The philosophy of the work ethic, deeply engrained in the American soul, presumes that hard work will produce self-sufficiency. But for millions of working Americans that premise is a lie. The hardship of these workers and their families results from the growing scarcity of jobs that pay a living wage. There are eminently feasible strategies that could make work pay. But these remedies require public policies, which in turn depend on a working electoral majority. Hence, making work pay requires not just a program, but a politics. Imagine the following election-year TV spots:
The viewer sees a woman in a white uniform and a name badge that reads "Mary." She is helping a frail elderly man in a nursing home. A voice-over declares: "Mary works in the health care system, helping others, but she can't afford dental care for her six-year-old child." The commercial cuts to a man toiling over a car in a gas station. The announcer: "Bill can't buy Christmas presents for his three kids this year." In another cut, a woman is seen entering data into a computer. The announcer: "fane's children are with the neighbors again. She can't afford decent day care." Finally, the camera cuts to a dejected man, dressed in work clothes, in a company cafeteria. The announcer says: "Bill's car broke down and there is no money to fix it. He hitched a ride today and was late. He doesn't know what to do tomorrow."
The commercial then cuts to a mosaic composed of these people. The announcer says: "What do all of these people have in common? They all work full time. None of them is on welfare. But there is no way any of them can make ends meet on their wages, not even for the basic necessities of life. None of them sees much hope for the future. And their future is our future. Isn't it time we did something to bring back the American dream?"
Or how about this:
A young couple in a dilapidated car are driving slowly through a pleasant neighborhood, staring at a modest house. The young woman is holding a child. They are looking at the house like children staring at a toy store window. The announcer declares: "In the last fifteen years, the average young family with children actually lost about 15 percent in earnings. The house the Bells are looking at will never be theirs. As hard as they work, they can barely hang on to their own apartment. The American dream of owning a home is no longer within their reach. It's time to restore the dream for them."
These are not the commercials we have seen lately, although some recent candidates have touched on aspects of the broad theme. The failure of politicians, especially Democratic ones, to pursue the theme of making work pay is puzzling, for the working poor are at the core of the Democratic constituency. It is a theme that also bridges over racial and gender divisions by emphasizing common pocketbook frustrations. Public opinion polls, even at the height of Ronald Reagan's popularity, suggested powerful latent support for the idea that work should pay and that government had a role in making that happen. Michael Dukakis talked about "good jobs at good wages," but failed to connect that theme with a substantive program. For the candidate who does communicate the theme and a program, there is a potentially winning politics. Working But Poor
America's well-to-do, who vote at roughly twice the rate of the working poor, are remarkably uninformed about just how little millions of working Americans earn and about what it means to be "middle class." Insisting to an interviewer not long ago that in real life he lived like a fairly ordinary guy, Robin Leach, star of television's "Lifestyles of the Rich and Famous," said, "I have no servants. I do have a cleaning lady, like everyone else. I have no limo. In cities I usually hail a taxi like everyone else." Former Education Secretary William Bennett turned down the $125,000 job of chairman of the Republican National Committee with the widely reported words, "I didn't agree to take a vow of poverty."
What does it take to live decently in America? As these comments suggest, people in different social strata have different standards. Nonetheless, survey results tell us something important. Going back to the 1950s, Gallup surveys have asked Americans what they consider the minimum amount of income necessary for a family of four to live in their communities. These polls reveal that the median response of the Americans surveyed never dropped beneath 140 percent of the official poverty line at any time during the 1980s and reached a zenith of somewhat more than 160 percent of the poverty line during the second half of the 1980s.
These judgments correspond with some government studies. When the Department of Labor last measured the budgets of American families, it found that the income required to afford what it termed a "low" family budget approached 170 percent of the official poverty line. Housing surveys from the late 1980s disclose that four-fifths of American households with incomes below 175 percent of the official poverty line had too little income to cover the costs of their shelter, even if they spent only the minimal amounts for the other necessities contained in the Department of Labor's "low" budget.
For an ordinary family, we constructed an "economy budget." This budget, which we delineate in our forthcoming book, The Forgotten Americans, measures the lowest realistic cost to cover basic necessities such as food, housing, clothing, transportation, medical care, and personal items. It includes no money for entertainment, eating out, vacations, child care, lessons or even allowances for the children, haircuts, pets, or many other activities that most American families take for granted. Amounting to $20,660 for a family of four in 1990, this bare-bones budget comes to 155 percent of the official poverty line.
