Home > income inequality, poverty > United States of low wages

United States of low wages

from David Ruccio

John Schmitt [pdf] defines low-wage jobs as paying less than two-thirds of the national median hourly wage.

Schmitt also explains that low wages are not the only problem for low-wage workers, particularly in the United States:

The intense policy focus on low pay can obscure the reality that low pay is often among the least of the labor-market problems facing low-wage workers, especially in the United States. U.S. labor law offers workers remarkably few protections. U.S. workers, for example, have the lowest level of employment security in the OECD and no legal right to paid vacations, paid sick days, or paid parental leave. The low level of union coverage in the United States means that contractual obligations generally don’t make up for the lack of legal guarantees.

In the absence of legal or contractual rights, low-wage workers are the least likely to have access to core benefits. Almost half of private-sector workers in the bottom fourth of the wage distribution in 2010, for example, had no paid vacations. In the same year, about 68 percent of private-sector workers in the bottom fourth of the wage distribution had no paid sick days, compared to only about 11 percent of workers in the top fourth. In the U.S. context, however, probably the most critical problem facing low-wage workers is the lack of access to health care. Rho and Schmitt estimate that in 2008, more than half (54 percent) of workers in the bottom wage quintile did not have employer-provided health insurance and more than one-third (37 percent) had no health insurance of any kind, private or public. The 37 percent non-coverage rate for the bottom quintile of wage earners in 2008 was up from 15 percent in 1979.

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Categories: income inequality, poverty
  1. Manuel Angeles
    April 24, 2012 at 7:42 pm

    I live in Mexico, where thanks to the neoliberal model of the last 30 years, up to 60% of those in employment are in the informal sector, with no job security, paid holidays, heath care, pension rights and, often, not even a fixed income. According to official sources, the population “vulnerable” to poverty or already in it ranges from 90% in the southern states to 70% in the north.

    As to the rich world, social/labour conditions seem to be converging on the model of captalism that Cole and Postgate described for mid-19th century England in “The British Common People”

  2. Robert Sherlock
    April 24, 2012 at 9:42 pm

    Note that on minimum wage in Texas $7.55 you could afford to eat, buy a nice new car and a nice house in 90% of the suburbs. I would say that a minimum wage in Texas is worth more than the average wage in Australia!

    • Ignacio
      April 27, 2012 at 10:28 am

      Ya, and rent a McMansion. I see the american dream consists on living in Texas with the minimum wage.

  3. Shlomo Kaminkovitz
    April 25, 2012 at 12:00 pm

    You don’t tell me their age, language, marital status, children, skill, education. I see that most of the “high wage” nations are in Europe. But Europe is dying. According your logic, workers in the US should be rushing to get into Greece.

  4. Shlomo Kaminkovitz
    April 25, 2012 at 1:00 pm

    To talk about a “national median hourly wage” for the US is misleading. We have in this country various localized economies tied together by various geographical, social, financial political, and regulatory arrangements.

    In addition: Never mind the outright cash transfer payments and in-kind gifts via public choice-political arrangements at all levels, “:low wage” workers receive all kinds of considerations and concessions. In this regard, hear Prof. Burkhauser (Cornell) correction of Diamond & Saez on errors of method and definition. http://www.econtalk.org .

  5. Kiersten Marek
    April 25, 2012 at 3:16 pm

    Reblogged this on Kmareka.com and commented:
    How’s this for a slogan: “We pay less in the US!”

  6. April 26, 2012 at 4:13 pm

    Well Robert – let’s see how that holds out:

    The median house price in Texas is $169,900 (from http://www.zillow.com/local-info/TX-home-value/r_54/ ). The tax rate seems to be from around 1.2 to 1.6% per year, the average insurance quote is $986 per year. That adds up to (giving them a 30 year fixed rate loan at 4%) $1040 per month. That requires 19.25 8-hour days to pay for the fixed costs associated with their house. Leaving 4.75 8-hour days per month to pay for everything else (about $260 per month – that would just cover transportation costs to drive back and forth from the burbs to wherever their crappy minimum wage job was located).

    No – you cannot afford to eat, buy a nice new car, and get a house in the suburbs on minimum wage in Texas (or anywhere).

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