The Working Poor
Page 39
The entire society needs governmental tools to help those working at the bottom of the economic hierarchy—both to lend them a hand in what they cannot do alone and to assist them in developing the capacity to do what they can ultimately do themselves. No dichotomy exists here between societal help and self-help. Government can be neither absent nor all-encompassing. It cannot fail to maintain a safety net, cannot avoid direct grants to the needy, cannot be blind to its role as the community’s resource. But it also has to blend its power in creative interaction with the profit and nonprofit worlds, with private industry and private charity.
The most evident point of attack is the wage structure. Business executives have the skill but certainly not the will to compress salary differentials by raising the bottom and making sacrifices at the top. Revised tax structures could induce such policy. Government has the skill to legislate a big boost in the minimum wage, but it lacks the political will, largely because most low-income Americans don’t vote their interests or don’t vote at all, and can’t compete with private industry’s sophisticated lobbying and campaign contributions.
Furthermore, the minimum wage is a blunt instrument, and the skill to use it is not perfected. Economists disagree over how much it could be raised without harming entrepreneurial risk-taking, although it is reasonably argued that the federal minimum, which has declined in real dollars against inflation, could probably rise considerably before doing damage. Eighteen states and the District of Columbia have demonstrated as much by placing their own minimum wages at $7.40 to $9.04 an hour, above the 2009 federal rate of $7.25.4
One idea for making the tool more refined is to set different mini-mums for different parts of the country based on regional costs of living. Another approach is the “living wage” law. More than 100 counties and cities now require that private companies with government contracts pay $6.75 to $14.75 an hour, levels calculated to support a decent standard of living.5 Preliminary results show minimal budget increases for localities, reductions in government subsidies to workers’ families, and relief among contractors who no longer have to squeeze employees’ pay to compete for low bids. Some economists suspect that the living wage doesn’t target the right people, however, because those being hired into such jobs are workers of higher caliber, not those at the bottom who need a hand moving up from minimum wage positions.
We have learned other ways to address the discrepancy between what people can earn in the market and what they need for comfortable living. One method, the Earned Income Tax Credit, rewards work. While the payment looks like a subsidy of the employee, it acts as much to subsidize the employer, who can pay low wages without causing the worker quite as much pain. Indeed, the program indirectly benefits many large corporations, from Wal-Mart to McDonald’s, and helps make them more profitable. Having cleverly invented this tool, however, we haven’t mustered the will to give it sufficient impact; aside from year-to-year growth with the cost of living, the program has seen no increases since 1996. In 2003, President Bush asked Congress for $100 million, not to augment the payments, but to hire 650 new auditors to check for fraudulent claims.6
Employers are also heavily subsidized by states, counties, and cities competing to attract new industry, and by the creation of federally funded enterprise zones with tax credits to draw manufacturers into poor areas. As a case in point, Alabama has awarded foreign auto companies hundreds of millions of dollars through property tax abatements, suspensions of income taxes, and payments to boost workers’ wages—plus a virtually union-free environment.
In exchange for such handouts, private industry could be asked for a great deal more than its mere presence, but that rarely happens. The creation of jobs is considered sufficient repayment. Here, federalism and local control can interfere with national economic interests, for when localities compete savagely to undercut one another in granting tax relief, they undercut their own tax bases and distort the geographical distribution of work. In Alabama and the rest of the South, which are practically devoid of organized labor, the incentives raise earnings among residents of some of the country’s poorest regions, but by diverting jobs, they also undermine unions elsewhere. The proportion of America’s workers in labor unions has gradually declined, from 35 to 12.1 percent nationwide between 1950 and 2007; in government, 36 percent are unionized, but in the private sector the figure is only 7.5 percent.7
Broader union membership would be beneficial, but even some union jobs yield only low-wage stagnation, as in parking garages and janitorial services. The country’s prosperity relies on badly paid workers—that’s a fact that is not going to disappear. So the best way to improve a worker’s wage is through promotion and upward mobility; new laborers will flow in beneath to take the low-wage positions, and ideally, most of them will eventually climb into decent pay scales.
We know at least two effective methods to help someone starting in the $5- to $8-an-hour range move to $15 or more: One is through sophisticated job training of the kind that rescued Peaches and Leary Brock from the ravages of low skills and disbelief in themselves; the skill is there, now the will has to be mustered to fund such efforts adequately. The second is through a revival of vocational education in high school and a network of apprenticeships for those who don’t go to college. There, too, the issue is not one of skill but of will.
