There’s No Money In Working Anymore

Photo: Andrey Rudakov/Bloomberg/Getty Images.
When’s the last time you got a raise, and how much was it? For so many Americans, the answer is too long ago and not enough. Last year, the Brookings Institution took a deep look at pay across the U.S., and found that almost half of workers — 44% — earn low wages. Almost a third of low-wage workers were below 150% of the federal poverty level. The median pay among low-wage workers was around $10.22/hr. And when wages stay the same, they’re not really staying the same. Factoring in inflation, workers are getting paid less and less every year. It’s not enough to live on.
Tiffany Lowe has been working in fast food restaurants for the past 19 years. At her first job, she made $6.50 an hour. Today she’s a KFC cashier in Memphis, Tennessee, and makes $7.85 an hour — an increase of less than $2 in almost two decades. She used to make $7.65, but got a $0.20 raise last December. “It's very hard to survive,” she says. “I stay with my mom now. I have to worry about food. I can’t move and get an apartment, because for a decent apartment it’s at least $550.”
The median rent in Memphis is $884. The National Low Income Housing Coalition released a report last week showing that there isn’t a single county in the U.S. where a full-time worker making minimum wage can afford a two-bedroom apartment. Lowe has four children; her oldest daughter is 19 and works at KFC with her while she also attends college. Her other children are 11, 7, and 6. According to the MIT Living Wage Calculator, in Shelby County, where Memphis is, a living wage for an adult supporting three children would be $32.68/hr.
And Lowe is far from alone. Even Martha Ross, a senior fellow at Brookings and one of the authors of the report on low-wage workers, was taken aback by the extent of the problem. “You know, I was surprised that it was at 44%,” she says. “To me, that made it clear that this is not only about workers and their ability or desire to get ahead — but about the need to build a labor market that offers chances to do that.”
Ross says there are two common misconceptions about low-wage work. “One is that they’re mostly young people who are going to, as they get more experience or graduate from college or high school, move on as a matter of course,” she says. “Most low-wage workers are not young.”
“Another misconception is that it’s temporary — that you can easily move up. And that is not borne out by the data,” she says. This is particularly true if you don’t have a college degree. “If you’re a person with relatively low levels of education, your chances of upward mobility are really, really limited.” Among low-wage workers, the share of people between the ages of 18 to 24 and currently in college is just 7%.
Various studies have shown that while the U.S. wants to think of itself as a land of opportunity, economic mobility is tough. In a comparison of income inequality among 35 countries in the OECD, the U.S. ranks 32nd. One study found that while Americans whose parents’ income was in the bottom fifth managed to rise to the top fifth income bracket about 8% of the time, we optimistically believe there’s a 12% chance. In Canada, the actual chance of rising from the very bottom to the very top is about 13.5%.
Low-wage work is, of course, not just a general problem facing Americans. It’s more specifically a gender and race problem. The Brookings report found that “women, people of color, and those with low levels of education are the most likely to stay in low-wage jobs.” According to the National Women’s Law Center, women make up almost two-thirds of minimum wage workers. And while both men and women do low-wage work, the gender makeup varies a lot depending on age group and education level. Of low-wage workers ages 18-24 who have no college degree and aren’t currently in school, 57% are men. But among low-wage workers ages 25-50 who have at least an associate’s degree, 62% are women. This indicates that women are more likely to be employed in a low-wage job even with a college degree.
Women, and especially women of color, also dominate in some of the lowest-paying industries. “Black and Latinx women specifically make up between 26% to 28% of those working in the service sector,” says Dr. C. Nicole Mason, president and CEO of the Institute for Women’s Policy Research. “These are jobs that are lower paying, have fewer benefits, less job security, the first to go when there's an economic downturn.”
