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Katrina Puts Spotlight on Minimum Wage

ED GORDON, host:

From NPR News, this is NEWS & NOTES. I'm Ed Gordon.

Hurricane Katrina shone a bright light on America's poverty crisis. The ranks of the poor swelled to 37 million Americans last month. That number includes those who work for the federal minimum wage, currently $5.15. In many corners, people are suggesting the minimum wage be raised to help workers thrive, not just survive. But would raising the minimum wage really help America's poor? And would the added burden on businesses have an adverse effect on the economy? Joining us to answer those questions and more are William Spriggs, senior fellow at the Economic Policy Institute in Washington, DC, and Barbara Ehrenreich, journalist and author of the best-seller "Nickel and Dimed." Her new book is called "Bait and Switch." She joins us from the City of Brotherly Love, Philadelphia.

I thank you both for joining us.

Mr. Spriggs, let me start with you. Between 1989 and 1997, we saw the minimum wage go up four times. In the last nine years, it has not moved. Why is that the case?

Mr. WILLIAM SPRIGGS (Economic Policy Institute): Well, it takes legislative action from Congress and signature of the president to raise the minimum wage. It's set within law, and so unless we raise it through legislation, it doesn't change. Each president except Ronald Reagan has, during their term, signed legislation to raise the minimum wage. And so far this President Bush has made no motion to raise the minimum wage. So we're about to repeat the Reagan legacy of a prolonged period in which the purchasing power of the minimum wage goes down and people making the minimum wage get dragged way below what would be a poverty wage.

You have to make above $9 an hour in order to keep a family of four at the official poverty line. You have to make around $8 an hour to keep a family of three above the poverty line. And you have to be at a little above $6 to keep a family of two above the poverty line. So anyone making the minimum wage could not keep any family.

GORDON: And, Barbara Ehrenreich, we should note in your book "Bait and Switch," you took a year and went out to try to see if, in fact, you could live along those lines. We should note you didn't always work for the minimum wage, sometimes above, but you saw the real struggle that people have to live through.

Ms. BARBARA EHRENREICH ("Bait and Switch"): Yes, and I was earning an average of $7 an hour. This was in my book "Nickel and Dimed." And I can tell you, $7 an hour isn't enough for one person, at least any way I could figure out to live, mostly because of extraordinary rents, even for trailer parks, even for dingy residential motel rooms. $7 an hour, that's about 1,200 a month. If you have to pay 600 or 700 on rent, you can see you don't have a lot to play around with. If there are child-care expenses, too, well, you're in the red before you've even bought groceries. So this is not a matter of ideology. This is a matter of arithmetic.

GORDON: And, Barbara, we should note in the new book, "Bait and Switch," you upped it, if you will, and you're looking at the life of the middle-class, unemployed, white-collar workers who are finding it harder year by year to stay employed, gainfully employed. And you're saying once again, `Let's not be fooled by labels. It is just difficult out there, period.'

Ms. EHRENREICH: Yes, and I think what I found in "Bait and Switch" about the white-collar unemployed certainly says to me that people who imagine themselves securely middle class and imagine the poor to be somebody else, you know, those people should bear in mind that they may be one year, even just six months, away from that very-low-wage job themselves.

GORDON: William Spriggs, much has been talked about since Hurricane Katrina in terms of America's poor, as if all of a sudden we've found them. They've always been there. I'm curious; as you've studied this issue throughout, when you look at the minimum wage, can you see historically a real bump in the quality of life as it relates to raising the minimum wage?

Mr. SPRIGGS: Well, there's a direct correlation for a large chunk of the poor. About 15 percent of the poor work full time, full year. So clearly when you see the minimum wage go up, you see the share of full-time, full-year, poor workers go down. There's a direct correlation for those workers. Oddly, when the minimum wage goes up, more people are pulled into the labor market because work pays. So oddly, in 1999, when the labor market was very tight and wages for low-wage workers was up, 40 percent of the poor actually worked. This includes those who were the full-time workers. So there is a logic to getting people into the labor market by raising the wage, but it definitely helps those who are able to work by raising the wage.

The key is that, as in Barbara's case, where she wasn't paid exactly the minimum wage, there are a whole set of workers whose wages are tied to the minimum wage. So employers are trying to bid above the minimum wage for these workers and the problem becomes the relationship between the average wage in the economy, which is now about $15 an hour, and the minimum wage. When that gets very big, the turnover in minimum-wage companies goes up because people are hoping to get a regular job and there's really no path from someone making $5 or $6 an hour to get them up to $15 an hour. They really have to be...

