Nickel and Dimed - On Not Getting By in America

Mike Lukovich of the Atlanta Journal-Constitution

This cartoon really impacted me because I saw it just after finishing Barbara Ehrenreich’s 2001 book, Nickel and Dimed: On (Not) Getting by in America.

This book was inspired by the welfare-to-work reform of the 1990s; it attempts to answer the question: can a person live on minimum wage? Ms. Ehrenreich courageously endeavored to find out by actually living the life of a low-wage worker (she was in her 50s which makes her willingness to undergo the humiliations and physical strain even more admirable). She spent a month in three different cities, working as a chain restaurant waitress, maid, and Wal-Mart associate. She lived in housing and ate the food that was affordable at her wages. She lived in horrible places—a tiny trailer, a squalid motel, and ate fast food because of a lack of kitchen facilities. Working one job full-time, she could barely afford to cover her most basic expenses, and she had a lot of advantages: no children, and because this was a short-term experiment, she didn’t have to worry about medical expenses or things like clothing (other than what she had to purchase for the job).

This experiment was done in 1999 and 2000, before the bursting of the dot-com bubble, when the country was experiencing prosperity and jobs were easy to get. This was also before corporations learned that they could save money by not hiring people as full-time workers. Ms. Ehrenreich tried to work two jobs so she could afford a better apartment; she just didn’t have the stamina required to pull off cleaning hotel rooms in the morning and waiting tables in the evening.

She also discusses the psychological effect of low-income work, that it encourages submissiveness and lack of initiative. At the same time, she makes clear that these are hard-working people, doing their best with the pitiful resources at their disposal.

In the aftermath of the Great Recession, things are much worse, which after reading her account, is hard to imagine. Certainly, jobs are much harder to get. Ms. Ehrenreich was able to get a job almost instantly in 1999; today she might have spent her entire 30-day allotment just finding a job (if she was lucky).

Low Minimum Wage Means Taxpayers Are Subsidizing Corporations

In the news this week is a story about an Ohio Wal-Mart that has set up bins in its employee-only section asking for food donations for needy fellow workers.

This story reminded me of a “New Rules” segment on Bill Maher’s show a few months ago when fast food workers were striking. Maher pointed out that a high number of minimum-wage workers have to use federal programs like food stamps and Medicaid to survive, and that this means the American taxpayer is subsidizing these large corporations. In other words, part of Wal-Mart and McDonald’s profit comes straight out of your tax payment.

Maher said,

If Colonel Sanders isn’t going to pay the lady behind the counter enough to live on, then Uncle Sam has to. And I for one am getting a little tired of helping highly profitable companies pay their workers.

A site called “Good Jobs First” has a report on use of Medicaid by employees of various corporations, divided by state. Wal-Mart stands out, frequently with the most employees on Medicaid in a particular state, followed by fast food companies and grocery stores. (Here’s another article with lots of links.)

CNN reported in June:

The cost of low wages at Wal-Mart are at the center of a new report released last week by the Democratic staff of the House Committee on Education and the Workforce.

The report details assistance that includes not only Medicaid and food stamps, but subsidized housing, reduced-price school breakfasts and lunches, subsidies for home heating, the earned income tax credit, and child care subsidies.

Factoring in what taxpayers contribute for public programs, the report estimated that one Wal-Mart supercenter employing 300 workers could cost taxpayers at least $904,000 annually.

That comes to $3000 a person per year. If each employee works 40 hours per week for 50 weeks, that’s 2000 hours (of course part of the problem is that Wal-Mart doesn’t allow employees to work full-time to evade federal regulations), means a pay increase of $1.50 an hour would cover this cost.

A DailyKos story from last year on this issue reported:

At over $446 billion per year, Wal-Mart is the third highest revenue-grossing corporation in the world. Wal-Mart earns over $15 billion per year in pure profit and pays its executives handsomely. In 2011, Wal-Mart CEO Mike Duke – already a millionaire a dozen times over – received an $18.1 million compensation package. The Walton family controlling over 48 percent of the corporation through stock ownership does even better. Together, members of the Walton family are worth in excess of $102 billion – which makes them one of the richest families in the world.

Our American system of capitalism is deeply flawed. Proponents of the “free market” claim that Wal-Mart is just paying its employees what the market demands. This is completely false; there is nothing “free” about this taxpayer-subsidized system of low-wage employment.

Can you feel the resentment rising? How long can the American people bear this injustice? Maybe as we learn that this is hurting all of us, we will stand up together and demand change.