Among all Latinx workers in the U.S., 63% make low wages. Among Black workers, 54% do. Yet despite these facts, racial wealth inequality doesn’t seem to have really sunk in for the country overall. While Americans overestimate how easy it is to pull yourself up by your bootstraps, we severely underestimate the wealth gap between white and Black people  — according to a study by Yale researchers, we think it’s about 80% smaller than it really is. Mason sets the record straight. “The median wealth for Black families is $17,000,” she says. “For white families, it’s $171,000. It’s criminal.”
These factors should throw into question how we measure the health of the economy and job market overall. At the end of last year, before anyone had heard of COVID-19, we were celebrating unemployment levels at a 50-year low. By that measure, finding a good job should have been easy. And yet in reality, more and more people were throwing themselves headfirst into the gig economy and side hustling themselves to exhaustion. The unemployment rate only shows that people who are looking for a job have found one; it doesn’t show that they’ve found good jobs. In fact, a growing number of workers are what’s called involuntary part-time workers — people who work part-time because they can’t find a full-time job.
“[The unemployment rate] is important, and we shouldn't lose it,“ says Ross. “[But] if wages aren't enough to support yourself, then the low unemployment rate doesn't mean that people are doing well.” According to the Bureau of Labor Statistics, between 2016 and 2026, the jobs experiencing the greatest growth will be personal care aides, food preparation and serving workers, home health aides, registered nurses, and software app devs. Except for the last, all of these jobs are mostly held by women, and the first three pay low wages. It means the problem of low-wage work is just going to get worse — unless something is done about it.

That so many people aren’t making a living wage isn’t some new reality of the coronavirus. It reached this point over several decades, as wages failed to rise. One easy way to see this is the productivity-pay ratio. In theory, when the productivity of workers goes up — as in, they produce more per hour — their pay should go up too. Between 1979 and 2018, the productivity of U.S. workers went up by almost 70%. Wages, though? Just 11.6%. And it’s not a mystery why the math has shifted. In 1965, CEOs of publicly traded companies made about 20 times more than a typical full-time worker did. In 2014, they made about 304 times what a typical worker did. The highest 1% of wages ballooned by 138% between 1973 and 2013. For the bottom 90% of wages, there was just 15% growth during that time period.
There are other contributing factors, including declines in unions and increases in automation. Globalization has also allowed U.S. companies to employ cheap labor in other countries. But ultimately, a living wage is not like the weather — something you observe and predict but can’t control. If the bottom line was that, as a country, we believe everyone deserves a living wage, the economy could be structured around that immutable fact. Ross says it’s policy and political choices, not "impersonal economic forces," that have allowed poverty wages to proliferate.
“We need to lead with our values,” Mason agrees. “As opposed to, ‘Oh, maybe you just need to do some reskilling or work a little bit harder’ — no, that's not it. Start from a place where you lead with, ‘These basic things should be guaranteed to all Americans.’” 
If minimum wage had risen proportionate to productivity, it would have been $19.33 in 2017. The federal minimum wage was set to $7.25 in 2009 and has remained stubbornly rooted there, despite repeated calls for an increase to $15. Though many states have set their own minimum wage, there’s not a single statewide minimum wage of $15 yet.
Where Lowe lives, employers aren’t required to pay a cent over $7.25. Tennessee is one of five states that doesn’t have its own minimum wage. It’s why, around two years ago, she got involved with Fight For $15 — a nationwide movement of workers who have been fighting for a federal minimum wage of $15, as well as health care, child care, and unions since 2012. When Lowe was first approached by Fight For $15 representatives, she wasn’t sure if she’d want to get involved. “But as time went on, I just got fed up,” she says. “We’re not being paid enough. They don’t care about us. Just all-around slave wages — I had to stand up and say enough is enough.”
Last year, Lowe gave a speech on Capitol Hill the day the House introduced the Raise the Wage Act, a proposal to hike the federal minimum wage to $15 by 2025. Nancy Pelosi, Bernie Sanders, and Chuck Schumer, among other politicians, surrounded Lowe. “I feel like [the lawmakers] were with us, the energy that I got was that they were on our side,” she says. “But it has to go through the Senate. That’s the problem.” In July 2019, it did pass the House. The Senate didn’t even vote on it.
