Wages Start Low, Lifetime Income Stays Low

New Orleans   Joe Fox, an old comrade and friend visiting New Orleans yesterday, dropped by for a cup of coffee at Fair Grinds Coffeehouse on St. Claude, a tour of WAMF-LP, and a bit of nostalgia over the more than forty years we’ve worked with and known each other. We reprised an old story that centered on him, but that I have also repeated for years.

Somehow in the late 1970s fresh out of Harvard Business School of all places, Joe had applied to work at ACORN, and I had hired him not as an organizer, but to build other operations for us in the hopes of creating additional sustainability. Quickly, he was deployed to develop and build our radio station in Tampa, WMNF, and help get our station in Little Rock, KABF get on the air as well. Joe was magic to the task, creating an income stream to build the station between a door-to-door canvass and grants as well as a notorious and perhaps reckless stint of climbing the tower to secure it in Florida before a storm. The story though that we have both told repeatedly revolved around a report that Harvard Business School published in its magazine touting the enhanced income its graduates were going to make with their degree. Someone was the high, and Joe, working for ACORN was the low, pulling down the average that year. Joe reminded me as we talked that when we won the CORAP grant to receive 100 VISTAs in 1978, that ACORN had to raise its salary schedule so that there was no resentment because all of the VISTAs would be paid more!

According to the recently released Census Bureau report annual income has risen for the second straight year to the point the average American household is making just north of $59,000 per year, over a 10% increase in the last two years. Statisticians and economists note that this is still just catch up. According to the Times, “In 1973, the inflation-adjusted median income of men working full time was $54,030. In 2016, it was $51,640 — roughly $2,400 lower.”

Researchers from the Social Security Administration have done a deep dive into their huge database and have begun to report that the loss of income for workers has a lot of causes that are often cited from deindustrialization to automation to stagnant wages in the service sector, but that the issue of lower pay actually starts young and lasts forever, depressing lifetime earnings. What they are finding is that depressed wages at 25 years of age may end up as significantly decreased lifetime earnings even after 30 years of work at 55 years of age. And, it’s been falling like a rock. The Times’ report says that “according to one conservative measure of inflation, in 1967, the median income at age 25 was $33,300; in 1983, it was $29,000. Twenty-five year-olds did better during the 1990s, but then the slide returned. In 2011, the median income for 25-year-old men was less than $25,000 — pretty much the same as it was in 1959.”

I started working around 1967, though I wasn’t 25, but 19. If the median income was $33,3000 then, it was still over $30,000 in 1978, when we were raising wages to about $5000 per annually at starting to match VISTA paychecks, not counting the reserve ACTION held for the end of their service when they mustered out. When Social Security sends me my income statements, and I’m sure Joe laughs at this as well, even though he is a successful businessman in Little Rock running the iconic Community Bakery, it seems to have taken me until 1982 to crack five-figures.

Next time I see him, and so many others, I hope they remember all we accomplished from our youth forward, rather than blaming me for a reduction of their lifetime income.

***

Please enjoy Earful by the Oil Boom

& Lee Ann Womack’s All the Trouble.

Thanks to KABF.

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Rising Rents are Squeezing Low-and-Moderate Income Families

New Orleans   The National Low Income Housing Coalition released its 2017 annual report, “Out of Reach,” looking closely at the impact of rising rent throughout the country and how it is pushing lower income and working families into untenable situations because the gap between rent and wages is widening. Millions of families are joining the great poet Langston Hughes by living his haiku: “I wish the rent were heaven sent.”

The gut punch of the report is plain and simple:

The 2017 national Housing Wage is $21.21 per hour for a two-bedroom rental home, or more than 2.9 times higher than the federal minimum wage of $7.25 per hour. The 2017 Housing Wage for a one-bedroom rental home is $17.14, or 2.4 times higher than the federal minimum wage.

State by the state, county by county, the story of this growing crisis is stark. The gap is the largest in a bunch of overwhelmingly “blue” states, which may be one of the reasons Congressional representatives are not running up the aisles and going from desk to desk with a Paul Revere warning call to “Help, the Landlord is Coming!” Those states with the largest gap between wages and what it cost to rent the average two-bedroom house are led by Hawaii, then Maryland, California, New Jersey, Vermont, Connecticut, Massachusetts, Maine, New Hampshire, and then Washington, D.C. I don’t need to tell you that this is aggregate data because you were already scratching your head when you didn’t hear New York, so yes, thanks to lower average rents upstate that offset the New York City metro area, they didn’t make the ten.

Sure enough when you look at the data even states with relatively lower rent still find that urban metropolitan areas like New Orleans, Houston, Miami, Salt Lake City, Dallas, Seattle, San Antonio, Anchorage, Chicago and elsewhere would require a minimum wage worker to labor 80 hours a week to find a one-bedroom place where they could live. And, yes, the Coalition’s point is not that everyone is working 80 hours to do so, but that if they were able to swing a place that is what it would take. The cold, bitter truth on the ground is that they cannot, which leads to overcrowding, homelessness, and embracing rent-to-own predatory contracts or whatever is available until the eviction notice comes.

Even the states where the average wage required to rent a two-bedroom house is relatively low, it’s still astronomical in terms of a family budget. Want a two-bedroom in Arkansas, then you need to make $13.72 per hour, the lowest wage to rent ratio in the country. Neighboring states are a good comparison with Mississippi at $14.84, Louisiana at $16.16, and Texas at 18.38. The lowest wage required after Arkansas is Kentucky at $13.95. The problem is obvious though. Wages are pretty much stuck at $7.25 in those states and too many of the big whoops in these states are fighting to keep wages that way.

As the report makes clear, it’s not for lack of working or lack of looking. Other “key findings” include:

Six of the seven occupations projected to add the greatest number of jobs by 2024 provide a median wage that is not sufficient to afford a modest one-bedroom rental home.

An extremely low income (ELI) household whose income is less than the poverty level or 30% of their area’s median cannot afford the average cost of a modest one-bedroom rental home in any state.

In no state, metropolitan area, or county can a full-time minimum-wage worker afford a two-bedroom rental home. In only 12 counties can a full-time minimum-wage worker afford a modest one-bedroom rental home.

It’s easy to see where this is going: bad to worse to crisis. I’m seems like we’re already there.

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