Yes, things are bad now. So we definitely shouldn’t criticize people struggling to get by. But even before the pandemic, many, many people in the U.S. simply didn’t earn enough to live. (Which also means it’s understandable that they went into this economic terror financially ill-prepared.)
Low income = little/no savings
As of December 2019, 44% of U.S. workers earned less than $30,000 a year. In fact, the median wage for those 53 million people was $18,000. Which means that 22% of U.S. workers aged 18 to 65 — aka 26.5 million workers — live on less than $18,000. And of course, that was even before the recent mass unemployment set in.
I should temper this with the point that the figure includes people working part-time or seasonally. So people in school, who only work part-time due to a disability or who simply can’t get more than part-time work will necessarily have dragged down the median.
But for the record, part-time workers account for just 9.2 million folks in the workforce as of January 2020. That’s only 7.8% of the total labor force. So their effect isn’t huge.
Moreover, it’s also important to remember that “part-time” is up to 34 hours per week. And many low-wage employers keep workers at 34 hours to avoid having to pay benefits. So many part-time folks may a) be working very nearly full-time and b) not have a choice in being technically part-time.
And lest you think these low-income workers have partners to help boost income. Well…
A second person might not help
It turns out that 30% (16 million) of low-wage workers lived in households below 150% of the poverty line. So about $26,000 for two people, $32,500 for a family of three and $39,000 for a family of four.
Perhaps that’s because 26% (14 million) of low-wage workers are the sole earners in their family, with a median income of $20,000. Presumably, most of these are either single-parent households or the partners are unable to work due to health problems, unaffordable childcare or a lack of jobs.
Even in multi-income households, 25% (13 million) of low-wage workers live with people who are also low-wage, resulting in a median of $42,000 among those folks. That much, at least, can be livable — depending what area of the country you’re in, number of dependents, general health, etc. Still, it’s awfully little for two people’s combined 34+ hours of work.
Their futures don’t look better
So yeah, part of the issue is that too many people have low-wage jobs — most of whom aren’t (despite what many people claim) students or teens. But it gets worse: They’re likely to remain low-wage workers as long as they’re in the workforce.
A Brookings Institution study found that 27 million low-wage workers ages 18 to 64 — aka 51% of all low-wage workers in that range — have only a high school diploma (or less) and are not in school. In other words, they’re not likely to qualify for better paying jobs in the future. Minimum wage increases notwithstanding, most of these people will have more or less the same income for their entire working lives.
A lot of people’s response is that these folks should take some initiative and learn skills to boost their earning potential. Well, unfortunately that doesn’t quite solve the problem.
First of all, 23% (12 million) of low-wage workers already have an associate’s degree or higher. So they put forth at least two years’ of effort to get marketable skills or at least a degree that ostensibly makes them more appealing to employers. And they’re still low-wage.
The problem is that the opportunity for better-paying jobs may simply not exist.
Low wage is pretty common
The Brookings Institution study looked at 400 major metropolises and found that low-wage jobs range anywhere from 30% to 62% of all employment opportunities. Even in expensive cities, there were an awful lot of low-wage jobs: 560,000 in Seattle, 700,00 in Boston and in San Francisco, and one million in D.C.
Meanwhile, among those 27 million people without college degrees, there are 3.4 people per one “good” job. (The study defined a good job as at or above the national median wage, adjusted for local cost of living.) So even if they could get a good job without a college degree… Well, about 1/3 of them would get one.
But still, some people will say that they should go to college to have a better chance of securing that one good job. Which is great in theory but…
The reality of adult education
With the skyrocketing cost of tuition, that’s not terribly feasible for many people. Even one or two classes could be more than a low-wage worker can afford. Some might get financial assistance, especially at the community college level.
But that’s a limited pool of resources. There isn’t enough for everyone. So many would need to take out federal loans, which creates problems in and of itself if they can’t get decent jobs after college (more on that later).