Wage differences between high school and college graduates have increased sharply since 1980 as many young people fall through a hole in the economy. Because secondary schools feel growing pressure toward a “college-for-all” curriculum, they send higher percentages to college (nearly 60 percent, up from 30 percent in 1970) but leave many of those who don’t attend or don’t graduate without the abilities required at well-paid levels of industry. “Doing well in the workplace involves a far more heterogeneous set of skills than doing well in high schools and universities,” writes Robert Lerman, an economist at the Urban Institute and American University. Unlike most industrialized countries, he notes, the United States has allowed vocational training to lag, leading to a “weakness in the middle-skill area” that has been cited by foreign manufacturers as reason to avoid investing here. Sweden, Norway, France, England, Japan, Australia, and Germany have spliced technical secondary-school courses into industry-sponsored apprenticeships, producing highly qualified personnel. But when industries come to the United States from abroad, they often invoke dramatic measures to address the American failings; Lerman reports that BMW, the German automaker, has flown American workers to Germany for instruction.
The notion of funneling certain teenagers into vocational school rubs against the American ethic of egalitarianism, which touts the ideal of equal opportunity without actually providing it. Many parents, believing fervently in the dream, oppose vocational tracking for their children, seeing college as the only reliable pathway upward. The trouble is, if you’re like Christie the day-care worker in Ohio, your failure to graduate from college may leave you without the technical skills to make you valuable in the hard-nosed labor market. Christie would have done better on a vocational track than by starting college and dropping out.
Here and there, vocational programs operate successfully under the aegis of certain industries, labor unions, and state governments. “In America, there’s everything,” Lerman says. “Somebody’s always doing something well somewhere.” State agencies in Wisconsin, for example, have collaborated with private companies to train young people in printing, finance, biotech, and a score of other areas. He believes that Head Start, the federally funded preschool program for poor children, could be a vehicle for creating youth apprenticeships among high school students, which would then provide credentials in the field of child development.8 But on a nationwide scale, we have not chosen to repair this breach in training our young people for well-paying work.
In broader educational matters, the intersection of skill and will is more complex and controversial. Volumes have been written about improving public schools, but insufficient atten
tion has been given to the unfair way they’re financed. The fundamental structure is so flawed that even the efforts of a few generous states to equalize funding between rich and poor communities have made too little difference. Most school districts depend largely on local property taxes, and since most Americans live in areas segregated by class as well as race, the disparities are acute. In New York State’s districts, for example, the tax base, the value of all taxable real estate, ranges from $2,395,304 to $184,647 per pupil, producing a per-student annual expenditure whose average ranges from $13,681 in the wealthiest school systems to $7,100 in the poorest—and this in a state that tries to reduce the gap by funneling more aid to poorer districts.9
The financing method perpetuates the inequities: The schools that have more money provide a superior education, which helps children improve their earning power so they can live in communities that have more to spend on public education. This, in turn, accentuates the racial divide, for public schools have been resegregated since the late 1980s, thanks in large measure to rulings by conservative judges installed by Republican presidents and Senates. One-sixth of the country’s black students now attend virtually all non-white schools, many of which are impoverished, and only one-seventh of the whites attend multiracial schools, defined as those with 10 percent or more minority enrollment.10
Breaking the pernicious pattern by funding schools on a statewide or nationwide basis would not end racial segregation, but it would be a step toward redistributing resources. But then, every solution creates at least one new problem. Money comes with strings attached. The ideal of pooling taxpayers’ involuntary contributions at higher levels of government to convey it equitably down the line collides with the powerful devotion in this land to local control—and to privilege. Vouchers for private schools undermine the separation of church and state and draw resources away from public schools.
Furthermore, not every ailment can be relieved by money. Even if teachers were paid in accordance with their essential value to society, even if there were enough of them to keep classes small and instruction somewhat individualized, even if they had sufficient books and microscopes and maps, not all the problems that children carry into school would go away. At some place along the continuum of difficulties, our skills weaken. We do not know how to address all those troubles that young people face. However, we do know how to do much more than we choose to do. Our insufficient will has not carried us even close to that twilight region where our competence fades.
The same can be said of every burden that weighs on the working poor. We know how to promote home ownership and make decent apartments affordable, but we don’t do enough of it. We know a great deal about how to treat alcoholism and drug addiction, but we don’t provide enough facilities to accommodate all who need and crave the help. That is also true of depression and other mental illness.
We know very well that many who work at the edge of poverty fall between the cracks of health insurance plans, earning too much to qualify for Medicaid and too little to buy private coverage. We have made only a partial response. Since 1998 government has filled much of the gap with the State Children’s Health Insurance Program (SCHIP), which provides federal matching grants to states that cover children at 100 to 200 percent of the poverty level—or higher, as in New Jersey, which extends coverage up to 350 percent. Few states have chosen to insure parents, however, and reduced tax revenues in a recession make that even less likely to happen. (The program’s annual federal budget of $4 billion is roughly the cost of a new aircraft carrier.) Furthermore, nearly a quarter of all uninsured children are ineligible for public coverage, a huge failing that could be changed by federal largess. Then, too, one-quarter of poor children who qualify for Medicaid are not enrolled, either because their parents don’t want government help, are deterred by complex application procedures, or simply don’t know that the children are entitled to benefits. We have not even had the will to spend extra money for outreach workers to get those kids insured. The same can be said for other support: Only one-third of the households in poverty receive food stamps or subsidized housing.
