Public Subsidies of Low Wages

Citizen Wealth Education Financial Justice Health Care Ideas and Issues

publicbenefitsNew Orleans      The Berkeley Center for Labor Research and Education at the University of California has released a report looking at many federal and state subsidies directed at relief for lower income Americans.  All good.  What they found though is that a huge percentage of this kind of support is not in Republican ideological terms, helping people get their lives together to get jobs, but is in fact subsidizing the low wages of existing work.  In the words of the chair of the center, our old comrade Ken Jacobs, “This is a hidden cost of low-wage work.”

The Center’s new report defined a working family as any family that included a worker averaging at least 27 hours of work weekly.  Under that definition, looking at the statistics that were available to them, almost 75% of the people helped by federal programs like food stamps, EITC, and Medicaid are headed by workers.  Based on their calculations the cost of such public support for working families was over $152 billion per year.  Working families were the biggest beneficiaries of federal programs aimed at the poor in all but six states.  Make a mental note or jot this down on a piece of paper nearby:  this does not include anything involving health care support based on the Affordable Care Act because no figures were available yet for such calculations.

Don’t misinterpret these figures.  I’m 100% for what I call “maximum eligible participation” as a key ingredient for “citizen wealth.”  In fact I think we need to redouble our efforts to make sure all families that are eligible for any of these programs are in fact receiving the benefits.  That’s what they are for, so we should make them work.

Where the rubber hits the road on welfare versus work is that the ideological drift since President Clinton has shifted most federal and state support towards workers and away from providing the underpinnings for the poor that would platform their ability to build stable lives, and, yes, even access more education and work.  There is only so much money and so many ways to slice the pie though, so instead lawmakers have retreated from attacking poverty and moved instead towards subsidizing lower wage work as we have increasingly become a service-based, lower waged economy over the last generation.

The inescapable argument of the Berkeley report is that if employers were paying fair wages, less subsidy would be required. At one level the report is feeding into the right ideology that maybe there is something wrong with workers getting food stamps, EITC and other support.   At one level the report is feeding into the right ideology that says we should support lower waged work and that maybe there is something wrong with workers getting food stamps, EITC and other support.  That is not their theme and is inadvertent, but that’s the cloud that hangs over a figure like $152 billion, as more red states will claim they should cut back support to workers, as we have seen recently with the retraction of support for providing food stamps for many men without dependent children.  Every dollar of that money is well spent, and more should be spent in fact, but as long as we are publicly subsidizing low wages, we are not able to provide more critical support to the lowest income families to pull them out of poverty, and that’s worse than a shame.