Occupy Wall Street’s two-month anniversary along with the recent setbacks protesters are now experiencing in New York City, Oakland, and elsewhere suggest that now is a good time for reflection on how the movement reflects the plight of poor and low-income Americans and has the power to draw the bright light of the media on often neglected issues, among them the need to:
- Create “good” jobs
- Ensure more people have access to banking services
- Defeat negative perceptions about the tax contributions of low-income workers
- End homelessness
Let’s take a look at each of these important priorities.
We need “good” jobs
One significant “Occupy” theme has been the need for jobs, but for workers at the bottom of the economic ladder, there is a need for “good jobs.” With nearly 26 million Americans, or more than one out of every six people who are either unemployed or underemployed, we are facing a serious jobs deficit. A new report by Half in Ten, “Restoring Shared Prosperity: Strategies to Cut Poverty and Expand Economic Growth,” shows that those who were employed in 2006 were less likely to have a “good” job—one that pays family-sustaining wages and includes important health and retirement benefits—than they were in 1979. Over the past three decades, the share of middle-skill jobs declined while the share of low-skill and high-skill jobs increased. Moving more low-income families back into the middle class should be a priority. One of the fastest ways is to develop more good jobs for low- and middle-skilled workers.
Texas provides an example of what not to do in a job-creation strategy. More than 76,000 of the jobs added by the state in the last year paid at or below the minimum wage, solidifying the income inequality and poverty in the state. We need jobs that pay family-sustaining wages and jobs that provide important benefits such as paid sick leave and retirement benefits so that low-wage workers can safely care for sick children without fear of job loss and build a nest egg for the future.
Passing the American Jobs Act, increasing the minimum wage and indexing it to inflation, reforming our workforce development system, and providing support for paid sick leave would help us expand economic opportunities to all Americans.
We need more access to banking
With protesters focused on how banks treat customers, the spotlight should also be on poor and low-income people who don’t have access to basic banking services. Building assets, whether by helping a parent or child finance postsecondary education, buying a home, or saving for retirement, allows families to plan for and invest in the future. Without savings, unforeseen events such as a job loss, car repairs, or medical emergency can devastate a low-income family’s budget, threatening their economic security. Before the Great Recession of 2007–2009, 52 percent of families with children were considered asset poor, meaning they did not have enough money to meet their expenses for three months at the poverty level should their source of income be disrupted. In 2009 7.7 percent, or more than 9,000 households, were unbanked, meaning they did not have a checking or savings account. What’s more, another 21 million households were underbanked in 2009. We need to increase access to banking services as an important step toward building economic security for all.
We need to stop suggesting that low-income people don’t pay taxes
One disappointing element of our national conversation about the 1 percent has been the accusation that low-income people are not contributing their fair share because they are a part of the 46 percent of Americans who do not owe federal income tax. But of those who regularly do not pay federal income taxes, most are elderly (44 percent), with the second-largest group being poor people with children or elderly to take care of (30.4 percent).
What’s more, Americans who do not pay federal income tax still contribute revenue to the United States in other ways. The U.S. government collects taxes going into the funds for Social Security and Medicare as well as excise taxes that fall on many Americans who do not pay income taxes. Social Security and Medicare taxes, which accounted for about 34 percent of federal revenues in 2007, is made up of a 12.4 percent Social Security tax (6.2 percent on the employer side and 6.2 percent on the employee side) and a 2.9 percent Medicare tax on all wages. These taxes combined represent a 15.3 percent tax on earnings, which is paid by everyone who works regardless of their other federal income tax obligations.
Further, the Social Security tax is only paid on incomes up to a certain amount, which in 2011 ended at $106,800. Consequently, low-income workers have 100 percent of their income taxed while those making much more don’t have all their income taxed. This growing income inequality is preventing more people from joining the over-$106,800 club.
Finally, aside from income-based payroll taxes, the federal government also collects taxes on alcohol, tobacco, and other items regardless of the income level of the buyer of those goods. Oftentimes, state taxes then kick in on these same items as well as others that are regressive by definition because everyone pays the same regardless of income. While the sales tax appears to be fair on its face—a flat rate paid by all consumers—it’s not. High-income earners are able to avoid taxation by foregoing spending portions of their income because they have extra income they can save. Those living in or near poverty do not have this luxury because they have to spend whatever income they have in order to feed and clothe their families.
In some states, such as Alabama and Mississippi, the full sales tax is collected on groceries, which further exacerbates the problems faced by families in poverty. While it may be true that the poorest of Americans do not pay federal income taxes, it would be wrong to imply that means that they do not contribute their fair share.
We need to end homelessness
Occupy Wall Street’s method of protest led to a significant, if perhaps unintended, consequence—forcing participants to develop relationships with people experiencing homelessness. The opportunity, then, is clear—the protest movement shines media attention on the problem of homelessness and draws a new group of passionate activists to the cause.
There are reports that some encampments experienced tensions between the homeless and some activists, with some of the activists believing that homeless individuals were using their protests as vehicles to get clothing and food without contributing to the cause. Similarly, some homeless people felt their best places for sleeping and spending time were being invaded while expressing sentiments such as “when you’re gone we’ll still be here.” Sounds like a challenge—making sure that they’re not still there, often invisible to the public consciousness, and in need of the services that occupiers are providing.
Curing the problem of homelessness is no small order. In 2010 more than 1.59 million people, including single adults and families with children, spent at least one night in a homeless shelter or transitional housing program (moving people from homelessness to permanent housing). Significant percentages of sheltered people are physically or mentally disabled (37 percent), survivors of domestic violence (12 percent), and veterans (12 percent) of the adult population.
Solutions to these problems are more affordable housing, more and better employment opportunities, adequate mental health services, sufficient levels of Social Security disability payments, and expanded child welfare services for those who age out of foster care.
Importantly, there is a way forward. Through the American Recovery and Reinvestment Act of 2009, the Obama administration invested significant sums in services that prevented or ended homelessness for 1 million Americans—with these funds set to expire next year, there is a risk of turning back the clock on progress. The administration also developed a comprehensive plan to end homelessness but many plans are only as strong as the funds in place to implement them. With current concerns about federal deficit reduction dominating the time of the U.S. Congress, and with super committee efforts to reduce spending seemingly paramount, those funds are at risk unless Congress gets a clear message that public will is clearly behind ending homelessness.
We need to stay vigilant
There is no doubt that over the past few days the Occupy Wall Street protesters faced some setbacks, but they and others who support economic justice for 99 percent of us must remain focused on that end. This pursuit includes issues critical to poor and low-income Americans, including the creation of “good” jobs, ensuring more people have access to banking services, defeating negative perceptions about the tax contributions of low-income workers, and ending homelessness.
John Craig is an intern with the Economic Policy team at the Center for American Progress. Joy Moses is a Senior Policy Analyst with the Poverty and Prosperity program at the Center. Katie Wright is the Special Assistant to the Half in Ten campaign at the Center for American Progress Action Fund.
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Senior Policy Analyst