The larger debate over the country’s patchwork health insurance system, which leaves 47 million uncovered, touches on all the big questions about government’s role, the private sector’s fairness, and the class structure of America. Employer-based policies may be the worst conceivable way to organize coverage. They drive up companies’ labor costs, force workers into badly run health maintenance organizations, and create pools of insured so small for some firms that a single employee’s cancer diagnosis can send premiums shooting through the roof for everyone. In an age of high mobility, workers bounce from one to another plan as they change jobs, often enduring months without protection. We don’t get our auto insurance through our workplaces, and we shouldn’t get our medical insurance that way either.
But do we have the skill to solve this? Can we craft a form of universal coverage without stifling efficiency and scientific enterprise? Despite fears about government suffocating the private sector, the opposite has happened in research and development, where soaring federal funding has stimulated a similar growth of private investment. The question is whether the same would happen if a single-payer system of medical insurance were created. The single payer would be the federal government, funding the plan through taxes, as it does now to insure 40 million elderly through Medicare and 50 million poor through Medicaid. That would provide basic care for everyone, regardless of income. You could even call it Basicare.
There are fears that this would lead to rationing of a kind, as in Canada and England. Some Canadians have experienced long waits in getting such treatment as chemotherapy after breast surgery, for example. In spreading finite medical assets more evenly throughout the population, would Basicare also deprive the wealthy of their privileged access to boundless supplies of specialists, high-tech testing, and advanced remedies? Would it constitute “socialized medicine” and sap the profit motive that drives research and draws talent into the profession? Many doctors who resent government regulation of their fees now refuse to see Medicaid and Medicare patients because the payments are so low—or they charge the elderly rich annual subscription fees to compensate for Medicare reimbursements.
The private alternative, however, has brought the nations medical system to the brink of catastrophe. Insurance companies exact wildly escalating payments from the public, indulge in exorbitant payoffs to their executives, execute dangerous denials of treatment, and reinforce a class-based hierarchy of care that damages the health of Americans with lesser means. Just as government has gradually entered the insurance business through Medicare, Medicaid, and SCHIP, it can’t shrink from further involvement without neglecting its duty to the general welfare. Until a single-payer system becomes politically acceptable, some form of federal-private interaction through subsidies and regulation is a must.
Here is where we need the will to develop the skill to have it both ways: to guarantee the benefits without smothering individual choice or medical initiative. That would be quite an achievement for a nation so steeped in aversion to big government yet so idealistic in the pursuit of social justice. Surely this would happen if members of Congress, who enjoy one of the country’s best insurance plans, faced the difficulties of Caroline Payne, who had to halt back treatment after being dropped from Medicaid; or Lisa Brooks, whose credit rating was ruined by an HMO that refused to pay for an ambulance; or those malnourished kids at the clinics in Boston and Baltimore.
We know what an unhealthy early childhood does to a growing human being. Neuroscience and other areas of research have taught us about the intricate relationships between the biological and the cognitive, between early nurturing and later functioning. Our understanding of the problems is ahead of the skills we have acquired to solve them, and the skills are ahead of our will to act. Across the country we have developed a multitude of early-intervention programs, many founded on sound concepts. But those that are underfu
nded and run by undertrained staff set an unhappy pattern: The project receives inadequate resources, which leads to its want of success, which causes it to be abandoned as a failed approach.
Parents’ handicaps in raising their children lie along that continuum between the correctable and the unmanageable. At the most accessible end of the spectrum, mothers and fathers may simply lack informed techniques of parenting that can be taught in classes or individual counseling. Plenty of well-to-do parents pay for such training; low-income parents may find sporadic help without charge through social agencies. Parents learn such skills as how to encourage their children rather than focus on their wrongdoing, how to do joint problem-solving and help kids make their own choices, how to manage anger, how to administer discipline sensibly, how to listen and express empathy, and how to achieve mutual respect.
At the distant end of the continuum, though, where serious personality disorders and disrupted families affect parenting, our skills are weaker. Some parents carry such profound disturbance from their own upbringing that lessons and advice don’t have much impact. We have not figured out how to curb sexual abuse, for example, other than by removing children to foster families, which are not always model households themselves. These are concerns that cut across class lines.
Given the decisive nature of the earliest years, why doesn’t American society muster its most ingenious efforts to guide parents and safeguard children? The successful programs are described with recurring terms: “comprehensive,” “intensive,” and “highly professional.” Another should be “expensive.” When you have highly professional specialists in medicine, psychology, and child development focusing on a family the way a trauma team huddles over a patient in surgery, you run up very high bills.