Living wage job gap calls for charting new course for U.S. economy

In August, fast food workers walked off the job in 50 U.S. cities, demanding a raise to $15 an hour. The strikes touched off a national debate about raising wage floors.

But this debate has been missing some critical context: a data-driven analysis of what it actually takes to make ends meet in America today, and how the $15 threshold and other proposals stack up.

People who are working full-time should earn enough to be able to make ends meet. This is a basic American value.

But it turns out $15 an hour falls short—for most family structures, far short. Furthermore, our current economic path isn’t creating nearly enough jobs that pay above even this basic threshold.

These are some of the findings of a new economic study, released December 3 by the Alliance for a Just Society, providing the data-driven analysis needed to put the wage debate in context.

The study, ‘America’s Changing Economy: Searching for Work that Pays in the New Low-Wage Job Market—2013 Job Gap Study,’ calculates what it costs to make ends meet by analyzing state-level data on the components of a basic, no-frills household budget including food, housing, utilities, child care, health care, and transportation. The Job Gap Study uses these household budgets to calculate living wage levels in 10 states, including lower-cost states like Idaho and higher-cost states like Connecticut, and also New York City. It calculates living wages for five different household structures, from a single individual to two working parents with two kids.

So what is a living wage? The study finds the living wage for a single individual ranges from $13.92 an hour in Montana to $22.66 an hour in New York City. For two working parents with two kids, the living wage ranges from $17.69 per parent in Idaho to $24.52 per parent in New York City. For a single parent with one child, it ranges from $19.36 in Montana to $30.02 in New York City.

How many job openings will pay these living wage levels, under current economic trends? Not nearly enough. Even at the lowest living wage level, the number of job seekers for each projected job opening that pays a living wage ranges from five to one in Colorado to 25 to one in Connecticut. This is a serious ‘job gap.’

At the national level, the numbers are similarly troubling. With 20.8 million job seekers in 2012, there are seven job seekers for every projected job opening in occupations with median wages above $15 an hour.

Low-wage jobs are on the rise since the official end of the recession in 2009: jobs with median wages below $15 an hour grew from 36.6% of total employment in 2009 to 39.5% in 2012.

This isn’t just a ‘jobless recovery.’ It’s an economic course that has slashed four million better-paying jobs (above the $15 median wage threshold) and replaced them with 3.6 million lower-paying ones (below the $15 threshold).

The findings of the Job Gap Study cast the wage-raising proposals in a new light. Raising the federal minimum wage to $10.10 an hour, for example, still falls far short of any living wage level.

As for the fast food workers’ call for a $15 an hour wage, it only begins to get in the ballpark of the lowest living wage thresholds, which seems a modest target.

This debate about wages is important for our whole economy. Because when 50 million workers don’t make enough to cover the basics (as we have now) the whole economy stagnates.

If we don’t want the trend toward low-wage jobs, and anemic growth, to become America’s ‘new normal,’ we need to chart a new course with the rules we write for the economy.

One element of this course should be responsible wage floors, floors that uphold the principle that people working full-time should be able to make ends meet while re-orienting job growth to create more economy-boosting jobs.

(LeeAnn Hall is the executive director of the Alliance for a Just Society, a national research, policy and organizing network with affiliates in 10 states. The Alliance has produced the pioneering series of Job Gap Studies annually for 15 years. This article previously appeared in The Hill.)