Raise Work Standards

Raise Work Standards

September 4, 2012
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Americans believe that hard work should be rewarded – people who go to work every day should not then be forced to raise their families in poverty. Yet today nearly a quarter of working adults in the U.S. are laboring at jobs that do not pay enough to support a family at a minimally acceptable level. Because their wages are so low, working people are forced to rely on public benefits, from Medicaid to food stamps to rental assistance, in order to make ends meet. Raising work standards would enable them to become more self-reliant and would raise the floor for all working people.

Increasing mobility out of low-wage, no-benefit jobs, as we propose with the Career Opportunity Plan, is part of the solution, but fails to fully address the problem. Regardless of how many training opportunities are available to individuals, millions of jobs as home health aides, food service workers, retail salespeople and other currently low-wage occupations will still exist and, in fact, are projected to be among the nation’s fastest growing positions in the future.1 The nation must act to ensure that these jobs can, at minimum, lift families above the poverty line and provide basic workplace protections, strengthening the floor for employment in the United States. By lifting the bottom of the nation’s labor market, we give working people a firm base from which they can work their way into the middle class. We also put a stronger backstop on the declining job quality of many formerly middle-class occupations.

Raising the lowest wages is the first step. The current minimum wage of $7.25 an hour is a rate at which it is impossible for working Americans to independently pay their rent, feed their families or get needed medical care—much less save for the types of investments that make it possible to lift oneself into the middle class, like an education, a first home, or the chance to start a business. Indeed, the value of the minimum wage today is 30 percent below its peak in 1968. A majority of minimum wage earners are adults living in low-income households and making significant contributions to their family’s total income. Assuming a full-time work schedule, a minimum wage job at the current rate of $7.25 an hour brings in an annual income of $15,080 – not enough to lift a family of three with a single working parent over the federal poverty threshold. The federal minimum wage for workers who earn tips – including food service workers, hotel bellhops, and nail service employees – is only $2.13 an hour and has not increased in more than 20 years. We propose raising the minimum to $10.00 an hour and $5.50 an hour for tipped workers, and linking these minimums to inflation, lifting working families out of poverty and ensuring that the value of the minimum wage does not erode further.

As inadequate as the minimum wage is, millions of American workers bring home even less. Wage theft – the practice of illegally underpaying workers – has become commonplace in the low-wage labor market. A study of employment conditions in America’s largest cities found that one in four low-wage workers were paid less than the minimum wage in a given week.2 Altogether, wage violations (including paying less than minimum wage, making employees work off the clock, pilfering tips, misclassifying employees as independent contractors, and a host of other schemes) robbed low-income employees of $2,634 annually on average, out of total average earnings of just $17,616. In addition to harming the families of low-income workers, wage theft drains tax revenue, deprives neighborhood businesses of the income low-income families would be spending, and puts law-abiding employers at a competitive disadvantage with those who break the law. It’s difficult to imagine anything more basic to a free economy than the right of an employee to be paid for his or her work: we propose strengthening the enforcement of basic workplace laws so that workers can bring home their full pay.

In addition to raising and enforcing workplace standards, giving all working people a shot at the middle class will require expanding the reach of basic labor protections to incorporate categories of workers that are currently left out. Domestic workers – a category that includes nannies, housekeepers, and elderly caregivers – and farm workers are among the employees who have been deliberately excluded from the protections of federal and state labor laws, originally due to discrimination against a labor force made up predominantly of women and people of color. Both industries now have a predominantly immigrant workforce and are generally low paid: a survey of domestic workers in New York found 26 percent earn wages that put them below the poverty line.3 Farm workers experience poverty rates more than double that of other wage and salary workers.4 These employees, who are a critical part of our economy, should not have to raise their families in poverty.

Finally, we add a new workplace standard: everyone gets sick, so it’s no surprise that an overwhelming 77 percent of Americans say that having paid sick days is very important for workers.5 Yet two out of three low-wage workers in the U.S. – the employees who can least afford to miss a paycheck – do not have a single paid sick day to recover from illness or take care of sick child or relative.6 These workers must choose between losing a day’s pay or coming to work sick, endangering their own health and the public. Many low-wage workers even risk losing their jobs and health coverage if they call in sick. According to one survey, one in six Americans says that they or a family member have been fired, suspended, punished, or threatened by an employer for missing work due to illness.7The result is a more fearful and precarious low-wage labor force, just one illness away from slipping into poverty. The solution is simple: at least 145 countries around the world provide employees with some guarantee of paid sick days for short or long-term illnesses.8 But while states and cities from Connecticut to Seattle have acted in recent years to secure a few days off for sick workers, the United States as a whole offers no such guarantee. We propose a minimum nationwide standard that would enable workers to earn paid sick days. 

