Report: Colorado’s Low-wage Workers Lag Even Further in Recession

( – promoted by Colorado Pols)

The Bell Policy Center has released a report that finds Colorado’s low-income working families are headed in the wrong direction — down the economic ladder.

The report says that, even before the economic downturn, these families were struggling and falling behind.

These are hard-working families. They clean our offices, they serve us fast food and make our hotel beds. They represent an essential segment of our workforce, and their contributions are important to our state’s economy.

Some of the report’s findings and how they compare to a similar report in 2004:

The number of working poor families in our state has grown by 51 percent, from  32,124 families living in poverty, representing 5.8 percent of working families, to 48,410 (8.3 percent).

More than 25 percent of working families do not earn enough to meet their basic needs. That’s 151,875 families. Six years ago, 20 percent were in this boat.

More low-wage workers have little security for the future, with the number of workers without any type of employer-provided pension growing by almost 275,000, to almost 1.7 million, since 2004.

With an eye on the upcoming legislative session, the Bell Policy Center recommends policies and public investments in two key areas: adult basic education and making low-wage jobs more secure.

Almost half of poor working families have a parent without a high school diploma or a GED. Adults without a high school education are not prepared for the 21st century workforce. Expanding opportunities for adults to increase their education and develop greater skills can lead to a pathway out of poverty.

To bolster the low-wage workforce, polices such as the Earned Income Tax Credit can help make low-wage jobs pay better, and policies can also encourage partnerships with business to make it easier for workers to save for retirement.

These are important areas where specific policies can help workers move up the economic ladder. But we also note that our state’s lack of revenues limits, in much a broader way, our ability to pursue policies and make investments in public systems and structures that create opportunity. That problem existed before the current economic downturn, and it will exist after a recovery – and we must address that problem so that we can expand opportunities for all Coloradans.

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  1. ohwilleke says:

    Its phase out leaves working class workers trying to move up with some of the highest marginal tax rates in the tax code that are further excacerbated by the phase out of other non-tax benefits.

    I agree that lack of job security is a huge problem, but the Bell doesn’t seem to suggest solutions and there aren’t easy ones.  Perhaps a right to temporary public employment for whatever needs local governments have at the time, would be the best and simplest proposal, but that would take funding that is hard to find.

  2. With the minimum wage failing to keep up with inflation, the recession forcing cut-backs that more severely affect low-income families, and employers reducing benefits packages, pretty much anyone other than a supply-side cultist could have predicted the contents of this report.

    The tax cut compromise won’t help these people, either – the Republian exchange of an SSI cut in place of the Working Families Credit hurts the poorest workers by increasing their taxes when they least need it.

    • According to the CDLE website, “Article XVIII, Section 15, of the Colorado Constitution requires the Colorado minimum wage to be adjusted annually for inflation, as measured by the Consumer Price Index used for Colorado.”

      • Now check on the history of that Article – it was passed by initiative and only went in to effect in 2007.

        In 1968, the Federal minimum wage (in inflation-adjusted dollars) was about $10/hour.  Today’s minimum wage in Colorado is $7.25.

        • but a higher minimum wage wouldn’t have changed the basics of that report one bit.

          • An increase in the minimum wage to 1968 levels would increase a minimum wage worker’s salary by ~35%.

            The extra income would directly reduce the number of people qualifying as “working poor”.

            It would reduce the number of poor families who cannot meet basic daily needs on their income.

            It would give some of them enough cash to begin saving for the future, or investing in themselves.

            And… that basic increase would in some cases be enough to allow one adult in a poor household to attend school to obtain their GED.

            One step – raising the minimum wage – addresses every single problem in the report while directly enacting the report’s one recommendation and facilitating its other suggestion.

          • In addition to all of those working poor, we also have the not-working poor and the underemployed working poor.

            There are still perhaps 23% of all U.S. workers either on unemployment, self-reporting as under-employed, or discouraged from the workforce altogether.  Yes, you read that right – nearly a quarter of the workforce is either unemployed actively seeking a job (9.7%), short-term discouraged or underemployed (7.3%), or long-term discouraged (est. at 6%) – see BLS and shadowstats.com for numbers…

            Now, in other eras that would have been cause for a massive government jump-start of the economy.  But because we are rarely presented with the broader unemployment index (the U6) and almost never with the pre-1994 method of calculating unemployment, the American public remains to some extent blissfully ignorant of the scope of our economic problem on the jobs front.

            A visionary President and Congress would work together to tackle this issue head-on, rather than the (expensive, but not nearly extensive enough) trimming-around-the-edges stimulus plan we’ve had so far.

  3. DavidThi808DavidThi808 says:

    No college diploma is bad. No high school diploma is killer.

    • BlueCat says:

      such as cleaning offices, making beds, staffing convenience stores, etc. No matter how many people get better educations that prepare them for better jobs, somebody has to do those so the only answer would be a minimum wage that is a  realistic living wage.  

