tag:theconversation.com,2011:/global/topics/working-poor-5127/articlesWorking poor – The Conversation2021-08-06T12:40:09Ztag:theconversation.com,2011:article/1657062021-08-06T12:40:09Z2021-08-06T12:40:09ZForget the American Dream – millions of working Americans still can’t afford food and rent<figure><img src="https://images.theconversation.com/files/414911/original/file-20210805-15-snb3a9.jpg?ixlib=rb-1.1.0&rect=176%2C112%2C4523%2C3015&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Retail employees such as cashiers are among the least-paid U.S. workers.</span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/Election2020MinimumWageFlorida/e0532f837478432da9ccec7a178eb98d/photo?Query=cashier&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=642&currentItemNo=13">AP Photo/Wilfredo Lee</a></span></figcaption></figure><p>The Biden administration is likely celebrating a <a href="https://www.bls.gov/news.release/pdf/empsit.pdf">better-than-expected jobs report</a>, which showed surging employment and wages. However, for millions of working Americans, being employed doesn’t guarantee a living income.</p>
<p>As <a href="https://sgpp.arizona.edu/people/jeff-kucik">scholars interested</a> in the <a href="https://knowlton.osu.edu/people/leonard.471">well-being of workers</a>, we believe that the economy runs better when people aren’t forced to choose between paying rent, buying food or getting medicine. Yet too many are compelled to do just that.</p>
<p>Determining just how many workers struggle to make ends meet is a complicated task. A worker’s minimum survival budget can vary considerably based on where the person lives and how many people are in the family. </p>
<p>Take Rochester, New York. It has a cost of living that’s closest to the national average across 509 U.S. metropolitan areas, according to the <a href="https://advisorsmith.com/data/coli">City Cost of Living Index</a> compiled by the research firm AdvisorSmith. </p>
<p><a href="https://livingwage.mit.edu">MIT’s living wage calculator</a> shows that a single adult living in Rochester <a href="https://livingwage.mit.edu/metros/40380">needs at least US$30,000</a> a year to cover the cost of housing, food, transportation and other basic needs. </p>
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<p>But in San Francisco, which AdvisorSmith data indicate is the U.S. city with the highest cost of living, affording just the basics <a href="https://livingwage.mit.edu/metros/41860">costs $47,587</a>, mainly due to significantly higher taxes and <a href="https://data.census.gov/cedsci/table?q=median%20rent&y=2019&tid=ACSDT1Y2019.B25031">rents</a>. </p>
<p>The city with the <a href="https://livingwage.mit.edu/metros/13220">lowest cost of living is Beckley, West Virginia</a>. Even there, a childless worker still needs to earn about $28,200 to make essential ends meet. Again, <a href="https://advisorsmith.com/data/coli/">the average American city</a> has a cost of living of around $30,000 a year for a single person.</p>
<p>Of course, costs add up quickly for households with more than one person. Two adults in Rochester need over $48,000 a year, while a single parent with one child needs more than $63,000. In San Francisco, a single parent would need to earn $101,000 a year just to scrape by. </p>
<p>So that’s what it takes to survive in today’s America. About $30,000 a year for a single person without dependents in the average city – a little less in some cities, and much, much more for families and anyone who lives in a major city like San Francisco or New York. </p>
<p>But we estimate that <a href="https://www.bls.gov/oes/current/oes_stru.htm#41-0000">at least 27 million U.S. workers</a> don’t earn enough to hit that very low threshold of $30,000, based on the latest occupation wage data from the Bureau of Labor Statistics, a government agency, from May 2020. We believe this is a conservative estimate and that the number of people with jobs who earn less than what’s necessary to afford the necessities of life is likely much higher. </p>
<p>Low-income occupations encompass a wide range of jobs, from bus drivers to cleaners to administrative assistants. However, the majority of those 27 million workers are concentrated in two industries: <a href="https://www.bls.gov/iag/tgs/iag44-45.htm">retail trade</a> and <a href="https://www.bls.gov/iag/tgs/iag70.htm">leisure and hospitality</a>. These two industries are among America’s <a href="https://www.bls.gov/emp/tables/employment-by-major-industry-sector.htm">largest employers</a> and pay the <a href="https://www.bls.gov/oes/current/oessrci.htm">lowest average wages</a>. </p>
<p>For example, the median salary for cashiers was $28,850 in early 2020, with 2.5 million of the nation’s 5 million cashiers earning less than that. Or take retail sales. There, 75% of workers – about 1.8 million – were earning less than $27,080 a year.</p>
<p>It’s the same story for leisure and hospitality, the industry that took the hardest hit from the COVID-19 pandemic, <a href="https://data.bls.gov/timeseries/CEU7072000006?amp%253bdata_tool=XGtable&output_view=data&include_graphs=true">hemorrhaging 6 million jobs</a> in April 2020 as much of the <a href="https://www.nytimes.com/2020/03/16/business/economy/coronavirus-us-economy-shutdown.html">U.S. economy shut down</a>. At the time, close to a million waiters and waitresses were earning less than the median income of $23,740. </p>
<p>Of course, millions of those jobs have returned, and wages have been surging this year – <a href="https://www.bloomberg.com/news/articles/2021-06-30/inflation-eats-at-surging-u-s-wages-with-biden-agenda-at-stake">though only slightly more than inflation</a>. But that doesn’t change the basic math that roughly 1 in 6 workers is making less than what’s necessary for an adult with no kids to survive. </p>
<p>That’s why it’s hardly surprising that 40% of U.S. households reported in 2018 that <a href="https://www.federalreserve.gov/publications/files/2017-report-economic-well-being-us-households-201805.pdf">they couldn’t afford an emergency $400 expense</a>. </p>
<p>To us, these figures should cause policymakers to redefine who counts among the “working poor.” A <a href="https://www.bls.gov/opub/reports/working-poor/2019/home.htm">2021 Bureau of Labor Statistics report</a> estimated that in 2019 about 6.3 million workers earned less than the poverty rate.</p>
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<p>But this situation drastically understates the scope of the working poor because the <a href="https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines/prior-hhs-poverty-guidelines-federal-register-references/2021-poverty-guidelines">federal poverty line</a> is unrealistically low – only $12,880 for an individual. The official poverty line <a href="https://www.investopedia.com/terms/f/fpl.asp">was created to determine eligibility</a> for Medicaid and other government benefits that support low-income people, not to indicate how much a person needs to actually get by.</p>
<p>Writer James Truslow Adams <a href="https://daily.jstor.org/james-truslow-adams-dreaming-american-dream/">coined the phrase “The American Dream”</a> in 1931 to describe a society in which he hoped anyone could attain the “fullest stature of which they are innately capable.” That depended on having a good job that paid a living wage. </p>
<p>Unfortunately, for many millions of hard-working Americans, the “better and richer and fuller” life <a href="https://www.routledge.com/The-Epic-of-America/Adams/p/book/9781412847438">Adams wrote about</a> remains just a dream. </p>
<p>[<em>Like what you’ve read? Want more?</em> <a href="https://theconversation.com/us/newsletters/the-daily-3?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=likethis">Sign up for The Conversation’s daily newsletter</a>.]</p><img src="https://counter.theconversation.com/content/165706/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Employment and wages soared in the latest labor report, but that’s small comfort for the many workers with a job that doesn’t pay a living wage.Jeffrey Kucik, Assistant Professor of Political Science, University of ArizonaDon Leonard, Assistant Professor of Practice in City and Regional Planning, The Ohio State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1582682021-04-08T17:31:58Z2021-04-08T17:31:58ZWelfare dependency of foreign nationals during the pandemic: insights from Switzerland<p>Welfare expenditures are a contested field, not just politically but also in public discourse. This hotly debated theme includes expressions of support for those in need, discussions on attempts to control social benefits, as well as endorsing the preexisting images of those believed to be receiving benefits without “deserving” them. </p>
<p>While these debates can be found in many countries, this contribution will deal with the Swiss context and discuss social assistance, which is at the intersection of migration law and the current pandemic. This analysis is necessary in order to elaborate on the consequences that foreign-national welfare receivers face, the most extreme case being deportation.</p>
<p>Social assistance is understood as the last resort, providing financial assistance only after other forms of support have been ruled out (e.g., unemployment benefits, retirement and survivor’s insurance, and invalidity pensions, or even private financial means). Yet in Switzerland there is no federal law regarding social assistance. Instead, it is either the cantons or municipalities (or a mixture) that take care of expenditures, financed via the state and municipality taxes. This puts <a href="https://www.srf.ch/news/schweiz/wie-viel-sozialhilfe-ist-zu-viel">pressure on municipalities</a> with a higher number of people in need, and this in turn can give rise to attempts to reduce basic needs or increase the sanctioning mechanisms that are at hand.</p>
<p>Basic needs and sanctioning mechanisms are generally suggested by the <a href="https://richtlinien.skos.ch/a-voraussetzungen-und-grundsaetze/a8-auflagen-leistungskuerzungen-und-leistungseinstellung/a82-leistungskuerzung-als-sanktion/">Swiss Conference for Social Assistance</a>, of which all cantons and some municipalities as well as many national ministries are members. Despite their aim to create a “fair and effective social assistance”, political motions and <a href="https://www.srf.ch/news/schweiz/wie-viel-sozialhilfe-ist-zu-viel">the reactions</a> of certain members have an effect on the decisions made. Thus, influencing the generosity of assistance provided and the means taken to sanction individuals seen as “recalcitrant”.</p>
<h2>(Un)deserving welfare recipients</h2>
<p><a href="https://www.srf.ch/news/schweiz/sozialhilfe-auffangbecken-in-der-not-oder-haengematte">Public debates</a> have circled around <a href="https://www.udc.ch/actualites/articles/exposes/halte-aux-abus-dans-lassurance-invalidite/">images</a> of supposed “welfare abusers” depicted as undeservingly receiving social assistance and other benefits without “contributing”. Such characterisations can target the socially and financially marginalised, individuals who often face difficulty in reentering the job market due to limited education, social difficulties or health issues that are not considered “severe enough” to allow them support via disability insurance.</p>
<p><a href="http://www.snf.ch/SiteCollectionDocuments/nfp/nfp45/NFP45_MaederU_SB.pdf">Restrictive policies</a> also target individuals who are working, yet despite their employment are unable to fully support themselves or their families. These are the so-called “working poor”, who often have jobs that do not pay a minimum wage and don’t offer regular hours. They are at risk of being exploited by employers while at the same depending on social assistance. </p>
<p>Research has discussed the increasingly harsh measures taken against those falling into the “last security net” in context of <a href="https://journals.sagepub.com/doi/abs/10.1177/0020715206070268?journalCode=cosa">neoliberal policies</a> It has also addressed how disadvantaged populations are <a href="https://www.sciencedirect.com/science/article/pii/S0167268119301969">socio-economically marginalized</a>, especially when unable to participate in everyday life, and criticised the [welfare-to-workfare] approach. </p>
<p>There has been a further step into the limitation of rights through <a href="https://onlinelibrary.wiley.com/doi/pdf/10.1111/1468-5965.00263">“welfare chauvinism”</a>, which proposes that assistance should be restricted to certain groups, often at the exclusion of foreign nationals. </p>
<h2>Intertwining of migration law and social policies</h2>
<p>Over the last few years in Switzerland we have witnessed an intertwining of migration and social policies. Cantonal/municipal social services have had the obligation to report social aid dependency since 2009, the 2019 revision of the Foreign Nationals and Integration Act (<a href="https://www.fedlex.admin.ch/eli/cc/2007/758/en">FNIA</a>) states that social assistance dependencies of foreign nationals must be reported “unrequested”. In addition, any claim for supplementary or unemployment benefits must be reported to the respective cantonal migration authorities (<a href="https://www.fedlex.admin.ch/eli/cc/2007/758/en#art_97">art. 97 FNIA</a>). </p>
<p>The <a href="https://nccr-onthemove.ch/projects/governing-migration-and-social-cohesion-through-integration-requirements-a-socio-legal-study-on-civic-stratification-in-switzerland/">transferred and shared</a> information by the social services includes the sum of benefits received, as well as a brief report on the overall behaviour of foreign nationals commenting on their level of cooperation and efforts taken to reenter the labour market. </p>
<p>Other agencies and institutions may share information on social networks and linguistic skills that will be considered by migration offices when they assess the feasibility of a (non)prolongation or the withdrawal of a (<a href="https://www.fedlex.admin.ch/eli/cc/2007/758/en#art_63">permanent</a>) <a href="https://www.fedlex.admin.ch/eli/cc/2007/758/en#art_62">residence</a> permit. Also introduced in 2019, migration authorities might decide to downgrade the permanent residence permit to a temporary one in case of social-aid dependency (art. 63 FNIA). The <a href="https://explore.rero.ch/fr_CH/if/result/L/VlRMU19SRVJPUjAwNzkzOTEyMQ==">assessment of the integration</a> of a foreign national is done for both, third country nationals and EU/EFTA citizens residing in Switzerland. </p>
<h2>Insecurities, no rights claiming and destabilization of legal stay</h2>
<p>With the current pandemic and given the number of foreign nationals working in the Swiss labour market, current discussions circle around the consequences of short-time work and an increase in unemployment. A study from Zurich’s <a href="https://digitalcollection.zhaw.ch/handle/11475/19967">University of Applied Sciences</a> states that during the state lockdown, foreign nationals were afraid to claim social benefits due to the risk of losing their residence permit.</p>
<p>At the same time, according to the <a href="https://skos.ch/fileadmin/user_upload/skos_main/public/pdf/medien/medienkonferenzen/2021_Medienkonferenz/Analysepapier_Herausforderungen.pdf">Swiss Conference of Welfare</a>, foreign nationals are among the persons whose social-welfare dependency will rise due to the pandemic. According to the organisation <a href="https://www.swissinfo.ch/ger/-die-angst--die-schweiz-verlassen-zu-muessen--waechst-/45907516">Isa Bern</a>, a cantonal integration program provider, foreign nationals avoid not only welfare support, including direct social assistance, but also supplementary benefits, reductions for health insurance and childcare support. This is due to the fact that in some cantons these services are understood to be social assistance. If we look at <a href="https://cigev.unige.ch/files/3716/0692/0389/rapport_covid_parchemins_juillet2020.pdf">former <em>sans-papiers</em></a> who were recently regularised by a Geneva program called <a href="https://www.ge.ch/dossier/operation-papyrus">Papyrus</a>, they too avoided social assistance due to their fears of losing their newly recognised legal status. </p>
<p>The fears to claim their rights in one sector (welfare policies), due to circumstances in another sector (migration law) have severe consequences, from <a href="https://www.cairn.info/revue-sciences-et-actions-sociales-2020-1-page-53.htm">extreme cases</a> of homelessness, loss of health insurance and hunger. The pandemic has increased the anxiety of many foreign nationals that their residence permit could be withdrawn. Yet there are only minimal responses from public administration.</p>
<p>The <a href="https://www.sem.admin.ch/sem/de/home/publiservice/weisungen-kreisschreiben.html">State Secretariat of Migration</a> (SEM) has recommended taking into account the current situation when evaluating cases, yet there were only two migration office so far (to the best knowledge of the authors), <a href="https://www.bernerzeitung.ch/auslaender-koennen-trotz-sozialhilfe-bleiben-914043313985">Bern-City</a> and the <a href="https://www.ge.ch/actualite/covid-19-employabilite-formation-aide-sociale-permis-23-04-2020">canton of Geneva</a>, that have publicly announced that they will strongly take into account the sanitary situation when assessing social assistance dependencies. Some nongovernmental organisations and political parties have <a href="https://beobachtungsstelle.ch/news/migrantinnen-drohen-rechtliche-folgen-aufgrund-von-corona/">criticised this practice</a>, arguing that calling into question the legal stay of disadvantaged foreign nationals <a href="https://www.parlament.ch/de/ratsbetrieb/suche-curia-vista/geschaeft?AffairId=20200451">should not be deemed a crime</a>. </p>
<p>With this contribution, we wish to highlight how restrictive migration laws undermine social-policy goals and does not take into account the harsh realities that disadvantaged populations face. We argue that the objective of social policies today increasingly emerges from neoliberal state practices, which not only function to control citizens, but also aim to exclude foreign nationals in the quest to reduce state expenditures. Especially in times of a worldwide pandemic, the attempt to circumscribe rights calls into question the very functioning and intentions of welfare states.</p><img src="https://counter.theconversation.com/content/158268/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Lisa Marie Borrelli receives funding from the National Centre of Competence in Research (NCCR) – on the move, which is funded by the Swiss National Science Foundation (51NF40-182897)</span></em></p><p class="fine-print"><em><span>Stefanie Kurt receives funding from the National Centre of Competence in Research (NCCR) – on the move, which is funded by the Swiss National Science Foundation (51NF40-182897)</span></em></p>The Covid-19 pandemic raises the question of the precariousness of foreigners dependent on social assistance in Switzerland - a precariousness that is still growing.Lisa Marie Borrelli, Chercheuse, Haute école spécialisée de Suisse occidentale (HES-SO)Stefanie Kurt, Professeure HES assistante, Haute école spécialisée de Suisse occidentale (HES-SO)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1473132020-10-06T18:55:00Z2020-10-06T18:55:00ZTrump’s decade-old audit illustrates why the IRS targets the working poor as much as the rich<figure><img src="https://images.theconversation.com/files/361987/original/file-20201006-24-y76qo3.jpg?ixlib=rb-1.1.0&rect=118%2C65%2C4256%2C2846&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Trump has tried to keep his taxes in the dark for years. </span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/president-donald-trump-acknowledges-the-crowd-during-the-news-photo/1149899043">Alex Wong/Getty Images</a></span></figcaption></figure><p>The New York Times’ exclusive on President Donald Trump’s taxes contains <a href="https://www.nytimes.com/interactive/2020/09/27/us/donald-trump-taxes.html">a lot of startling new findings</a>. </p>
<p>A few noteworthy examples: He paid only US$750 in federal income tax in 2016 and 2017 – and nothing at all in 10 of the previous 15 years; he took massive income tax deductions for property tax payments on a New York estate he apparently uses for personal reasons; he paid consulting fees to family members; and he took $70,000 in business deductions for haircuts. </p>
<p>The report also zeroed in on a fact that has been well known for many years yet in my mind overshadows all of the other discoveries: Trump’s taxes are under audit and <a href="https://www.marketwatch.com/story/president-trump-has-faced-a-decade-long-audit-of-his-taxes-heres-how-long-irs-audits-usually-take-2020-10-01">have been so since at least 2011</a>. Trump claims that’s why he can’t release his taxes, though the <a href="https://www.axios.com/trump-tax-returns-irs-commissioner-audit-20ebb0a7-dc47-4177-bf4c-565aa5cfb734.html">IRS itself says that’s not the case</a>. <a href="https://www.cnn.com/2020/09/30/politics/donald-trump-tax-returns-1st-debate-new-york-times/index.html">He also says</a> he has paid “millions of dollars” in taxes in recent years. </p>
<p>Why is it taking so long to audit Trump’s taxes, when the IRS <a href="https://www.irs.gov/pub/irs-pdf/p55b.pdf">usually wraps up its audits</a> within a year? </p>
<p>As a <a href="https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=1997162">tax law expert</a>, I believe a reason Trump’s audit is taking so long is related to the IRS’s practice of targeting the working poor at rates comparable to the wealthy. It’s hard to reel in the rich and often easier to focus on the poor. </p>
<h2>The gray areas of tax law</h2>
<p>Tax law is often perceived as an exercise in crunching the numbers. The taxpayer – or an accountant – simply plugs in data from her various W-2s and 1099s, and out comes a figure. Some tax preparation services even show the taxpayer the real-time effect of each entry on the amount of tax owed.</p>
<p>In reality, tax law has plenty of gray areas, particularly for business owners, in which tax law depends on subjectively judging why a person did what he or she did.</p>
<p>When someone acts for business reasons, they should be able to deduct their expenses. As the saying goes, “You have to spend money to make money.” The federal income tax is a net income tax, meaning it respects that old saying and applies only to earnings that exceed costs. If someone is acting for personal reasons like consumption or leisure, a tax deduction is generally not allowed.</p>
<p>Uncovering the motives behind the activities of any person requires a lot of information and difficult analysis, but for someone like Trump, whose personality is his business, the task is exponentially harder.</p>
<p>For instance, is Trump’s Seven Springs estate in New York business or personal property? If it’s for business, property taxes paid on it are fully deductible. If it’s personal property, only $10,000 of the property taxes could be deducted, thanks to Trump’s own <a href="https://taxfoundation.org/tax-reform-explained-tax-cuts-and-jobs-act/">Tax Cuts and Jobs Act</a> of 2017. The answer depends on a lot of factors, such as how he promotes the property, what types of improvements he makes and what he does while there. Despite some contradictory statements from his sons, The New York Times suggests that Trump <a href="https://www.nytimes.com/interactive/2020/09/27/us/donald-trump-taxes.html">has treated the Seven Springs estate as business property</a>, which would allow him to fully deduct the taxes on the estate.</p>
<p>Another gray area is the $26 million he claims in consulting fees, including ones reportedly paid to family members such as his daughter Ivanka. To determine if consulting fees paid to a family member are actually nondeductible gifts, the IRS must examine what she was asked to do and whether the fees were reasonable. It is unclear from The New York Times story what exactly Ivanka was tasked with doing to earn the almost $750,000 in fees Trump deducted.</p>
<p>As for Trump’s $70,000 in haircuts, to determine if they were deductible, the IRS must understand whether they were unique to his job on “The Apprentice.” Inherently personal expenses – <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3705646">things like grooming, meals and commuting</a> – are incredibly difficult to deduct. Trump would have to demonstrate that his business motives completely outweighed his personal ones. In other words, he would have to show that he would not have gotten haircuts but for his business. Since he deducted the cuts, we can presume his hair would have gone unkempt without the show.</p>
<figure class="align-center ">
<img alt="Treasury Secretary Steven Mnuchin testifies during a House Financial Services Committee on May 22, 2019. A screen behind him displays President Trump and a list of times he has promised to release his tax returns." src="https://images.theconversation.com/files/361988/original/file-20201006-18-uiexi0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/361988/original/file-20201006-18-uiexi0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=426&fit=crop&dpr=1 600w, https://images.theconversation.com/files/361988/original/file-20201006-18-uiexi0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=426&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/361988/original/file-20201006-18-uiexi0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=426&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/361988/original/file-20201006-18-uiexi0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=535&fit=crop&dpr=1 754w, https://images.theconversation.com/files/361988/original/file-20201006-18-uiexi0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=535&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/361988/original/file-20201006-18-uiexi0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=535&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Trump has repeatedly promised to release his tax returns, a point raised during Treasury Secretary Steven Mnuchin’s House testimony in May 2019.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/treasury-secretary-steven-mnuchin-testifies-during-a-house-news-photo/1150961593">Mark Wilson/Getty Images</a></span>
</figcaption>
</figure>
<h2>Easier targets</h2>
<p>Compounding the difficulty of sorting out these gray areas, the IRS is <a href="https://www.npr.org/2020/04/09/830159777/irs-budget-cuts-and-staffing-challenges-create-coronavirus-payment-headaches">operating on a shoestring budget</a>, despite research showing that <a href="https://www.cbo.gov/budget-options/2018/54826">a dollar of investment in the IRS yields more than a dollar in tax collections</a>. Auditors must stretch their budgets to uncover the information they need and then make difficult judgment calls.</p>
