Four news stories caught my attention this week, all dealing with wage and income in the United States. With more than 203,000 newly employed Americans in November and the unemployment rate at 7 percent, economic expectations were exceeded. To add to the good news, the third-quarter gross domestic product, the GDP, hit an annual adjusted rate of 3.6 percent.
However, those numbers are hiding something quite important, something of which Pope Francis and President Obama spoke, and that is the continued economic inequality Americans face daily.
Of those newly filled jobs, almost 60,000 are retail or food service positions, those that pay the federal or state minimum wage. If you happened to be hanging around some of the fast food joints Thursday, you might have run into those protesting for a $15 per hour wage.
Fifteen dollars per hour sounds like a lot of money when in fact it is only $30,000 annually if one were working a 40-hour week for 50-weeks a year, with no vacation pay. KBIA/91.3 FM reported that a single parent with one child must make a minimum of $16.47 per hour or about $33,000 to make ends meet. Unfortunately, most retailers and food service employees work part time and full timers are usually limited to 37 hours a week with no hope for overtime.
I can only speculate that some of the new hires are men and women who have taken a second or third job to support their families. Simply paying the rent or mortgage, utilities, car and insurance payments and putting food on the table will eat up most, if not all, of one’s take home pay.
In Boone County, where rent will take $7,000 to $15,000 from a family’s budget, a family of four needs $36,000 to $57,000 to survive. If you are not sure what this feels like, have your civic or church group participate in a Poverty Simulation presented by Central Missouri Community Action; you will learn quickly that $15 an hour is still poverty wages.
If you believe service industry employees are students or high school dropouts, the Wall Street Journal will stop you in your tracks. In a March 2013 column, the Journal wrote, “Underemployment — skilled workers doing jobs that don't require their level of education — has been one of the hallmarks of the slow recovery. By some measures, nearly half of employed college graduates are in jobs that don't traditionally require a college degree.”
Of the nearly 60,000 new service industry jobs created in November, as many as 30,000 went to college graduates.
It is not just newly minted college graduates who are finding it difficult to land one of November’s 2,000 or so high-paying careers. Men and women with decades of professional experience are applying to Walmart and McDonald’s.
To say that social welfare, and I emphasize “welfare” here, is used by those who do not want to find work is truly not seeing the large cracks in the current system. The University of Illinois and University of California – Berkeley are telling us that more than 55 percent of all food service workers are on food stamps.
This is not to say that there are no high wage jobs available. Boeing Aircraft’s average employee is paid some $87,000, something that makes the building of the new 777X in Missouri so important. However, of the top 250 Standard & Poor’s 500 Index companies, retailers seem to have the largest gaps between the “average” salaried employee and the CEO.
At J.C. Penney, No. 1 on Bloomberg’s “Top CEO Pay Ratios,” the average employee makes about $29,600, including salary and benefits, while CEO Ron Johnson made more than $53 million, a 1,795 percent disparity. By contrast, W. James McNerney of Boeing receives $27 million, a disparity ratio of 317 percent.
And $29,600 for retail may be high. Using MIT’s “Living Wage Calculator” for Boone County, the salary here might be closer to $22,000. The average food service employees would see $16,000 annually.
The protesters are not part of some socialist plot designed to redistribute wealth. Wage disparity and poverty go hand-in-hand and are thought to be two taboo topics to bring up at the dinner table. We need to stop blaming the workers and start discussing solutions. The first thing is raise the minimum wage to something more reasonable than Missouri’s $7.50 an hour.
David Rosman is an editor, writer, professional speaker and college instructor in communications, ethics, business and politics. He writes a weekly column for the Missourian.