      Besides the problem of those low wage workers we also face the destruction of the once mighty middle class, many of whom also can no longer make ends meet. Lake Wobegon, where everybody is above average doesn’t actually exist.  In the real world most people are average.  That’s  the meaning of average.  For the US to stop its  current march to Banana Republic social structure and retain a vibrant middle class majority we also need plenty of average well paying jobs with decent benefits or with basic universal healthcare coverage for the whole public.  

      Low paying service jobs in place of the  well paying jobs we once had in abundance as a manufacturing powerhouse won’t stop the slide. There is simply no way around that.  We can’t all be highly educated professionals and rocket scientists.

      • Duke Coxdukeco1 says:

        Herein, BC, lies our greatest threat, IMHO. Your comments are right on, and I believe the demise of the middle class in the US will be the most devastating socio-economic development of the early 21st century.

        The US Chamber of Commerce is engaged in policies that will hasten the arrival of “the New Feudalism” in this country. Multi-national corporations, whom the Chamber almost exclusively represents, have no interest in a healthy, growing, middle class in America.

        Driving down wages and increasing the supply of cheap, expendable, labor is the focus of the U.S. Chamber. The middle class market they service in the future will be in India, Indonesia, South America, and the Middle East. The sweatshops will be here.

         

        • DavidThi808DavidThi808 says:

          And I said also – your points are spot-on.

          1. Many jobs are now global. A software developer in China competes directly with software developers here. That puts downward pressure on some pay as the system equalizes.

          2. Many jobs have a giant difference in value between the top performers and the bottom performers. For software development it is generally considered 10X (I find it to be even larger). So the top 20% are paid very well while the bottom third are paid poorly (and yet by many measures are still overpaid).

          We are no longer in the world where the job pool is just the U.S. and the pay is defined by the position instead of the individual.

          • BlueCat says:

            The loss of a robust middle class is simply not compatible with the survival of the United States of America as we have known it.  It will much more closely resemble a Banana Republic than it will the egalitarian vision embodied in our constitution. Equality under the law and equal opportunity (not outcome, just opportunity) can’t possibly continue to coexist with the already monumental level of disparity that is exponentially growing in our economy. Period. No matter the explanation, its a tragic loss. Not to mention the loss to our security that must result from abandoning manufacturing to the point of utter dependence on foreign states with their own interests, for just about every material thing we need.

            • (I personally agree with the view that the middle class in vitally important, under attack, and shrinking rapidly, however,)

              Do you think our view of the middle-class in America is skewed by our historical vantage point?  (My point being that the large prosperous middle-class, as we know it, seems to be a post-depression, post-WWII phenomenon — more than an inherent historical fact of American democracry.)  Just wondering?

                • Middle of the Road says:

                  The middle class came about post WWII, largely thanks to the GI Bill.  

                  • Would you equate the merchant class of yesterday to today’s middle class?  Agree with you about the creation of the middle class in US – GI Bill plus lots of pent-up demand and Europe in shambles made for many jobs here.

                    Merchant class or middle class, I know economies, communities and societies fare badly when many people are poor and a few are very wealthy.  

                    • Middle of the Road says:

                      The merchant class (or bourgeoisie as they were known in France) typically treated labor (the poor) badly while making a profit off of low wages or using indentured servants to avoid paying any wages at all.

                      They were usually considered a class below “gentlemen” and were fairly well off. They often merged with nobles to move up in status after the 1700s. I often see writers intermingle the two terms but the merchant class holds very little in common with what we consider middle class today.

                      (Can you tell I had to write a paper about this in college?)  

                  • contained a link to an earlier, 1986, article.  At the end of that 1986 article is this prescience:

                    Any substantial decline of the middle class — even if it is partly psychological — would be ominous for the U.S. as a whole. It is the middle class whose values and ambitions set the tone for the country. Without it, the U.S. could become a house divided in which Middle Americans would no longer serve as a powerful voice for political compromise.



                    It is only because the middle class is so sacred in the U.S. that even its potential shrinkage is so controversial. Virtually everyone agrees that America needs to maintain its middle class. While the split-level home and station wagon are modern inventions, the stabilizing influence of a large middle class has been highly valued for quite a bit longer. “Of the three classes,” observed Euripides, “it is the middle that saves the country.”

                    A quarter of a century on or 2,500 years after Euripedes, the judgement is the same; our political future is a function of our economic future, or lack thereof.

              • BlueCat says:

                in so far as both the rise of the world’s greatest middle class and the rise to greatness as a nation coincided. But we always had a a pretty healthy number of middling folks such as the earlier numbers of pretty prosperous independent farmers, compared to most nations. The gilded age was over the top disparity and we’re headed that way again.

      • DavidThi808DavidThi808 says:

        Is a shortage of low-skill workers. If 20% of the low skill workers were qualified for middle class jobs (and the recession was over), then there would be a severe shortage of low-skill workers and their pay would rise.