<p>The IRS’s limited resources mean that <a href="https://www.documentcloud.org/documents/6430680-Document-2019-9-6-Treasury-Letter-to-Wyden-RE.html">auditors end up focusing their attention</a> on cases with more straightforward issues and more accessible information. That’s why <a href="https://www.cbpp.org/research/federal-tax/policy-basics-the-earned-income-tax-credit">lower-income individuals receiving the earned income tax credit</a> were audited at a 1.2% rate in 2016, <a href="https://www.irs.gov/pub/irs-pdf/p55b.pdf">the most current year of mostly complete data</a>, comparable to the audit rate of roughly 1.5% for individuals earning over $500,000.</p>
<p>Typically, EITC audits are resolved within a year. That’s because examiners can look for objective facts, such as how many children are in the home, rather than sorting out subjective motives behind expenses. Often computers can quickly flag errors, making for more open-and-shut cases. </p>
<p>In addition, as my research has shown, state and federal governments already have <a href="https://scholarship.richmond.edu/law-faculty-publications/1435/">a lot of information about individuals receiving public assistance</a>, such as the earned income tax credit. Auditors don’t have to spend their limited resources getting information out of EITC recipients.</p>
<p>While auditing the poor may be easier than targeting the rich, auditing wealthier individuals is likely to do much more to close the tax gap – the difference between what is owed to Uncle Sam and what is actually collected – which the <a href="https://www.taxpolicycenter.org/briefing-book/what-tax-gap">IRS most recently estimated at about $381 billion</a>. Because <a href="https://www.irs.gov/pub/irs-pdf/p5364.pdf">most misreported income comes from cases</a> where the taxpayer alone controls the information about the income, the IRS might collect more underpayments if it had more resources for auditing the rich. </p>
<p>[<em>Understand new developments in science, health and technology, each week.</em> <a href="https://theconversation.com/us/newsletters/science-editors-picks-71/?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=science-understand">Subscribe to The Conversation’s science newsletter</a>.]</p>
<h2>Letting the big fish go</h2>
<p><a href="https://www.irs.gov/newsroom/taxpayer-bill-of-rights-8-the-right-to-confidentiality-0">Taxpayer privacy protections</a> make it impossible to know exactly why Trump is being audited. But the difficulty of sorting out these gray areas of law while Trump holds most of the relevant information almost certainly has contributed to the length of the audit.</p>
<p>If nothing else, the reporting on Trump’s taxes highlights that taxpayers like him are the biggest fish but the hardest to catch, particularly when you have a cheap rod. IRS audits have instead focused on smaller fish downstream.</p><img src="https://counter.theconversation.com/content/147313/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Hayes Holderness does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Because the rich often have complicated deductions that dabble in the gray areas of tax law, it’s simply easier to audit the straightforward taxes of the working poor.Hayes Holderness, Assistant Professor of Law, University of RichmondLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1418462020-08-03T12:00:19Z2020-08-03T12:00:19ZMillions of America’s working poor may lose out on key anti-poverty tax credit because of the pandemic<figure><img src="https://images.theconversation.com/files/350687/original/file-20200801-22-1qjeezj.jpg?ixlib=rb-1.1.0&rect=26%2C17%2C3000%2C1967&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Demand for food aid has soared during the pandemic.</span> <span class="attribution"><span class="source">Joe Raedle/Getty Images</span></span></figcaption></figure><p>The pandemic is driving American families to the edge, with tens of millions at risk of <a href="https://theconversation.com/landlord-leaning-eviction-courts-are-about-to-make-the-coronavirus-housing-crisis-a-lot-worse-142803">losing their homes</a> and over 1 in 10 U.S. adults reporting their households <a href="https://www.cbpp.org/research/poverty-and-inequality/more-relief-needed-to-alleviate-hardship">didn’t have enough to eat</a> in the previous week. </p>
<p>While <a href="https://www.nytimes.com/2020/07/28/us/politics/coronavirus-relief-bills-house-senate.html">Congress debates extending unemployment benefits</a> that expired on July 31 and other additional aid, there’s an important program that already exists that could help struggling Americans get through the crisis however long it lasts. Known as the <a href="https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit">earned income tax credit</a>, or EITC, it provides aid primarily to the working poor. In a typical year, <a href="https://www.census.gov/topics/income-poverty/supplemental-poverty-measure/library/publications.All.html">it lifts more than 8.5 million people out of poverty</a>, while improving the health and well-being of parents and children. </p>
<p>Since the credit depends on earned income, many families may be at risk of losing all or some of the benefit because <a href="https://fred.stlouisfed.org/series/CCSA">so many were laid off</a> as <a href="https://www.cbsnews.com/news/us-economy-shutdown-coronavirus-saved-2-7-million-lives/">economies in many states shut down</a>. Even as restaurants and other businesses reopen, it’s <a href="https://voxeu.org/article/covid-19-and-labour-reallocation-evidence-us">likely that many of those who lost</a> their jobs <a href="https://www.cnn.com/2020/07/07/economy/job-losses-coronavirus/index.html">will remain unemployed or underemployed</a> for many months or longer. </p>
<p>Our own research shows changes to the structure of the U.S. economy, with the <a href="https://github.com/alice1020/COVID-unemployment-and-income-supports/blob/master/Occupational_inequality_and_COVID-19_Modifying_ex.md">sharp growth of low-wage and unstable jobs</a>, is weakening the EITC’s effectiveness at fighting poverty.</p>
<p><a href="https://www.forbes.com/sites/elainemaag/2020/06/03/heroes-act-would-expand-the-eitc-for-childless-workers-and-help-fight-recession/#1621b8b96810">Some lawmakers are trying to reform</a> the EITC as part of the next coronavirus bailout to ensure it helps more Americans and make it more like a <a href="https://theconversation.com/search/result?sg=91b5ab76-015f-42ce-9676-67954badd307&sp=1&sr=1&url=%2Fbasic-income-for-all-could-lift-millions-out-of-poverty-and-change-how-we-think-about-inequality-53030">basic income guarantee</a>. We believe doing so would not only ensure low-income Americans continue to have access to this vital tax credit during the pandemic, additional changes could also strengthen the program for years to come. </p>
<h2>The EITC success story</h2>
<p>The earned income tax credit, which <a href="https://www.cbpp.org/research/federal-tax/policy-basics-the-earned-income-tax-credit">supplements earnings for many low- and moderate-income workers</a>, has helped buffer economic hardship for single parents and other recipients since it was created in 1975. </p>
<p>Eligible taxpayers receive the credit after they file their taxes. And unlike a deduction, even those who didn’t pay any income tax can receive the credit, which they’ll get as part of their refund. Twenty-eight states and the District of Columbia <a href="https://www.urban.org/policy-centers/cross-center-initiatives/state-and-local-finance-initiative/state-and-local-backgrounders/state-earned-income-tax-credits">also offer their own EITCs</a>, typically based on the federal credit. </p>
<p>In 2019, taxpayers <a href="https://www.ncsl.org/research/labor-and-employment/earned-income-tax-credits-for-working-families.aspx">received about US$63 billion in credits</a> through the federal EITC, making it the government’s largest cash safety net program for working families with children. Recipients qualify for the credit based on how much money they earn and depending on their marital status and number of children. The benefit rises with each dollar earned until reaching a peak and then phasing out. </p>
<p>For example, in 2019, a <a href="https://www.census.gov/programs-surveys/saipe/guidance/model-input-data/cpsasec.html">single person earning $13,545 a year received $392</a>, while a typical family of four with an annual income of $22,261 received roughly $2,951 – which comes out to an extra $250 a month.</p>
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<p>Put another way, a family with one child <a href="https://www.law.cornell.edu/uscode/text/26/32">receives an average credit</a> of 34 cents for every dollar of earned income, which rises to 40 cents for two and 45 cents for three or more children. </p>
<p>The tax credit has been tremendously successful. In 2018, the latest data available, the EITC lifted <a href="https://www.cbpp.org/earned-income-tax-credit-and-child-tax-credit-have-powerful-antipoverty-impact-8">about 10.6 million people out of poverty and reduced its severity for another 17.5 million</a>. And since its inception, <a href="https://www.nber.org/books/moff14-1">it has reduced child poverty</a> by 25%. </p>
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<p>But the benefits extend well beyond providing struggling families with more income. Research shows the credit <a href="http://www.nber.org/papers/w16296.pdf">has helped improve the mental and physical health of mothers</a>, <a href="https://www.doi.org/10.1111/ppe.12211">improves perinatal health of mothers and their children</a>, <a href="https://pubmed.ncbi.nlm.nih.gov/27056961/">improves child development</a>, <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3104729">reduces incidents of low birth weight among infants</a> and <a href="https://www.doi.org/10.1257/aer.102.5.1927">improves children’s cognitive function</a>. </p>
<p>It also <a href="http://www.crfb.org/blogs/eitc-attracts-bipartisan-praise-and-proposals">enjoys strong bipartisan support</a> because of its focus on encouraging and supporting working. </p>
<p>But the EITC only helps individuals able to find work, which becomes a bigger challenge in a pandemic or <a href="https://www.nber.org/papers/w19785">severe recession</a>. </p>
<p><a href="https://github.com/alice1020/COVID-unemployment-and-income-supports">Our unpublished calculations</a> from a <a href="https://www.bls.gov/cps">national representative survey</a> showed that about a fifth of the <a href="https://www.eitc.irs.gov/partner-toolkit/basic-marketing-communication-materials/eitc-fast-facts/eitc-fast-facts">25 million</a> EITC beneficiaries in 2019 lost their jobs from March to April and over 16% remained unemployed in June, the latest data we have available. That means over 4 million working families could lose a large portion of their benefits in 2021, depending on a variety of factors. </p>
<h2>Reforming the EITC</h2>
<p>While these problems are most obvious in a recession, they’ve worsened over the past four decades as the <a href="https://voxeu.org/article/work-past-work-future">labor market</a> <a href="http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.308.299">has changed</a>.</p>
<p>The share of workers doing low-skill, low-wage work has jumped from 42% in 1980 to about 54% in 2016. And an increasing number of these jobs are in the precarious gig economy that doesn’t provide stable incomes. That means workers are less likely to see a steady aid from the EITC because the maximum benefits are gained when working full time at minimum wage.</p>
<p>The EITC’s also provides very little support to those without children. A nonpartisan think tank estimates that about 5.8 million adult workers without any children as dependents <a href="https://www.cbpp.org/sites/default/files/atoms/files/5-8-20tax.pdf">are taxed into poverty</a> – or impoverished further – each year because their EITC is too small to offset their federal income and payroll taxes.</p>
<p><a href="https://www.hassan.senate.gov/news/press-releases/senators-hassan-and-shaheen-push-for-tax-credit-expansion-for-hard-working-families-in-next-covid-19-relief-package">House Democrats</a> are pushing to reform the EITC in the next coronavirus relief bill. Specifically, they’d like to tweak the credit’s phase-in so that workers receive more benefits for fewer hours worked, allowing those who lost their jobs and remained unemployed for the remainder of 2020 to maintain benefits similar to last year. They also would lower the minimum age for receiving the credit to 18 from 25 for certain vulnerable groups like those experiencing homeless. </p>
<p>We’d suggest also increasing the benefit for tax filers without children and lowering the minimum age for everyone so that the millions of young people graduating from high school and college into an economic recession can get additional support. </p>
<p>These reforms would <a href="https://www.taxpolicycenter.org/taxvox/using-eitc-help-fight-economic-slowdown">not only help now</a> but could also deepen the impact of the EITC by creating an income floor for more people as the economy changes, essentially creating something very much like a basic income guarantee. A key difference, however, is that most universal basic income proposals <a href="https://www.marketwatch.com/story/the-push-for-universal-basic-income-is-gaining-momentum-amid-the-pandemic-11595874035">don’t require recipients to work</a>. </p>
<p>While we cannot fully predict how interactions between job losses and the tax and benefit system will play out, this moment presents an opportunity to test reforms that would benefit low-income working families for years and decades to come.</p><img src="https://counter.theconversation.com/content/141846/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rebecca Hasdell receives funding from the Canadian Institutes for Health Research. </span></em></p><p class="fine-print"><em><span>Alice Milivinti and David Rehkopf do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The earned income tax credit lifts around 6 million of the working poor out of poverty every year, but with the economy hammered by COVID-19, many might not get the benefit they need.Rebecca Hasdell, Postdoctoral fellow, Stanford UniversityAlice Milivinti, Postdoctoral Researcher, Stanford UniversityDavid Rehkopf, Associate Professor of Medicine, Stanford UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1375512020-04-30T15:36:37Z2020-04-30T15:36:37ZWhy South Africa needs to ensure income security beyond the pandemic<figure><img src="https://images.theconversation.com/files/331781/original/file-20200430-42903-1nan0qw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Job seekers wait on the side of a road in South Africa. Joblessness stands at a record high.</span> <span class="attribution"><span class="source">Mujahid Safodien/AFP via Getty Images</span></span></figcaption></figure><p>A slew of countries ranging from the US to <a href="https://basicincome.org/news/2020/04/brazil-the-national-senate-approves-emergency-basic-income/">Brazil</a> to <a href="https://www.channelnewsasia.com/news/singapore/coronavirus-covid-19-solidarity-budget-600-cash-payout-12635268">Singapore</a> to South Africa have decided to give people money in <a href="https://www.imf.org/en/Topics/imf-and-covid19/Policy-Responses-to-COVID-19#U">response</a> to the economic crisis caused by the coronavirus pandemic. </p>
<p>While the amounts and details of the grants have varied, these governments have all made it clear that such payments are a short-term emergency response to an exceptional situation. But is the economic uncertainty caused by COVID-19 as exceptional as it seems? Might the reasons for guaranteeing economic security be valid even without a global pandemic?</p>
<p>Take the case of South Africa. </p>
<p>The government has decided to substantially bolster the social security net, directing R50 billion to those most acutely affected by the crisis <a href="http://www.thepresidency.gov.za/speeches/statement-president-cyril-ramaphosa-further-economic-and-social-measures-response-covid-19">over the next six months</a>. This will be distributed in the form of increasing the current child support grant. In addition, pensions and disability grants will go up. But the biggest change is the introduction of a special <a href="https://www.gov.za/coronavirus/socialgrants">“COVID-19 Social Relief of Distress grant”</a> to be paid to people who are currently unemployed and do not receive any social grant or unemployment insurance for the next six months.</p>
<p>The new COVID-19 grant is the first time unemployed working-age adults are being included in the social grant system. Since 1994, the African National Congress government has resisted including them. And the resistance remains.</p>
<p>South Africa’s treasury has been busy making it clear that the new direct cash transfers are exceptional and <a href="https://www.timeslive.co.za/news/south-africa/2020-04-24-mboweni-gives-clarity-on-social-grant-top-ups-that-will-end-in-six-months/">temporary</a>. At a recent media briefing, finance minister Tito Mboweni <a href="https://twitter.com/NeilColemanSA/status/1253686184984920069">repeated again and again</a> that the additional grants were temporary. His anxiety that people will expect the additional grants to remain in place – and that they will become “agitated” when the grants are taken away – is palpable.</p>
<h2>Economic distress – before the pandemic</h2>
<p>The name of the new grant shows exactly what it’s meant for. Calling it the COVID-19 Social Relief of Distress grant makes it clear that this is an emergency measure, here only to relieve the distress of COVID-19. </p>
<p>But economic distress was the norm for many before the coronavirus outbreak. Illness, ill-fortune and economic precarity existed long before this pandemic. The outbreak only makes the economic crisis broader, deeper and more visible.</p>
<p>An accident, a family death, or a delayed train can happen to anyone. But for the large number of people in South Africa who <a href="https://theconversation.com/employed-but-still-poor-the-state-of-low-wage-working-poverty-in-south-africa-118018">work for low wages</a> without a proper contract, or who simply <a href="https://mg.co.za/article/2019-08-05-unemployment-in-south-africa-is-worse-than-you-think/">cannot find work at all</a>, one of these events can be the tipping point into destitution. </p>
<p>They don’t need a pandemic to experience economic distress.</p>
<p>We would argue that South Africa needs more than emergency provisions such as a short-term new social grant or an <a href="https://basicincome.org/news/2020/04/emergency-basic-income-during-the-coronavirus-crisis/">emergency basic income</a>. Rather, it needs a <a href="https://www.businessinsider.com/spain-universal-basic-income-coronavirus-yang-ubi-permanent-first-europe-2020-4?r=US&IR=T">permanent form</a> of economic security, be it in the form of a <a href="https://basicincome.org/basic-income/">universal basic</a> income that is given to all and then taxed back from those that don’t need it, or some other form of income guarantee for all. </p>
<h2>Work does not provide economic security for all</h2>
<p>Politicians are now willing to guarantee citizens some measure of economic security through the state because they cannot ask them to leave their homes and find economic security through work. But in a place like South Africa, finding economic security through wage labour was never the solution. It is just wishful thinking. </p>
<p>The statistics are stark: South Africa has an <a href="https://mg.co.za/article/2019-08-05-unemployment-in-south-africa-is-worse-than-you-think/">unemployment rate of nearly 40%</a>. And of those lucky enough to have work, about 54% of full-time employees <a href="http://nationalminimumwage.co.za/wp-content/uploads/2015/09/NMW-RI-Descriptive-Statistics-Final.pdf">earn below the working-poor line of R4,125</a> a month. </p>
<p>The current economic distress brought on by the pandemic is not a brand new crisis. It’s an amplification of what was already reality for many South Africans. Indeed, it deepens economic insecurity around the world: globally, <a href="https://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_368252/lang--en/index.htm">over 60%</a> of workers are in <a href="https://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/---publ/documents/publication/wcms_534326.pdf">“non-standard”</a> employment – that means it’s precarious, short-term or informal.</p>
<p>The link between wage labour and economic security has long been a mirage in South Africa. Mass unemployment and precarity are neither new nor temporary. They are structural and enduring features of South Africa, further compounded as companies collapse and invest in labour-saving technologies. The need to provide economic security beyond the labour market has long been political reality.</p>
<h2>Guaranteeing economic security</h2>
<p>The idea that economic security should be a universal right – much like universal access to health care – has been around for centuries. At its core, it’s simply the argument that no matter who they are or what they do, every human being should be guaranteed enough resources to stay alive.</p>
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<img alt="" src="https://images.theconversation.com/files/331790/original/file-20200430-42946-12cn4su.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/331790/original/file-20200430-42946-12cn4su.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/331790/original/file-20200430-42946-12cn4su.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/331790/original/file-20200430-42946-12cn4su.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/331790/original/file-20200430-42946-12cn4su.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/331790/original/file-20200430-42946-12cn4su.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/331790/original/file-20200430-42946-12cn4su.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Ray van Heerden, a car guard, from the poverty-stricken shantytown of Munsieville, cannot work due to the lockdown.</span>
<span class="attribution"><span class="source">EFE-EPA/Kim Ludbrook</span></span>
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</figure>
<p>There are many ways to provide this kind of economic security. It could be via a social grant given to everyone who needs it. Or a negative income tax, a payment through the tax system that tops up the income of the poor to a basic level. Or it could be via a universal basic income – a regular payment to every resident, with no conditions or targeting. </p>
<p>Universal basic income has the advantage of simplicity. There’s no need for a bureaucracy to decide who should get it and who should not. And while many people critique it for being expensive and going to people who already have money, this is not the case. It goes to everyone, but is taxed back from the wealthy who don’t need it – meaning it both <a href="https://theconversation.com/why-universal-basic-income-costs-far-less-than-you-think-101134">costs less</a> than you might think, and ends up helping only those who really need it.</p>
<p>The biggest source of <a href="https://www.cambridge.org/core/journals/africa/article/labour-laziness-and-distribution-work-imaginaries-among-the-south-african-unemployed/B9DBDA172DB42F855DD499AF6D186646/share/e9e0f792be89ed65da54e4a7796b142663637c0b">resistance</a> to providing economic security to all, be it through universal basic income or other forms of guaranteed income, is the idea that people have to work for money – that “you can’t get money for nothing”. This is why, despite a <a href="https://doi.org/10.1080/03057070701475575">big push</a> for basic income in the early 2000s, the South African state has always resisted the idea. But work has never been able to provide economic security for all in South Africa. Why keep expecting the poor to receive money through work only, when work is unavailable, or unstable and badly paid?</p>
<p>The fact that many countries are now giving citizens emergency cash could be a step in the right direction. Finally, anyone who needs it can access some form of economic support from the state. But this should not be a temporary measure. It does not address a new problem, but rather a very old one that is suddenly worse. What the country needs is not an emergency basic income, but a permanent income guarantee. In fact the Spanish government plans to maintain the basic income it is implementing <a href="https://www.independent.co.uk/news/world/europe/coronavirus-spain-universal-basic-income-europe-a9449336.html">beyond the pandemic</a>.</p>
<h2>No longer business as usual</h2>
<p>The circumstances that necessitate an income guarantee have long existed in South Africa. It is time for the government to acknowledge this. There can be no return to business as usual, because business as usual means poverty, suffering and ongoing economic distress.</p>
<p>The poor and most vulnerable understand that the economic insecurity they face is not a state of exception. It is the default. It will not end after the easing of the lockdown. </p>
<p>This international Workers’ Day, the COVID-19 pandemic provides an opportunity to see things as they are – that work cannot be assumed to shelter everyone from economic distress. It also provides an opportunity to delink basic livelihood from wage labour, and <a href="https://theconversation.com/the-new-labour-struggle-less-work-same-pay-and-basic-income-for-all-76903">begin to develop policies that deliver</a> an economically secure future for all.</p><img src="https://counter.theconversation.com/content/137551/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Economic distress was the norm for many before the coronavirus outbreak. The pandemic is an opportunity to provide an economically secure future for all.Hannah J. Dawson, Post-doctoral fellow at the Society, Work and Politics Institute (SWOP), University of the WitwatersrandLiz Fouksman, Leverhulme Early Career Fellow, University of OxfordLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1360042020-04-14T12:23:38Z2020-04-14T12:23:38ZCoronavirus lockdowns are pushing mass transit systems to the brink – and low-income riders will pay the price<figure><img src="https://images.theconversation.com/files/327518/original/file-20200413-135656-1n0lr2o.jpg?ixlib=rb-1.1.0&rect=57%2C114%2C3776%2C2437&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Mass transit ridership in Los Angeles and elsewhere has plummeted during the crisis.