This is the real poverty line -- the threshold of self-sufficiency. A look at the official povety line only reinforces that conclusion. When first calculated in the mid-1960s, the official poverty line was defined as three times what an average family spent on food, which reflected family budgets at that time. Since then, the proportion that the average family spends on food has declined to one-fifth, but the measure of poverty has not been adjusted. If the official poverty line were recalculated for 1990 as five rather than three times the minimum food budget, the income necessary for a family of four to rise above poverty would be $22,600 -- or 67 percent higher than the officially reported poverty line of $13,360 for 1990. This higher figure would bring the poverty index into agreement with the surveys and other government studies we have cited, and also with the income required by our economy budget.
Many millions of solid, responsible, and hard-working Americans struggle to afford the basic necessities on incomes beneath this low level. Six million workers who were employed full time for the entire year did so in 1989, the seventh year of a record peacetime recovery. Another 5.5 million workers living beneath this income level in 1989 were employed part-year or part-time because they could not find full-time jobs for the entire year. The families of these two groups contained nearly 30 million people.
In 1989 the average hourly wage for all production workers (four-fifths of all private-sector workers in the United States) was $9.66. Employed at this wage, a year-round, full-time worker earned $19,320, or slightly less than the economy budget of $19,540 for a family of four for that year. Approximately half the production workers in America in 1989 earned wages that would have failed to lift a family of four above the real poverty line even if they worked full time over the entire year. Indeed, nearly 25 percent of full-time workers earned less than three-quarters of the real poverty line. As a result, the idealized American family -- two parents and two children, with one parent employed and the other at home -- was not a possibility for many full-time workers, at least not if they wanted to escape poverty. With two children, these families cannot rise above poverty unless both spouses work. The problem of low wages thus not only leaves millions of hard-working people in poverty, but prevents millions of others from realizing the very kind of family life that conservatives especially hold out as a model.
A commercial starts with a grainy, black-and-white film of Henry Ford, walking around a turn-of-the-century Ford assembly line, mugging to the camera, chatting with workers. The announcer says: "Henry Ford understood the nature of free enterprise. That is why he introduced the two-day weekend and paid his employees good wages. He knew that unless he did, they couldn't buy the cars they built." The scene shifts to color, and the inside of a textile manufacturing facility, with people hard at work. The announcer says: "Today, America is in trouble because too many of our workers can't afford to buy the very goods they manufacture. Millions of our workers can't afford even the basic necessities for themselves and their families."
The scene shifts again to the interior of a sparkling, new-car showroom. The room is filled with shiny new Fords, one bored salesman sitting by his desk, and very few customers who are browsing. The announcer continues: "Maybe we need to remember what Henry Ford understood so well." Will Voters Support Making Work Pay?
There is ample evidence in public opinion data that despite growing cynicism about government, most people think public policy should be enlisted to reward work. Voter cynicism has a populist double edge. David Broder wrote in a recent column, "Everywhere I went last autumn, I heard rumblings that the Washington insiders had forgotten who put them in power," adding that the restiveness reflects sentiments such as "Congress could find money for savings-and-loan bailouts and other 'special interest' needs but not for down-home concerns of average voters." To argue for the worth of public programs that help to recreate the American ethos is to appeal to our basic sense of what we are as a nation.
Nevertheless, there is a widely held perception that the public opposes an expansion of governmental action on the domestic social front. During the Reagan era, much was written on the public's skepticism of expanded federal governmental involvement designed to address domestic problems. Yet all major polls have found consistent, indeed overwhelming, popular support for domestic social programs before, during, and after the 1980 elections. Even in 1984, despite Reagan's landslide victory, only 6 percent of the voters indicated that they had voted for the President because of his conservative philosophy. Exit polls taken on the eve of the 1984 elections also showed 80 percent of the voters expressing support for continued or increased levels of federal social expenditures. In fact, public support, as measured by The New York Times/CBS News Poll, actually increased for social programs between 1980 and 1984. No wonder researchers have pointed to a "substantial ideological gap" between the social policies of the Reagan administration and not only the views of the American public in general, but even "those of the average Republican who was considerably left of the party's presidential nominee."
