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Nickle & Dimed: Must there always be working poor?(33 posts)

Nickle & Dimed: Must there always be working poor?PdxMark
Nov 20, 2003 2:03 PM
Despite pretty solid liberal tendencies, I have a healthy free marketeer streak. I think it's good that companies fail, global trade happens, the WTO tries to enforce global trade, etc. But last night we saw a play adapted from the book "Nickle & Dimed."

This is the book in which the autheor documents her attempts to cover living expenses at several different low-paying jobs, like waitressing, healthcare aide, Walmart, etc. It highlighted the plight of many working poor - inability to cover minimum living expenses like housing & food.

My free marketeer side understands that the wages these folks are paid reflect market value and the relative bargaining positions of workers & employers. An across the board minimum wage of $10/hour would cost many jobs and render the US economy as a whole less competitive globally.

But my soft-hearted liberal side cringes at the notion that people can work a full-time week, or more, and not earn enough to cover the cost of housing & decent food. (Though I can accept that a certain number of these jobs will always be present.)

So a few questions...

Is it really so bad for the working poor in a historical context? Prior to the post-WW2 middle class boom, it seems that the working poor have usually had it pretty hard. Tenements, shacks, extended families living together. Is it worse now or does it just seem that way from the relative luxury of the modern American middle class?

Can a large economy like the US ever develop to the point that eliminates such institutional working poverty? It seems that some semi-socialist European (& Asian?) countries might have done so, but maybe it's there I'm ignorant of it. If institutional poverty has been eliminated in other countries, what price (if any) are they paying for their labor market inefficiencies?

Can a Walmart worker in UK or Germany live any better than a Walmart work in the US?
yesmohair_chair
Nov 20, 2003 2:33 PM
Like it or not, someone has to clean the toilets, and it's not likely to be anyone with an MBA. The working poor are those without "skills," and until they learn a marketable skill, there isn't much else for them to do. I'm not sure I want to pay a higher wage to the guy who cleans the toilets around here. I don't want to do it, but let's face it, it's a job anyone can do. The guy who plays piano down at Nordstrom's should make more money than the toilet cleaner.

I also wonder if there is really is a true class of working poor. In other words, how many of the "working poor" people stay at that level versus how many are just passing through. It's sort of like the unemployment rate, which is expected to be at a certain level. There are a lot of starving actors, lawyers, musicians, accountants, writers, engineers, etc. working low paying, unskilled jobs while they go to school or learn their trade. Most of these people aren't likely to stay at poverty level for very long.
Unemployment & persistencePdxMark
Nov 20, 2003 2:56 PM
Unemployment is a good example. It's necessary to the smooth, efficient functioning of an economy. Without the unemployed, it would be very difficult for businesses to grow & expand as they succeed.

As with unemployment, temporary poverty is pretty different from persistent or permanent poverty. Passing through on the way to a career or a "living wage" job is one thing. I certainly spent some time there. But it would be demoralizing to remain impoverished while working one's whole life. Is that very common? I don't know.
Couple things I don't get.czardonic
Nov 20, 2003 3:41 PM
  • True, anyone could clean toilets, but few are willing to.
  • Clean toilets are mandated by law in many cases, and certainly provide more value to Nordstom's customers than piano music. I suspect they would lose a lot more money if they fired the janitor than if they fired the pianist.

    So, why don't factors like these work in favor of the janitor, at least in relation to the pianist (actually, I suspect that the pianist has a night job cleaning toilets). More generally, why is it that jobs that are deemed "dirty" seem to be devalued, regardless of how essential they are to the economy. There are a lot of jobs that "anyone" could do, but it is only those that carry a certain irrational taint that we assume should be low paying.

    Things like this always leave me with a sinking suspicion that there is more at play in these issues than supply and demand.
  • The economics of janitorial life,TJeanloz
    Nov 20, 2003 4:20 PM
    We might presume that few people want to be janitors. Or specifically, toilet cleaners. But toilet cleaning as a full time job is not really an in-demand skill. Think of your office, or any retail store, or any public bathroom. How many people does it take to clean the bathroom vs. other employees? We have more investment bankers in my firm than we do janitors for the whole building. I think the demand just isn't there for those jobs. Judging from the number of ads left on my doorstep for home cleaning services, they don't seem to be fully employed either.