</span> <span class="attribution"><span class="source"> Tommaso Boddi/Getty Images</span></span></figcaption></figure><figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/327526/original/file-20200413-78775-1gv8ozi.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/327526/original/file-20200413-78775-1gv8ozi.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=255&fit=crop&dpr=1 600w, https://images.theconversation.com/files/327526/original/file-20200413-78775-1gv8ozi.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=255&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/327526/original/file-20200413-78775-1gv8ozi.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=255&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/327526/original/file-20200413-78775-1gv8ozi.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=321&fit=crop&dpr=1 754w, https://images.theconversation.com/files/327526/original/file-20200413-78775-1gv8ozi.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=321&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/327526/original/file-20200413-78775-1gv8ozi.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=321&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<p>Low-income Americans <a href="https://www.theatlantic.com/ideas/archive/2020/03/coronavirus-will-supercharge-american-inequality/608419/">have borne the brunt</a> of the coronavirus pandemic. They may also get left behind in the recovery.</p>
<p>Steep declines in ridership during the crisis have pushed public transit systems across the U.S. into <a href="https://www.bloomberg.com/news/articles/2020-03-19/so-far-stimulus-is-leaving-mass-transit-behind">deep financial distress</a>. Though Congress included allocations for transit in the <a href="https://www.congress.gov/bill/116th-congress/senate-bill/3548/text">CARES Act</a>, <a href="https://whyy.org/articles/septa-is-getting-643m-in-federal-coronavirus-aid/">cities said</a> it <a href="https://nyc.streetsblog.org/2020/03/25/experts-senate-bills-25b-for-transit-wont-be-enough/">won’t be nearly enough</a>. Even major systems in large metro areas like New York City and Washington, D.C., have serious concerns about long-term survival without more sustained support. </p>
<p>Failure of transit systems would be a disaster for the large proportion of low income households that depend on buses and trains to get to work and elsewhere – not only in urban areas, but in rural ones too.</p>
<p><a href="https://intraweb.stockton.edu/eyos/page.cfm?siteID=58&pageID=11&action=details">I’m currently</a> in the middle of a two-year study of transport inequality in the U.S. One of my early findings is that about 20% of the poorest households don’t own a vehicle. That would make them entirely reliant on public transportation, compared with 6% for all households. </p>
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<p>For my study, I looked at the <a href="https://www.census.gov/programs-surveys/acs">income and vehicle data</a> from 2013 to 2017 for households in the bottom quintile of the income distribution in each of the <a href="https://www.ers.usda.gov/data-products/commuting-zones-and-labor-market-areas/">country’s 709 commuting zones</a>, which represent local economic clusters.</p>
<p>In urban areas, 21% of these low-income households didn’t have a single vehicle. In rural areas, it was slightly lower but still significant at 16%. The share without a car varied widely among states, from over half of the poorest households in New York to just 6.8% in Utah. </p>
<p><iframe id="x0CCB" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/x0CCB/4/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<p>Dependence on transit also mirrors the <a href="https://www.manhattan-institute.org/racial-inequality-in-america-post-jim-crow-segregation">deep racial inequalities</a> in America. Almost a third of low-income African American households didn’t own a vehicle. Even among black households of all income levels the share without a car is very high at 16%.</p>
<p>Even before the present crisis, America’s inadequate transport infrastructure was being seen as a <a href="https://www.theatlantic.com/business/archive/2015/05/stranded-how-americas-failing-public-transportation-increases-inequality/393419/">driver of inequality</a>, limiting access to jobs, education and other services for poorer households. <a href="https://wagner.nyu.edu/files/faculty/publications/JobAccessNov2015.pdf">Higher unemployment rates</a> and <a href="https://www.mitpressjournals.org/doi/pdf/10.1162/REST_a_00707">longer duration of joblessness</a> had also been linked to limitations in transit access in certain regions of the country.</p>
<p>If cities and states have to drastically cut back public transportation availability over the long term, it could exacerbate these inequalities. Higher-income households with access to cars will be able to more easily return to their commutes as the crisis eases. And those who, prior to the outbreak, used mass transit might be more weary of returning to the subways and buses, which would worsen the funding problems.</p>
<p>Any long-term disruptions, however, will bring devastating isolation to a large number of low-income households across the country. Their ability to get to work or even look for work once the lockdown ends will be severely hampered if transit systems are not adequately supported to maintain at least pre-crisis service levels. </p>
<p>[<em><a href="https://theconversation.com/us/newsletters?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=expertise">Expertise in your inbox. Sign up for The Conversation’s newsletter and get a digest of academic takes on today’s news, every day.</a></em>]</p><img src="https://counter.theconversation.com/content/136004/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ramya Devan does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>One in 5 of the poorest US households don’t have a car and rely on public transportation to get around.Ramya Devan, Professor of Economics, Stockton UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1180182019-06-06T13:36:57Z2019-06-06T13:36:57ZEmployed but still poor: the state of low-wage working poverty in South Africa<figure><img src="https://images.theconversation.com/files/278291/original/file-20190606-98027-bwylw6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Low-wage poverty is highly associated with unstable work such as in the informal sector</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Paid employment is generally considered the predominant and most sustainable way of pulling people out of <a href="https://www.ilo.org/jobspact/news/WCMS_140634/lang--en/index.htm">poverty</a>. But the past two decades have seen a global rise in the complex phenomenon of the <a href="https://www.ilo.org/global/statistics-and-databases/publications/WCMS_696387/lang--en/index.htm">working poor</a>. South Africa is no exception.</p>
<p>This delink between paid employment and poverty reduction is a major challenge for the government. It means that attention must be given to two things: rapid job creation, and also the creation of decent jobs. </p>
<p>While one may think that being employed suggests the person is immediately pulled out of poverty, this is not always the case. Finding a job does not guarantee someone will receive remuneration that is high enough to cover their basic needs and be relatively secure financially. In some cases, workers reluctantly only work part-time after failing to find full-time work. </p>
<p>Some workers are paid wages below the amount that’s necessary to maintain a decent living standard. They are also not entitled to health or retirement benefits. <a href="http://www.lse.ac.uk/business-and-consultancy/consulting/assets/documents/Low-Pay-and-In-Work-Poverty.pdf">Low-wage work</a> is also associated with poor working conditions and job insecurity. These include poor health and safety standards, discrimination and excessive work hours. </p>
<p>In other words, for some workers employment no longer guarantees significant poverty reduction. Some workers remain poor because wages are too low to lift them and their families out of poverty. </p>
<h2>Main findings</h2>
<p>Comprehensive information on the extent of low-wage working poverty in South Africa wasn’t available until our recently published <a href="https://www.tandfonline.com/doi/full/10.1080/0376835X.2019.1597682">study</a>. We examined the data from the first four waves of the National Income Dynamics Study (NIDS), which took place between 2008 and 2015. <a href="http://www.nids.uct.ac.za/about/what-is-nids">NIDS</a> is South Africa’s first national household panel study.</p>
<p>We found that while low-wage poverty probability declined during the 7-year period, in 2015 nearly 20% of workers were still identified as low-wage poor employed. This downward trend is similar to what was found by <a href="https://www.ru.ac.za/media/rhodesuniversity/content/iser/documents/The_working_poor_in_South_Africa,_1997-2012_-_Michael_Rogan_and_John_Reynolds_(2015.4).pdf">a 2015 study</a> for the 1997-2012 period, though that piece of research focused on working poverty and didn’t take the low wage threshold into consideration.</p>
<p>When it comes to demographics, low-wage poor were identified as predominantly women (slightly above 50%), Africans (90%), 38 years old on average, without 12 years of education. On average there were five members per household, and two of them were working.</p>
<p>Most low-wage poor were involved in elementary occupations. They were street vendors, domestic helpers and cleaners, and garbage collectors. And nearly 75% of this group were in the informal sector, which is associated with a lack of job security and benefits. This finding is concerning, given the fact that the informal sector only <a href="https://www.ekon.sun.ac.za/wpapers/2008/wp212008/wp-21-2008.pdf">contributes</a> about 7% of the country’s GDP.</p>
<h2>What should government do?</h2>
<p>There are ways for the government to address these issues. </p>
<p>Policy is a key area where changes can be made. The government should focus on policy that provides affordable quality education and skills training to previously disadvantaged communities. Moreover, education and training programmes should focus on skills and competencies demanded by the labour market.</p>
<p>Low-wage poverty is highly associated with the unstable work environments and insecurity that are experienced by workers in the informal sector, and workers with low-skilled occupations like domestic workers and street vendors. Policy prescriptions should therefore aim to promote economic growth and infrastructure development within the informal sector. They should also focus on increasing awareness and enforcement of labour regulations that protect workers in low-skilled or elementary occupations.</p>
<p>Speedy <a href="https://blogs.worldbank.org/jobs/how-can-new-infrastructure-accelerate-creation-more-and-better-jobs">infrastructure development</a> also helps to pave the way for the creation of more and better jobs associated with higher wages and improved working conditions.</p>
<p>It’s also important that there’s a focus on creating quality jobs and transforming existing unstable, low-paying jobs to more stable work environments that pay workers higher earnings. This involves improving the transition of workers from the informal to the formal sectors.</p>
<p>Government and the private sector should also provide small and informal business owners with easy access to financial and organisational support. These business owners need <a href="http://www.durban.gov.za/Resource_Centre/edge/Documents/Edge%2017th%20Edition%20Microbusiness%20in%20the%20Informal%20Economy.pdf">skills and knowledge</a> about everything from finances to supply chain processes and customer management to help them run and grow their businesses. </p>
<p>There should also be an increase in the awareness of minimum statutory employment conditions among elementary occupation workers and employers, together with the implementation of effective mechanisms to monitor and enforce compliance.</p>
<p>Last but not least, increasing the national minimum wage for all sectors may be a useful, if somewhat <a href="https://wol.iza.org/articles/employment-effects-of-minimum-wages/long">contentious approach</a>. Using the currently <a href="https://www.thesouthafrican.com/news/national-minimum-wage-south-africa-how-much/">proposed minimum wage</a> of R3 500 per month, the low-wage poverty rate is somewhat higher (35% in 2008 and 24% in 2015, compared to 26% and 19% respectively using the original lower-amount threshold adopted in the study).</p>
<p>Some workers argue they cannot meet their basic needs with the currently proposed minimum wage (of R3 500 per month). But a higher minimum wage helps improving their <a href="https://saefa.org.za/images/NMWreport.pdf">productivity and turnover</a>. On the other hand, some employers claim they cannot afford an increased minimum wage without running the risk of retrenching workers and replacing them with cheaper capital. In this case, the state may intervene by assisting firms with special taxation benefits, wage subsidies and training opportunities for workers.</p>
<p><em>This is an extract from the journal article titled “Employed yet poor: low-wage employment and working poverty in South Africa”, which the writer co-authored with Jade Feder, an Economics Masters graduate at the University of the Western Cape.</em></p><img src="https://counter.theconversation.com/content/118018/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Derek Yu does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Paid employment is no longer a guarantee that workers will earn enough to cover their basic needs and become relatively secure financially. Hence the global phenomenon of the working poor.Derek Yu, Associate Professor, Economics, University of the Western CapeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1069792018-11-30T11:05:04Z2018-11-30T11:05:04ZThe rise of the low-pay workforce – when seven jobs just isn’t enough<figure><img src="https://images.theconversation.com/files/246720/original/file-20181121-161609-14pz74k.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Pexels</span></span></figcaption></figure><p>The UK is experiencing <a href="https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/october2018">record levels of employment</a>, with over 32m people in work. But many workers and their families <a href="https://theconversation.com/welcome-to-britain-a-land-where-jobs-may-be-plentiful-but-are-more-and-more-precarious-87423">continue to struggle to survive financially</a> – it’s estimated 5.5m workers are paid below the <a href="https://home.kpmg.com/uk/en/home/insights/2017/11/kpmg-living-wage-research-2017.html">Real Living Wage</a>, which is set at a level at which people can afford to “live”, based on the <a href="http://www.livingwage.org.uk">minimum income standard</a>. </p>
<p>But what’s missing from these statistics are those people who have to work in more than one low paid job to make ends meet. This is the focus of <a href="https://www.dur.ac.uk/business/research/research-centres/forgotten-workers/">our research</a> – which has never been conducted in the UK before. </p>
<h2>The Forgotten Workers</h2>
<p>We interviewed 50 low paid workers in multiple forms of employment in the regions of Yorkshire and North-East England. We expected to speak to workers with two or three jobs, but were surprised and alarmed to find a number with four, five, six and even seven different jobs.</p>
<p>All of the workers we spoke to had multiple jobs as they were struggling to make a living, and some made use of <a href="https://theconversation.com/why-does-the-growth-of-food-banks-matter-58000">food banks</a>. Ages ranged from late-teens to 60s and education levels varied: a minority had no qualifications, but many had NVQs, GCSEs, O-levels, A-levels, good quality degrees and even masters degrees. </p>
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<img alt="" src="https://images.theconversation.com/files/247029/original/file-20181123-149335-1dlzmzs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/247029/original/file-20181123-149335-1dlzmzs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/247029/original/file-20181123-149335-1dlzmzs.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/247029/original/file-20181123-149335-1dlzmzs.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/247029/original/file-20181123-149335-1dlzmzs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/247029/original/file-20181123-149335-1dlzmzs.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/247029/original/file-20181123-149335-1dlzmzs.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">A culture of low pay is trapping people in poorly paid jobs.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
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<p>The workers we interviewed were employed in cleaning, catering, the entertainment sector, the care sector, bar work, security, DIY, social services, public services, libraries, education, retail, administration, accountancy and IT services. These occupations spanned the private, public and third sectors, but a number of public sector jobs had been outsourced to private contractors due to austerity cuts. </p>
<p>In terms of employment contracts, there was a combination of full-time, part-time, agency, temporary, seasonal, term-time only, casual and zero hours. </p>
<h2>Job insecurity</h2>
<p>We believe the rise of multiple jobs is due to the creation of a deregulated “flexible” labour market. Recent research by the Joseph Rowntree Foundation highlighted the <a href="https://www.jrf.org.uk/report/monitoring-poverty-and-social-exclusion-2016">expansion of insecure work</a>. The TUC, which comprises the majority of the UK’s major trade unions, has also reported that only one in 40 jobs <a href="https://www.tuc.org.uk/economic-issues/labour-market-and-economic-reports/only-one-everyforty-net-jobs-recession-full-time">created since the recession is full-time</a>. </p>
<p>The workers we interviewed had to acquire additional jobs as a result of low wages, limited working hours, under-employment and job insecurity. Additional factors include the proliferation of part-time, zero hours contracts and temporary <a href="https://theconversation.com/jobs-figures-mask-bogus-self-employment-in-the-shadow-economy-58017">and casual contracts</a>. Many of the people we spoke to were experiencing job insecurity and instability, and having to work for employment agencies. </p>
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<img alt="" src="https://images.theconversation.com/files/246722/original/file-20181121-161609-10onmll.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/246722/original/file-20181121-161609-10onmll.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/246722/original/file-20181121-161609-10onmll.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/246722/original/file-20181121-161609-10onmll.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/246722/original/file-20181121-161609-10onmll.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/246722/original/file-20181121-161609-10onmll.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/246722/original/file-20181121-161609-10onmll.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">People are working multiple part-time, low-pay jobs.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
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<p>The workers we spoke to were also acutely aware of these issues and the associated challenges of insufficient wages and hours in order to make ends meet – as Anna, who works four jobs, two cleaning, one in catering, and one as a shop worker, explained: </p>
<blockquote>
<p>I’m exhausted. I get up at 4:30 in the morning. I leave the house at 5:10 for a 6am start and 10am finish. Then I come here [to my second job] at 11am and I’ve got all day here. I finish at 4pm here, get across the water and go to my son’s and get a sandwich or something and then go to my next job. </p>
<p>That one is five nights a week and it’s a very hard job. The evening job is really hard. I get really tired when it’s about 8pm. It’s about midnight when I get to bed. But if I didn’t do these jobs I wouldn’t be able to live. I wouldn’t be able to survive. </p>
</blockquote>
<h2>Decent working hours</h2>
<p>The changing world of work has thrown up a range of challenges and the voices of these forgotten workers can no longer be ignored. These workers are not in this position out of choice. These were the only jobs available – leading them to have to take on more than one job due to low wages, limited working hours and opportunities.</p>
<p>Our research affirms the necessity for the adoption of the Real Living Wage. This is set at £9/hour, (£10.55 in London), whereas the National Minimum Wage (£7.38/hour) and National Living Wage (£7.83/hour) are set at a lower level. Indeed, some workers we spoke to who received a National Living Wage pay rise had their hours cut by their employer to compensate for the rise, so they actually ended up worse off. </p>
<p>Along with a recommendation for more effective wage regulation, there also needs to be stronger regulation of working time arrangements with guaranteed hours. Many of the workers we spoke to worked zero hours or highly variable short hours contracts. These recommendations are important because it is very clear that more people need access to secure jobs with decent working hours and opportunities for progression, if this situation is to be improved.</p><img src="https://counter.theconversation.com/content/106979/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>New research shows high numbers of people in the UK are working multiple low-paid jobs.Andrew Smith, Senior Lecturer in Human Resource Management and Employment Relations, University of BradfordJo McBride, Associate Professor (Reader) of Industrial Relations, Work and Employment, Durham UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/999272018-07-20T10:36:15Z2018-07-20T10:36:15ZWhy the war on poverty in the US isn’t over, in 4 charts<figure><img src="https://images.theconversation.com/files/228296/original/file-20180718-142435-1v01jtj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">About 12.7 percent of Americans lived below the poverty line in 2016.</span> <span class="attribution"><span class="source">StanislauV/shutterstock.com</span></span></figcaption></figure><p>On July 12, <a href="https://www.whitehouse.gov/briefings-statements/cea-report-expanding-work-requirements-non-cash-welfare-programs/">President Trump’s Council of Economic Advisers concluded</a> that America’s long-running war on poverty “is <a href="https://www.whitehouse.gov/wp-content/uploads/2018/07/Expanding-Work-Requirements-in-Non-Cash-Welfare-Programs.pdf">largely over</a> and a success.” </p>
<p><a href="https://scholar.google.com/citations?user=q_7k-4IAAAAJ&hl=en">I am a researcher who has studied poverty</a> for nearly 20 years in Cleveland, a city with one of the country’s highest rates of poverty. While the council’s conclusion makes for a dramatic headline, it simply does not align with the reality of poverty in the U.S. today. </p>
<h2>What is poverty?</h2>
<p>The U.S. federal poverty line is set annually by the federal government, based on algorithms developed in the 1960s and adjusted for inflation. </p>
<p><a href="https://aspe.hhs.gov/poverty-guidelines">In 2018, the federal poverty line</a> for a family of four in the contiguous U.S. is $25,100. It’s somewhat higher in Hawaii ($28,870) and Alaska ($31,380). </p>
<p>However, the technical weaknesses of the federal poverty line are well known to researchers and those who work with populations in poverty. This measure considers only earned income, ignoring the costs of living for different family types, receipt of public benefits, as well as the value of assets, such as a home or car, held by families. </p>
<p>Most references to poverty refer to either the poverty rate or the number of people in poverty. The poverty rate is essentially the percentage of all people or a subcategory who have income below the poverty line. This allows researchers to compare over time even as the U.S. population increases. For example, <a href="https://www.census.gov/content/dam/Census/library/publications/2017/demo/P60-259.pdf">12.7 percent of the U.S. population</a> was in poverty in 2016. The rate has hovered around 12 to 15 percent since 1980. </p>
<p>Other discussions reference the raw number of people in poverty. In 2016, <a href="https://www.census.gov/content/dam/Census/library/publications/2017/demo/P60-259.pdf">40.6 million people lived in poverty</a>, up from approximately 25 million in 1980. The number of people in poverty gives a sense of the scale of the concern and helps to inform the design of relevant policies. </p>
<p>Both of these indicators fluctuate with the economy. For example, the poverty population grew by 10 million during the 2007 to 2009 recession, equating to an increase of approximately 4 percent in the rate. </p>