Despite the frequently cited concern, improving conditions for low-wage workers does not inevitably lead to loss of employment. Indeed, research shows that a higher minimum wage does not result in lost jobs.9 For example, there is no evidence that states that increased their minimum wages above the federal level suffered job loss as a result. This research confirms earlier work by economists David Card and Alan Krueger.10 In fact, minimum wage increases stimulate economic growth by putting money in the pockets of people most likely to spend it: a recent study by the Federal Reserve Bank of Chicago concluded that every $1.00 increase in the minimum wage results in a $2,800 boost in spending by a low-wage worker’s household over the following year.11Research on guaranteeing paid sick days similarly shows a net economic benefit and no loss of jobs.12

In an era where all able-bodied adults are expected to work, we must ensure that all American jobs meet basic standards of decent employment and keep families out of poverty. To achieve this, we propose the following policies:

1. Increase the minimum wage:

  • Phase in an increase of the minimum wage to $10.00 an hour by 2013, restoring much of its lost buying power and ensuring that a family of three with a single working parent will not fall below the federal poverty line. 
  • Phase in an increase in the tipped minimum wage to $5.50 an hour by 2013.
  • Index the new minimum wage to inflation so that workers’ wages keep up with the cost of living.

2. Guarantee paid sick days based on the Healthy Families Act of 2011, (H.R. 1876, S. 984). 

  • Enable workers in businesses with 15 or more employees to earn up to seven paid sick days each year which they could use to recover from their own illness, access preventive care, or provide care for a sick family member. 
  • Workers earn one hour of paid sick time for every 30 hours worked, up to 56 hours (seven days) per year, unless the employer enacts a more generous program. 

3. Prevent wage theft based on the Wage Theft Prevention Act of 2010 and Fair Playing Field Act of 2010.

  • Expand the number of United States Department of Labor wage and hour inspectors.
  • Increase penalties for violations of federal wage and hour laws.
  • Increase penalties for failure to deduct and withhold employee income taxes in order to prevent misclassification of independent contractors.
  • Eliminate the statute of limitations that has limited DOL to two years to resolve wage complaints.
  • Allow workers to file private lawsuits while DOL is investigating a complaint.

4. Extend labor protections to excluded workers.

  • Amend the Fair Labor Standards Act and other relevant workplace legislation to explicitly include domestic workers and farm workers.
  • Based on the POWER Act (H.R. 2169, S. 1195), authorize immigrant workers who have experienced serious labor violations and are cooperating with local, state, or federal worker protection agencies to address these violations to apply for U visas and receive temporary legal status with work authorization. 

ENDNOTES

 

  1. Bureau of Labor Statistics, “The 30 occupations with the largest projected employment growth 2010-2020,” United States Department of Labor, February 1, 2012, Accessed online March 4, 2012. http://www.bls.gov/news.release/ecopro.t06.htm

  2. Annette Bernhardt, “Broken Laws, Unprotected Workers: Violations of Employment and Labor Laws in America’s Cities,” National Employment Law Project (2008). http://www.nelp.org/page/-/brokenlaws/BrokenLawsReport2009.pdf?nocdn=1

  3. “Home is Where the Work Is: Inside New York’s Domestic Work Industry,” Domestic Workers United and DataCenter (2006). http://www.domesticworkersunited.org/media/files/266/homeiswheretheworki...

  4. William Kandel, “A Profile of Hired Farmworkers, A 2008 Update,” United States Department of Agriculture (July 2008). http://www.ers.usda.gov/Publications/ERR60/ERR60.pdf

  5. Smith, “Paid Sick Days,” August 2008. http://www3.norc.org/NR/rdonlyres/D1391669-A1EA-4CF4-9B36-5FB1C1B595AA/0...

  6. Low-wage workers refers to the bottom quarter of income earners. SOURCE: Bureau of Labor Statistics, Employee Benefits Survey, Table 32, “Leave Benefits: Access, Civilian Workers”

  7. Smith, “Paid Sick Days,” August 2008. http://www3.norc.org/NR/rdonlyres/D1391669-A1EA-4CF4-9B36-5FB1C1B595AA/0...

  8. Jody Heymann, Alison Earle, and Jeffrey Hayes, “The Work, Family, and Equity Index: How Does the United States Measure Up?,” The Project on Global Working Families (February 2007). http://www.mcgill.ca/files/ihsp/WFEI2007FEB.pdf

  9. See for example: Arindrajit Dube, T. William Lester, and Michael Reich, “Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties,” The Review of Economics and Statistics 92 (2010). http://www.universityofcalifornia.edu/news/article/24614

  10. David Card and Alan B. Kreuger, “Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania,” The American Economic Review 84 (1994). http://emlab.berkeley.edu/~card/papers/njmin-aer.pdf

  11. Daniel Aaronson, Sumit Agarwal, and Eric French, “The Spending and Debt Responses to Minimum Wage Increases,” The Federal Reserve Bank of Chicago (February 2011). http://www.chicagofed.org/webpages/publications/working_papers/2007/wp_2...

  12. Vicky Lovell, “Valuing Good Health: An Estimate of Costs and Savings for the Healthy Families Act,” Institute for Women’s Policy Research (April 2005). http://www.nationalpartnership.org/site/DocServer/HFACBALovell.pdf?docID...

  13. Celinda Lake et al, “The Economc Power of and Popular Support For Raising the Minimum Wage,” Lake Research Partners (July 2011). http://www.nelp.org/page/-/rtmw/uploads/LRP_Min_Wage_Memo_06-07-2011.pdf...

  14. Tom W. Smith and Jibum Kim, “Paid Sick Days: Attitudes and Experiences,” National Opinion Research Center at the University of Chicago, June 2010. http://www.publicwelfare.org/resources/DocFiles/psd2010final.pdf 

 

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