracts and for low-income persons’ “right to remain” in their affordable homes.
- Resist government programs which experiment with “time-limiting” publicly-assisted housing residents’ right to decent, affordable housing.
- Support Fair Housing Laws in theory and practice.
Health Care: The Problem
Forty-four million Americans are without health insurance. Our patchwork insurance system is grossly inefficient and costly, excluding many without employer-provided insurance and providing limited coverage for many who are covered. Many people have policies that exclude certain types of coverage and/or otherwise fail to provide adequate financial protection in the event of serious injury or illness. For many households, health care services are simply unaffordable. Fifty-one percent of households over age 65 and one in six households under age 65 are spending more than 10 % of their incomes for out-of-pocket costs plus premiums.
Provide decent, affordable health coverage for all persons living in the U.S.
Increase preventive care which would be medically cost effective and contribute to family well-being.
Achieve commitment of Congress to universal, comprehensive, accessible, quality, affordable, publicly accountable health care for all persons living in the U.S. as a national policy and implement this Congressional commitment through progressive, principled and comprehensive incrementalism, that is, moving deliberately with programs such as Federal matching grants for states that agree to create state-based universal coverage systems and creating a national universal health care system funded by a combination of public and private revenue sources.
Track the percentage of household covered by various types of public, employer-based, and individual insurance.
Track the percentage of households who spend more than 10 percent of income for co-payments, uncovered prescription drug expenses, and other out-of-pocket costs.
Develop a sustained public education campaign about the health care crisis and workable solutions, in particular highlighting the human consequences of the present failed system, and the moral, ethical, and spiritual dimensions of the issue.
Build a popular movement to counterbalance the power of organized insurance and medical interests. This movement would need to have considerable organizational capacity to inform and engage people at the local level and mobilize them to advocate for sweeping reforms.
Achieve comprehensive campaign finance reform, to reduce the power of insurance companies and others that oppose a universal health care system and negotiated limits on provider fees.
Continue to work in partnership with the National Coalition on Health Care on public education programs such as Health Sabbaths, the Universal Health Care 2000 Campaign, and health ministries coalitions and community-based health alliances.
Child Care: The Problem
Millions of low-income households can’t afford and/or can’t obtain quality child care. A 1998 survey by the Children’s Defense Fund (CDF) found that in every state the average child care tuition exceeds $3,000 a child and rises to more than $5,000 in 17 states. A family with an infant and a four year old, with both parents working full time at the minimum wage ($21,400), would spend about 30 percent of their income on child care–as much as 50% in 23 highest-cost states. According to CDF, more than five million children are left home alone after school. Welfare reform is expected to significantly increase the need for child care, particularly for very young children. A problem affecting the quality of services is that low wages and lack of benefits make it difficult to retain and reward good workers.
Ensuring quality affordable child care to all households that need it is the ultimate goal. The interim goal is to cut the percentage of parents who spend more than 25-30% of their income for child care by 50% in 3 years, and 75% in five years.
Expand federal, state and local support for child care programs.
Provide targeted subsidies to income-burdened households.
Improve wages and working conditions for child care workers.
Seek a greater voice in public policy development for parents who need child care.
Track the percentage of parents who spend more than 10 percent, 25 to 30 percent, and 50 percent of their incomes on child care.
Work with organizations advocating for children, working mothers, and workers’ rights.
Transportation: The Problem
With an estimated two-thirds of new jobs in the suburbs and low-income workers often living in central cities and unable to afford housing nearer available, many workers do not have adequate, affordable transportation to get to work. According to one study, less than half of entry level jobs are accessible by public transportation. The problem is especially hard on working mothers who must also make arrangements to transport children to child care facilities or school, and former welfare recipients, only 6% of whom have cars, are especially handicapped. Problems with inadequate bus schedules, affordability of bus passes, lack of public transportation routes to major industrial centers, long commutes, and safety issues around bus stops and other areas have been documented. The situation is worse in many rural and suburban areas which lack public transportation altogether.
Ensure that 50% of entry level jobs are accessible by public transportation by the year 2005 –a big step toward the ultimate goal of adequate, affordable transportation options for all workers.
Expand the supply of affordable housing so workers can live in closer proximity to their jobs (see Housing Goals, above).
Provide alternative job placement services and exemptions from welfare-to-work requirements where effective transportation is not available.
Increase funding for public transportation (which is ecologically preferable to increased automobile usage).
Federal, state and county agencies involved in welfare-to-work implementation should develop a formal transportation plan that ensures that recipients of Temporary Assistance to needy Families (TANF) have practical transportation options.