Nor is there any indication that the public's interest in supporting broad domestic social programs abated with the election of President Bush. The patterns of the Reagan period appear in even stronger form during the Bush administration. Within a year of the 1988 elections, issues related to poverty, hunger, and homeless-ness ranked second behind drugs in the minds of the public as the most important problems facing the nation. Surveys found that over 60 percent of Americans polled wanted to spend more money on a variety of social and health programs and wanted sharp reductions in defense spending. According to a Washington Post/CBS Poll of March 4, 1991, 81 percent of the American public felt that the government was not making enough progress on poverty issues.
On the more vividly symbolic issue of "bigger government," the public's position has also shifted. The Harris polls indicate that through the last decade there has been a persistent growth of national sentiment for more active government at the federal level. Despite President Bush's push for his "thousand points of light" outside of the governmental sector, majorities ranging from 73 to 92 percent of the American public say that they want more governmental activity to deal with environmental, homeless, and housing issues. By 1989, as Louis Harris wrote at the time, there were nearly twice as many people as in 1980 who favored a "more activist government." To be sure, many conservatives oppose any program requiring more governmental social expenditures. But a program strengthening the work ethic could have appeal for conservatives who otherwise regard antipoverty measures with little sympathy. Many conservatives tend to support government spending when the purpose is to induce and reward self-reliance. A leading conservative think tank, the Heritage Foundation, has advocated expanding the earned income tax credit as a way of providing assistance to those who work hard and yet still need help. This has also been the theme of leaders on the right such as Secretary of Housing and Urban Development Jack Kemp -- and it is a view shared by many voters who are self-described conservatives. The Program
Any program to improve the situation of the working poor should have several components. It should include education and training policies that increase workers' skills and hence their earning potential. It should try to assure more child support from absent fathers for single mothers and their children (see, in this issue, "Bringing Fathers Back In," by Irwin Garfinkel). It should aim to open up more full-time jobs that provide a living wage (see also in this issue, Virginia duRivage, "Flexible Trap: The Proliferation of Marginal Jobs").
Inevitably, however, a self-sufficiency program will require measures to bolster the income that low-wage workers earn from their jobs and provide meaningful incentives for people on welfare to work. Two core elements here are a liberalized earned income tax credit and a higher minimum wage. It is misleading to debate which of these approaches is superior, for they need to work in tandem. Too generous an earned income tax credit, by itself, would force taxpayers to subsidize stingy employers. To rely solely on a higher minimum wage to produce decent living standards for diverse families would be inflationary.
We propose to raise the minimum wage modestly to a level that will support a fully employed single individual with no children at the real poverty line (155 percent of the official poverty line) and thereafter, if the family breadwinners are fully employed, to use tax credits to lift families with children above the real poverty line. Currently, that would mean raising the minimum wage to $4.85 an hour, or a 14 percent increase, which would still leave it beneath its value relative to the median wage in either the 1950s or 1960s. The cost of family tax credits, net of savings from reduced welfare, food stamps, and other programs, would be $20 billion, less than half the peace dividend that President Bush has recommended.
A "fully employed" family, in our usage, contains an adult who is single and employed 2,000 hours a year in one or a combination of jobs, or two adults who are employed 3,000 hours a year, with less stringent standards for families containing small children or containing workers experiencing bona fide unemployment for a brief period. A family with two employed adults working 3,000 hours at minimum wage would earn an after-tax income of about $13,500. Suppose that the real poverty line after taxes for a family of four were $18,200 -- $4,700 higher than $13,500. If its earnings were its sole income, the family would then receive a refundable tax credit of $4,700, raising the family's after-tax income to $18,200.
These core income-support policies would be complemented by national health insurance reform, so that health care would not have to be purchased in the marketplace out of meager household incomes. (A properly designed national health program will slow down the rate of growth of health expenditures, which, in the long run, could produce net savings.) Households receiving the family tax credits we propose would become ineligible for all other low-income programs, many of which are stigmatizing. From its maximum ($4,700 in the above illustration for a family of four), the family tax credit would decline by 25 cents for each additional dollar of income. As a consequence, fully employed families of four with incomes somewhat above $30,000 would receive some assistance. In this manner, the program offers a vehicle to raise all fully employed families out of poverty and also provides benefits to families at less than the median income, the large majority of them struggling economically, even if they are not in poverty. Moreover, by accenting the fully employed, the strategy assists people who work hard and creates a larger income differential between welfare and work, thus nourishing and rewarding the work ethic rather than undermining it.