Oh, and of course they’ll need a job that’s willing to work with their class schedules. Plenty of people’s schedules change every single week, and it could easily be a medley of shifts. So hopefully, they have a good relationship with the person who delegates shifts or coworkers who are fine routinely trading shifts.
And of course, at one or two courses a term, it’s going to take people many, many years to have the degree they need to claw their way up from low-wage status.
So yes, getting a degree might be a good long-term solution — again, more on that in a moment — but these people are being castigated now for needing benefits/not getting ahead. People want to cut low-income people’s government assistance now.
There aren’t even enough skilled jobs
Even if low-wage workers get a degree, there’s no guarantee there would be enough decent jobs for them.
In the last 30 years, 63% of all new jobs were low-wage and/or low-hour ones. Thirty years ago, for every 100 low-wage jobs, there were 94 jobs that paid above average wages. As of November 2019, it’s now 100:80.
In December 2019, there were an estimated 152,383,000 jobs. If 44% (80 out of every 180 jobs) are not considered low wage, then there are about 67,048,000 non-low-wage jobs out there. (Well, there were pre-pandemic, anyway.)
So even if only half of low-wage workers got degrees/qualifications, that would be 26.5 million people who were then qualified for jobs with decent pay. In other words, 39.5% of the non-low-wage jobs would have to be available to absorb them all. Unlikely to say the least.
Low wage doesn’t necessarily mean unlivable
Yes, before some of you chime in, you can live on $30,000 in some parts of the country. As you’ll recall, my emergency budget is less than $30,000 a year. On the other hand, my mortgage and utilities are only $800 a month combined. So that gives me an edge over a lot of people.
In some cases you can live on under $30,000 even in expensive cities. But generally people accomplishing this:
- Don’t need (and thus don’t own) a car
- Have good health
- If they have health insurance it’s usually through a partner/the government
- Have very low utility bills
Plus they don’t usually have student loans or, if they do, have income-based repayment plans.
Of course, most low-wage workers haven’t been to college (thus no loans) and either don’t have health insurance or it’s covered by subsidies/Medicaid. So… That’s two items off the budget, I guess?
So what can we do?
First, we can stop going around saying that poor people are only poor because they’re bad with money. These figures show that a large chunk of people in this country simply don’t make enough for even most frugal folks to do more than get by (if that).
For example, here in Arizona even a $30,000/year job nets $2,081 a month. Not great, but livable. Well, as long as you don’t live alone, since a studio is more than $700 a month here. Instead, you can share a two-bedroom for about $575 after utilities (not including cable or Internet) or a three bedroom for around $540.
That leaves about $1,500 for any car or student loan payments, gas, groceries, Internet (split two ways at least), medical expenses (hopefully, your employer chips in for your premium since the average is $440 a month), cell service, haircuts, streaming entertainment (cable’s probably too pricey), etc. So you probably won’t live large, but it’s doable.
But again, 44% of workers make less than $30,000. So their finances look a little different.
Full-time work at Arizona minimum wage (which is, relative to other states, pretty high at $12 an hour) nets $1,620. But of course a fair number of places paying minimum wage like to keep workers at 34 hours per week so they don’t have to pay benefits, which puts people at $1,398 per month. So that $540-575 a month in housing costs is going to hurt.
But good news: You probably don’t have student loans, definitely don’t have health insurance to pay for and might not even have been able to afford a car (though if you did, you almost definitely have a loan). So that lowers your cost of living, I suppose.
Stop telling them to move
Second, we can stop making privileged assertions.
For example — because I’m sure some people reading this are about to say it and a dude on Twitter said it rather authoritatively — we should stop saying these people “could just move somewhere cheaper.”
Most of them are not in a financial position to save enough for an interstate move. And they don’t make enough money to get a credit card or loan to facilitate a change of state.
Moreover, their support system (including potential childcare, but also simply someone to borrow a little cash from if need be) or access to quality healthcare may be located in the more expensive place.
