Saving the dream: Help the middle class, raise the minimum wage

Saving the dream: Help the middle class, raise the minimum wage

January 5th, 2014 in Opinion Times

The dream is slipping.

Middle-class incomes have shrunk nearly 10 percent since 2000, after enjoying mostly steady growth during the previous decade.

Specifically, a typical American household made about $51,017 in 2012, according to the U.S. Census Bureau. That was 8.3 percent lower than the median income of $55,627 five years before in 2007 (the year before the recession) and nearly 10 percent lower than the peak of $56,080 (adjusted for today's dollars) that occurred in 1999.

In fact, the typical American household income in 2012 is frighteningly similar and slightly lower than in 1989 - a quarter of a century ago. Median income in 1989 was $51,681 when adjusted for inflation.

In other words, the American Dream of ever-increasing incomes has flat-lined. Most of us are losing ground. All but those in the top 5 percent - the wealthiest of the wealthy - who keep making more and more and more.

Meanwhile, average middle-class debt has grown from less than $40,000 in 1989 to just over $80,000 in 2010.

Not surprisingly, poverty is up, adding to the tax bite on the middle-class.

The 15 percent of our population in poverty - 2.5 percentage points above that in 2007 - is not what you think: A family of four living on $23,490 is living in poverty, and nearly three-quarters of enrollees in America's major public benefits programs are working families whose jobs pay minimum wage or just above it. Moreover, recent research indicates that nearly 40 percent of Americans between the ages of 25 and 60 will experience at least one year below the official poverty line at some point in their working years.

Our lawmakers voted recently to slash food stamps after the radical right among them said the stamps "turn the safety net into a hammock that lulls able-bodied people to lives of dependency and complacency." Probably soon we'll hear similar conservative arguments on a proposal to raise the minimum wage.

But if Walmart's recent earnings report is any indication, market forces and other rational thinkers might want to consider dampening the radical right wailers this time around.

In November, Walmart's quarterly earnings topped Wall Street estimates by only a penny, but the world's largest retailer came in 0.3 percent low in sales and predicted a flat holiday selling period.

Walmart is where the middle class and not-so-middle class shop. But now times have gotten so hard, many can't even shop there.

The current federal minimum wage is $7.25 per hour and raising it to $12 would lift many workers out of poverty, according to Ron Unz, a software developer who is the chairman of the Higher Wages Alliance.

Walmart is America's largest private employer and 300,000 of its workers have average wages of just $8.75 per hour, forcing many to receive food stamps and other government benefits to survive, Unz recently wrote in an opinion piece for the New York Times. If a minimum wage increase boosted their pay to at least $12 per hour, Walmart could cover the costs by a one-time price rise of just 1.1 percent, and the average Walmart shopper would only pay an extra $12.50 per year, according to Unz.

But the U.S. budget and taxpayers might be the biggest beneficiaries of minimum wage increases.

Analyzing wages and workers in the fast-food industry, researchers at the University of California at Berkeley found that more than half of the families of front-line fast-food workers are enrolled in one or more public programs, compared to 25 percent of the workforce as a whole.

The cost of public assistance to families of workers in the fast-food industry is nearly $7 billion per year.

Perhaps conservatives who don't like government and taxes might agree that it would be better for businesses to pay their own employees rather than, as Unz describes it, "quietly shifting the burden to government programs and the American taxpayer."