Provide welfare participants and entry level workers with free subway and bus passes, with such subsidies continuing until wage levels permit workers to afford their own transportation.
Increase funding for initiatives such as Reverse Commute programs, van services, JOBSLINKS programs, car buying clubs and community garage programs.
Encourage employers to pool their resources, subsidize affordable transportation services, and participate in advocacy for improved public transportation options.
Establish savings incentive programs with matching grants to help workers who need cars to purchase them.
Subsidize auto insurance for welfare participants and entry level workers who need cars. Improved auto insurance regulation, including the establishment of public insurance counsel offices in each state, is needed to ensure that auto insurance is available and affordable.
Help to develop a new advocacy network linking local groups working on transportation problems such as social services, employment advocates, and other groups concerned with municipal services.
Utilities: The Problem
Utility costs for energy, heat, telecommunications and water have a major impact on the budgets of low-income households. In 1994, over seven million households had energy bills exceeding 15 percent of their annual incomes. A national study in 1995 found even larger energy burdens for Families with Dependent Children (replaced by TANF) and single elderly and disabled persons receiving SSI. Widows and widowers on Social Security were also burdened.
Similar problems can be documented for other utilities. An estimated one-third of households receiving food stamps do not have telephones. Rising costs for water are impacting many households on fixed incomes. For most utility services, there are frequently serious problems regarding market concentration and oligopolistic practices, and there is inadequate representation for consumers in the regulatory and legislative processes.
Cut the number of consumers who spend more than 10% for energy costs by 50% in three years and 75% in five years.
Increase funding for the Low Income Energy Assistance Program (LIEAP) so as to assist all consumers spending more than 10% of income for energy costs.
Encourage competition in markets characterized by oligopolistic practices.
Establish utility affordability programs as a responsibility of federal, state and local government.; expand funding for LIHEAP and other programs to improve affordability.
Encourage energy efficient homes and appliances.
Promote cooperative buying arrangements to obtain discounted service.
Increase consumer representation in regulatory rate proceedings
Establish public utility counsels in every state.
Conduct annual surveys to determine the percentage of households spending in excess of 10 % of income on utilities.
Define benchmarks for other essential services and survey household costs.
Work with organizations such as the National Consumer Law Center, Consumers Union, and the Consumer Federation of America.
Banking and Credit: The Problem
Many low-income households lack access to affordable banking services and credit. An estimated 12 million households currently have no bank accounts at all. In addition, many households cannot meet the minimum balances required by banks to avoid fees. Recent Federal Reserve data show that almost half of American families, 48 million households, keep checking account balances too low to avoid substantial fees. Many banks have raised minimum balance requirements in recent years making increasing numbers of unbanked” consumers and the poor dependent on “fringe banking” services (pawn brokers, check cashing outlets, pay-day lenders, etc) that charge usurious fees many of which are subsidiaries of major banks and financial institutions.
Reform the nation’s financial services system so that low-income people can afford basic banking services and obtain fair access to credit at reasonable rates.
Reduce the size of the nation’s “unbanked” population by half in three years, and 75% in five years.
Pass federal and state laws requiring that banks offer affordable transaction accounts to all customers and publicly promote the availability of such accounts. (New York and New Jersey already have basic banking laws.)
Ban egregious forms of fringe lending and heavily regulate those forms that remain.
Expand affordable access to credit through credit unions and nonprofit organizations.
Promote savings and asset development through consumer education, individual development accounts, and other forms of savings incentive programs.
Track percentage of households able to afford banking services.
Track percentage of households able to save some money and accumulate financial assets to meet personal goals.
Work with groups such as Consumers Union, the Consumer Federation of America, and the U.S. Public Interest Research Group.
National Jobs for All Coalition
Authors: Charles Bell, Consumers Union; Sheila Collins, William Paterson University; Helen Lachs Ginsburg, Emerita Brooklyn College; Gertrude Schaffner Goldberg, Adelphi University; William Grady, Chief of Staff, U. S. Rep. Louise M. Slaughter; Philip Harvey, Rutgers Law School; Sumner Rosen, Columbia University, ret. ; June Zaccone, Emerita Hofstra University;
Consultants: Irving Beinin, NJFAC Executive Committee; Robb Burlage, Health Justice Ministries, NCCC; Robert Cherry, Brooklyn College; David Mendelsohn, NJFAC Executive Committee; Gina M. Miserendino, Delaware Housing Coalition *Affiliations listed for identification only