Also, if they did move to a cheaper state, minimum wage is likely to be lower than their current, more expensive city. So even with cheaper housing, their situation might not look all that different in the end.
At any rate, the Twitter guy clarified that he had meant a short move, specifically he said “15 minutes away.” I’m not completely sure where he lives, but in most cities there aren’t many moves that short which would result in significantly cheaper rent — unless you’re in a high-cost area to begin with. Which low-income people rarely (if ever) are.
Besides, how cheap do you go before it’s a matter of personal safety? Cheap areas of town tend to be that way for a reason.
Also, there’s the issue of someone who’s just scraping by being able to save up first month’s rent and deposit. Heck, even just the first month’s rent in advance can be an issue. Some people only have their rent in hand a few days before it’s due. It’s tough to find a good, affordable option, be approved (1-3 days alone) and move everything you own in less than a week. Not impossible, but certainly very difficult.
Stop trying to think outside the box
And finally, we can stop making weird suggestions.
For example, the guy on Twitter came up with a brilliant solution. Literally the perfect plan. Just wait for it. You won’t believe you’ve never thought of this.
Ready? Seriously, you’re gonna kick yourselves. The person or family can…
Live in a storage locker and take showers at truckstops.
I mean, it’s pretty perfect, right? All you have to do is:
- Live in a place with no extreme temperatures.
- Know of a public restroom that doesn’t require you to be a customer to use. (And if there are more than one of you and the toilet isn’t within walking distance, have very well-timed toilet routines because you don’t want to waste gas for multiple trips a day.)
- Find a storage locker with a very lax/oblivious security guard and other staff who either won’t notice how much you’re there — or just won’t care enough to stop you from very illegally living in a storage locker.
- Hope there are electrical outlets so you can plug in a burner to cook your food — and presumably somehow you’ve also been able to purchase a mini-fridge so you can eat more than non-perishables.
- Hope that those doors aren’t terribly airtight so you can leave yours closed, thereby hiding your — again — very illegal tenancy.
So basically, a very solid plan.
To be fair, he did later state that this was “just a suggestion” and he knew it “wouldn’t work for everyone.” But the fact that he thought it would work for anyone is slightly disturbing.
What’s more frustrating is that, when people come up with these bizarre suggestions, it further cements (in their minds anyway) the idea that poor people just aren’t trying hard enough to find solutions. Because in a matter of minutes, that guy came up with one, right? So it apparently stands to reason they just need to think a little harder.
Almost every “out of the box” suggestion I’ve ever heard is untenable for many, if not all, of the people in question. Please just stop.
Stop telling them to get second jobs
Yes, many people have had to resort to this. (The infamous McDonald’s budget assumed it was normal, as you may recall.) But it’s ridiculous that they have to. It’s indefensible that we pay people so little that multiple jobs are the only way to survive, let alone get ahead.
Besides, not everyone can work a second job. There are issues of childcare, transportation, reconciling two potentially variable schedules every week and just general physical limits. Not everyone is well enough to routinely work more than 40 hours a week.
But what can we actually do?
Well, even if it weren’t the middle of a pandemic with mass unemployment, I don’t know that I’d have any brilliant suggestions. People are terrified to raise the minimum wage to a living one, fearing price inflation and small business closure.
And it’s not like they’re making any more land, so saying that low-income housing should be increased is problematic at best. Thus getting the cost of housing down isn’t going to happen any time soon.
Finally, people will scream bloody murder if we raise taxes to better fund welfare programs, let alone single-payer healthcare. So getting people the financial help they need is… unlikely.
So I guess more federal grants to help the low-wage workers who do want to give school a shot? Maybe? Would still involve higher taxes though, heaven forfend.
At any rate, if we can’t fix the problem just yet, the least we can do is stop blaming people for working the jobs that are actually available to them. Stop blaming them for not being able to get ahead on wages that are too low to allow more than basic survival.
That, at least, would be a start.
Has anyone lived on this little? Did anyone have the idea that the numbers were quite this bad (even before the pandemic)?