<p><a href="https://www.census.gov/content/dam/Census/library/publications/2017/demo/P60-259.pdf">The rates of poverty over time by age</a> show that, while poverty among seniors has declined, child poverty and poverty among adults have changed little over the last 40 years. Today, the poverty rate among children is nearly double the rate experienced by seniors.</p>
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<p><a href="https://www.whitehouse.gov/briefings-statements/cea-report-expanding-work-requirements-non-cash-welfare-programs/">The July report by the Council of Economic Advisers</a> uses an alternate way of measuring poverty, based on households’ consumption of goods, to conclude that poverty has dramatically declined. Though this method may be useful for underpinning an argument for broader work requirements for the poor, the much more favorable picture it paints simply does not reconcile with the observed reality in the U.S. today.</p>
<h2>Deserving versus undeserving poor</h2>
<p>Political discussions about poverty often include underlying assumptions about whether those living in poverty are responsible for their own circumstances. </p>
<p>One perspective identifies certain categories of poor as more deserving of assistance because they are victims of circumstance. These include children, widows, the disabled and workers who have lost a job. Other individuals who are perceived to have made bad choices – such as school dropouts, people with criminal backgrounds or drug users – may be less likely to receive sympathetic treatment in these discussions. The path to poverty is important, but likely shows that most individuals suffered earlier circumstances that contributed to the outcome. </p>
<p>Among the working-age poor in the U.S. (ages 18 to 64), approximately 35 percent are not eligible to work, meaning they are disabled, a student or retired. Among the poor who are eligible to work, fully 63 percent do so. </p>
<p>Earlier this year, <a href="http://thehill.com/blogs/congress-blog/economy-budget/397188-house-and-senate-farm-bills-set-contrasting-visions-for">lawmakers in the House proposed</a> new work requirements for recipients of SNAP and Medicaid. But this ignores the reality that a large number of the poor who are eligible for benefits are children and would not be expected to work. <a href="https://www.brookings.edu/research/who-is-poor-in-the-united-states-a-hamilton-project-annual-report/">Sixty-three percent of adults</a> who are eligible for benefits can work and already do. The issue here is more so that these individuals cannot secure and retain full-time employment of a wage sufficient to lift their family from poverty. </p>
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<h2>A culture of poverty?</h2>
<p>The circumstances of poverty limit the odds that someone can escape poverty. Individuals living in poverty or belonging to families in poverty often work but still <a href="https://www.unitedwayalice.org/home">have limited resources</a> – in regard to employment, housing, health care, education and child care, just to name a few domains. </p>
<p>If a family is surrounded by other households also struggling with poverty, <a href="https://www.childtrends.org/child-trends-5/five-ways-neighborhoods-concentrated-disadvantage-harm-children">this further exacerbates their circumstances</a>. It’s akin to being a weak swimmer in a pool surrounded by other weak swimmers. The potential for assistance and benefit from those around you further <a href="https://www.psc.isr.umich.edu/pubs/pdf/rr12-776.pdf">limits your chances</a> of success. </p>
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<p>Even the basic reality of family structure feeds into the consideration of poverty. Twenty-seven percent of female-headed households with no other adult live in poverty, dramatically higher than the 5 percent poverty rate of married couple families.</p>
<p>Poverty exists in all areas of the country, but the population living in high-poverty neighborhoods <a href="https://www.brookings.edu/research/u-s-concentrated-poverty-in-the-wake-of-the-great-recession/">has increased over time</a>. Following the Great Recession, some 14 million people lived in extremely poor neighborhoods, more than twice as many as had done so in 2000. Some areas saw some dramatic growth in their poor populations living in high-poverty areas.</p>
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<p>Given the complexity of poverty as a civic issue, decision makers should understand the full range of evidence about the circumstances of the poor. This is especially important before undertaking a major change to the social safety net such as broad-based work requirements for those receiving non-cash assistance.</p><img src="https://counter.theconversation.com/content/99927/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Robert L. Fischer does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A White House Council concluded that the war on poverty is “largely over.” But, while poverty among seniors has declined, poverty among adults and children as changed little over the last 40 years.Robert L. Fischer, Co-Director of the Center on Urban Poverty and Community Development, Case Western Reserve UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/920212018-02-26T19:12:06Z2018-02-26T19:12:06ZWhat Australia can learn from Fiji in reducing the working poor<p>Labor’s calls to <a href="https://www.theguardian.com/australia-news/2018/jan/31/labor-signalling-much-more-aggressive-approach-to-raising-the-minimum-wage">raise the minimum wage</a> or other pushes to <a href="https://theconversation.com/australians-support-universal-health-care-so-why-not-a-universal-basic-income-91572">implement a universal basic income</a> ignore Australia’s system of supporting low-paid workers in other, more important, ways. These are called a “<a href="http://www.uq.edu.au/economics/johnquiggin/JournalArticles94/ASSA94.pdf">social wage</a>” and includes things like pensions, education, healthcare and housing.</p>
<p>Australia could learn from Fiji in this, even though the countries’ economies are very different. In <a href="https://www.mailife.com.fj/professor-partha-gangopadhyay-to-lead-review-of-national-minimum-wage/">my experience reviewing</a> the Fijian wage system, I found that a mixture of both minimum wages and social wages significantly reduced the number of those in <a href="http://www.oxfordhandbooks.com/view/10.1093/oxfordhb/9780199914050.001.0001/oxfordhb-9780199914050-e-22">working poverty</a>.</p>
<p>In Fiji, total government revenues are <a href="https://www.quandl.com/data/ODA/FJI_GGX_NGDP-Fiji-General-Government-Total-Expenditure-of-GDP">about 20-30% of GDP</a>, and <a href="https://www.adb.org/sites/default/files/publication/30184/fiji-2012-revitalizing-economy.pdf">28-30%</a> of government expenditures are on social wages. </p>
<p>In trying to reduce the number of Fijian working poor, the government could have cut back on services and benefits in favour of a higher minimum wage. It could also keep services at their present level and only increase the minimum wage by a small amount.</p>
<p>I recommended that social wages be kept at their current levels, and the <a href="http://fijisun.com.fj/2017/09/10/national-minimum-wage-increase-of-new-rates-fulfilled-by-government-usamate/">minimum wage be increased by just 15%</a> (something the unions have <a href="http://www.abc.net.au/news/programs/pacific-beat/2017-07-10/fiji-minimum-wage-rise-of-36-cents-criticised-as/8694878">criticised</a>). </p>
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Read more:
<a href="https://theconversation.com/australians-support-universal-health-care-so-why-not-a-universal-basic-income-91572">Australians support universal health care, so why not a universal basic income?</a>
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<p><a href="http://www.fijitimes.com/story.aspx?ref=archive&id=404983">In 2017</a>, 32% of working Fijians were in poverty, rising to 52% in the informal sector (occupations that aren’t covered by government regulators).</p>
<p>An average urban Fijian household with 4.5 members needs <a href="http://www.statsfiji.gov.fj/component/advlisting/?view=download&format=raw&fileId=1381">roughly 250 Fijian dollars</a> (A$150) per week to satisfy their basic needs. The <a href="http://www.statsfiji.gov.fj/component/advlisting/?view=download&format=raw&fileId=1381">poverty line</a> is set amazingly low, at <a href="http://www.fiji.gov.fj/Media-Center/Press-Releases/FIJI%E2%80%99S-FIRST-EVER-NATIONAL-MINIMUM-WAGE-ANNOUNCED.aspx?feed=news">F$186</a> in 2014 prices. </p>
<p>But the national minimum wage is <a href="http://www.fiji.gov.fj/Media-Center/Press-Releases/FIJIAN-GOVERNMENT-INCREASES-NATIONAL-MINIMUM-WAGE.aspx">just F$2.32</a> per hour, or F$111.36 for a 48-hour week. </p>
<h2>What’s going on in Fiji</h2>
<p>As I arrived in Fiji in 2017, negotiations over raising the minimum wage were stalled. At the same time, <a href="http://www.abc.net.au/news/rural/rural-news/2016-03-04/fiji-farmers-rebuild-after-cyclone/7219948">recent cyclones</a> had damaged food crops, pushing up the <a href="https://tradingeconomics.com/fiji/food-inflation">price of food</a>. </p>
<p>Together, these two factors put pressure on real wages (adjusted for inflation), leading to severe working poverty. </p>
<p>In Fiji there is an overall national minimum wage rate, as well as ten separate minimum wages that apply to different industries. Together these create a “wage floor” (the minimum that can be earned), while the actual wages can be higher, depending on other factors such as supply and demand. </p>
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<a href="https://theconversation.com/explainer-what-exactly-is-a-living-wage-86927">Explainer: what exactly is a living wage?</a>
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<p>Social wages are provided by the state as a specific bundle of social services. In Fiji I studied just a few services: social development, public education, healthcare, housing and local amenities, and social assistance (such as food vouchers). There are other programs available for vulnerable Fijian households (such as the old age grant, and death and disability benefits) but I wanted to focus on programs mainly used by low-paid workers. </p>
<p>I surveyed workers to find out how much they would be willing to pay for these government programs – in other words, how valuable the services really are to individual Fijians. </p>
<p>Using this data, I recommended to the national wage bargaining team that social wages be kept at their current levels, and the minimum wage be increased by just 15%. </p>
<p>If social wages hadn’t been so effective in supporting the working poor, I would have recommended they reduce social wages and raise minimum wages by more than 15%. I have calculated that by using this mixture of minimum wages and social wages, Fiji could reduce working poverty from 32% to below 10%.</p>
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<a href="https://theconversation.com/australian-politics-explainer-the-prices-and-incomes-accord-75622">Australian politics explainer: the Prices and Incomes Accord</a>
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<p>For social wages, businesses share their responsibility with other taxpayers. They must give an adequate minimum wage to low-paid workers and must pay adequate taxes to fund social wages of low-paid workers. </p>
<p>Of course, implementing a universal basic income could help fight working poverty in the long run. But there is still <a href="http://www.igmchicago.org/surveys/universal-basic-income">some controvery</a> among economists as to whether there a universal basic income is beneficial once the costs of social security and health care are stripped away. </p>
<p>What are the lessons for Australia? The <a href="https://www.fairwork.gov.au/how-we-will-help/templates-and-guides/fact-sheets/minimum-workplace-entitlements/minimum-wages">national minimum wage in Australia</a>, at A$18.29 per hour or A$694.90 per 38-hour week, is quite high <a href="https://stats.oecd.org/Index.aspx?DataSetCode=RMW">compared with other OECD countries</a>. At the same time, successive Australian federal governments have seriously <a href="http://onlinelibrary.wiley.com/doi/10.1111/j.1467-9515.1981.tb00668.x/abstract">whittled away</a> social wages in Australia.</p>
<p>Using both a minimum wage and social wages can help us achieve good labour market outcomes for the working poor without compromising the long-term sustainability of the economy.</p><img src="https://counter.theconversation.com/content/92021/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Partha Gangopadhyay worked as a consultant of the Fiji Government to lead the national minimum wage review in Fiji in 2017. </span></em></p>Experience in Fiji shows that reducing working poverty requires not only a raise in the minimum wage, but a minimum set of government services and benefits.Partha Gangopadhyay, Associate Professor of Economics, Western Sydney UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/890482017-12-13T11:22:37Z2017-12-13T11:22:37Z3 myths about the poor that Republicans are using to support slashing US safety net<figure><img src="https://images.theconversation.com/files/198817/original/file-20171212-9451-1baw0sz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Sen. Chuck Grassley recently seemed to suggest some poor people spend all their money on "booze or women or movies."</span> <span class="attribution"><span class="source">AP Photo/Charlie Neibergall</span></span></figcaption></figure><p>Republicans continue to use long-debunked myths about the poor as they defend <a href="https://www.forbes.com/sites/johntharvey/2017/12/02/economists-say-the-trump-tax-plan-will-have-disastrous-consequences/#207ea56c4209">lower taxes for the rich</a> and <a href="http://thehill.com/homenews/house/363642-ryan-pledges-entitlement-reform-in-2018">deep cuts to the social safety net</a> to pay for them. In so doing, they are essentially <a href="https://www.washingtonpost.com/blogs/plum-line/wp/2017/12/04/two-ugly-quotes-from-republicans-reveal-the-truth-about-their-tax-plan/?utm_term=.07ba3f41345c">expressing scorn</a> for working class and low-income Americans. </p>
<p>Sen. Chuck Grassley, for example, recently <a href="https://www.washingtonpost.com/news/morning-mix/wp/2017/12/04/grassley-explains-why-people-dont-invest-booze-or-women-or-movies/">justified</a> reducing the number of wealthy families exposed to the estate tax as a way to recognize “the people that are investing, as opposed to those that are just spending every darn penny they have, whether it’s on booze or women or movies.”</p>
<p>Similarly, Sen. Orrin Hatch <a href="http://www.politifact.com/truth-o-meter/article/2017/dec/05/context-orrin-hatchs-comments-about-chip-people-wh/">raised concerns</a> about funding certain entitlement programs. “I have a rough time wanting to spend billions and billions and trillions of dollars to help people who won’t help themselves, won’t lift a finger and expect the federal government to do everything,” he said.</p>
<p>These statements, the likes of which I expect we’ll all hear more of in coming months, reinforce three harmful narratives about low-income Americans: People who receive benefits don’t work, they don’t deserve help and the money spent on the social safety net is a waste of money. </p>
<p>Based on my <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2423540">research</a> and 20 years of experience as a clinical law professor representing low-income clients, I know that these statements are false and only serve to reinforce misconceptions about working class and poor Americans.</p>
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<span class="caption">Food participants get an average of $125 a month, hardly enough to feed a family without earning money as well.</span>
<span class="attribution"><span class="source">AP Photo/Robert F. Bukaty</span></span>
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<h2>Most welfare recipients are makers not takers</h2>
<p>The first myth, that people who receive public benefits are “takers” rather than “makers,” is flatly untrue for the vast majority of working-age recipients.</p>
<p>Consider Supplemental Nutrition Assistance Program benefits, formerly known as food stamps, which currently serve about <a href="http://www.newsweek.com/people-food-stamps-snap-decline-participation-640500">42 million Americans</a>. At least one adult in more than half of SNAP-recipient households <a href="https://www.cbpp.org/research/policy-basics-introduction-to-the-supplemental-nutrition-assistance-program-snap">are working</a>. And the average SNAP subsidy is $125 per month, or $1.40 per meal – hardly enough to justify quitting a job.</p>
<p>As for Medicaid, nearly <a href="https://www.kff.org/medicaid/issue-brief/understanding-the-intersection-of-medicaid-and-work/">80 percent of adults</a> receiving Medicaid live in families where someone works, and more than half are working themselves.</p>
<p>In early December, House Speaker <a href="http://edition.cnn.com/2017/12/06/politics/paul-ryan-entitlement-reform/index.html">Paul Ryan said</a>, “We have a welfare system that’s trapping people in poverty and effectively paying people not to work.” </p>
<p>Not true. Welfare – officially called Temporary Assistance to Needy Families – has <a href="http://www.aphsa.org/content/dam/NASTA/PDF/CRS-RPT_R44751_2017-02-01.pdf">required work</a> as a condition of eligibility since then-President Bill Clinton signed welfare reform into law in 1996. And the <a href="https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/do-i-qualify-for-earned-income-tax-credit-eitc">earned income tax credit</a>, a tax credit for low- and moderate-income workers, by definition, supports only people who work.</p>
<p>Workers apply for public benefits because they need assistance to make ends meet. American workers are among <a href="http://time.com/4621185/worker-productivity-countries/">the most productive in the world</a>, but over the last 40 years the bottom half of income earners have seen <a href="http://equitablegrowth.org/research-analysis/republican-tax-plan-slams-workers-and-job-creators-in-favor-of-the-rich-and-inherited-wealth/">no income growth</a>. As a result, since 1973, worker productivity has <a href="http://www.epi.org/productivity-pay-gap/">grown almost six times</a> faster than wages. </p>
<p>In addition to wage stagnation, most Americans are spending more than <a href="https://www.bls.gov/news.release/cesan.nr0.htm">one-third of their income</a> on housing, which is increasingly unaffordable. There are 11 million renter households paying more than <a href="http://www.jchs.harvard.edu/sites/jchs.harvard.edu/files/harvard_jchs_state_of_the_nations_housing_2017_chap1.pdf.">half their income</a> on housing. And there is <a href="http://nlihc.org/oor">no county</a> in America where a minimum wage worker can afford a two-bedroom home. Still, only <a href="http://nlihc.org/sites/default/files/oor/OOR_2017.pdf">1 in 4</a> eligible households receive any form of government housing assistance.</p>
<p>To be sure, there are recipients of public benefits who do not work. They are primarily children, the disabled and the elderly – in other words, <a href="https://www.thoughtco.com/who-really-receives-welfare-4126592">people who cannot or should not work.</a> These groups constitute the majority of public benefits recipients.</p>
<p>Society should support these people out of basic decency, but there are self-interested reasons as well. To begin with, all working adults have been children, will someday be old and, at any time, might face calamities that take them out of the workforce. The safety net exists to rescue people during these vulnerable periods. Indeed, most people who receive public benefits leave the programs within <a href="https://www.census.gov/newsroom/press-releases/2015/cb15-97.html">three years</a>.</p>
<p>Moreover, many public benefits pay for themselves over time, as healthier and financially secure people are more productive and contribute to the overall economy. For example, <a href="https://www.cbpp.org/research/policy-basics-introduction-to-the-supplemental-nutrition-assistance-program-snap">every dollar in SNAP spending</a> is estimated to generate more than $1.70 in economic activity. </p>
<p>Similarly, Medicaid benefits are associated with enhancing <a href="https://www.kff.org/medicaid/issue-brief/understanding-the-intersection-of-medicaid-and-work/">work</a> opportunities. The <a href="https://www.cbpp.org/research/federal-tax/eitc-and-child-tax-credit-promote-work-reduce-poverty-and-support-childrens">earned income tax credit</a> contributes to work rates, improves the health of recipient families and has long-term educational and earnings benefits for children. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/199016/original/file-20171213-27588-15tfh1m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/199016/original/file-20171213-27588-15tfh1m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=412&fit=crop&dpr=1 600w, https://images.theconversation.com/files/199016/original/file-20171213-27588-15tfh1m.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=412&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/199016/original/file-20171213-27588-15tfh1m.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=412&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/199016/original/file-20171213-27588-15tfh1m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=517&fit=crop&dpr=1 754w, https://images.theconversation.com/files/199016/original/file-20171213-27588-15tfh1m.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=517&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/199016/original/file-20171213-27588-15tfh1m.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=517&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The current federal minimum wage is hardly enough to feed a family.</span>
<span class="attribution"><span class="source">AP Photo/Kiichiro Sato</span></span>
</figcaption>
</figure>
<h2>What the needy deserve</h2>
<p>The second myth is that low-income Americans do not deserve a helping hand. </p>
<p>This idea derives from our belief that the U.S. is a meritocracy where the most deserving rise to the top. Yet where a person ends up on the income ladder is tied to where they started out. </p>
<p>Indeed, America is not nearly as socially mobile as we like to think. Forty percent of Americans born into the bottom-income quintile – the poorest 20 percent – will stay there. And the same “<a href="https://www.washingtonpost.com/news/wonk/wp/2016/10/06/striking-new-research-on-inequality-whatever-you-thought-its-worse/?utm_term=.074d818b5336">stickiness</a>” exists in the top quintile. </p>
<p>As for people born into the middle class, only 20 percent will ascend to the top <a href="https://www.newyorker.com/magazine/2014/03/03/the-mobility-myth">quintile</a> in their lifetimes.</p>
<p>The third myth is that government assistance is a waste of money and doesn’t accomplish its goals. </p>
<p>In fact, poverty rates would <a href="https://www.cbpp.org/blog/safety-net-cut-poverty-nearly-in-half-last-year;">double</a> without the safety net, to say nothing of human suffering. Last year, the safety net lifted <a href="https://www.cbpp.org/research/poverty-and-inequality/chart-book-accomplishments-of-the-safety-net">38 million</a> people, including 8 million children, out of poverty.</p>
<h2>The facts of welfare</h2>
<p>In trotting out these myths, Republican lawmakers are also tapping into long-standing <a href="https://www.washingtonpost.com/news/posteverything/wp/2017/12/08/republicans-are-bringing-welfare-queen-politics-to-the-tax-cut-fight/?utm_term=.8d360a5ce417">racist stereotypes</a> about who receives support. For instance, the “<a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2423540">welfare queen</a>” – a code word for an African-American woman with too many children who refuses to work – is a fiction.</p>
<p>The facts of welfare are that most recipients are white, families that receive aid are smaller on average than other families and the program requires recipients to work and is tiny in relation to the overall federal budget – <a href="http://econofact.org/welfare-and-the-federal-budget">about half a percent</a>. Yet, the welfare queen is an archetype invoked to generate public antagonism against the safety net. Expect her to make frequent appearances in the months to come.</p>
<p>Americans should demand fact-based justifications for tax and entitlement reforms. It is time to retire the welfare queen and related tropes that paint needy Americans as undeserving.</p><img src="https://counter.theconversation.com/content/89048/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michele Gilman is affiliated with the American Civil Liberties Union of Maryland and the Women's Law Center of Maryland.