    Supply on the other hand, is huge. Virtually anybody can clean toilets. I avoid it whenever possible, but if I needed a job, it is one that I could do (and do pretty well, I think). So, for example, the immigrants who clean my offices toilets are relatively limited in their job prospects - they don't speak english, they don't really have a marketable education, but they can clean toilets. I think the supply/demand scenario is about right for the job. What janitors everywhere need is Kohler to come out with a fancy toilet that requires a Ph.D. to clean, and is federally mandated. But then, none of my current janitorial friends would be able to get that job either...
    Mostly convinced, but. . .czardonic
    Nov 20, 2003 4:53 PM
    . . .every year businesses lose substantial amounts of money to employee illness, much of it from communicable ailments that could be reduced if we took hygiene seriously. But we don't. It seems like it would be a textbook case for an ounce of prevention. The value of a clean toilet remains, in my opinion, artificially low due to the perceptions of ickyiness and status.

    Put another way, "anyone" can clean a toilet in the same way that "anyone" can manage your finances. For some reason, most people take their money more seriously than their health.

    But janitor is probably not a good example anyway, and your point about the Kohler Ph.D. is well taken.
    Mostly convinced, but. . .TJeanloz
    Nov 21, 2003 6:26 AM
    This reminds me of an experiment we did in 8th grade science. We were tasked with taking bacterial cultures from a number of locations around the school, putting them in petri dishes, and letting them grow for two weeks. Whoever had found the most bacterially infected place on campus won. This was an all-boys school, and there was one bathroom that was notoriously nasty. Just filthy, all the time, and the team that took their cultures from there were sure that they were a lock to win.

    The terrifying thing was that the bathroom turned out to be about the cleanest place tested - because, regardless of apparent filth, it was at least cleaned every day. My team won by testing the doorknob of the most-used door in school. It was really a fascinating commentary on perception and reality.

    That said, I'm a proponent of living with some degree of filth as a way to maintain your immune system. I think people who shelter themselves too much from germs end up hurting themselves in the long run, because they get the sniffles every time they go out in public. The polio epidemic of the early 1900s was a direct result of kids being kept "too clean" - and I'd like to avoid something like that...
    WHAT?!jose_Tex_mex
    Nov 21, 2003 7:52 PM
    The working poor are people without skills? Check out the local quickee mart and the unemployment line - there are PLENTY of Ivy league graduates with PHD's. If you think the hard workers of America are under-educated, lazy, or what not, you have absolutely no idea of what life is like in the real world.

    What do you do in life? Are you able to afford a home, a car, a family, and a decent standard of living? Or, are you basing the lifestyle your work provides on a leased car, your x-box and imported beer?

    Not that you will admit it, I bet you live at home with your mother and do not pay rent or make the bed.

    Most individuals in the country today do not make over 100,000 a year. However, for those families trying to afford a modest home, a modest car, and a modest lifestyle $100,000 pretty much ensures they are struggling.

    If you can scoff and turn your nose at those Americans who are working their asses off and still unable to make ends meet - congratulations - I hope it lasts.

    BTW - there's a lot of postings here from yourself during working hours. While you are wasting time at work cruising the net there are a lot of people working hard - are your internet skills what pay the bills?
    WHAT?! WHAT?!TJeanloz
    Nov 22, 2003 8:01 AM
    $100,000?

    That's way more than I spend in an average year. And I live in the best part of town, in a very nice building, drive a car that's anything but modest, and eat out every night.

    If $100,000 is a "struggling" budget for you, I think you have some pretty odd priorities. I would have to put in some effort to spend $100K.

    And furthermore, your insinuation that many of the unemployed are well educated misses the point of this thread - the discussion revolves around the "working poor" - those whose equilibrium place in the market is at a low wage, regardless of economic conditions.
    WHAT?! WHAT?!jose_Tex_mex
    Nov 22, 2003 6:47 PM
    Do you live in the USA? If not, there's a lot of things we pay for that take a bite out of our paychecks that Euro's overlook.

    I do not make 100,000 a year. However, if you care to do the analysis on a family of four or five in the US making 100,000 a year, they will not be in the lap of luxury.

    Rule out credit cards and the leased life Americans have accustomed themselves to.

    The average American works until July 11 to pay the bills of our government. Have a look at what someone in the 100,000 range has to pay in taxes at IRS.org.

    Factor out taxes and in the price of a mortgage, modest car, insurance, and shoes for Timmy and Jimmy. You will see that unless you want to be a servant to VISA/MASTERCARD, taking the family out once a week to a movie/dinner or to a ball game a few times over the summer will put you in to deficit spending.

    That's just not right.

    America used to be a place where hard work got you somewhere. Nowadays it feels as if they just work you hard to keep you where you are.

    When the Irish came to America on famine ships there were notes posted that basically read - If you cannot make it in America -It's your own fault, a character flaw.

    Those days are long behind us.

