Low-wage workers are being exploited by middle-class and affluent Americans
We have a blind spot: the millions of women and men who work for low wages, many in the growing service sector.
Dodge City Daily Globe
September 26, 2003
Low-wage workers are needed, are often overlooked
By Andrew J. Cherlin
The Baltimore Sun
Americans celebrate hard work. We love rags-to-riches stories. We tell welfare recipients that they must get off the rolls in five years because work builds character. But we have a blind spot: the millions of women and men who work for low wages, many in the growing service sector.
The harried middle class relies on them to care for their children, cook their restaurant meals and attend to their elderly parents. Corporations hire them to park cars, sort mail, move office furniture and mop floors. They don't make much money -- the earnings of people without a college education haven't increased much since the 1970s. Yet the events of the past year suggest that middle-class and affluent Americans are overlooking and even demeaning them. More and more, their needs are losing out to the government's focus on reducing the welfare rolls and subsidizing the middle class.
Consider workers whose annual incomes are between $10,000 and $20,000. One-fifth of all people who worked in 2001 fell into this category. Some are poor; some are perched precariously above the poverty line (which was $18,244 for a family of two adults and two children in 2002), and some are in families that pool their earnings to attain a working-class, or even lower-middle-class, lifestyle. More than half are women, and more than a third are nonwhite. As they try to follow the American work ethic, here are some of the obstacles they face.
o The health insurance squeeze: Virtually all welfare recipients receive health insurance coverage through Medicaid, the government program of medical assistance to the poor. The majority of middle-class workers receive health insurance through their, or their spouse's, employers. Low-wage workers, however, often fall between the cracks. According to the Kaiser Commission on Medicaid and the Uninsured, one-third of full-time workers earning $10,000 to $20,000 had no health coverage in 2001; others undoubtedly had coverage for only part of the year.
The crisis in state budgets is making this situation even worse. The Kaiser Commission reported that 17 states were planning to increase the co-payment low-income families must contribute to obtain Medicaid coverage in 2003. State officials are planning to increase co-payments or freeze enrollments in the State Children's Health Insurance Program. These increases may seem modest to the middle class but for low-income families they can be substantial. If the electric bill is overdue, hard-pressed parents may pay it rather than the co-payment and gamble that no one will get seriously ill. Unfortunately, some will lose this gamble.
o The child care squeeze: Federal and state governments now spend more than $9 billion annually on child-care subsidies, but low-wage workers are being neglected. We rightly think that if we are placing time limits on welfare, we ought to provide child-care subsidies to current and recent recipients who are entering the work force. Yet as state budget deficits grow, fewer subsidies are left for low-wage workers who haven't been on welfare recently. The U.S. General Accounting Office reported to Congress in May that more than half of the states don't provide child-care subsidies to all who apply and that nearly all of these states give families on welfare, or making the transition off welfare, preference over other low-income working families.
o The tax cut freeze: The most recent indignity began last November, when The Wall Street Journal editorial page complained about "lucky duckies" -- people with poverty-level earnings who owe little tax after subtracting the personal exemption and the standard deduction. "The last thing the White House should do now," the editors argued, "is come up with more exemptions, deductions and credits that will shrink the tax-paying population further."
The House of Representatives seemed to agree. This spring, Congress excluded 6.5 million low-income families from an increase in the tax credit families receive for each child. After widespread outrage, Congress reconsidered including these families; but it did not resolve the issue by the August recess. "There are a lot of things that are more important" than extending the tax credit to low-income families, said House Majority Leader Tom DeLay. Meanwhile, tax-cut checks are being sent to middle-class families.
The one exception to the shabby treatment low-wage workers get is the Earned Income Tax Credit, or EITC. It provides up to $4,000 to low- and moderate-income working families with children. Broadly popular because it helps the poor while also rewarding work, it is costlier than cash welfare. More than half the benefits go to families with incomes under $20,000.
But now even the EITC is under scrutiny.
The IRS contends that more than a quarter of EITC credits were issued erroneously in 1999, but experts say that much of the problem reflects errors among taxpayers at all income levels. Although the IRS devotes a disproportionate percentage of its enforcement budget to the EITC, it has requested a 68 percent increase in EITC enforcement funds. Only after objections by public interest groups did it scale back a plan to require some EITC applicants to prove in advance that the children they care for live with them for six months or more.
Here, then, are the messages we seem to be giving to low-wage workers: Work hard and hope you don't get sick. If you need child care, go to the end of the line. You don't deserve a tax cut and stop cheating on your EITC form.
One wonders why more middle-class Americans aren't bothered by this finger-wagging stance. Are they too concerned about their own rising health care premiums and shaky pension plans to care about the problems of the working poor and near-poor? Are they too dependent on the low-wage service? Do they think, like the Journal's editors, that people earning poverty-level wages already have it too easy?
In truth, low-wage workers are America's unlucky duckies. They are squeezed between a middle class that has family-friendly benefits and a lower class that has policy-makers' attention. They deserve our appreciation. They deserve health insurance, child care assistance, decent wages and the respect of more fortunate Americans, who increasingly can't go about their daily lives without them.
o Cherlin is the Griswold Professor of Public Policy in the Department of Sociology at the Johns Hopkins University.
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