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Race and Beyond: Working to Stay Poor

SOURCE: iStockphoto

A person making $7.50 an hour—25 percent more than the federal minimum wage, or about $1,200 a month in pre-tax income—gets by only with help from family, friends, or some sort of publicly supported assistance.

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I have a friend who works at Foot Locker—the successful international retail chain of more than 3,300 stores—who is struggling to make ends meet.

He’s an assistant manager at a store in a suburb of Washington, D.C. He told me he earns $7.55 an hour for a 40-hour work week. In addition, he said he gets a 2 percent commission on sales, discounts on in-store purchases, stock options, and health care. My friend does well, selling dozens of pairs of sneakers every pay period that cost as much as $250 each. But even if those benefits seem generous, when his check reaches his pocket, he doesn’t have enough money to support himself—or a family.

Consider, for example, if he chooses to take advantage of a 30 percent discount to buy store merchandise. To do so, he would have to scrimp on some other basic necessity, such as paying rent, buying food, or covering the cost of getting to and from work. Even his health care is a hard choice because he said the cost of his basic, company-sponsored coverage is about $60 each paycheck.

Like the vast majority of poorly paid workers, my friend often has to rely on support from family, friends, or government assistance just to live and work every day. Sure, he’s employed, but he’s mired in poverty nonetheless. I call this indentured servitude.

Companies and their well-heeled executives who practice this type of capitalism are cheating society. By failing to pay workers a fair living wage, they’re forcing taxpayers to pick up the slack.

In other words, corporations that don’t do their share to support workers in feeding and caring for their families push that burden onto taxpayers, who ultimately provide a safety net for the working poor. If corporations would pay their employees a living wage, the size of government would shrink because these indentured servants wouldn’t have to rely on Medicaid and emergency rooms when they get sick, food stamps because they are hungry, or Section 8 housing because they can’t afford rent. They work to stay poor.

It’s no secret that companies are profiting big during this slow economic recovery. The Dow Jones average just breached 16,000—a record for the historic stock indicator. Companies are sitting on piles of profits, but little of their largess trickles down to their workers. In some cases, the firms aren’t hiring at all; the unemployment rate remains stubbornly high as corporate executives argue they’re not confident enough in the recovery to employ more workers or pay them higher wages.

Corporations have legions of lobbyists, lawyers, and accountants protecting them from paying a fairer share of taxes. They do everything they can to keep and hide their wealth in offshore accounts, embrace corporate welfare, and hire foreign workers who toil in dangerous sweatshop conditions.

When inflation and the cost of living are considered, a company paying $15 for flipping burgers is not unreasonable, considering how much money they give away in dividends. People who work deserve to earn a wage that can, in the very least, sustain them and feed their families.

Low-wage work is not inferior labor. In some cases, laborers’ hard work is far more challenging and difficult than sitting at a desk or shuffling papers. It’s grossly unfair for taxpayers to foot the bill for the enormous income gap simply because corporations refuse to pay a living wage.

Government programs such as Medicaid, Social Security, and living assistance are signature pieces of legislation from our government. We pride ourselves on being compassionate and charitable as individuals. Corporations add to the size of government when they refuse to play their monetary part in the American Dream.

When corporations pay their employees minimum wage, they add to the deficit and take money out of the hands of consumers, which weakens the economy. A person making $7.50 an hour—25 percent more than the federal minimum wage, or about $1,200 a month in pre-tax income—gets by only with help from family, friends, or some sort of publicly supported assistance.

Any person that makes that in an entire year relies on the government to eat, live, and survive. By one estimate, taxpayers subsidize a single Walmart in Wisconsin with $900,000 per year in government assistance for its underpaid workers.

Former Secretary of Labor Robert Reich draws in interesting comparison involving Walmart—the nation’s largest private employer, with more than 4,000 stores—to General Motors, which held that title in the 1950s. “General Motors in today’s dollars was then paying its workers about $50 to $60 an hour,” he observes. Today, Walmart’s median wage, including part-time workers, is $8.80 an hour.

How can Americans live with so many workers being forced into indentured servitude? While capitalism provides many in the country with abundant freedom and opportunity, the downside is that greedy executives deny many at the bottom to provide for the few at the top. Worse, they’re rarely accountable for their role in the immoral practices that produce a country bifurcated into stark rich or poor contrasts.

When will millions of voices collectively say enough is enough? When will the middle class collectively use their spending power to demand better for their less-affluent neighbors? Our shared future depends on it, and the clock is ticking.

Ianta Summers is the executive director of Insider Solutions, a Washington, D.C.-based government relations firm that specializes in coalition building, strategy, and political consulting.

Note: The author reached out to representatives of Foot Locker for comment on this article. She received no reply.

To speak with our experts on this topic, please contact:

Print: Katie Peters (economy, education, poverty, Half in Ten Education Fund)
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Print: Anne Shoup (foreign policy and national security, energy, LGBT issues, health care, gun-violence prevention)
202.481.7146 or ashoup@americanprogress.org

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Print: Madeline Meth (women's issues, Legal Progress, higher education)
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Spanish-language and ethnic media: Tanya Arditi
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TV: Lindsay Hamilton
202.483.2675 or lhamilton@americanprogress.org

Radio: Chelsea Kiene
202.478.5328 or ckiene@americanprogress.org

 

This is part of a regular column: Race and Beyond

For more from the same column, click here