</span></em></p>As the GOP prepares to slash spending to pay for tax cuts, lawmakers have been bringing up claims about the poor that don’t stand up to scrutiny.Michele Gilman, Venable Professor of Law, University of BaltimoreLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/869272017-11-10T05:50:14Z2017-11-10T05:50:14ZExplainer: what exactly is a living wage?<p>Australia’s national minimum wage should become a “living wage”, according to a <a href="https://www.theguardian.com/australia-news/2017/nov/02/unions-seek-dramatic-pay-increases-to-ensure-minimum-living-wage">new campaign</a> from the Australian Council of Trade Unions (ACTU). But what exactly is a living wage?</p>
<p>In theory, a living wage is no different to a minimum wage. Both set a binding “floor” on wages, below which no employee can (legally) be paid. But in practice there are several differences between minimum and living wages, in their value, purpose, and adjustment. </p>
<p>A living wage is set higher than a minimum wage and may be “pegged” to (fixed as a percentage of) some other measure of living standards, such as average weekly earnings. This ensures that the living wage holds its relative value over time.</p>
<p>Essentially, while the minimum wage sets a <em>bare minimum</em>, the living wage aspires to be a <em>socially acceptable minimum</em>. Typically, this is seen as a level that keeps workers out of poverty.</p>
<p>But the point at which workers fall into poverty varies widely, due to differences in family responsibilities, and complex interactions between low wages and welfare payments. These factors necessarily affect how the level of the living wage would be set and adjusted.</p>
<p>The idea to shift to a living wage follows a string of bad news about pay. Many vulnerable workers <a href="http://fbe.unimelb.edu.au/home/newsroom/the-gig-economy-and-migrant-workers-changing-the-face-of-work-2017-foenander-lecture">have been denied</a> their minimum entitlements by employers. Wage growth is so slow that even the Reserve Bank Governor has <a href="https://www.theguardian.com/australia-news/2017/jun/19/rise-up-and-demand-pay-increases-reserve-bank-chief-urges-workers">encouraged</a> workers to demand pay increases. And workers are <a href="https://blogs.imf.org/2017/04/12/drivers-of-declining-labor-share-of-income/">getting less</a> of the national income, as capital owners increase their share.</p>
<h2>Living vs. minimum wages</h2>
<p>Australia’s national minimum wage is set each year by an expert panel of the Fair Work Commission (FWC). The panel <a href="https://www.fwc.gov.au/awards-and-agreements/minimum-wages-conditions/annual-wage-reviews">receives submissions</a> from a wide range of organisations and <a href="https://www.fwc.gov.au/resources/research/annual-wage-review-research/previous-research">conducts research</a> to inform its decisions. </p>
<p>Increases to the minimum wage are based on <a href="http://www8.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/fwa2009114/s284.html">objectives</a> enshrined in law. These refer to different factors, including business competitiveness, employment growth, and the needs of the low paid. There is no specific mention of poverty in the current objectives. Nor is there a fixed relationship with any other measure of living standards. </p>
<p>In other countries, minimum wages and living wages co-exist. In the United States, <a href="http://www.epi.org/minimum-wage-tracker/">long periods can pass</a> without increases in the federal minimum wage, as there is no mechanism for its regular adjustment. This has led many local governments to set their own mandatory <a href="http://laborcenter.berkeley.edu/minimum-wage-living-wage-resources/inventory-of-us-city-and-county-minimum-wage-ordinances/">living wage ordinances</a>, above the federal (and state-level) minimum wages. </p>
<p>The situation is different in the United Kingdom, where the <a href="https://www.gov.uk/government/organisations/low-pay-commission">Low Pay Commission</a> recommends a national minimum wage increase each year. Even there, the movement for a voluntary “<a href="https://www.livingwage.org.uk/what-real-living-wage">real living wage</a>” has strong support from employers.</p>
<p>If the ACTU plan became law, Australia’s living wage would differ from the US and UK models. It would <em>replace</em>, rather than complement, our national minimum wage, substantially raising the wage floor. This would require the FWC’s expert panel to have different wage-setting objectives, with its primary goal being to eliminate working poverty.</p>
<h2>Would a living wage help the poor?</h2>
<p>Regrettably, poverty is the reality for many of Australia’s lowest-paid workers. Some struggle to make ends meet and go without basic necessities, such as meals and heating - particularly those <a href="http://journals.sagepub.com/doi/abs/10.1177/0022185610397138">in single-income families</a>.</p>
<p>Neither our current minimum wage, nor the proposed living wage, is a pure “anti-poverty” tool. This is because the poorest people <a href="http://www.natsem.canberra.edu.au/storage/Poverty-Social-Exclusion-and-Disadvantage.pdf">do not have paid jobs</a> - often due to serious socioeconomic disadvantage. A living wage only helps those who rely on paid work (their own or someone else’s) for an income.</p>
<p>The intention of a living wage is therefore not to eradicate all poverty, but to end poverty among those who work - “the working poor”.</p>
<p>This laudable ambition is complicated by differences in personal and family circumstances. A living wage cannot vary from person to person, yet low-paid workers <a href="https://www.fwc.gov.au/sites/afpc2006wagereview/research/AFPCResearchSeries0406AnUpdatedProfileontheMWWorkforceinAus.pdf">are not all alike</a>: some live alone, some have children, and <a href="http://onlinelibrary.wiley.com/doi/10.1111/j.1475-4932.2007.00432.x/abstract">many are in</a> dual-income families.</p>
<p>Who should a living wage be set for? The income needed to prevent poverty is inevitably much higher for workers with families than for those who live alone. </p>
<p>The Social Policy Research Centre (SPRC) produces “<a href="http://apo.org.au/node/103781">budget standards</a>” that show the minimum income required by different types of families to reach a healthy living standard. Their evidence has been widely used by <a href="https://www.fwc.gov.au/documents/sites/wagereview2010/downloads/healy_phd_thesis.pdf">the ACTU</a> and <a href="http://www.acoss.org.au/wp-content/uploads/2017/03/ACOSS-minimum-wage-submission-2017_FINAL.pdf">other advocacy groups</a> in submissions to the Fair Work Commission.</p>
<p>According to their analysis, an employed single adult <a href="http://unsworks.unsw.edu.au/fapi/datastream/unsworks:46141/binaaacbcf3-915f-40bc-a70f-2052746ab643?view=true">currently needs</a> A$597 per week (before tax, and including housing costs) to live healthily. A couple with two young children needs almost twice as much: A$1,173. </p>
<p>The national minimum wage <a href="https://www.fwc.gov.au/documents/decisionssigned/html/2017fwcfb3501.htm">is currently</a> A$695 for a full-time worker. So, according to the SPRC’s research, that worker already earns enough for a healthy life if they live alone, but not nearly enough if they have a family. This highlights the difficulty of setting a single living wage that would universally prevent working poverty.</p>
<p>Families with children also receive other government assistance through targeted welfare payments. This further complicates the task of setting a living wage.</p>
<h2>What are the alternatives?</h2>
<p>There are other ways to tackle working poverty. In the US, an “earned income tax credit” reduces the taxes of low-paid workers, so their wages stretch further. Such a scheme <a href="https://openresearch-repository.anu.edu.au/bitstream/1885/40576/3/DP450.pdf">has been recommended</a> for Australia.</p>
<p>Another very different approach to welfare is a universal basic income (UBI). This would provide a guaranteed minimum income, regardless of whether someone works, and without eligibility tests like those behind Centrelink’s recent <a href="https://www.theguardian.com/australia-news/2017/apr/10/centrelink-debt-scandal-report-reveals-multiple-failures-in-welfare-system">“robo-debt” debacle</a>. </p>
<p>Supporters of UBI also <a href="https://www.weforum.org/agenda/2017/01/why-we-should-all-have-a-basic-income/">see it as</a> a solution to job losses caused by rapid automation.</p>
<p>Living wages and UBI are radically different ways of tackling poverty. Work remains vital for a living wage, but is optional for a UBI. A living wage would raise the value of paid work, but might make life harder for some jobseekers whose labour becomes more expensive. A UBI would provide income <em>without</em> work, which might encourage more people to drop out of the labour force altogether. </p>
<p>In pushing to “make work pay”, the ACTU is hoping to capture both the public imagination and, for workers, a larger slice of the economic pie.</p><img src="https://counter.theconversation.com/content/86927/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The ACTU has proposed Australia adopt a “living wage”. This might improve the incomes of some people, but it wouldn’t solve “working poverty”.Josh Healy, Senior Research Fellow, Centre for Workplace Leadership, The University of MelbourneAndreas Pekarek, Lecturer in Management, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/839652017-09-21T19:41:29Z2017-09-21T19:41:29ZThis is what the lives of Big Issue sellers tell us about working and being homeless<p>The “<a href="https://www.theguardian.com/society/2017/sep/12/crisis-measures-wont-solve-homelessness-australian-governments-warned">homelessness crisis</a>”, particularly in <a href="http://www.theage.com.au/victoria/citys-rough-sleepers-more-common-in-the-suburbs--and-just-tip-of-the-iceberg-20170913-gygu3n.html">Melbourne</a> and <a href="https://www.theguardian.com/australia-news/2017/aug/29/second-sydney-homeless-camp-dismantled-by-nsw-government">Sydney</a>, has attracted renewed attention in recent months. While there are higher rates of unemployment for people who are homeless, many are <a href="http://melbourneinstitute.unimelb.edu.au/__data/assets/pdf_file/0007/2202865/Scutella_et_al_Journeys_Home_Research_Report_W6.pdf">working and homeless</a>. </p>
<p>For the past two decades, the growing numbers of Big Issue sellers on city streets across Australia have perhaps been the most visible and public of the “working homeless”. </p>
<p>While The Big Issue is based on the idea of “<a href="https://www.thebigissue.org.au/support-the-big-issue/donate/">a hand up, not a hand out</a>”, little research has been carried out on its impact and sellers’ experiences. <a href="http://www.palgrave.com/us/book/9781137594822">My research findings</a> reveals the long-lasting effects of inequality and poverty and the impact of <a href="https://www.actu.org.au/media/349417/lives_on_hold.pdf">precarious employment and working conditions</a>. </p>
<p>There is a need for more co-ordinated and comprehensive policy responses to – and resources for – homelessness, entrenched disadvantaged and long-term unemployment.</p>
<hr>
<p><em><strong>Further reading:</strong> <a href="https://theconversation.com/supportive-housing-is-cheaper-than-chronic-homelessness-67539">Supportive housing is cheaper than chronic homelessness</a></em></p>
<hr>
<h2>Australia’s first social enterprise</h2>
<p>The Big Issue – a homeless street press publication – was launched in 1991 in London and in 1996 in Melbourne. Premised on the importance of creating work for those who are homeless and long-term unemployed, its motto is “<a href="https://www.bigissue.com/about/">working, not begging</a>”. </p>
<p>The Big Issue is part of a much larger global network of “homeless street press”, which has its historical roots in activist groups in the US. The Big Issue took the grassroots activist model and merged it with a business imperative to create arguably the first social enterprise: a business with a social purpose.</p>
<p>Social enterprises, a fast-growing sector in Australia, aim to respond to social problems with market-based business ideas and practices. </p>
<p>The Big Issue aims to be a self-sustaining business that engages sellers in “genuine” work. Sellers buy The Big Issue magazine for half the market price (at the moment A$3.50) and sell it on for full price ($7), thereby making $3.50 per sale.</p>
<p>As a model of social engagement it is incredibly popular politically. Every year, politicians and business leaders help raise the profile of the organisation by spending a few hours selling The Big Issue. </p>
<p>But what is it really like being a Big Issue seller? Does it provide a pathway out of homelessness and poverty? Do market-based solutions to homelessness and poverty work? </p>
<p>I spent some 18 months alongside 40 Melbourne sellers (and one ex-seller) to answer these questions. Most had been homeless at some point. Some were still homeless, while others had managed to secure private rentals or social housing. Most sellers remained hopeful of a pathway out of poverty, but few realised this. </p>
<h2>What do sellers say about their work?</h2>
<p><strong>Money helps, but not enough</strong></p>
<p>Perhaps unsurprisingly, Big Issue sellers welcomed the chance to work. Many had injuries, disabilities or other health conditions that meant more formal employment was out of reach. Others simply could not find work. </p>
<p>Being able to top up <a href="http://www.abc.net.au/news/2017-08-23/newstart-not-enough-to-afford-basic-needs/8835678">meagre Centrelink payments</a> to help pay for rent, everyday basics, medical expenses, or even to save a little was welcome and in some cases life changing. </p>
<p>Sellers spoke of the dignity that working gave them – as a chance to demonstrate their commitment to working – and were grateful for the opportunity. </p>
<p>Yet, apart from a slim few, most sellers made very limited income. Some sold only two or four copies a day, thus earning no more than $14 for five to eight hours’ work. The most successful sellers scraped closer to the minimum wage, but only on the best hours of the best days. </p>
<p>The income from The Big Issue is very precarious – sellers can never be sure of what they’ll get. To make ends meet, many worked rain, hail or shine and through illness or painful medical conditions. </p>
<p><strong>Relationships: good and bad</strong></p>
<p>Sellers spoke powerfully of social relationships they made with regular customers, The Big Issue staff, and their local community. Having meaningful and positive interactions was central to the significance of their work. </p>
<p>However, sellers also spoke of the difficulty of the visible and public nature of their work. Sellers were aware people were judging them, their appearance and actions. Sellers sometimes struggled to put on a “smiley face” while managing the challenges and disadvantage of being homeless and poor. </p>
<p>At times, sellers had to manage negative interactions with the public, from sneers of “get a real job” to feeling lonely and ignored. They might just have one of the hardest sales jobs in the country. </p>
<h2>What can we learn from Big Issue sellers’ experiences?</h2>
<p>These experiences reveal the flimsy basis of the “lifters and leaners” rhetoric, which still persists in recent government welfare policy changes. </p>
<p>Punitive approaches such as <a href="https://theconversation.com/expansion-of-cashless-welfare-card-shows-shock-tactics-speak-louder-than-evidence-82585">welfare cards</a> and <a href="https://theconversation.com/helping-drug-users-get-back-to-work-not-random-drug-testing-should-be-our-priority-77468">drug tests</a> have little grounds in research evidence, and do much to stigmatise and blame people for society’s inequalities. </p>
<hr>
<p><em><strong>Further reading:</strong> <a href="https://theconversation.com/how-history-can-challenge-the-narrative-of-blame-for-homelessness-80617">How history can challenge the narrative of blame for homelessness</a></em></p>
<hr>
<p>Sellers’ experiences certainly do not support the presumption of “work-shy” benefit dependency. Many work five, sometimes seven, days a week in spite of their difficulties.</p>
<p>Sellers recounted multiple experiences of inequality. These range from waiting years for public housing and being moved on when homeless, to struggling to manage family and medical budgets on Centrelink payments and feeling dismissed by society as not contributing. </p>
<p>Their experiences offer a powerful insight into the everyday challenges of living in poverty and long-term unemployment in Australia. The effects of stigmatisation, social exclusion and disenfranchisement are powerful. </p>
<p>While homelessness is a complex phenomenon, its recent <a href="http://www.smh.com.au/federal-politics/political-news/national-obscenity-still-a-blight--homelessness-continues-to-increase-20170411-gviegb.html">growth</a> in Australia cannot be disassociated from broader social inequalities and poverty. This includes recent <a href="http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/4102.0Main+Features20Sep+2011#2">rises in long-term unemployment</a>, <a href="http://www.abs.gov.au/AUSSTATS/abs@.nsf/Latestproducts/6202.0Media%20Release1Aug%202017?opendocument&tabname=Summary&prodno=6202.0&issue=Aug%202017&num=&view=">underemployment</a>, <a href="https://theconversation.com/the-costs-of-a-casual-job-are-now-outweighing-any-pay-benefits-82207">precarious working conditions</a>, and <a href="https://theconversation.com/australia-needs-to-reboot-affordable-housing-funding-not-scrap-it-72861">need for more affordable housing</a>. </p>
<p>My research indicates that being a Big Issue seller may provide avenues for meaningful work and social interactions, but does not offer secure pathways out of poverty and homelessness or into waged work. Market-based business initiatives are not an effective replacement for comprehensive government policy when it comes to structural inequality. </p>
<p>The experiences of Big Issue sellers tell us there is an urgent need to address inequality, unemployment and homelessness in Australia. A significant part of this is tackling the unequal and precarious labour market. Current policy responses to are not enough, and many serve to deflect the structural basis of poverty. </p>
<p>As a starting point, government can do much more through resourcing social and public housing, women’s refuges and homeless services and by increasing the Disability Support Pension and Newstart Allowance, which has <a href="https://theconversation.com/election-factcheck-qanda-is-it-true-australias-unemployment-payment-level-hasnt-increased-in-over-20-years-59250">not increased in real terms in 20 over years</a>. </p>
<p>Beyond this, there is a need to address the lack of opportunity for meaningful social engagement, dignity and work for those excluded from formal employment.</p>
<hr>
<p><em>Jessica Gerrard is author of <a href="http://www.palgrave.com/us/book/9781137594822">Precarious Enterprise on the Margins</a>: Work, Poverty and Homelessness in the City.</em></p><img src="https://counter.theconversation.com/content/83965/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jessica Gerrard does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Big Issue sellers get social contact and dignity out of their work, but it’s not a secure pathway out of poverty and homelessness. Social enterprises enable small steps; governments can do much more.Jessica Gerrard, Senior Lecturer in Education, Equity and Politics, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/767542017-04-27T20:42:16Z2017-04-27T20:42:16ZWork please but poverty, no thanks: how can we avoid the rise in the working poor?<figure><img src="https://images.theconversation.com/files/166854/original/file-20170426-2841-6dhji8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption"></span> <span class="attribution"><span class="source">Domesticallydelish/Visualhunt </span>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>As the British rock group <a href="https://www.youtube.com/watch?v=TjPhzgxe3L0">The Smiths</a> famously sang in 1984, “I was looking for a job and then I found a job, heaven knows I’m miserable now”. The rise of the working poor calls into question the adage that work is the best way out of poverty. With radical changes on the labour market, the types of jobs available and new threats such as robotics, old sureties can no longer be counted upon. What can society do faced with a rise in the share of in-work poor?</p>
<h2>So what is in-work poverty?</h2>
<p>Though definitions vary, the <a href="https://www.eurofound.europa.eu/observatories/eurwork/comparative-information/working-poor-in-europe">European Commission</a> considers the working poor to be people who are employed for over half the year but whose household income falls below 60% of the national median. This definition captured almost <a href="http://ec.europa.eu/eurostat/web/income-and-living-conditions/data/database">10% of the EU working population in 2015</a>. The working poor are especially concentrated among single-earner households with children (19.8%), while dual-earner households with no kids have the lowest risk (6.2%).</p>
<p>In-work poverty has arisen from changes on the labour market and in who works, compounded by <a href="https://www.oecd.org/fr/cad/reductiondelapauvrete/43528654.pdf">social protection systems</a> that are not well adapted to the new realities of the economy. Stable jobs that previously provided security for a worker and “his” family have been replaced by a range of new contracts, pseudo self-employment and precarious work forms. The diversity of labour market participants has also increased to include more women, more single parents, and young people struggling to find a foothold in work.</p>
<h2>And where are the working poor?</h2>
<p>Young people are <a href="http://ec.europa.eu/social/main.jsp?catId=738&langId=en&pubId=7695&type=2&furtherPubs=yes">overrepresented</a> among the working poor since their jobs tend to be lower paid and more precarious. Yet the official rates of in-work poverty may be complicated by the nature of household-level statistics. For example, in-work poverty among young people is <a href="http://www.style-research.eu/wordpress/wp-content/uploads/ftp/STYLE-Working-Paper-WP8_1.pdf">less pronounced in Southern Europe</a>, where young adults tend to remain in the family home.</p>
<p>These statistics illustrate the household effects inherent to the working poverty measure: poverty is defined at the household level yet people are employed as individuals. In this way, poverty is hard to disentangle from household composition. This feature, in turn, renders working poverty a tricky problem from a policy perspective – at which level should it be tackled?</p>
<h2>Is the “sharing” economy driving more workers into poverty?</h2>
<p>The growth of new forms of self-employment provides an additional dimension to the in-work poverty challenge. In <a href="http://ec.europa.eu/eurostat/documents/3888793/5848841/KS-RA-10-015-EN.PDF/703e611c-3770-4540-af7c-bdd01e403036">almost all countries</a>, in-work poverty is higher among the self-employed. A recent <a href="http://www.style-research.eu/wordpress/wp-content/uploads/2015/03/STYLE-Working-Paper-WP7.1-UK.pdf">study</a> on self-employment showed that there is greater polarization in incomes for the self-employed than for employees.</p>
<p>The rise of the so-called “sharing” economy has further highlighted ways in which the low-paid self-employed are vulnerable: they shoulder much of the risk, yet enjoy a <a href="http://uk.businessinsider.com/uber-drivers-say-theyre-making-less-than-minimum-wage-2014-10?r=US&IR=T#ixzz3W1mRyYXC">relatively small portion</a> of the fruits of these new markets. Research from <a href="http://www.style-research.eu/wordpress/wp-content/uploads/2015/03/STYLE-Working-Paper-WP7.1-Germany-.pdf">Germany</a> suggests that low-paying self-employment tends to be concentrated amongst already economically marginalized groups – “youth, women, part-time workers, single parents and self-employed [workers] with health problems”.</p>
<h2>A new definitional problem?</h2>
<p>Part of the problem of the new economy relates to the question of whether workers are really self-employed or just employees without the benefits. While truly independent workers set their prices to account for the cost and maintenance of equipment, low-demand periods, sick days, etc., prominent “sharing” economy players like Deliveroo and Uber deny their workers this control. Uber has been subject to challenges on this point in <a href="http://fortune.com/2016/10/28/uber-legal-lawsuits/">many countries</a>, with a potential impact upon worker entitlements in terms of wages, holiday pay and sick pay.</p>
<p>The problem of definition extends to the variability of incomes in the sharing economy. The risk borne by the workers means that they can be managing one week yet working poor the next. In addition, as pseudo self-employed workers, they are at risk when they face periods without work, such as for health reasons.</p>
<h2>What kinds of policies could help?</h2>
<p>One of the challenges for policymakers is to adapt social support in line with <a href="http://www.style-research.eu/wordpress/wp-content/uploads/2015/03/STYLE-Working-Paper-WP10.1a-Tracing-the-interface-between-numerical-flexibility-and-income-security-for-European-youth-during-the-economic-crisis.pdf">precariousness on the labour market</a> and incomes that fluctuate week by week. The problem is complex and may in fact require action on many fronts. From the labour market perspective, policy makers <a href="http://www.style-research.eu/wordpress/wp-content/uploads/2015/03/D_4_2_Policy_learning_and_innovation_processes_Synthesis_Report_FINAL.pdf">require new tools</a> to tackle the reality of modern day employment situation – that requires social support to protect against irregular or low incomes and measures to deal with the negative consequences of some “innovations” in the new economy.</p>
<p>For social protection, making benefits unconditional, or universal, is one option to provide a floor below which earnings are guaranteed not to fall, mitigating the risk of in-work poverty. A number of countries have experimented with forms of <a href="http://www.revenudebase.info/2017/03/30/canada-40-ans-apres-lexperience-dimpot-negatif-article-de-bilan-perspectives/">negative income tax</a> whereby workers receive additional income to compensation for low wages. However, these can be expensive to implement and are not necessarily adaptable to short-term income fluctuations. <a href="http://www.etui.org/fr/Actualites/Le-salaire-minimum-en-Europe-demeure-tres-modeste">Minimum wages</a> are another way to provide an hourly floor but short or irregular hours means that a minimum rate does not necessarily guarantee a living wage each week. A <a href="http://homepage.univie.ac.at/peter.rosner/arm14/marx.pdf">Belgian study</a> of policy options for countering in-work poverty concluded with a call for universal measures since they could bolster rather than undermine work incentives (when compared with more targeted measures).</p>
<p>In relation to labour markets, policy activity in recent years has been towards <a href="http://www.style-research.eu/wordpress/wp-content/uploads/2015/03/D_10_4_Flexicurity_Policies_to_integrate_youth_before_and_after_the_crisis_FINAL.pdf">reducing legislative protection</a> rather than increasing with the aim of raising employment and promoting flexibility. In the new economy traditional forms of collective action by unions are difficult since workers are often transient, young and mobile – all factors that do not help union recruiters. However, there are signs of <a href="https://www.theguardian.com/commentisfree/2017/mar/31/deliveroo-organising-wages-conditions-gig-economy">new forms of mobilisation for example among Deliveroo riders</a> and fast-food workers on so-called <a href="http://fightfor15.org/about-us/">zero-hour contracts</a>.</p>
<p>In any case, it is vital not to underestimate the risk of allowing in-work poverty to continue unabated – when people feel that they are losing out despite playing by the rules, the risks to society extend beyond precariousness to <a href="http://www.euractiv.com/section/social-europe-jobs/opinion/european-labour-market-recovery-fails-to-reach-all-people/">decreased social cohesion and increased populism</a>.</p><img src="https://counter.theconversation.com/content/76754/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Les auteurs ne travaillent pas, ne conseillent pas, ne possèdent pas de parts, ne reçoivent pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'ont déclaré aucune autre affiliation que leur organisme de recherche.</span></em></p>It is important to take serious the increasing risk of those who work but remain in poverty. When the population feels that it is losing even if it respects the rules of the game, populism increases.Mark Smith, Dean of Faculty & Professor of Human Resource Management, Grenoble École de Management (GEM)Genevieve Shanahan, Research assistant, Grenoble École de Management (GEM)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/697582016-12-13T03:55:15Z2016-12-13T03:55:15Z1990s Oregon campaigns anticipated Trump’s politics of division<p>The white working class surprised many pundits and social scientists by supporting Donald Trump, leading some to describe the election results as a “whitelash.”</p>
<p>The fact that the president-elect successfully mobilized this population was far from inevitable. After all, a fair number of Trump supporters <a href="http://www.nytimes.com/interactive/2016/11/08/us/elections/how-trump-pushed-the-election-map-to-the-right.html?_r=0">once voted for Obama</a>. A good many of them, when questioned, explained that they “didn’t really like either candidate,” or that they “wanted a change.” History certainly shows us that populist fervor can shift left and right.</p>
<p>Consider Oregon. That Portlandia-style bastion of crunchy granola togetherness also has a long history of racism, such as early 20th-century laws which permitted blacks to pass through towns but required them to leave by <a href="http://thenewpress.com/books/sundown-towns">sundown</a>. More recently, anti-government <a href="http://www.opb.org/news/series/burns-oregon-standoff-bundy-militia-news-updates/">militia</a> groups have consolidated their influence there. Many of its residents share a great deal in common with other Americans who live outside of cities: Their lives are more precarious today than they were even a few decades ago.</p>
<p>Twenty years ago, <a href="http://www.beacon.org/The-Stranger-Next-Door-P468.aspx">I interviewed</a> dozens of residents of a small town that had been swept up in a local populist rebellion, part of a <a href="https://en.wikipedia.org/wiki/Oregon_Ballot_Measure_9_(1992)">statewide campaign against gay rights</a> that predicted Trump’s politics of division. Timber communities like Cottage Grove, in the middle of the state, became laboratories for a right-wing populism that appealed to nostalgia, exploited people’s fears and distrust of elites, and turned neighbors against one another. But it also gave rise to a progressive populism, at least for a while.</p>
