Beth Shulman is the author of The Betrayal of Work: How Low-Wage Jobs Fail 30 Million Americans (The New Press, 2003) and works with the Russell Sage Foundation’s The Future of Work and Social Inequality projects.
It’s baa-a-a-ack! The trickle-down theory, that discredited notion that incentives and tax breaks for the rich will somehow become rising incomes for the poor, has been trotted out again by the Bush administration as a cure for all the devastation of Hurricane Katrina. Has the president learned nothing from history? Even if the theory does turn out to restore some of the jobs that washed away in the flood, they will still be the same jobs that meant poverty for a quarter of the residents of New Orleans and 40 percent of its children.
New Orleans is a microcosm of America. One out of every four jobs nationwide, or more than 35 million, pays poverty wages and provides few benefits. Yet these jobs are some of the fastest-growing occupations in our economy: home health care workers, janitors, child care providers, security guards, hotel workers, food service employees. Contrary to popular belief, the people holding these jobs are not college students on study break but mostly adults, working adults like the rest of us, trying to take care of their families.
So what has President Bush done to deal with this failure of the national economy to provide most people with a living wage and basic benefits, and the desperate need of Gulf Coast people for jobs and income? He has lowered wage standards. In New Orleans, he suspended the Davis-Bacon laws that require federal contractors to pay at least the area’s prevailing wages and benefits. And nationwide, he has failed to hike the minimum wage, which now stands at a miserable $5.15 per hour. If it had merely kept up with inflation, it would be at $7 today.
There’s more. Despite the clear health hazards of resuming life in the flood zone, President Bush has refused to address the failure of low-wage employers to provide access to affordable health care for their workers. He offered to provide Medicaid for all evacuees until the end of this year, but that does not address the underlying problem. According to a recent poll by The Washington Post , the Henry J. Kaiser Foundation and the Harvard School of Public Health, 53 percent of the evacuees in Houston shelters had no health insurance before the hurricane. Again, this mirrors the country: Less than half of all workers who make less than $20,000 a year have health insurance through their employers.
At the end of the year, thousands of people in New Orleans will once again join the ranks of the 45 million Americans without health care coverage. Something more needs to be done. But what?
First, let’s admit that the trickle-down theory doesn’t work. It has never worked. It didn’t work in the 1980s, and it won’t work in New Orleans, and it doesn’t work for the millions of American families who work hard but don’t have the basics for a decent life. Changing the approach in New Orleans could be a first step in living up to our ideals of valuing hard work, by ensuring that a day’s honest labor earns a basic living wage and health security.
Tax credits to businesses are not enough. The federal government should award its Katrina reconstruction contracts only to corporations that provide living wages and basic benefits. Why should our taxpayer dollars go to companies that create poverty? Low-wage jobs mean that taxpayers end up paying subsidies through public programs because the workers earn so little and have so few benefits. Let’s aim our tax dollars instead at corporations that generate income, not just for CEOs but for hard-working Americans.
Second, raise the national minimum wage—and enforce it. Study after study has found that with a hike in the minimum wage and the enactment of living wage ordinances in communities nationwide, citizens have higher incomes, tax benefits grow and there is little job loss. New Orleans and the other ravaged areas need investment, yes, but they also need workers who earn enough to buy the products sold in their communities. It would still be the level playing field employers crave—but it would be high enough to raise workers’ heads above water, in a metaphor that is now grimly appropriate.
Third, the government must find a way to ensure that every American has health insurance. It should no longer be a privilege of the rich; it should be the right of every working American. We must find a way either to extend coverage through Medicaid or some other program, or require employers to provide health insurance coverage or pay their fair share.
If the working poor of New Orleans had been earning a few more dollars per hour, many could have afforded a car or the bus fare that would have let them escape the disaster. If we ensure that jobs earn a living wage and basic health security, working families nationwide might be able to afford the fundamentals of a decent life that the rest of us take for granted. We could raise a new approach to poverty out of the mud that covers New Orleans—call it the trickle-up theory. Anything less will be a national shame.