GORDON: And I guess, William Spriggs, that was my next question; and follow up, if you will, the idea that once you find yourself in this group, it is very difficult--and we see disproportionately African-Americans and Latinos within this group of the working poor to a great degree. It is very difficult to springboard yourself above this number.

Mr. SPRIGGS: That's correct, because the firm that you've hired into, the whole wage structure is based on this very low wage. So, you know, even if they gave you a 50 percent wage increase, which would be a very big wage increase, they still can't get you up to what would be the average wage in the economy. So you're really locked in, and that's why the turnover at these companies is very high because people are trying to switch out of those companies and out of those industries into jobs that pay better, but people are trapped in that zone. When we raise the minimum wage, we lower the turnover rate and we lower the gap between people who have the exact same skills as workers who are in jobs that would pay the average wage. They have the same skills and the same background, but they do suffer a penalty from working in these companies.

GORDON: Barbara, talk to me, if you will, about the stories that you found when you talked to the people who really lived this life. They are really ofttimes living a horrific tale from year to year.

Ms. EHRENREICH: Well, it's from week to week, because when you're at a very low wage, the minimum or just above, anything can become a catastrophe. You don't need a hurricane to wreck your life. A broken car, a car that's not working; it can be a sick child, you know, who you have to stay home with, 'cause the day-care center or baby sitter won't take a sick child. You stay home, you could lose your job. So anything can knock you off the track.

GORDON: And, Barbara, what do you think Washington is missing in all of this? It seems to me, again, that the bureaucrats in Washington will talk about--even those who tout raising the minimum wage to $7, some have seen as the key, offtimes don't really know the hardship that many of these people live day to day.

Ms. EHRENREICH: No. I mean, our senators and congresspeople are very disproportionately white male, wealthy cut of society. They have in those cases no notion of what it would be like to try to take care of a family or even, you know, be one wage earner in the family where the wages are under $10 an hour. I wish we could have this as a kind of entrance exam. You want to be a senator? Please spend one month, three months out there trying to do this, and then we'll talk to you.

GORDON: William Spriggs, you've been around Washington for some time. When you talk about issues like this, is it to a great degree falling on deaf ears on Capitol Hill? Are they understanding what these people are grappling with?

Mr. SPRIGGS: No, they aren't, and part of the problem is that you get people talking out of both sides of their mouths. They think that it's inefficient to interfere in the labor market by setting wages, but we should solve this problem, they think, through safety nets, like providing Medicaid, providing housing assistance, but then at the same time, those same people will vote against the budget for Section 8 housing or for Medicaid assistance. And so it really is a difficult situation. It has become, unfortunately, a partisan battle. Through 1980, both Republicans and Democrats voted in the majority to raise the minimum wage and now it has become partisan. So it really is a Democrat issue. And currently with the Republican-controlled Congress, that means the majority of members of Congress would vote against it.

GORDON: And, Barbara, what do you think happens to these folks if we don't see any raise in the federal minimum wage?

Ms. EHRENREICH: I just want to underscore what something Bill said first, is that this is, in fact, a situation where things are only getting worse. Before Katrina, Congress was due to return to Washington and make deep cuts in things like Medicaid and other programs which are already inadequate for the poor and working poor. So there's an attack on two fronts. The safety net is being destroyed while wages are stagnant or actually decreasing in real value. What will this lead to? Well, right now it's hard to know how people keep--you know, survive at all. When I was working on "Nickel and Dimed"...

GORDON: Yeah.

Ms. EHRENREICH: ...I worked alongside full-time workers who lived in their cars. I worked alongside full-time workers who did not get enough to eat and were actually dizzy by the end of the shift. You know, this is a state of biological threat...

GORDON: Yeah.

Ms. EHRENREICH: ...to people, and I think this is a kind of condition which eventually, historically, has led to huge social instability.

GORDON: Yeah. And I think it's important--and I'll echo what you suggested earlier--that many, many people who are perhaps riding in their cars now and feel very comfortable are only a paycheck or two away from feeling the real pinch.

William Spriggs is a senior fellow at the Economic Policy Institute and Barbara Ehrenreich is a journalist and author of "Nickel and Dimed," and her new book is called "Bait and Switch."

I thank you both for joining us today. Appreciate it.

Mr. SPRIGGS: Thank you.

Ms. EHRENREICH: Yeah, my pleasure.

GORDON: This is NPR News. Transcript provided by NPR, Copyright NPR.

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