<p>Economic anxieties make people more susceptible to political messaging that exploits social divisions, promising simple solutions to complex problems. But the experience of Oregon shows that the appeal of reactionary populism ebbs and flows, and can be mitigated by grassroots political organizing. </p>
<h2>A populist campaign</h2>
<p>As I describe in <a href="http://www.beacon.org/The-Stranger-Next-Door-P468.aspx">my book</a>, the lumber industry in the Pacific Northwest once created jobs that were secure, unionized and paid enough to support a family. A sense of economic security made rural Oregon a pretty live-and-let-live sort of place.</p>
<p>But in the 1980s, automation, tougher environmental regulations and a sluggish national housing market, coupled with globalization, led to the collapse of the timber industry. While the city of Portland enjoyed a high-tech fueled upswing, middle-aged men and women in rural Oregon were forced to settle for low-paying service sector jobs, or leave their hometowns in search of work. People started camping in vans, thrift stores cropped up everywhere and evangelical Protestantism became a refuge.</p>
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<img alt="" src="https://images.theconversation.com/files/148460/original/image-20161202-25653-1w4kf77.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/148460/original/image-20161202-25653-1w4kf77.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=817&fit=crop&dpr=1 600w, https://images.theconversation.com/files/148460/original/image-20161202-25653-1w4kf77.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=817&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/148460/original/image-20161202-25653-1w4kf77.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=817&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/148460/original/image-20161202-25653-1w4kf77.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1027&fit=crop&dpr=1 754w, https://images.theconversation.com/files/148460/original/image-20161202-25653-1w4kf77.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1027&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/148460/original/image-20161202-25653-1w4kf77.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1027&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Oregon Citizens Alliance founder Lon Mabon holds up a draft of ‘The Family Act’ in Brooks, Oregon, Thursday, June 6, 1996, a measure that would bar same-sex marriages.</span>
<span class="attribution"><span class="source">AP Photo/Shane Young</span></span>
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<p>The following decade, an organization called the Oregon Citizens Alliance sponsored a series of ballot measures that promised to turn back the clock. It managed to convince many Oregonians that by fighting gay rights they could take a stand against the “elites” who were eroding their small-town values, and restore the “natural” dichotomy of the sexes.</p>
<p>Though few area residents had ever met an openly gay person, this issue had surprising resonance. Families stopped their kids from playing with those whose parents were on the opposite side of the issue. Fistfights broke out at the high school. Practically overnight, the question of whether gays and lesbians should be recognized in the law, and given legal protections, became a central way small communities defined themselves.</p>
<p>The campaign offered a space where people could openly voice prejudices against sexual minorities, people of color and elites. By asserting their superiority over these groups, they could feel powerful, at least for a moment. </p>
<p>The campaigns did little to address the material insecurities they faced, however. When I questioned them, supporters of the anti-gay measures admitted as much. They weren’t certain that outlawing gay rights would address their problems, but they were willing to see whether it could. Though the ballot measures passed in rural Oregon, they <a href="http://bluebook.state.or.us/state/elections/elections21.htm">failed statewide</a>, and were ultimately declared <a href="http://www.glapn.org/6013OregonAntiGayMeasures.html">unconstitutional</a>.</p>
<h2>Organizing for human dignity</h2>
<p>Meanwhile, an organization called the <a href="http://www.rop.org/">Rural Organizing Project</a> appeared on the scene.</p>
<p>The Rural Organizing Project reached back into the tradition of progressive populism, which had been a formidable influence in late 19th-century America. It brought together conservative Christians, loggers, people of color, laborers, office workers and farm workers, fostering relationships among people who hardly knew one another, though they often lived in the same small communities. And it challenged the belief that “white working-class” people march in lockstep.</p>
<p>“Human dignity” groups cropped up throughout the state, dedicated to the principle that targeting the “other” would not alleviate their problems. They trained people in the techniques of democratic process and small-group consensus, and changed the public conversation – at least for a while. </p>
<p>Twenty-odd years on, the majority of Oregonians may have voted for Clinton but most of the state’s <a href="http://www.politico.com/2016-election/results/map/president/oregon/">rural citizens</a> chose Trump in November. </p>
<p>Decades of neoliberal policies have eroded the economic power of vast numbers of Americans and <a href="http://www.newyorker.com/magazine/2016/10/31/hillary-clinton-and-the-populist-revolt">failed to protect them</a> from insecurity. Calls to deport illegal immigrants and build a wall around Mexico appeal to those who feel excluded by the current economic order, and who wish to address the corrosive affects of globalization. </p>
<p>“We’ve lost ground during the past 20 years, but without dialogue and a place for people to confront extremism, we’d be a lot worse off,” Kelley Weigel, executive director of the Western States Center, a Portland-based organization dedicated to progressive community organizing, told me recently. “The Rural Organizing Project and groups like it are critical to our collective future.” </p>
<h2>Resisting the politics of division</h2>
<p>While racism and sexism have deep roots in this country, <a href="http://www.oregonlive.com/pacific-northwest-news/index.ssf/2016/12/afl-cio_one_of_oregons_largest.html#incart_river_home">labor unions</a>, grassroots progressive organizations and the Democratic Party have, at times, enabled people to better understand the structural sources of their insecurity. </p>
<p>A <a href="http://onlinelibrary.wiley.com/doi/10.1111/1475-6765.12157/full">recent study</a> of 16 European nations found that a college education and union membership help inoculate workers against the far right’s message that immigrants, or racial and sexual minorities, are stealing our jobs. </p>
<p>“We’ve had a number of wins, which have resulted in cities and states passing policies that increased the minimum wage, offered paid sick leave, expanded public education, and protections for same-sex marriage,” says Weigel. But many of the organizations that could counter the appeal of right-wing populism are today struggling. </p>
<p>In the post-World War II era, one in three American workers <a href="http://www.nytimes.com/2016/08/14/opinion/sunday/the-decline-of-unions-and-the-rise-of-trump.html">belonged to a union</a>. In today’s “gig economy,” only <a href="https://theconversation.com/why-americas-labor-unions-are-about-to-die-69575">one in 10</a> does. During the past three decades, as the share of the work force in a union fell sharply, inequality in hourly wages increased by over <a href="http://www.nytimes.com/2016/12/05/opinion/how-to-help-working-people.html">40 percent</a>. If his nominees for secretary of education and transportation are any indication, Trump’s administration will be staunchly anti-union. And the Democratic Party, a potential bulwark against reactionary populism, has yet to put forth a viable national plan to alleviate <a href="http://www.newyorker.com/magazine/2016/10/31/hillary-clinton-and-the-populist-revolt">economic inequality</a>.</p>
<p>In this climate, the politics of division will continue to be an ever-present threat. Positioning the white working class as inevitably racist and sexist, however, may play into the very divisions that Trump’s campaign so effectively exploited. As Oregon’s story shows, organizations can help people understand the real sources of their insecurity, and challenge them to acknowledge their own racial privilege.</p><img src="https://counter.theconversation.com/content/69758/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Arlene Stein does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A professor takes us back more than 20 years, to when struggling white working-class voters in Oregon were convinced that a conservative social agenda would help bring back timber jobs.Arlene Stein, Professor of Sociology, Rutgers UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/625572016-07-18T10:01:16Z2016-07-18T10:01:16ZHow Theresa May’s government can help struggling families<figure><img src="https://images.theconversation.com/files/130859/original/image-20160718-2122-15iv2c6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">In need of support.</span> <span class="attribution"><span class="source">shutterstock.com</span></span></figcaption></figure><p>Theresa May has come into office talking about people who are <a href="https://www.gov.uk/government/speeches/statement-from-the-new-prime-minister-theresa-may">“just managing”</a>, but find life tough. Similarly, then Labour Party leader Ed Miliband talked about the squeezed middle in the build-up to last year’s general election. </p>
<p>These are families who are not in dire poverty, but struggle in insecure jobs, with limited housing prospects. Many in this situation expressed their disillusionment with the status quo by voting for Brexit and this has once again raised intense political angst about working families on modest incomes whose economic fortunes have waned over the past eight years.</p>
<p>New <a href="https://www.jrf.org.uk/report/falling-short-experiences-families-below-minimum-income-standard">research</a> carried out by colleagues and me for the Joseph Rowntree Foundation sends a clear message that there are a huge number of families in the UK who are hard working and yet struggling to make ends meet. As many as one in three families in the UK fall below a minimum standard of living, based on what members of the public consider to be socially acceptable.</p>
<p>Our latest study is based on in-depth interviews with parents in 30 families who are below this socially agreed minimum but not in dire poverty. It shows how even working families can severely struggle to keep their heads above water, particularly where work is low-paid and sporadic. </p>
<p>Typically, families at this level are unable to afford some things considered the norm in 21st century Britain. This could mean not having a modest annual family holiday or, in some cases, even foregoing some of the most basic needs, including mothers skipping meals to put food on the table for their children.</p>
<h2>An uphill battle</h2>
<p>Many are remarkably resourceful on low incomes. Typically, families were highly organised and worked hard to eke out their scarce resources, looking carefully for the best deals and being disciplined about not getting into debt. Others were fighting an uphill battle, finding it hard to afford the basics, juggling debts, always feeling skint. What distinguished these families was not just their personal qualities, but the situations they found themselves in – often because of factors beyond their control, such as family illness or insecure work.</p>
<p>Extended family support makes a huge difference in terms of avoiding the worst effects of low income living. Grandparents often make it possible for mums to work, by being around for childcare. Those without this advantage found it hard to juggle work and care and some felt they needed to wait until their children were at secondary school to do more than very part-time work. Grandparents were also a source of financial back-up – helping out when there was a crisis or funding a holiday, children’s activities or trips out. These opportunities to do more than just survive can make a huge difference to a child growing up on a low income.</p>
<p>Another striking factor was that most of the families we spoke to had at least one member with a health problem. This probably reflects the fact that ill health can be a contributory cause, and not just an effect, of low income. It is certainly a limiting factor in many people’s lives, adding to costs and often restricting the capacity to earn, whether it is an adult with ill health or a child that needs caring for.</p>
<p>The most important thing for these families, though, is having a stable income and life situation. Precarious employment and the uncertainties of renting a home from a private landlord (which <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/501068/2014-15_Section_1_Households_tables_and_figures_FINAL.xlsx">a quarter of all families now do</a>, due to a lack of social housing), combined sometimes with family breakdown, deny families the stability that they crave.</p>
<h2>Priorities</h2>
<p>A key research question of the study was what happens when a family does not have enough to afford a minimum living standard: what do they prioritise and what do they give up? Some of the answers were straightforward and unsurprising. Keeping homes warm and food on the table have a high priority; having a holiday may have to go by the board this year. Parents prioritise the needs of their children – by, for example, barely socialising as adults and rarely buying clothes for themselves in order that their children are not disadvantaged, both materially and socially.</p>
<p>But an interesting finding was that when money is short, families find different ways of structuring their spending so that they can meet a range of basic material and social needs. For example, unable to afford a holiday or a trip to the cinema, families may invest more in creating family entertainment in the home – potentially subscribing to paid-for television. </p>
<p>Middle-class commentators who have a rich social life outside the home may consider this to be an unnecessary frivolity. But to the family concerned, it may be meeting the social need for family interaction in a highly cost-effective manner. This helps explain a frequent lack of understanding in the way that the lifestyles of people on low incomes are discussed.</p>
<p>For Theresa May’s new government, the message from our research is clear. Families struggling to get by on low and sporadic incomes crave stability. They want steady jobs, secure homes, benefits that don’t keep fluctuating and childcare that they can rely on. </p>
<p>This is a big ask, and governments cannot deliver stable lives. But promoting more reliable forms of work, housing and childcare is as good an agenda as any for a government newly committed to helping people who are barely managing to keep their heads above water.</p><img src="https://counter.theconversation.com/content/62557/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Donald Hirsch receives funding from the Joseph Rowntree Foundation.</span></em></p>New research shows that a third of UK families fall below a minimum standard of living – many are hardworking but still struggle to make ends meet.Donald Hirsch, Professor of Social Policy, Loughborough UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/533222016-01-18T17:47:57Z2016-01-18T17:47:57ZEnsuring the lowest paid don’t lose out under welfare reform will take more than just positive thinking<p>Two long-term trends in society call into question the traditional tax-and-spend welfare policies of the left. Globalisation has reduced the number of secure, well-paid jobs in manufacturing industries and helped accelerate the growing inequality between those at the bottom and those at the top, whether in or out of work. And social and political shifts have fragmented community solidarity, <a href="http://www.bsa.natcen.ac.uk/latest-report/british-social-attitudes-32/welfare.aspx">eating away at public support</a> for decent welfare benefits for the unemployed, even among Labour voters. </p>
<p>Welfare policy faces an uphill struggle, where even as poverty grows worse most people seem quite unconcerned about it. So a new report from the think-tank Civitas, launched by veteran Labour MP Frank Field and parliamentary researcher Andrew Forsey, should be given credit for positive thinking. The report, <a href="http://www.civitas.org.uk/publications/fixing-broken-britain-an-audit-of-working-age-welfare-reform-since-2010/">Fixing Broken Britain?</a>, puts forward a programme of welfare reform based on what they see as the successes of the policies of the 2010 coalition and 2015 Conservative governments.</p>
<p>These are assessed on three criteria: helping claimants into work, delivering savings to the taxpayer, and making those households struggling to survive on a low income better off than they were previously. By this measure, the report awards the 2010-2015 Liberal Democrat/Conservative coalition a score of two out of three, arguing that “the government has delivered a drastic reduction in unemployment” and “gained success many times over with its policy of making life on benefit that much more difficult.” But on the third measure the authors argue that while employment increased under the coalition, the government failed to generate secure, lasting jobs that <a href="http://www.jrf.org.uk/data/work-poverty-levels">paid enough to keep working families out of poverty</a>. </p>
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<span class="caption">Frank Field MP.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/policyexchange/7158658196">policyexchange</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
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<p>The authors list several other failures. Numerous cuts and constraints on departments and local government have exacerbated poverty among workless families. Universal Credit, if it is finally rolled out, seems certain to reduce living standards further for low-waged and workless families <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/437246/households-below-average-income-1994-95-to-2013-14.pdf">according to official DWP statistics</a>. Cuts to housing benefit in a situation where there is little expansion of affordable housing will also reduce living standards.</p>
<p>The report also identifies areas where policies could be improved, not least by addressing the effects of sanctions on tens of thousands of benefits claimants each year.</p>
<h2>Boost productivity to boost income</h2>
<p>The authors argue powerfully for a national productivity strategy in order to create more stable and well-paid jobs, pointing to the new National Living Wage due to be introduced in April as a way to a “lower tax, lower welfare, higher wage society”. But the National Living Wage <a href="https://theconversation.com/national-living-wage-mirage-is-a-disaster-for-the-low-paid-44478">offers very little extra to most low-paid workers</a>. </p>
<p>They propose a number of concrete reforms, chiefly designed to focus Tax Credits solely on families with children, help vulnerable groups in very low-paid jobs, such as those with mental or physical health problems, and revamp Job Centres to help claimants plan their return to work over a period of time – <a href="https://theconversation.com/fact-check-do-job-centres-have-a-target-for-benefit-sanctions-41212">rather than focusing on targets</a> to remove benefit claimants from the rolls.</p>
<p>Most commentators agree that Britain has <a href="https://theconversation.com/to-solve-britains-productivity-puzzle-try-asking-the-workers-43028">failed to achieve the levels of productivity needed to pay decent wages</a> to substantial parts of the workforce, and that this should be remedied. Data <a href="http://stats.oecd.org/">from the OECD</a> show that in the 2000s UK productivity exceeded that of France, Germany and the eurozone average. But since 2007 it has dropped, falling behind that of Germany to a level comparable to France and the eurozone average.</p>
<p>Unfortunately solving this problem will require much more than modifying the tax credit and benefit system: it must at the least include investment in human capital, raising education standards, expanding training opportunities and making paid work more family friendly. The report praises the coalition for “strengthening the family”, for example, but doesn’t mention that childcare costs in the UK are <a href="http://www.publications.parliament.uk/pa/ld201415/ldselect/ldaffchild/117/11715.htm">among the highest in the developed world</a> – a powerful disincentive for parents to go back to work.</p>
<p>Nor does it point out that the coalition withdrew considerable state sector investment, while at the same time failing to encourage the private sector to make up the difference. Private sector investment in the UK as a percentage of GDP <a href="http://www.oecd.org/unitedkingdom/economic-survey-united-kingdom.htm#chart">collapsed in 2007 and has failed to recover</a>. It now stands at about three-quarters of the G7 average.</p>
<p>Field and Forsey are remarkably positive in assessment of the coalition’s welfare strategy, although they agree that it has achieved cash savings by impoverishing those at the bottom. They may be right to point to better productivity as a way forward, but they tell us nothing about how we can get there.</p><img src="https://counter.theconversation.com/content/53322/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Taylor-Gooby receives funding from the Economic and Social Research Council and NORFACE.</span></em></p>Getting jobseekers off benefits and into well-paid jobs should be a priority. So why has pace been glacial?Peter Taylor-Gooby, Professor of Social Policy, University of KentLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/457882015-08-12T04:37:59Z2015-08-12T04:37:59ZHow high unemployment has eclipsed the plight of South Africa’s working poor<figure><img src="https://images.theconversation.com/files/91180/original/image-20150807-27593-3bpciz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Unemployment is the main concern for about half of South Africa's poor population while the other half is concerned about low earnings or the poor quality of work.</span> <span class="attribution"><span class="source">Reuters/Jon Herskovitz</span></span></figcaption></figure><p>In the wake of the financial crisis and the ensuing period of austerity, there has been a renewed interest in the working poor in developed countries, including the US and the UK. In the US in particular there are <a href="http://www.oxfamamerica.org/static/media/files/Working-Poor-in-America-report-Oxfam-America.pdf">concerns</a> about the rising number of people who have two or three different jobs but who still cannot make ends meet.</p>
<p>In South Africa, the release of the latest <a href="http://www.statssa.gov.za/publications/P0211/P02112ndQuarter2015.pdf">unemployment figures</a> is a reminder that the country has a different problem. Unemployment seems to have been one of the biggest challenges since the first democratic elections in 1994, with roughly <a href="http://www.southafrica.info/news/business/unemployment-300715.htm#.VcRsYPnvPrc">25%</a> of the labour force consistently being unemployed. </p>
<p>This number is based on the most conservative definition of unemployment. Given this rate, it is perhaps not surprising that South Africa has been less concerned about poverty among the employed.</p>
<p>But the “triple challenge” of poverty, inequality and unemployment requires that we consider how the labour market is linked with the goal of poverty reduction. In other words, is poverty simply a problem of unemployment in South Africa or are employed people also living below the poverty line? Perhaps just as importantly, is the situation of working South Africans improving with regards to poverty?</p>
<p>Although not often recognised, South Africa has both an unemployment problem and a working poverty problem. That roughly one-fifth of South African workers are poor and that half of all poor South Africans live with at least one employed person would suggest that the contribution of the labour market to human development is not reaching its potential.</p>
<h2>The numbers are shocking</h2>
<p>Since 2006, more than one-fifth of South Africa’s total workforce has been living in households which are not able to meet their basic minimum food and non-food requirements. This is according to Statistics South Africa’s official upper-bound <a href="http://beta2.statssa.gov.za/publications/Report-03-10-06/Report-03-10-06March2014.pdf">poverty line</a>. </p>
<p>This was a slight improvement on the 2004 figures, where about 29% of all workers – formal and informal – were “poor”, according to our calculations from the General Household Surveys. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/91165/original/image-20150807-27571-tuzvaj.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/91165/original/image-20150807-27571-tuzvaj.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=325&fit=crop&dpr=1 600w, https://images.theconversation.com/files/91165/original/image-20150807-27571-tuzvaj.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=325&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/91165/original/image-20150807-27571-tuzvaj.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=325&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/91165/original/image-20150807-27571-tuzvaj.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=408&fit=crop&dpr=1 754w, https://images.theconversation.com/files/91165/original/image-20150807-27571-tuzvaj.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=408&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/91165/original/image-20150807-27571-tuzvaj.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=408&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<p>The bad news is that not much progress has been made since 2006. By 2012, working poverty decreased further to 21% (own calculations), but the decrease was not statistically significant if the survey margin of error is included. </p>
<p>At the same poverty line, about half of all poor South Africans lived with an employed person in 2012. This means that unemployment is the main concern for about half of the poor population while low earnings or the poor quality of work is the concern for the other half.</p>
<h2>The impact of social grants</h2>
<p>So, why has progress towards reducing working poverty not been sustained since 2006? There are a number of ways to answer this question, but measuring how wages and other income sources have contributed to poverty reduction is probably the most revealing. </p>
<p>Overall levels of poverty decreased considerably in the early to mid-2000s as government expanded the social grant system. The contribution of social grants to poverty reduction can be seen in the steep drop – from 60% to 55% – in poverty rates between 2004 and 2006 (own calculations). Since 2006, poverty rates have continued to decrease but at a slower rate.</p>
<p>Social grants were also an important part of the decrease in working poverty in the early to mid-2000s. This explains much of the drop in the working poverty rate between 2004 and 2006. But the rate of social grant expansion was not sustained over a longer period and the working poverty rate stabilised after 2006.</p>
<p>If we look more specifically at the relative contribution of grant income to the reduction of working poverty, we find that this relative contribution continued to increase (or at least did not decrease) between 2004 and 2012. This means that wages or earnings played an increasingly smaller role in the reduction of working poverty throughout the 2000s. </p>
<p>Also, in relative terms, the increase in the importance of the contribution of grant income to poverty reduction was actually greater among the working population than for the population as a whole.</p>
<h2>Policy implications</h2>
<p>From a policy perspective, there are a number of implications associated with these findings. In terms of labour market policy specifically, studies of working poverty often contribute, at least tangentially, to debates on labour market flexibility.</p>
<p>While the research discussed here cannot contribute to this debate directly, it is worth noting that working poverty in South Africa has persisted over a period which saw: </p>
<ul>
<li><p>both high and low levels of economic growth;</p></li>
<li><p>high and persistent level of unemployment;</p></li>
<li><p>the onset of and (partial) recovery from a major financial crisis;</p></li>
<li><p>the introduction of protective labour market legislation; and </p></li>
<li><p>the expansion of the social grant system. </p></li>
</ul>
<p>The persistence of working poverty and unemployment amid the interplay of these potential drivers and mediators of low earnings perhaps offers more questions than answers as to the sclerotic nature of South Africa’s labour market. The key question is where the responsibility lies for the roughly one-fifth of the country’s workforce that resides in poor households. </p>
<p>Private and public employers surely have some level of responsibility for ensuring a minimum level of decent wages. At the same time, the greater social responsibility for vulnerable workers is something which should also be shared more widely.</p>
<p>While we can debate the definition of poverty and the way in which we choose poverty lines, we must be clear that no-one should live below, or even near, any of South Africa’s official national poverty lines.</p><img src="https://counter.theconversation.com/content/45788/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>One in five workers in South Africa is poor. The plight of the working poor has wide implications. Employers have a responsibility to ensure a minimum level of decent wages.Mike Rogan, Senior Researcher, Rhodes UniversityJohn Reynolds, Senior Researcher & Head: Neil Aggett Labour Studies Unit, Rhodes UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/392812015-04-23T09:58:09Z2015-04-23T09:58:09ZWhy do poor children perform more poorly than rich ones?<figure><img src="https://images.theconversation.com/files/77024/original/image-20150403-9332-kvo5kj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Investments like reading to a child can make a big difference to how she performs later in life. </span> <span class="attribution"><span class="source">Reading a book from www.shutterstock.com</span></span></figcaption></figure><p><a href="http://www.jstor.org/stable/10.1086/262080">Research</a> has shown that children of poorer parents display substantially worse math and reading skills by the time they start grade school. Other <a href="http://onlinelibrary.wiley.com/doi/10.1111/1468-0297.00075/abstract">studies</a> have revealed that these wide gaps in pre-school skills persist into adulthood and help <a href="http://jenni.uchicago.edu/papers/Cunha_Heckman_etal_2006_HEE_v1_ch12.pdf">explain</a> low educational attainment and lifetime earnings. </p>
