Report: Taxpayers cover the costs of low wages
Sunday, January 03, 2016
by Lolly Bowean
Four days a week, Marcie Barnett rises at 3 a.m. and then travels by bus and train about 90 minutes from her South Shore apartment to her job as a security officer at O'Hare International Airport.
She's on her feet for eight-plus hours patrolling the airport corridors, guarding doors to make sure people don't improperly enter or exit and watching over the baggage claim area.
But with her $12.20 an hour wage, Barnett doesn't earn enough to pay rent on her three-bedroom apartment, cover utilities and buy groceries for her daughter and granddaughter, who live with her. So she relies on a Chicago housing choice voucher to subsidize more than half of the rent.
"I have expenses that are going up and some bills just don't get paid," said Barnett, who has learned not to panic over her state of constant financial crisis. "I've been living like this for so long, I don't even think about it. It's become second nature."
Barnett, 61, is one of thousands of Cook County residents who go to work, put in the hours, but still receive some form of public aid. At a time the country is engaged in a fierce debate over the minimum wage, Barnett's struggle helps to give it a face.
"There is a hard pocketbook cost to keeping workers in poverty in Cook County," said Liz Ryan Murray, the policy director for the National People's Action, a collection of grass-roots groups that support a higher minimum wage. "It affects everyone from people who have businesses, to the workers, to law enforcement, to educators, to everyone who (wants) a healthy economy.
"Poverty isn't free," she added. "It's not just low-paid workers that suffer. It's all of us."
National People's Action released a study recently in an attempt to broaden the conversation on low-wage workers to look at how taxpayers end up paying to help support those earners. The report comes as activists are pushing for the adoption of a Responsible Business Act in Cook County that would force companies with more than 750 employees to either pay a higher salary to their workers or pay a penalty.
Opponents of raising wages argue that the move would force businesses to eliminate jobs, move elsewhere or even close. They say that an increased minimum wage would increase the cost of goods, which would then lower demand and lead to more unemployment.
"Higher wages are generally a good thing when they are driven by labor market conditions and increased worker productivity," said James Sherk, a research fellow with The Heritage Foundation in Washington, D.C. "What's harmful is when the government comes in and tries to make businesses raise wages more than the market demands. Then policies intended to help low-income workers with higher wages can result in them having less take-home pay," because of fewer worked hours, he said.
Just as the NPA's study shows the taxpayers' burden for low-income workers, other studies suggest that raising wages could help some workers, but result in higher unemployment overall — therefore not reducing government spending on welfare programs, according to Sherk.
Authors of the NPA report point out that while paying lower salaries benefits corporations, it penalizes taxpayers who have to offset the cost of living for workers. Typically, the authors say, those low-paid employees must turn to public assistance in the form of housing vouchers, food stamps, discounted day care or child care programs.
According to the NPA study, 60 percent of the cost of public assistance in Illinois goes to families headed by someone who works. In addition, nearly 1 million people in Cook County live in poverty and either collect public assistance or qualify for it, the report shows. County taxpayers end up covering the cost of nearly $150 million in health care for the working poor. They pay millions more for child care and other expenses, Murray said.
The local study was influenced by a similar national report that looked at major corporations such as McDonald's and Wal-Mart and how their wages eventually cost the public.
For more than a decade, Ken Jacobs, chair of the Labor Center at the University of California at Berkeley, has been examining the number of fast-food workers dependent on food stamps, free day care programs and other subsidies. His report, released earlier this year, estimated that state and federal governments spend more than $150 billion a year on four anti-poverty programs mainly used by working people.
When workers don't earn enough to support themselves or their families, the effects spill over to other parts of their lives, Jacobs said. Low-wage workers tend to suffer from more short-term and long-term health problems and rely on subsidized health care. Their children perform poorly in school, which sometimes steers them to a life of low-wage work.
"Low wages have an impact ... well beyond just the direct workers that are affected," he said.
If more workers were paid a living wage, public assistance would target the people who need it the most, Jacobs said.
Take Mary Hood, 29, a Bronzeville mother who works for $10.50 an hour at McDonald's. When she started working at the fast-food chain, she was a cashier, but she worked hard and got a management position.
Still, her hourly pay remained the same.
"My paychecks vary because I work depending on business," she said. "So my pay is not consistent. I have one daughter and I have rent, lights, gas, life insurance and school fees. I just stretch it out paying what I can throughout the month."
As a result, Hood collects $360 a month in food stamp benefits and relies on Medicaid for health care. Without the public aid, she wouldn't be able to make it.
"I feel like, why should I have to depend on government assistance when I get up and go to work every day?" she said. "I'm not the type of woman or mother to depend on the state. These programs are supposed to assist you until you don't need it. I have a job and can't let go (of the benefits) because my job doesn't provide all I need."
When Diana Bueno, 28, decided to get a job and go to work full time, she thought that if she could just put in the hours, she'd earn enough to start providing a better life for herself and her three small children. But after three months of working as a passenger service assistant at O'Hare Airport transporting elderly, sick and disabled travelers through the terminals in wheelchairs, she feels defeated.
"I feel like I'm working the most I can and not getting anywhere for it," she said. "I like what I do. I'm just not making enough to make a difference. Once I get a paycheck, it's all gone. I'm behind in so many bills, I think, 'What's the point?'"
Bueno's salary equation is complicated. Technically, she earns about $6.75 an hour and is expected to bring in at least $26 a day in tips. That would make her hourly wage around $10 an hour. But often her checks are less than $200 a week, she said. She doesn't earn what she needs in tips. And the money she earns doesn't go far.
When she first started working, Bueno said she worked a day schedule and paid a baby sitter to care for her children. But she quickly learned that was eating up all her pay.
So now she endures a chaotic schedule so that she can swap free child care duties with her sister.
"I push wheelchairs from 3 a.m. until 11:30 a.m.," she said. Then she rushes to pick up her niece. She spends part of the afternoon cleaning her South Lawndale house and cooking before she has to pick up her three children and her sister's two other children from school. By the time she helps all the children with homework, feeds them dinner and puts all six of them to bed by 8, she's exhausted, she said.
Then the children are awakened at midnight, when her sister gets in from work, so they can go to her house for the rest of the night.
At 1 a.m. Bueno is up, getting dressed so she can catch her two buses and a CTA train to the airport for her shift.
"I just try not to think about it," she said. "Sometimes I sleep a little on the Blue Line. I get some sleep on the bus."
With all of that, Bueno still needs to collect about $400 in food stamps.
Barnett lived for years sharing a one-bedroom apartment with her family of three because that was all she could afford. Her daughter and granddaughter shared a bed in the bedroom. She slept on an air mattress in the living room.
She thought she'd never be able to afford to move, until she was awarded the housing voucher.
"It's a struggle, but I have to make it work," she said.
At her job, Barnett is given only 32 hours a week, she said. That way, if it's necessary that she work overtime, she's never over the 40-hour mark to earn higher hourly pay.
Even with her subsidized rent, making ends meet is a struggle.
"I have a ring I put back and forth into the pawnshop," she said. "Sometimes that helps if I'm in a pinch."