When Low Wages Don't Add Up

Elena, a single mother living in San Diego, is well aware of the pressure to get off welfare and take whatever employment is available. "Get a job, get a job, then get a better job" was the message she got from her welfare caseworker. "I didn't buy that," she says. What was the point of taking a job if it meant losing ground financially? "If I am going to get off of welfare, it's because I can support my kids and support myself," she adds.

Elena faced a problem many poor mothers face: inadequate wages for available jobs and a lack of qualifications for something better. Resisting the "work first" demand of current welfare reform, she has concentrated on dealing with those problems that keep her locked in poverty. While on welfare, she has earned a GED and four secretarial certificates, with the hope of qualifying for a secretarial position that would pay a livable wage.

It's not that people like Elena are unwilling to work hard. "I worked one time from 8:30 to 4:00," she recalled, "[then] I went home. My babysitter was, like, two doors away, so I saw my kids for a little, then I had to be at my other job by six. Worked from six to late at night, five hours." So by the time she got home, she said, "I didn't get to see my kids. I would just see them asleep. I didn't even know my own kids."

In the world of middle- and upper-class workers, such problems are discussed as "the work-family trade-off." But for poor families, it's more complicated than trying to strike a balance. When sudden expenses come up, such as a medical bill for a child, the balance can be tipped toward disaster. To some families, the economics of getting into the workforce seem untenable. As Elena put it, "You take your children to a child supervisor and they get paid for it, but if you take care of your children you don't get paid for it. You could pay somebody to clean your house, but if you clean your house you don't get paid for it." At low wages, attending to one's family begins to seem as unaffordable as paying someone else to do it.

Studies of those who have left welfare over the last few years have confirmed the difficulties people are encountering in the low-wage workforce. A three-city study published by researchers at Johns Hopkins University in October 2000 found that two-thirds of those who left welfare had steady employment one year out. The average wage for these workers was $7.50 per hour. For many, that meant a lower income than they had on welfare. Forty percent of these low-income workers still relied on food stamps and two-thirds needed subsidized housing. A study published last year by the Urban Institute found that those who recently left welfare fared about the same as those who left welfare in earlier eras. In both groups, only about two-thirds had jobs and nearly half had post-tax earnings that put them below the poverty line.

While a wage of about $7.50 per hour can sometimes be adequate to raise people above the poverty line (if their job is full time and they receive all available wage supplements, such as food stamps and housing subsidies), most of those leaving welfare either did not land a full-time job or did not receive all of the wage supplements, according to the Urban Institute. Of course, some new employees work at wages closer to the minimum wage, which is $5.15 per hour. And one in seven of those who have left welfare report no visible means of support. Some end up back on the rolls. Of those on welfare in 1999, 26 percent were there for the first time, but 23 percent had returned, the Urban Institute found.

There's evidence, as well, that leaving welfare can bring on serious hardship. A study by the Economic Policy Institute (EPI) found that in 1999, 46 percent of all families that had recently left welfare experienced one or more critical hardships, such as going without food, shelter, or necessary medical care, while only 33 percent of those remaining on welfare did. Thus poverty, whether measured in terms of income or in terms of ability to meet basic needs, is the basic condition for most who have left welfare. As the EPI report puts it, work just isn't enough.

To address the problem of low wages, not just for the welfare poor but for the working poor, living-wage campaigns are coming to life around the nation. A highly publicized sit-in at Harvard University last year, in which students pressed for higher wages for Harvard staff, got national media attention. And vigorous living-wage campaigns have been active in municipalities, counties, and college campuses for quite some time. According to the Association of Community Organizations for Reform Now (ACORN), 82 city and county living-wage ordinances have been passed since 1991. In addition, living-wage campaigns are currently active on more than 30 college campuses, and in more than 60 municipal, county, and state governments.

Behind this organizing, there are complicated questions of what exactly is meant by "meeting basic needs" and what level of income constitutes a living wage. Some researchers believe that the way in which the poverty line is calculated -- by taking an estimated food budget and tripling it -- is part of the problem. Such a standard tends to underestimate poverty because it misses inflation in other necessary goods. Under the current standard, for example, rent could rise by 6 percent, transportation by 4 percent, and food by 3 percent, but the poverty line would only reflect a 3 percent rise in the cost of living. As Barbara Ehrenreich pointed out in her recent book Nickel and Dimed, higher rent and transportation costs are what really eat into wages.

Some have suggested a more reasonable way of setting the poverty line. The Women's Educational and Industrial Union (WEIU) recently calculated that a family of three in Massachusetts would need an income of approximately $42,000 per year to become economically self-sufficient. The EPI designed a "basic family budget" that takes into account housing, child care, health care, food, transportation, and taxes. They found that "across the United States, basic family budgets are roughly comparable to about twice the poverty level."

There are a range of programs, besides welfare, that are meant to ease poverty, such as housing assistance and rent control, transportation vouchers, child-care subsidies, and food stamps. Higher wages, however, have distinct advantages over in-kind transfers. A good job increases individual freedom of choice, and better skills allow for greater flexibility in responding to labor-market changes. More often than not, in-kind transfers control and limit choices. Even conservatives ought to agree that the complex arrangements for attending to the demands of daily life are best met by those who face them head-on, rather than have them dictated by the rules of a government bureaucracy. But people need the financial means to make ends meet and to get to a point of self-sufficiency.

That's not to say that in-kind transfers aren't important -- national health care would make just about everyone's life easier -- but many poverty-associated problems would be best addressed by better wages in the private sector. What's often obscured in the welfare debate is that the welfare poor are just as rational and sensible as anyone else when it comes to knowing what adds up and what doesn't. And getting people off welfare is not the same as getting them out of poverty.

President Bush is likely to continue to emphasize a few success stories and point to declining welfare rolls. To the extent that welfare mothers are still poor, Bush will go on moralizing about the importance of marriage and family values. Republicans and centrist Democrats alike are showing an obsession with personal choices that comes from a paternalistic attitude toward the poor and an unwillingness to address real economic problems. Welfare is but one part of a larger story about income and poverty. What the poor really need is fewer lectures, more jobs, and better wages.