<p>Put together, these findings paint a bleak picture of how the fates of generations of poor children are largely sealed before they even set foot in a classroom, suggesting the current K-12 school system is ineffective as a springboard for opportunity. </p>
<p>So if we want a society that is meritocratic, we need to answer a fundamental and vexing question: why do less well-off children perform so poorly? Once we get a better sense of the answer, we can begin to understand how to improve mobility from generation to generation and craft appropriate economic and social policies to close the yawning income-related gap in ability. </p>
<h2>A rich investment</h2>
<p>These income-based achievement gaps are at least partially caused by substantial differences in how much rich and poor parents invest in their children. For example, parents of very young children among the top 25% of earners are more than twice as likely to have at least ten books in the home than those from the bottom quartile. Wealthier mothers are also more than 50% more likely to read to their child three or more times a week. </p>
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<a href="https://images.theconversation.com/files/78805/original/image-20150421-9012-baxrck.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/78805/original/image-20150421-9012-baxrck.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/78805/original/image-20150421-9012-baxrck.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=376&fit=crop&dpr=1 600w, https://images.theconversation.com/files/78805/original/image-20150421-9012-baxrck.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=376&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/78805/original/image-20150421-9012-baxrck.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=376&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/78805/original/image-20150421-9012-baxrck.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=473&fit=crop&dpr=1 754w, https://images.theconversation.com/files/78805/original/image-20150421-9012-baxrck.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=473&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/78805/original/image-20150421-9012-baxrck.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=473&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="attribution"><span class="source">TKTK</span>, <span class="license">Author provided</span></span>
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<p>In addition, children aged 6 to 7 from richer families are more than twice as likely to be enrolled in special lessons or extracurricular activities compared with their lower-income counterparts.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/78807/original/image-20150421-9012-1hl4gp5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/78807/original/image-20150421-9012-1hl4gp5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/78807/original/image-20150421-9012-1hl4gp5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=479&fit=crop&dpr=1 600w, https://images.theconversation.com/files/78807/original/image-20150421-9012-1hl4gp5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=479&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/78807/original/image-20150421-9012-1hl4gp5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=479&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/78807/original/image-20150421-9012-1hl4gp5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=603&fit=crop&dpr=1 754w, https://images.theconversation.com/files/78807/original/image-20150421-9012-1hl4gp5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=603&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/78807/original/image-20150421-9012-1hl4gp5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=603&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="attribution"><span class="source">tktktk</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>That leads us to the next question: why do rich and poor parents invest so differently in their children? </p>
<h2>Career investment</h2>
<p>One important reason parents invest so much time and money in their children’s development is to improve their career prospects when they grow up. </p>
<p><a href="http://www.jstor.org/stable/2534952?seq=1#page_scan_tab_contents">Economic theory</a> tells us that if this were the only reason families invested in their children (and all parents had sufficient access to borrowing), then all families would invest time and money up to the point where the labor market returns to the last dollar of investment equals what the family could earn from putting that same dollar in the bank. </p>
<p>Put simply, they’d invest in their kids until stashing cash in a savings account offered the same return. </p>
<p>This does not necessarily mean that all families should invest the same amount in their children, as not all children earn the same labor market return from the same investment. Indeed, children with higher ability have higher marginal returns at every level of investment. So, it takes more investment in them before the return on this additional investment equals the gains from savings.</p>
<p>This suggests one potential reason children from higher-income families receive greater investments and perform better academically: the natural ability of children and parents may be positively correlated. Higher-ability parents will tend to earn more and have more able children leading to a positive correlation between parental income and child investments and achievement. </p>
<p>The fact that these investment and achievement gaps shrink considerably when accounting for differences in maternal ability and education suggests that this is likely an important part of the story. However, the fact that significant gaps remain even after accounting for these characteristics suggests that other factors are also likely to be important.</p>
<h2>The joy of reading to a child</h2>
<p>First, parents may care about more than their children’s future careers. Parents may simply take pleasure in reading stories to their children or watching them learn to play a new musical instrument. They might enjoy bragging to their friends about their children’s success in school. In other words, if investments in children provide a direct benefit above and beyond the future labor market returns, parents will choose to invest more as their income rises – just as they tend to purchase more of other goods or services as their earnings increase. </p>
<p>Another explanation for the difference is that low-income parents may be poorly informed about the value of investment activities. They may face uncertainty about (or under-estimate) the value of investing in their children. </p>
<p>A third possibility is that poor parents may be unable to finance desired investments if they cannot borrow fully against their own future income or against the potentially high returns earned by their children.</p>
<p>While all of these possibilities might explain why richer parents invest more in their children than their poorer peers, it is important to understand which ones actually do, because they have very different policy implications. </p>
<p>If parents are investing in their children up until the return is the same as saving elsewhere, then there is no way to shift spending to increase future income, and the investment level is efficient. On the other hand, if they are investing too little in their children, so that the labor market returns are higher than saving elsewhere, the investment level is inefficient. In this case, policies that shift spending to education investment for these children increase future income. </p>
<p>If investment gaps result only from a strong correlation between the abilities of parents and children and/or the pure pleasure gained from activities like reading to a child, policies designed to reduce the income-related gap may be equitable but inefficient (that is, they may reduce overall US output). </p>
<p>By contrast, if low-income families are poorly informed or constrained in their capacity to borrow, then they may make inefficiently low investments in their children. In this case, well-designed policies can improve both equity and efficiency. </p>
<h2>Finding the right policy response</h2>
<p>In order to help sort this out, University of Western Ontario colleagues Lance Lochner, Youngmin Park and I <a href="http://economics.uwo.ca/cibc/workingpapers_docs/wp2015/Caucutt_Lochner_Park03.pdf">examined</a> the extent to which these explanations are consistent with other important empirical findings in the child development literature. We started with four facts: </p>
<ul>
<li><p>fact 1: the return to additional investment for poor children is high relative to the return on savings</p></li>
<li><p>fact 2: the return to additional investment is lower for higher-income children</p></li>
<li><p>fact 3: unexpected increases in family income lead to greater investments in children and improved childhood achievement</p></li>
<li><p>fact 4: income received when a child is young has a greater impact on achievement and educational attainment than income received when the child is older.</p></li>
</ul>
<p>Our research showed that to explain the high returns to additional investment among the poor (fact 1), information or credit market failures are needed. Absent these market frictions, families will invest until the returns are driven down to or below the returns on savings. </p>
<p>The timing of income is only important (fact 4) if some parents are constrained in their borrowing. Otherwise, families can always use borrowing and saving to spend money when they want regardless of when it is received. </p>
<p>If parents with young children are poorly informed about the value of investments and/or face limited borrowing opportunities, then policies designed to alleviate these market failures can improve efficiency while also improving the economic outcomes for those who are most disadvantaged. </p>
<h2>What might these policies look like?</h2>
<p>Governments can step in to directly provide credit for early child investments like they do for college students. One recent example is New York City’s pilot program, <a href="http://council.nyc.gov/html/pr/080513childcare.shtml">Middle Class Child Care Loan Initiative</a>, which provides low interest loans to middle-income families with small children to help pay for quality childcare programs. Means-tested subsidies for preschool can also help address borrowing problems. </p>
<p>Programs that help inform low-income parents about the value of talking and reading to their young children or the benefits of attending a quality preschool are steps towards confronting information problems.</p>
<p>By ensuring poorer families have access to financial resources and information about how important it is to make even modest and inexpensive investments in their children like a bedtime story, we can go a long way to shrinking this investment gap.</p><img src="https://counter.theconversation.com/content/39281/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Elizabeth Caucutt receives funding from CIGI-INET.</span></em></p>Investment gaps may be key to understanding why poorer children perform so much worse throughout life.Elizabeth Caucutt, Associate Professor of Economics, Western UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/353142015-01-15T11:02:15Z2015-01-15T11:02:15ZWe don’t fight poverty anymore<p>Fifty years ago, Lyndon Johnson spoke of war on poverty and pursuit of a great society. He talked about investing in education and employment and about eliminating social exclusion that comes with poverty. </p>
<p>Above all, he pointed to opportunity for all as the backbone of a great society. </p>
<p>Since then, LBJ and the social programs that emerged during that time have been justifiably criticized. Nonetheless, that period of domestic policy gave rise to a conviction that fighting poverty was a national cause because the whole society is stunted and degraded when millions of people live poor.</p>
<p>Fifty years later, we don’t fight poverty anymore. </p>
<h2>No safety nets today</h2>
<p>We don’t even promise to keep low-income children cared for and safe. Forget safety nets; if parents can’t buy their way out of economic harm, their kids lose – a lot. </p>
<p>We have a surfeit of data that show how poverty undermines health, development, emotional well-being and our whole life course. For example, poor children are more likely to have chronic respiratory and stress-related problems, experience obesity and to leave school before graduating, all affecting life opportunities.</p>
<p>We know that today <a href="http://www.nccp.org/publications/fact_sheets.html">almost half</a> of US children – some thirty million – live in or near poverty. </p>
<p>Working hard, caring for each other, trying to juggle two or three jobs with schooling and bills that outstrip wages, people living these conditions are a big part of the nation. But they slipped off the policy map years ago along with the national conviction that the welfare of our people is worth a fight. </p>
<p>Over the last decade I have heard a lot about what happens when a nation backs down. </p>
<h2>Living in poverty: the mother’s experience</h2>
<p>In doing research on wages and family life, I have <a href="http://thenewpress.com/books/moral-underground">listened</a> to hundreds of parents – mostly mothers – describe relentless waves of crises in housing, childcare, transportation and the loss of public aid. They report a morass of obstacles to receive even the tiniest public help. They talk about a quagmire of low-wage, go-nowhere jobs that have irregular schedules, unpredictable hours and few or no benefits. </p>
<p>As one young mother explained recently, “There’s no one that cares but you, so you do what’s best for your child and forget them….” Another said that if your children are “…minority…or just poor,” no one seems to notice what is happening – “they just don’t see,” she said. </p>
<p>A grandmother asked me the question, “How would you feel if you couldn’t keep your children warm?” She went right to the heart of matter; how is it that we simply accept the damage and suffering that poverty is doing to so many?</p>
<h2>A centuries-old commitment to public responsibility</h2>
<p>Back in colonial times, poverty was common cause; everyone had to pony up whether they liked it or not. </p>
<p>If you were well heeled in a colonial-era town, you would be expected to house a struggling family or apprentice a youngster to your trade and pay a tithe for the common good. </p>
<p>While adults were expected to work hard and overcome hardship, the whole society was responsible for creating the opportunity to make that possible. </p>
<p>This principle – individual effort coupled with societal responsibility – remained a tense partnership for centuries, tipping back and forth. </p>
<p>Social programs such as mothers’ aid programs, social security for the elderly and disabled, child health services, unemployed workers’ jobs corps, and general “relief” for poor families were programs that would rise and fall back. </p>
<p>In the 1960s, LBJ <a href="http://www.c-span.org/video/?c4498971/lbj-great-society-speech-1964">described</a> the war on poverty as society’s commitment to “…millions of Americans – one fifth of our people – who have not shared in the abundance which has been granted to most of us, and on whom the gates of opportunity have been closed.” </p>
<p>While the great society programs that emerged may have been deeply flawed, that did not negate the nation’s responsibility for alleviating poverty. Yet in the 1990s, domestic policy went into a full retreat, dramatically cutting support for poor families. </p>
<h2>Change in the 1990s</h2>
<p>Arguably, the greatest achievement of the <a href="http://www.gpo.gov/fdsys/pkg/PLAW-104publ193/html/PLAW-104publ193.htm">1996 welfare reform </a>was the consolidation of bipartisan support for making sure jobs – any job, at any wage – became the sole option for poor families. </p>
<p>Messaged as a mix of personal responsibility and work opportunity, what was omitted was wage responsibility. </p>
<p>The low-wage labor market gained access to hungry workers who had no option but minimum wage, no-future work <a href="http://www.epi.org">disproportionately affecting</a> African American and Latino families. </p>
<p>The meanest betrayal of all was a collective shrug at the impact on children. Safety nets gone, parents were tied to jobs but were unable to cover rent and heat, far be it buy childcare. </p>
<p>What happened – what is happening – to all those kids when parents work multiple jobs, shifts, unpredictable schedules, and still can’t pay the bills? Actually, there’s not a lot of effort to find out anymore. But we do know <a href="http://www.nccp.org/publications/fact_sheets.html">half</a> of US children live poor and that black and Latino children are <a href="http://www.diversitydatakids.org/">disproportionately affected</a>. </p>
<p>We know reams about the effects of economic instability on children and family well-being and it is not good news. </p>
<h2>Wage responsibility: the elephant in the room</h2>
<p>How would we renew a commitment to poverty alleviation in the US? </p>
<p>This nation has every possible resource to face the challenge. Foremost, we have a remarkably hard-working population committed to being responsible and independent. We also have a centuries-old commitment to public responsibility and investing in human development and providing aid for those who are young, elderly, disabled or otherwise need some assistance. </p>
<p>But the elephant in the room, when it comes to responsibility for causing as well as reducing poverty, is wage responsibility, decent jobs responsibility and business responsibility for ensuring that working people can take care of their families. </p>
<p>This has been a decade of unsurpassed wealth gain for the richest few. Now we are beginning to see evidence of a renewed antipoverty spirit at least on the local, city and state levels. <a href="http://www.raisetheminimumwage.org">Raising the minimum wage</a> is a growing focus all across the country with ballot initiatives on the issue passed in five states in the November elections, including in so-called red states. </p>
<p>At the community level nationwide, there are <a href="http://9to5.org">organizations</a> working to improve child care and other safety net programs for low-wage families. </p>
<p>Working <a href="http://familyvaluesatwork.org">people</a> are joining up with progressive legislators, mayors and business leaders to take responsibility for building a better society.</p>
<p><em>This article is part of a series commemorating Lyndon B Johnson’s <a href="https://theconversation.com/us/topics/great-society">Great Society</a> programs</em></p><img src="https://counter.theconversation.com/content/35314/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Lisa Dodson has received funding from the Ford Foundation, Annie E. Casey Foundation, WK Kellogg Foundation, and Robert Wood Johnson Foundation.</span></em></p>Fifty years ago, Lyndon Johnson spoke of war on poverty and pursuit of a great society. He talked about investing in education and employment and about eliminating social exclusion that comes with poverty…Lisa Dodson, Senior Scientist and Senior Lecturer, the Heller School for Social Policy and Management, Brandeis UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/261882014-05-02T02:22:08Z2014-05-02T02:22:08ZThe Commission of Audit wants to rip up Australia’s social contract<figure><img src="https://images.theconversation.com/files/47587/original/krm5rskx-1398986159.jpg?ixlib=rb-1.1.0&rect=0%2C117%2C2461%2C1694&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Commission of Audit made much of the affordability of Australia’s core areas of social spending without any consideration of our social responsibilities.</span> <span class="attribution"><span class="source">AAP/Tom Compagnoni</span></span></figcaption></figure><p>The recommendations in the Commission of Audit’s <a href="http://www.ncoa.gov.au/">report</a>, which was released yesterday, would, if implemented, erode the fundamental building blocks of Australia’s social contract. </p>
<p>The social contract – the suite of policies, legislation, programs, health care and social services – has served to ensure that every Australian is able to have a basic but decent standard of living. It has been carefully crafted over the 20th century since Federation.</p>
<p>The social contract has also served to ensure that extremes of poverty and inequality have been largely avoided, with some important exceptions. </p>
<h2>Growth of the working poor</h2>
<p>The Commission of Audit believes that the minimum wage should be set at 44% of average weekly earnings (AWE), which is a measure of average earnings across both part-time and full-time employment. Using AWE as a benchmark, rather than <a href="http://www.abs.gov.au/ausstats/abs@.nsf/mf/6302.0">full-time average earnings</a>, significantly erodes the value of the minimum wage because it includes the wage of people who are either underemployed (around 7% of the Australian workforce) or who choose to work in part-time jobs. </p>
<p>If the Commission of Audit’s recommendation is implemented, the current minimum wage of A$622.20 per week would be reduced to A$488.90 per week.</p>
<p>Of great concern would be its effect on people in <a href="http://www.fairwork.gov.au/pay/national-minimum-wage/pages/default.aspx">part-time, casual jobs</a>. It would reduce the current hourly rate of $16.37 to $12.80 per hour (<a href="http://www.fairwork.gov.au/pay/pay-penalty-rates-overtime-and-allowances/pages/default.aspx">plus a casual loading</a>). For many people, including the 10% of the female workforce that is underemployed, this would be a large loss of income.</p>
<p>The recommendation on the minimum wage would shift the foundation of adequacy in wage setting as enshrined in the 1907 <a href="http://worksite.actu.org.au/the-harvester-judgement-and-australias-minimum-wage/">Harvester Judgment</a>. It would take us down the track of an American-style working poor with all the negative social and economic consequences for society.</p>
<h2>Big holes in the social safety net</h2>
<p>The recommendation for reducing the minimum wage also needs to be set in the context of recommendations across the income-support system. There was no attempt to address the low level of unemployment payments in the form of the <a href="http://www.humanservices.gov.au/customer/services/centrelink/newstart-allowance">Newstart Allowance</a>.</p>
<p>However, the Commission of Audit wants to make life harder for people forced to live on these low payments. Currently, <a href="http://www.humanservices.gov.au/customer/enablers/income-test-allowances">earned income between $100 and $250 per fortnight</a> reduces fortnightly payment by 50 cents in the dollar. The Commission of Audit recommendation means it would be reduced by 75 cents in the dollar. </p>
<p>This undermines efforts of people to sustain themselves while on low Newstart payments through a small amount of part-time work. This new taper rate would apply across the board to all benefits and pensions.</p>
<p>If implemented, the recommendation means that there will be a greater disincentive for people to take on any work as it will be more trouble than what it’s worth. It is exactly counter to the type of help a government would want to give people to get off income-support payments. It erodes people’s capacity to help themselves through paid work and will increase poverty. It could also extend participation in the <a href="http://www.economist.com/node/2766310">grey</a> or black economy.</p>
<p>The recommendation that young people on unemployment payments will eventually be required to move to areas with higher employment opportunities sounds like a bit of nasty social engineering. Historically, young people have moved to areas with greater opportunities and they don’t need a government regulation to do so. But they do need jobs with decent wages to go to.</p>
<h2>A squeeze on age pensions</h2>
<p>The change to indexing arrangements in the age pension, as recommended by the Commission of Audit, will erode the pension’s value if implemented. The current arrangements ensure a modest but adequate standard of living for Australia’s older population. The erosion of adequacy sets the ground for the pauperisation of some groups of older people, especially single women (a group highly reliant on the full age pension) and those in rental accommodation.</p>
<p>There is a case for high-value housing to be included in the assets test. However, there would need to be a very careful assessment of the level at which this is set. </p>
<p>The Commission of Audit also recommends raising the pension eligibility age to 70 to take effect by 2053, linking the pension eligibility age to life expectancy. This long lead time is better than a transition as early as 2030 as some reports suggested. However, other factors still need to be taken into account, particularly the health status of workers in occupational and industry sectors where working to 70 will be very difficult to achieve. </p>
<p>Altogether, the recommendations across social welfare would create big holes in the Australian social safety net – one that has been carefully crafted since Federation. The fact that Australia has a <a href="https://theconversation.com/robin-hood-and-piggy-bank-what-the-welfare-state-does-for-us-25790">well-targeted and efficient social welfare system</a> is entirely overlooked.</p>
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<img alt="" src="https://images.theconversation.com/files/47601/original/thw4hr42-1398994338.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/47601/original/thw4hr42-1398994338.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/47601/original/thw4hr42-1398994338.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/47601/original/thw4hr42-1398994338.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/47601/original/thw4hr42-1398994338.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/47601/original/thw4hr42-1398994338.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/47601/original/thw4hr42-1398994338.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">The Commission of Audit, chaired by Tony Shepherd, ignored that Australia has a well-targeted and efficient social welfare system.</span>
<span class="attribution"><span class="source">AAP/Lukas Coch</span></span>
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</figure>
<h2>The end of universal health coverage</h2>
<p>The Commission of Audit recommendations on Medicare would fundamentally change the basis of our universal, publicly funded health system. The recommended GP co-payments are large at $15 and would be very hard on low-income earners. If implemented, this would undermine one of Medicare’s chief goals: to ensure everyone could see a doctor when they needed to.</p>
<p>However, it is also alarming that the Commission of Audit thinks that the well-off should be entirely out of Medicare for basic health services and should pay for them through the private system. </p>
<p>This recommendation would lead to Australia having a dual health-care system – one for the well-off and one for everyone else. This sets up the conditions for the higher-income groups to continually contest expenditures on a health system that they do not have access to themselves. </p>
<p>This is why a universal system works so well. It ensures social solidarity on the provision of health care. The Commission of Audit’s recommendation has the potential to set up the type of inequalities in health care combined with the exorbitant costs of the system that we see in the US.</p>
<h2>Conclusions</h2>
<p>The Commission of Audit has made much of the affordability of Australia’s core areas of social spending. But it might also have considered whether Australia can afford to rip up its long-standing social commitments on decent wages, an adequate social safety net and a universal health-care system. The costs of many of its recommendations may ultimately be too high. </p><img src="https://counter.theconversation.com/content/26188/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Veronica Sheen does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The recommendations in the Commission of Audit’s report, which was released yesterday, would, if implemented, erode the fundamental building blocks of Australia’s social contract. The social contract…Veronica Sheen, Research Associate, School of Social Sciences, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/215372013-12-17T15:42:49Z2013-12-17T15:42:49ZLowest paid face biggest decline in living standards since 1850s<figure><img src="https://images.theconversation.com/files/37893/original/k4ry3bmq-1387216863.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">You work for 16 hours, and what do you get? </span> <span class="attribution"><span class="source">Dominic Lipinski/PA Wire</span></span></figcaption></figure><p>The labour market has shown some signs of recovery in the past year and the unemployment rate has fallen to 7.6%. While this appears to be a positive sign the reality is that many people with jobs are increasingly struggling to make ends meet. </p>
<p>A University of Birmingham report <a href="http://www.birmingham.ac.uk/Documents/college-social-sciences/social-policy/CHASM/2013/Financial-inclusion-report-2013-final.pdf">has highlighted</a> the fact that, in 2012, the real value of workers’ wages fell back to 2003 levels, following several years of pay freezes and economic restructuring. And research by the <a href="http://www.neweconomics.org/publications/entry/raising-the-benchmark">New Economics Foundation</a> (NEF) found that, in the past three years, workers on low and middle incomes have experienced the biggest decline in their living standards since reliable records began in the mid-nineteenth century. </p>
<p>For the average worker, wages have fallen by £1,300 every year since 2010. And at least one in five workers now earns less than a living wage – £13,600 or less for someone working full-time.</p>
<p>All of this means that, for the first time on record, more than half of those in poverty in the UK are living in a family with at least one person in a paid job, according to a <a href="http://www.jrf.org.uk/sites/files/jrf/MPSE2013.pdf">Joseph Rowntree Foundation (JRF) report</a>. A total of 13 million people in the UK were in poverty in 2011/12, with 6.5 million of those living in working families. The JRF report also shows that 4.6 million people were paid below a living wage in 2011, rising to 4.9 million in 2012. So (some) more people may be working but their pay is not keeping pace with inflation or helping many to avoid poverty.</p>