Now it’s July 2020, and coronavirus cases are continuing to climb at a terrifying rate. “I've been having anxiety attacks,” says Lowe. “My son has a weak immune system, and I’m afraid that I’m going to come home and bring him the virus.” Her immunocompromised son is 7 years old.
For Lowe, the virus is not the beginning of hardship. It’s her breaking point. “It’s not possible to stand six feet apart in the restaurant industry,” she says. “So basically, you’re just taking a chance on your life for a couple of dollars. I mean, it’s devastating.” She says that being called an essential worker is “a slap in the face.”
Jamila Allen feels similarly. She’s 24 and a supervisor at restaurant chain Freddy’s in Durham, North Carolina, and also a member of Fight For $15. She thinks she was promoted to supervisor because her coworkers relied on her already and came to her when they had questions. “I think I could say I’m keeping the store running,” she says. She makes $11/hr for that responsibility. “I need to get paid more for dealing with difficult customers. I need to get paid more for cleaning up after everybody. I need to get paid more for risking my life coming to work every day, because we’re still in a pandemic.”
And in the midst of a pandemic, Allen rides the bus to work. “I hate it, but I have no choice,” she says. It’s either the bus or paying for a rideshare every day. “That’s like $13 a day. I can’t afford that.”
Asked whether she’s ever seriously considered quitting — deciding that the danger isn’t worth it — Allen admits that she has. “I really did. When [the pandemic] first started, I had a lot of questions,” she says. “I was asking, ‘How are we doing this? What is happening?’” She pauses. “But yeah. I guess more or less, I need the money. I have to work.” 
Since the virus hit, she’s been involved in several strikes for hazard pay, paid sick leave, and other protections. “I think we’ve done at least two virtual strikes.” A virtual strike, she explains, is “a lot of Zoom calls.” During one, they were on a call with senators who listened as they stated their demands. “And we’re planning a strike for July 20th. That’s for Black lives,” she says.
The Strike for Black Lives is a major event — tens of thousands of workers are joining together in nationwide strikes demanding a better social and economic reality for Black Americans. Participants include members of Fight for $15, Service Employees International Union, American Federation of Teachers, National Domestic Workers Alliance, Movement for Black Lives, Poor People’s Campaign, Working Families Party, and many more. Among the strike’s stated demands is that “corporations take immediate action to dismantle racism, white supremacy, and economic exploitation wherever it exists, including in our workplaces.”
This is how Allen explains the status of the low-wage worker in America: “We are essential, but we’re not essential at the same time. Because they need us to work, but they could easily fire us at the same time. We’re valuable, but we’re also expendable.” It almost sounds like some clever riddle you have to puzzle out. But it’s not; it’s just hypocrisy. “That’s why we need to organize,” she says.
If Allen were making $15/hr starting tomorrow, she says she would probably get her own place first. “I could afford a car,” she muses. “I could have enough money for the payments every month. I could easily save more money, and save it quicker. I could go back to school.” She says she’d maybe study to become a veterinarian.
And what would Lowe be able to afford with $15? “A house,” she says immediately. “Extra-curricular activities [for my kids]. It’s not much, but it’s a start.”
Allen agrees that it’s just a start. “Eventually we’re going to need more,” she says. Political movement on the minimum wage is taking so long that by that time a new law passes, and the new threshold is actually instituted, the new minimum may be sorely inadequate. After all, Fight For $15 began in 2012. Rep. Rashida Tlaib (D-MI) has suggested that a federal minimum wage of $20 is more appropriate.
One thing is clear. Life has been difficult for far too many people long before the pandemic. There’s no nostalgia for the past; this year, across the country, there’s been an explosion of strikes and protests that are determined to forge a different reality. There’s no going back. “Everything is on the table,” says Lowe. “Everyone knows what’s going on, because we scream this all the time. Give us what we need.”

More from Work & Money

R29 Original Series