A program that enables fully employed families to attain self-sufficiency could assist up to 25 million people who are presently poor, with additional assistance given in the form of tax reductions to many families now only moderately above self-sufficiency. The number of Americans the proposal could help rivals the largest federal programs such as Social Security, or Medicare, but at much lower cost.
The secondary effects of these measures would help even more people and add to the political payoffs. Consider, for example, that the program would bring $50 million annually to a city of about 500,000 people. The beneficiaries will spend much of this $50 million for local products and services, which will enhance the viability of hundreds of small local businesses dependent on the purchasing power of their community's residents. The spin-off and multiplier effects would spread throughout the local economy to the benefit of thousands beyond the recipients themselves.
A customer walks through a shop, looks at the merchandise, stares at the price tags, and leaves the store without buying anything. As the action unfolds, the announcer explains: "Alice Young's business will go bankrupt this year. Unlike the savings and loan institutions, the federal government will not bail her out. She works evenings and weekends, and she's wondering what went wrong. She doesn't know that in addition to those who are unemployed, there are millions of families who work full time, and are paid wages so low that they cannot make ends meet. They can't afford to shop in her store. Her business and her city's economy suffer from the problem of chronic low wages. When people around us cannot get decent jobs, the entire economy is hurt. When millions are shut out of the American dream, sooner or later it will hurt all of us. Isn't it time to do something about it?" The Politics
A presidential candidate may yet embrace this theme for 1992. Would it make a difference? We can shed some light on that question by exploring what would have happened if the Dukakis campaign of 1988 had emphasized a far-reaching, comprehensive program to assist working Americans, highlighting the work ethic and the rewards that work should bring.
To project the electoral impact of the theme of making work pay, we looked to the General Social Survey of 1989, which provides information on a sample of 1,537 citizens. The voting outcome of the survey sample -- Bush, 52.4 percent, and Dukakis, 47.6 percent -- was within about 1 percent of the actual outcome of the election. We calculated the potential effects of this electoral strategy on both non-voters and voters. In this analysis, based on the data from the General Social Survey, we took into account the income levels of voters and non-voters, their attitudes about assistance to the poor, and a range of cross-pressures that operate on their choices of candidates, and on whether or not to vote.
The conclusion is startling. The potential of a campaign focusing on issues about the economic health of families is substantial. About 65 percent of those who voted felt that the government was doing too little for the poor. In fact, nearly one-quarter (23 percent) of the votes cast for George Bush came from people who lived in lower-income households, many of which would directly benefit from programs to assist low-income workers, and who also believed that the government was doing too little to help the poor. If merely one in five of these voters had shifted from Bush to Dukakis -- even allowing for a similarly proportioned, opposite shift from higher-income families -- it would have added 2 percent of the total vote to the Dukakis column.
In addition to shifting the candidate preference of those who actually voted, this theme also has the potential of increasing voter turnout. Nearly half (44 percent) of all non-voters both lived in low-income households and believed that the government was doing too little for the poor. Political scientist John Zipp's research found that a primary reason for non-voting is that "individuals do not have their interests represented in the political sphere... [Non-voting becomes] a chosen form of political action." Based on attitudes documented in the General Social Survey, we project that such a campaign could have generated an increase in turnout. From our analysis of the interrelationship of attitudes toward governmental spending, household income, and candidate choice among the voters, the possible increase in turnout would have added another 2.7 percent to the Dukakis vote, leading to an outcome giving Dukakis 52.3 percent of the vote and Bush 47.7 percent of the vote.
Of course, it is not possible to rerun the 1988 election. But our reexamination does suggest the potential that exists for a candidate or party that champions the cause of self-sufficiency. A large flag flies in the foreground while in the background victorious American soldiers are embracing next to a charred battleground somewhere in the Iraqi desert. The announcer intones: "The war is over. We won. As Americans we are rightfully proud of what we have achieved. American bravery, intelligence, and hard work were successful." The scene gradually shifts to a factory of American workers, producing U. S. flags. Men and women, blacks, whites, Asians, and Hispanics are all working side-by-side. Everyone is working hard. The announcer continues: "These are also brave Americans. They work hard, too. But here, at home, we haven't won the war yet. The workers who make the flags we fly don't have wages that give them a chance at the American dream." The camera focuses in on one of the workers. The announcer continues: "Bill makes $11,000 a year. His income will not provide the essentials to take care of his family. It's time for all Americans to have real opportunity. It's time to win the war at home."