The economic slump in the U.S. has lasted longer than expected and worries many that the nation is headed towards a double dip recession. Problems exist for many Washingtonians when you look at the lingering financial situation and the number of people who do have jobs but doesn’t pay very well.
This situation is compounded for returning citizens.
Entry level jobs is where the majority of returning citizens turn to, but in order to get the economy going will require more than low-level job creation. MIT economics professor Paul Osterman says, “Raising the minimum wage to get more cash to the working poor is crucial.”
20 percent of employed American adults are earning $10.65 an hour or less. The federal minimum wage currently stands at $7.25 an hour, although 18 states set their own above the federal level, with Washington State paying out the most at $8.67 an hour.
Returning citizens tend to make $10.65 or less, and in the District of Columbia, that hourly wage doesn’t go very far. “I make ten bucks an hour,” said Brandon Hager, who works in retail, “and I’m barely getting by. I make just enough to keep PEPCO working, transportation, and to pay my rent.” Hager said he has a friend who works in food service that sometimes gives him extra food. He added without that he didn’t know what he would do.
Groceries, one of the most basic necessities, takes a lot of if Hager’s paycheck and Washingtonians too, so getting help from a friend is greatly appreciated. Recently, a survey by Washington Consumers’ Checkbook shows families would spend $150 a week if they shopped at average-priced chains, like Safeway, could save $1,326 by shopping at the discount store Bottom Dollar Food or Aldi.
Osterman recommends gradually raising the minimum wage to something close to a living measure over the next few years. He views this as the first step in aiding people to getting out of poverty, on top of injecting more money into the economy. Osterman’s comments come as his new book is released, “Good Jobs America.”
“If you give someone making $15,000 a year a $3,000 increase, that’s going to make a tremendous difference in their life,” he said.
Hager thinks an extra $3,000 would make a big difference to him.
“$3,000 might not seem like much to some of us D.C. people, but man, that could make a real difference in the way I live.” Hager said he went to prison for selling drugs in 2001, and received two year sentence. He’s worked various retail jobs and has tried to stay away from turning to crime to make ends meet.
Opposition to increasing the minimum wage believe the increase would do more harm than good to the working poor. “If you increase the minimum wage, all you’re doing is making things hard on those that are having a problem getting by,” said Felix Echols, who lives in DuPont Circle. “It’s bad because that means these small businesses eventually wouldn’t be able to handle the increased wages, unless they rainsed their prices too.”
Many economists say the same thing, but labor economist Heidi Shierholz with Economic Policy Institute believes there’s no real proof to show raising the minimum wage causes companies to cut back on hiring or lose money.
“If you raise the price of anything, people take less of it. That includes labor,” said William Dunkelberg, chief economist for the National Federation of Independent Businesses (NFIB). “That’s why you can’t raise wages during bad times. If you raise the price of labor, and the economy is growing, maybe I’ll still hire people. But not now.”
The other side of the coin is finding jobs for the growing number of returning citizens, as well as other unemployed Americans. Advocates for the unemployed praise the administration for stepping in. Business groups and their allies call the effort unnecessary and counterproductive.
A provision in the American Jobs Act bill that Obama sent to Congress would allow unsuccessful job applicants to sue if, “they think a company of 15 more employees denied them a job because they were unemployed.”
The provision would also ban employment ads that declare the unemployed ineligible, with phrases like “Jobless need not apply.” Hager found the President’s involvement necessary. “I’m glad to hear that President Obama is trying to do something to help people who are having a tough time, but it looks like the GOP is sticking to their guns and resisting his recommendations, and leaving Americans in limbo.” He added that he felt Republicans were taking Americans hostage.
The current downturn is characterized by a relatively low rate of layoffs, but still high unemployment. Many of the jobless have been out of work for an extended period. Around 14 million Americans are officially unemployed, of whom more than 6 million are considered “long-term unemployed,” because they’ve been out of work for six months or more. The average duration of joblessness is currently 40 weeks, the highest in more than 60 years.