Exploding Myths About The Poor
(FORTUNE Magazine) – Lost amid reports of the exodus of U.S. jobs abroad is the fact that 30 million Americans--25% of the country's domestic workforce--don't earn enough to stay out of poverty. In her new book, The Betrayal of Work, Beth Shulman writes about this vast, largely invisible population. A lawyer and former vice president of the United Food and Commercial Workers Union, Shulman documents the personal stories--and explodes many of the myths--of America's lowest-paid workers. We caught up with her to discuss the minimum wage, globalization, and upward mobility. --Nicholas Stein
Q: What are some of the biggest misconceptions about these workers?
A: People talk about low wage, low skill. In fact, most of these workers are enormously skilled--and vital. The majority are female and high school educated. Some have college training. They work in child care, nursing homes, and other essential jobs. Also, two-thirds are white.
Q: Is it new to have so many workers below the poverty line?
A: Since the 1970s we have seen a continual increase in workers making a poverty wage: less than $8.70 an hour for a family of four. About 25% of Americans earn that little now; the number is estimated to be 30% by 2010.
Q: Is globalization to blame?
A: Globalization has had a profound impact on our economy. But most low-wage jobs are local. You can't export child care to Beijing or nursing care to India.
Q: Is there such a thing as upward mobility anymore?
A: The reality belies the myth. After 25 years in the workforce, 75% of people in the bottom 20% of earners still make less than the median wage [$12.87 per hour in 2001].
Q: What would help resolve this issue?
A: Adjusted for inflation, the minimum wage [$5.15 an hour] has fallen by $2 since 1968. At the very least, the minimum wage should be raised to $8.70. If people work hard, they should get a poverty wage. And in order to get government contracts, companies should be required to offer [that amount] and basic benefits.
Q: What do you say to the argument that if companies had to pay a higher minimum wage, they'd have to lay off employees, leaving them in even worse shape?
A: A variety of studies looking at the impact of an increase in the minimum wage have shown that it has little or no effect. Besides, you could say we'd have more jobs if we paid people $3 an hour. We need to establish a floor beyond which companies should not be allowed to go. The economy is not a force of nature. We intervene all over the place. We need to ensure these workers get a fair shake.
Q: Have any companies found ways to solve these problems?
A: Hotel workers in Las Vegas get health benefits, pension benefits, and wages of $12 an hour. Similar programs exist in San Francisco and Milwaukee.
Q: What will happen if we don't act?
A: America has always stood for fairness. We enacted laws to end child labor and to ensure that the elderly don't go hungry. We need to do the same for working Americans. If we don't, we will undermine our values.