        We don’t need everyone going to college, but we do need a lot more going.

  4. More chilling: these folks will continue to suffer far into the future too. And their plight affects us all, whether we’re emotionally connected or not. It’s in our own self interests to invest, invest, invest in their economic salvation.

    Oh, wait. They deserve it, don’t they, Repugs? Does that mean then Repugs, along with the rest of us, deserve the certain fallout? Oh no, that can’t be so. They’re not cutting off those “lazy” noses to spite their faces. They’re letting the “market work”.

  5. cologeek says:

    If you can find someone willing to do that sort of job for $7 an hour, why would you pay $12? (for example)  Supply and demand work in the labor market just as it does for energy, consumer goods, and services.

    • Those consumer goods are being produced in China.  Pretty hard to compete with $12/week wages. As for the unskilled labor influx, I’d include the US citizens who have dropped out of high school.  They’re willing to work for less too.

      Energy is a free market?  Then what the heck is that PUC thing all about?  

    • Try globalization and “free trade” agreements where we agree to tie our hands behind our back while the other country gets to continue underpricing us by short-cutting in any number of ways.

      As coloradowahine writes, Chinese goods are produced with $12/week wages, paid on a Chinese-government controlled currency that deliberately undervalues those wages, with government-provided health care (and many other government services that happen “for free” in Communist countries), produced in facilities that have none of the environmental responsibility or worker protections we have implemented as a (comparatively) socially responsible country.  And then to top it all off, the Chinese government continues to block our own products from entering the country to provide a balance of trade.  Under those conditions, it’s hard to maintain any sort of manufacturing sector, nevermind a competitive one that pays decent wages.

      • selling consumer goods made in China, at really great prices, for people in the US making really low wages.    

      • cologeek says:

        has no effect on an economy that is increasingly service based?  That does strain believability.  If the various free trade agreements are the source of the problem, why didn’t the Democrats do anything about it during the last two years?  And if free trade is so bad, why is President Obama pushing for a new agreement with South Korea?

        • The economy, as you say, is becoming more service-based.  But, as I note, the reason is that manufacturing jobs are going overseas because of unfair competition.

          The problem, regardless, is that we have unskilled workers making less than poverty wages, and bearing the brunt of the unemployment crisis on top of that.  We can put more service workers to work if we have more money circulating in the economy.  Poor people send more of any increase in their income directly back in to our economy than any other group, and the fact that we as a society apparently think it’s okay to pay these people less than subsistence wages is a sad statement on our country.

          PS – don’t get me started on free trade agreements and Democratic leaders.  In fact, that probably goes for most rank-and-file Democrats.  It’s not just FTAs, but they don’t help.

          • DavidThi808DavidThi808 says:

            As a country advances economically the low-skilled jobs move to other countries. It doesn’t just happen here – Japan & Taiwan used to be a major low-cost manufacturing centers but over the past decades they’ve also seen those jobs go away.

            • And those lower-skilled jobs here in the US get replaced by by new, higher-skilled jobs. Didn’t the computer industry – almost all of it, start here?  Yes, today the manufacturing is being done elsewhere – it is now low-skill labor.  What was once high-skill becomes low-skill over time.  The key is having a robust R&D environment with lots of opportunities to use research in developing new stuff. The introduction and early life of the new stuff is what creates the high-skill jobs.

            • AristotleAristotle says:

              40-odd years isn’t forever.

              Point stands, of course – this mess is decades in the making. The thing that makes me worry most about this recession is the fact that we don’t have anywhere near the industry we used to, so I don’t know where we can expect the recovery to start happening.

            • The Japanese cost of living is astronomical compared to here.  Also, I think the Japanese have a desire to be the best and at the forefront; they pride themselves on their miniaturization skills, the robotics, and their high-end manufacturing.  In the latter respect they are more like Germany than like China or Mexico or Indonesia.  Even when their manufacturing was low-cost, their vehicles might not have had any power but they still ran for 200,000+ miles.

              Taiwan I couldn’t say; they have some similar issues to Japan, and some similarities in their direction as well.  Lots of electronics parts still come from Taiwan, and there’s a lot of design of those parts there.

              Regardless, however, we have a problem in this country: we could be doing manufacturing – or food production, or… – but we refuse to acknowledge the disparity in our trading arrangements with other countries: they don’t protect their workers or their environment the way we do.  If a company did that here inside the U.S., they’d be penalized, subjected to lawsuits, or even shut down.  But we allow companies in this country to import goods that we know aren’t made to those standards, and we don’t make any effort to impose tariffs to equalize that disparity.

              I’m not saying we protect against $12/wk. labor costs – different countries do in fact have significantly different costs of living.  But if we are in the business of running this country for the posterity of The People, then we at least need to even out the regulatory differences via import taxes.

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