<p>And in recent years there has been a growth in “underemployment”, including people working on zero hours contracts (these increased by 50,000 between 2011 and 2012 while the average number of hours worked on such contracts fell). Wage freezes and cuts, a time when living costs have risen, are also part of the picture.</p>
<h2>Long-term trends</h2>
<p>The more fundamental root of the problem lies not in the current recession but in more significant long-term shifts since the 1970s. These shifts include changes in the nature of the labour market, with a decline in skilled manual work and growing wage inequality between workers in unskilled jobs and those workers who can command an increased “skills premium” in particular sectors.</p>
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<a href="https://images.theconversation.com/files/38027/original/cmmqmr7w-1387286011.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/38027/original/cmmqmr7w-1387286011.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/38027/original/cmmqmr7w-1387286011.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=448&fit=crop&dpr=1 600w, https://images.theconversation.com/files/38027/original/cmmqmr7w-1387286011.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=448&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/38027/original/cmmqmr7w-1387286011.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=448&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/38027/original/cmmqmr7w-1387286011.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=562&fit=crop&dpr=1 754w, https://images.theconversation.com/files/38027/original/cmmqmr7w-1387286011.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=562&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/38027/original/cmmqmr7w-1387286011.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=562&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<p>Indeed, pay at the top has increased astronomically over the last few decades and these trends have continued in the last few years. For example, the period 2002 to 2011 saw average pay packages for CEOs in FTSE100 organisations soaring <a href="http://www.birmingham.ac.uk/Documents/college-social-sciences/social-policy/CHASM/briefing-papers/2013/changing-remuneration-mix-for-uk-top-management.pdf">from £2.6 million to £4.8 million</a> (with the top ten executives receiving between £7.9 and £20.9 million in 2011). And data from <a href="http://www.eba.europa.eu/-/eba-presents-data-on-high-earners-in-eu-banks-for-2012">European Banking Authority</a> found that the number of UK bankers earning more than €1m rose from 2,436 in 2011 to 2,714 in 2012 and their average total pay, including fixed salaries and bonuses rose from €1.4m in 2011 to €2m in 2012. These highest earners received bonuses averaging 3.7 times their base salary, a practice that the European Union is planning to reform with their proposal to cap variable pay to 100% of salary.</p>
<p>At the same time as pay has become much more unequal, the proportion of national wealth (GDP) going to wages has also fallen (<a href="http://www.tuc.org.uk/sites/default/files/tucfiles/How%20to%20Boost%20the%20Wage%20Share.pdf">from 65% in 1970 to 60% in 2007</a>) as more of the national wealth goes to share holders rather than workers. So workers on average, and below average, wages are receiving a smaller share of a smaller pot. Reforms in the 1980s also weakened the ability of trade unions to campaign against these trends and union membership is now half what it was in the 1970s. According to the <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/204169/bis-13-p77-trade-union-membership-2012.pdf">Office for National Statistics</a>, around 6.5 million employees in the UK were trade union members in 2012, well below the peak of over 13 million in 1979.</p>
<p>The main response to low pay from successive governments since the 1980s has been to try to <a href="http://www.cih.org/resources/PDF/Policy%20free%20download%20pdfs/Making%20work%20pay%20report%20November%202012.pdf">“"ake work pay</a>” by introducing a minimum wage and providing income top-ups to low-paid workers through the tax credit/benefit system. But the minimum wage is below the level of a living wage and <a href="https://www.gov.uk/universal-credit">Universal Credit</a> is beset by major <a href="http://www.bbc.co.uk/news/uk-politics-24839358">technical, implementation and design problems</a>. More importantly, Universal Credit does nothing to tackle the root of the problem in the labour market and, indeed, merely serves to support employers who pay low wages. </p>
<p>Until we address the root causes of low pay, reforms such as Universal Credit will, at very best, merely ameliorate the problem and, at worst, serve to perpetuate it.</p><img src="https://counter.theconversation.com/content/21537/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Karen Rowlingson receives grants from the Arts and Humanities Research Council, the Leverhulme Trust and Friends Provident Foundation</span></em></p>The labour market has shown some signs of recovery in the past year and the unemployment rate has fallen to 7.6%. While this appears to be a positive sign the reality is that many people with jobs are…Karen Rowlingson, Professor of Social Policy, University of BirminghamLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/181632013-09-13T05:16:53Z2013-09-13T05:16:53ZMichael Gove and the real picture of poverty in Britain<figure><img src="https://images.theconversation.com/files/31265/original/vrkqjd3s-1379002789.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">From the heart: a food bank established last month outside HSBC.</span> <span class="attribution"><span class="source">Stefan Rousseau/PA Wire</span></span></figcaption></figure><p>Michael Gove’s recent <a href="http://www.bbc.co.uk/news/uk-politics-24042446">suggestion</a> that inadequate financial management skills among poor families are to blame for the increasing demand on food banks has, unsurprisingly, sparked an angry response. Critics feel the Conservative Party is out of touch with the pressures on ordinary families. </p>
<p>Gove’s comments have been <a href="http://www.bbc.co.uk/news/uk-politics-24046099">criticised</a> not only by opposing politicians but also in the UK media spanning the <a href="http://www.mirror.co.uk/news/uk-news/austerity-drive-one-million-more-2267891">left</a>- and <a href="http://blogs.telegraph.co.uk/news/timwigmore/100235414/lynton-crosby-still-has-to-teach-the-tories-how-to-speak-about-welfare/">right</a>-wing press, and by experts in <a href="http://www.citizensadvice.org.uk/index/pressoffice/press_index/press_office20130910b.htm">poverty-related fields</a>. His views on the matter have been widely disparaged as naïve, condescending and ignorant of the realities of life for people on low incomes.</p>
<p>Such reactions are neither surprising nor unwarranted. What is surprising is that this response suggests some revelation about Gove’s or the Coalition’s position in his comments. Similar messages – that the poor are irresponsible, lazy and unskilled in managing their own affairs – are evident throughout Coalition policy and rhetoric. Cameron evokes the same position in reference to <a href="http://www.conservatives.com/News/Speeches/2012/04/David_Cameron_Conservatives_are_working_in_the_national_interest.aspx">“skivers vs strivers”</a>.</p>
<p>Documentation relating to <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/48897/universal-credit-full-document.pdf">Universal Credit</a> cites intergenerational cycles of worklessness caused by addiction and crime, supported by Louise Casey’s <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/6151/2183663.pdf">“troubled families”</a> rhetoric. These continue despite a <a href="http://www.poverty.ac.uk/articles-families/still-not-listening">persistent lack of empirical evidence</a> supporting the existence, never mind propagation, of such families in significant numbers. </p>
<p>Similarly, Iain Duncan-Smith’s <a href="http://www.official-documents.gov.uk/document/cm84/8483/8483.pdf">recent consultation</a> into child poverty measurement has come under a <a href="http://www.poverty.ac.uk/system/files/attachments/PSE%20policy%20working%20paper%20No.%208,%20Bradshaw,%20CONSULTATION%20ON%20CHILD%20POVERTY%20MEASUREMENT.pdf">great deal of fire</a> from academics, partially as a result of the stigmatising and uninformed assumptions about causes, effects and correlates of child poverty evident in the consultation documentation.</p>
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<a href="https://images.theconversation.com/files/31267/original/jt2hkz8x-1379002970.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/31267/original/jt2hkz8x-1379002970.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/31267/original/jt2hkz8x-1379002970.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=818&fit=crop&dpr=1 600w, https://images.theconversation.com/files/31267/original/jt2hkz8x-1379002970.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=818&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/31267/original/jt2hkz8x-1379002970.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=818&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/31267/original/jt2hkz8x-1379002970.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1028&fit=crop&dpr=1 754w, https://images.theconversation.com/files/31267/original/jt2hkz8x-1379002970.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1028&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/31267/original/jt2hkz8x-1379002970.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1028&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Michael Gove: top of the heap.</span>
<span class="attribution"><span class="source"> Lewis Whyld/PA Wire</span></span>
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<p>Political rhetoric is shaped by - and has a role in shaping - popular opinion. While many members of the public <a href="http://www.dailymail.co.uk/news/article-2416737/Michael-Gove-food-banks-Poor-got-blame.html?ito=feeds-newsxml">were outraged</a> by Gove’s comments, the underlying assumptions and implications are not too different from those evident in popular conceptions of poverty. Representations of poverty <a href="http://www.dailymail.co.uk/debate/article-1120672/PETER-HITCHENS-Poverty-It-8217-s-just-lie-Left-uses-destroy-middle-class.html">in the media</a> often draw on assumptions that “real” poverty does not exist in the UK, or that the <a href="http://www.huffingtonpost.co.uk/2013/08/26/jamie-oliver-food-poverty_n_3816831.html">poor are responsible</a> for their own suffering. </p>
<p>These views reflect a hardening of <a href="http://www.natcen.ac.uk/media/1106142/poverty%20and%20welfare.pdf">public attitudes</a> towards the poor, and <a href="http://www.natcen.ac.uk/media/1106142/poverty%20and%20welfare.pdf">popular explanations</a> of poverty which draw more heavily on individual shortcomings than structural causes. Such views, exacerbated by the political rhetoric described above, can then further fuel this rhetoric and resulting policies through the <a href="http://poverty.ac.uk/articles/dwp-adds-confusion-over-consultation-child-poverty-measurement">misapplication of data</a> on popular values as if they were data on empirical fact.</p>
<h2>The real picture</h2>
<p>Turning to the facts, <a href="http://www.poverty.ac.uk/system/files/attachments/PSE%20policy%20working%20paper%20No.%208,%20Bradshaw,%20CONSULTATION%20ON%20CHILD%20POVERTY%20MEASUREMENT.pdf">findings</a> from the Poverty and Social Exclusion Research Project, the largest-scale survey of its kind in the UK to date, have recently been published. An increase in the depth and breadth of poverty <a href="http://poverty.ac.uk/sites/default/files/attachments/The_Impoverishment_of_the_UK_PSE_UK_first_results_summary_report_March_28.pdf">is revealed</a>. </p>
<p>Twice as many people fell below minimum standards in 2012 as did in 1983. 4% of children and 8% of adults cannot afford to eat properly. Little supporting evidence for the position that poor people are irresponsible and lazy can be found. Where families are short of money, hard-pressed parents sacrifice their own nutritional needs to protect their children. And with regard to <a href="http://news.sky.com/story/1074902/cameron-welfare-reforms-put-fairness-back">Cameron’s “skivers”</a> who make a “lifestyle choice” to claim benefits, embarrassment was found to be a common response to living on a low income (a finding supported <a href="http://www.turn2us.org.uk/pdf/Benefits%20stigma%20Draft%20report%20v9.pdf">in other research</a>). </p>
<p>Furthermore, low income is not so often a result of unemployment as Coalition rhetoric would suggest: <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/200720/full_hbai12.pdf">evidence on child poverty</a> shows that the majority of poor children live in households containing at least one worker.</p>
<p>That those living on benefits view their lives as a humiliating struggle rather than a free ride is no surprise when the impact of the Coalition’s decision to uprate benefits at a rate of only 1% per year is examined. The following <a href="https://www.gov.uk/government/publications/abstract-of-statistics-2012">chart</a> shows the real value of unemployment benefit (now JSA), and its value as a proportion of average earnings, since 1948. Whilst the value of benefits in real terms is reasonably stable, the departure from average earnings indicates that the gap between the rich and the poor is ever increasing.</p>
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<a href="https://images.theconversation.com/files/31263/original/d3hnb4xx-1379002330.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/31263/original/d3hnb4xx-1379002330.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/31263/original/d3hnb4xx-1379002330.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=238&fit=crop&dpr=1 600w, https://images.theconversation.com/files/31263/original/d3hnb4xx-1379002330.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=238&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/31263/original/d3hnb4xx-1379002330.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=238&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/31263/original/d3hnb4xx-1379002330.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=299&fit=crop&dpr=1 754w, https://images.theconversation.com/files/31263/original/d3hnb4xx-1379002330.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=299&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/31263/original/d3hnb4xx-1379002330.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=299&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<p>As well as benefits being uprated by less than inflation, reductions in real earnings, the freezing of child benefit, the <a href="https://www.gov.uk/benefit-cap">benefits cap</a> and <a href="https://www.gov.uk/housing-benefit/what-youll-get">bedroom tax</a> are further reducing incomes. In addition many poor working age households now have to pay some council tax following the transfer to local authorities. </p>
<p>Poverty, then, is a real and present condition in the UK, it is getting worse, and there is scant evidence that the poor are to blame. Indeed, stigmatising Coalition policies which target the poor have resulted in legal challenges to the proposed <a href="http://www.doughtystreet.co.uk/news/article/legal-challenge-to-benefit-cap-test-cases-issued-for-vulnerable-families">benefits cap</a> and <a href="http://www.cpag.org.uk/content/cpags-challenge-housing-benefit-changes">bedroom tax</a>. The UN special rapporteur on housing has <a href="http://www.bbc.co.uk/news/uk-politics-24053718">gone so far</a> as to dub the bedroom tax a breach of human rights.</p>
<p>It is hardly news that harsh popular and governmental responses to the poor and to poverty clash with empirical evidence. Similar themes can be found, for example, in <a href="http://www.csiss.org/classics/content/25">Mayhew’s investigations</a> of poverty and the poor laws in the 1850s. </p>
<p>But it could be reasonably expected that policy would have moved on since those times. Politicians work within an electoral system which requires popular support, and this will inevitably impact rhetoric and policy, but this is not an adequate excuse for ignoring evidence and propagating damaging and stigmatising perceptions. </p>
<p>Academics must do better at communicating findings in a way that is accessible to the wider public, but politicians bear the responsibility for making informed policy decisions based on sound evidence rather than prejudice.</p><img src="https://counter.theconversation.com/content/18163/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Gill Main does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Michael Gove’s recent suggestion that inadequate financial management skills among poor families are to blame for the increasing demand on food banks has, unsurprisingly, sparked an angry response. Critics…Gill Main, Research Fellow, Social Policy Research Unit, University of YorkLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/165002013-07-30T13:47:21Z2013-07-30T13:47:21ZZero-hour contracts: the dark side of flexible labour markets<figure><img src="https://images.theconversation.com/files/28364/original/xqts8jc6-1375190951.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Flying the flag for workers' rights.</span> <span class="attribution"><span class="source">Elliott Brown</span></span></figcaption></figure><p>Whether it be young people selling sports shoes, or carers looking after the elderly, workers in the UK are increasingly being forced into zero-hour contracts. This hasn’t happened by accident: it is a product of many years of moving towards a “flexible” labour market, one that in practice means more power for employers over employees.</p>
<p>What is a “zero-hour employment contract”? For a start, it is a contradiction in terms. An employment contract implies a set of rights and obligations between the employee and the employer, but a zero-hour contract only involves obligations on the part of the employees: to be available for whatever work the employer chooses to offer, or risk being excluded in future.</p>
<p>You might expect such an unappealing arrangement to be confined to situations where the activity was by nature intermittent - for example to cover concerts, or weddings. It might also be expected to be used for students or moonlighters, not for those in need of a regular job. But now we learn that Sports Direct uses this form of contracting as the <a href="http://www.theguardian.com/business/2013/jul/28/sports-direct-staff-zero-hour-contracts">main means of staffing</a> an ongoing and obviously highly profitable activity. From a workforce of 23,000, just 2,000 are employed full-time.</p>
<p>This cannot be explained by the need to manage fluctuations in demand, as Sports Direct owns or pays rent on a fixed number of shops with predictable opening hours. Each store will also have a minimum staffing level. This provides at least a basic platform for offering guaranteed hours to most staff. </p>
<p>There can be only two explanations for this vast use of these non contracts. First, they are a means to gain increased control over the staff as the employer can choose to only offer the most productive, or more likely the most compliant, employees regular or more convenient work schedules. The alternative explanation is that these contracts take advantage of the large pool of unemployed without the risk of high turnover. </p>
<p>Whatever the apparent benefits, we do know that Sports Direct has scored a publicity own goal. A few weeks back it was trumpeting its high profits and “progressive” profit sharing, involving <a href="http://www.ft.com/cms/s/0/f3f11e5c-ef71-11e2-8229-00144feabdc0.html#axzz2aQZuCXnS">large bonuses</a> for its permanent staff. It now transpires that 90% of its workers are on zero hours, a contractual position used to exclude them from rights to the profit share. </p>
<p>Many of the zero-hour staff may have succumbed to moral pressure to take whatever job is available rather than rely on benefits, even when this could mean greater financial insecurity (at least unemployed people can rely on a regular income, of sorts). These staff have the moral high ground here. They now know their employer is doing this not out of necessity but because it excludes most staff from the reward scheme and because UK employment law allows these contracts to be used even for staff who work regularly for the company and for long periods.</p>
<p>It would be easy to simply blame capitalist greed for the current wave of zero-hour contracts. With Sports Direct that is clearly the case. But there are other sectors also reliant on these contracts, and here much of the blame lies with taxpayers and governments. Domiciliary (home-based) social care is a great example of such a sector.</p>
<p><a href="https://research.mbs.ac.uk/european-employment/Portals/0/docs/Department%20of%20Health%20-%20Full%20Report.pdf">Recent research </a> by Manchester Business School found seven out of ten private domiciliary care providers employed all care staff on zero hours. Here, the practice can be directly related to the fact home care is commissioned by local authorities who in turn are not allocated enough social care money by Westminster.</p>
<p>Zero-hour contracts enable care agencies to operate in a tough commissioning environment where margins are low and permanent staff are more expensive to employ. Unlike their colleagues with guaranteed shifts, zero-hour staff are only paid for face-to-face care time with breaks between clients and travel time normally unpaid, meaning the effective income may even be below the national minimum wage.</p>
<p>Most of the care workers we talked to are primary or joint breadwinners for their families, far removed from the stereotype of casual workers associated with such contracts.</p>
<p>From sports shops to home care, zero-hour contracts are depriving core employees of their basic rights to fairness at work, whether this is the right to be paid for time spent at work or to share in company bonus schemes alongside other staff. </p>
<p>At its most basic, a job should provide security of income and the opportunity for workers to plan their lives. Zero-hour contracts fail on both counts, revealing the darker side of the flexible labour markets of which our governments are apparently so proud.</p><img src="https://counter.theconversation.com/content/16500/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jill Rubery has received funding from from a wide range of sources including the European Commission, the ESRC, the Department of Health and the International Labour Organisation She is an active member of the Manchester Fairness At Work Research Centre at the University of Manchester </span></em></p>Whether it be young people selling sports shoes, or carers looking after the elderly, workers in the UK are increasingly being forced into zero-hour contracts. This hasn’t happened by accident: it is a…Jill Rubery, Professor of Comparative Employment Systems, University of ManchesterLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/131402013-03-28T03:19:28Z2013-03-28T03:19:28ZWhy the ACTU needs to hold the line on the minimum wage<figure><img src="https://images.theconversation.com/files/21831/original/9tqk7gzg-1364431137.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">ACTU secretary Dave Oliver has called on the government to increase the minimum wage to combat growing income inequality in Australia.</span> <span class="attribution"><span class="source">AAP</span></span></figcaption></figure><p>The recent <a href="http://www.abc.net.au/4corners/stories/2013/02/06/3684714.htm">Four Corners documentary</a> on poverty in the United States is a salutary reminder of why the Australian Council of Trade Unions (ACTU) needs to hold the line on minimum wages in relation to average weekly earnings. </p>
<p>The documentary highlighted the hardships for working people to manage the most basic of accommodation and living costs with earnings of <a href="http://www.dol.gov/whd/minwage/america.htm">$7 to $8 per hour</a>. According to the Washington-based <a href="http://www.epi.org/publication/declining-federal-minimum-wage-inequality/">Economic Policy Institute</a>, the federal minimum wage in the USA had slipped to 37% of average hourly earnings by 2011 from around 50% in the late 1960s.</p>
<p>While the <a href="http://www.fairwork.gov.au/media-centre/latest-news/2012/06/pages/20120601-2012-minimum-wage-decision-released.aspx">minimum wage</a> in Australia is set at $606.40 per week (or $15.96 per hour). around twice that of the American minimums, it too is also slipping in relation to average earnings, which stand currently at <a href="http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/6302.0main+features3Nov%202012">$1393 per week</a>.</p>
<p><a href="http://www.actu.org.au/Images/Dynamic/attachments/7870/acturelease130327-minimum%20wage-final.pdf">The ACTU</a> reports that the minimum wage has fallen from 50% of average weekly full-time earnings in 2000 to 43.4% in 2012. It wants Fair Work Australia to increase the national minimum wage to $636.40 a week or $16.75 per hour – an increase of $30 per week, or 79 cents per hour. The increase would affect 745,000 workers. The ACTU argues that Australia on current trends is on track of creating an “American-style class of working poor in Australia”.</p>
<p>Business groups are contesting the ACTU proposal, with the <a href="http://www.abc.net.au/news/2013-03-28/acci-argues-for-5-dollar-a-week-increase/4598806?section=business">ACCI suggesting a $5.80</a> per week pay rise, claiming increased imposts on business and barriers to employment creation. However, there are many reasons why the ACTU’s claim of $30 per week should be supported.</p>
<h2>Growing income inequality</h2>
<p>The disparity between the minimum wage and average earnings is a facet of growing income inequality, which the federal government’s <a href="http://www.socialinclusion.gov.au/resources/financial-stress-and-inequality">Social Inclusion Board</a> shows has increased over the last 15 years. It also notes that income inequality now stands at the OECD average. However, the longer term trend should be a matter of concern for policymakers. Countries with higher levels of inequality do worse on a range of social and economic <a href="http://www.newstatesman.com/society/2010/11/inequality-social-health-essay">indicators than more equal societies</a>.</p>
<h2>Insecure and part time work</h2>
<p>Australia has a large proportion of workers in casual and insecure work, compared to <a href="http://www.oecd-ilibrary.org/employment/activating-jobseekers_9789264185920-en">most OECD countries</a>. Around <a href="http://www.abs.gov.au/ausstats/abs@.nsf/mediareleasesbytitle/7F849D8157174167CA2575D2002B1C98?OpenDocument">20% of the workforce</a> is employed in casual jobs, which pay an hourly rate. There is also a very high level of level of underemployment in Australia, currently <a href="http://www.ausstats.abs.gov.au/ausstats/meisubs.nsf/0/70B7EC25FEF4162ECA257B2D000D426B/$File/62020_feb%202013.pdf">7.3%</a> of the workforce. A decent hourly rate helps to shore up the living standards of casual and underemployed workers.</p>
<h2>Women</h2>
<p>Women are particularly affected by employment insecurity and underemployment. About 1.1 million women are in casual jobs constituting <a href="http://www.ausstats.abs.gov.au/ausstats/subscriber.nsf/0/FD569F0180EF0C5DCA2579E50014C7D6/$File/63590_november%202011.pdf">23% of the female workforce</a> in contrast to 16% of the male workforce employed casually. Underemployment or not enough hours of work, <a href="http://www.ausstats.abs.gov.au/ausstats/meisubs.nsf/0/70B7EC25FEF4162ECA257B2D000D426B/$File/62020_feb%202013.pdf">currently affects 9.5%</a> of the female workforce compared to 5.5% of the male workforce. <a href="http://www.socialinclusion.gov.au/resources/financial-stress-and-inequality">The Social Inclusion Board</a> further notes that women have higher rates of persistent low economic resources. There is an important gender equity component to the minimum pay claims.</p>
<h2>Making work pay</h2>
<p>As <a href="http://www.theaustralian.com.au/business/cost-of-living-in-australian-cities-higher-than-for-london-hk-rome/story-e6frg8zx-1226270946657">The Economist’s Worldwide Cost of Living Survey</a> frequently reminds us, Australia is an expensive place to live — and <a href="Unions%2520need%2520to%2520hold%2520the%2520line%2520on%2520minimum%2520wages.docx">housing affordability is particularly low</a>. These cost of living pressures need to be taken into account in setting minimum wages, as the ACTU submission to Fair Work Australia will no doubt argue. Decent wage rates, especially at the lower end of the earnings spectrum, are important in alleviating poverty and ensuring that those leaving social welfare payments are better off in work. </p>
<p>A working population reduces welfare expenditure and enhances productivity. But we should also consider that decent wages have multiplier effects through the economy in supporting spending, so business groups should not complain too much.</p>
<h2>Some advice for the USA – and Australia</h2>
<p>In his <a href="http://www.whitehouse.gov/the-press-office/2013/02/12/remarks-president-state-union-address">State of the Union address</a> in February, President Barack Obama prioritised the growth of the middle class (and middle-class jobs) as core aims for the forthcoming term of office. He didn’t explicitly define “middle-class jobs”, but we might conclude that they are jobs that pay decent wages and are fairly secure. In this light, Obama could also have given some thought to the plight of those of those at the bottom of the earnings scale trying to get by on minimum wages of $7-$8 per hour.</p>
<p>We might conclude that Obama’s middle-class jobs are those which provide earnings sufficient for a standard of living consistent with social norms and expectations – buying a house or comfortably paying rent, raising a family, social participation. That is why the relationship between minimum wages and average earnings is so important, and why the present disparity should be reduced in both Australia and the USA. </p><img src="https://counter.theconversation.com/content/13140/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Veronica Sheen does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The recent Four Corners documentary on poverty in the United States is a salutary reminder of why the Australian Council of Trade Unions (ACTU) needs to hold the line on minimum wages in relation to average…Veronica Sheen, Research Associate, Political and Social Inquiry , Monash UniversityLicensed as Creative Commons – attribution, no derivatives.