    Americans are becoming indentured servants. All we need to do is get rid of that pesky second amendment and we'll all be peasants.
    Is this a joke?TJeanloz
    Nov 24, 2003 6:09 AM
    I live in Boston - widely recognized as one of the most expensive metropolitan areas to live in. I think your idea of "modest" and mine probably diverge pretty significantly.
    Is this a joke?jose_Tex_mex
    Nov 24, 2003 2:01 PM
    I tell you what, give me a few days, I will do the math.
    We can do the math together...TJeanloz
    Nov 24, 2003 2:58 PM
    $100,000. We'll just round and say that's $70,000 after income taxes (depends on your state). Seem fair?

    And we'll say that you, unlike most Americans, are diligent in saving for your retirement, so you take 20% of your pay and put it away (I suppose this should be pre-tax, but let's not complicate things). $56,000

    Housing. The census reports that the median apartment costs $653/month; the median owned dwelling costs $724 (includes mortgage, maintenance, utilities). $47,312, assuming we own our home.

    Food. In 1997, the average US family of four spent $6,463 on food (US census abstract). $40,849

    Average expenditure on things for children (health insurance, transportation, education, clothing, and misc.), excluding food and housing (we already have those): $13,860, for families with income >61,000. Down to $26,989.

    The cost of owning and operating an automobile is $5,308 (census abstract). We'll say you have two cars. $16,989.

    So you have ~$17,000; or ~$325 a week of discretionary income. Spend that on clothing for yourself or your wife. Bike parts for yourself, bike parts for your wife. Whatever.

    You're going to tell me that all of the costs I gave were lowballs. My response is that these costs are the statistical averages for the appropriate sample from the census. This is an "average" lifestyle. Except that we also put away 20% for retirement, which is significantly above average.
    fair enough...jose_Tex_mex
    Nov 24, 2003 4:16 PM
    TJeanloz,
    You sound like a fair enough person - I don't want to play math games nor will I say your estimates were low balls. In fact I will use some of them without question.

    I reread the original post and perhaps, should clarify. 100K might seem like a lot in the Dakotas but in the North East I will make the argument that a "family" making 100K is NOT going to live in the lap of luxury. If they want to live the "American Dream" we were sold in school they will have to struggle.

    Again, I am in the NE. So my analysis is targeted for say VA, MD, NY, NJ, and your state.

    Critical point 1 is taxes, we need to agree here as the math will be skewed if we do not. It is my honest, humble belief, that Americans work until July 11 to pay ALL taxes, you only mentioned income (which was not for 100K). What about all of the other taxes you pay? What about the power bar you bought? The gas in your car. The property tax? Do you have car tax? What about paying tax on the used car you bought.

    So I will continue with 7/11 as the day you work to pay your taxes that's 192 out of 365 - 52%, so you take home 48K.

    In the NE I factored in $1500 for mortgage + repairs, and $500 for one auto, insurance, gas, tolls, repairs and all. Is that fair?

    If not, you would be scared to move to my area, which is working/struggling middle class. Around here, 300K buys you a shell on which property taxes are nearly 6K, no exageration.

    So, take off another 24K and we are down to 24K. Let's use your food cost of $6463, child cost of $13860 and we are down to $3677 - $70.71 a week to spend. What about phone, internet, utilities (which CANNOT be included in the $1500 in the NE), maybe cable.

    What about a family vacation? How about the endless amount of stuff kids need and want. There's no way this family can go to the ball game regularly. You have to know that there's more unexpected bills than expected.

    We pay much, much, more than anyone realizes in taxes. Everyone should do the math for themselves.

    If need be, I can come up with real life figures showing much the same - that will take a while. Let me know if there's any glaring problems with my analysis.
    It's a hugely complicated issue,TJeanloz
    Nov 20, 2003 2:51 PM
    This is a topic that almost everybody who studies labor economics grapples with at some time or another. Will there always be people living in poverty? The answer really depends on the definintion. There will always be people making less than the Federally annointed "poverty line" - but poverty is really a state of life more than it is a state of income.

    When you look at it from a historical perspective, the "working poor" in 21st Century America have it pretty good. Things that would have been inconceivable luxuries 100 years ago are now indispensable - telephone, refrigerators, automobiles, etc. Another real issue is the breakup of the family - and I'm not going to go all right wing Christian conservative on you, but let's face it, when you can amortize the same living costs (rent for example) over more earners, there is more money left at the end of the day for variable costs. What we have is people in the working poor spending beyond their means (often on credit) to pretend that they are a part of a vast middle class. The problem with that is that there is a nasty cycle that keeps people poor, but under the former system, people were given a much greater chance to break out of it.

    There's way more to say here, but I have actual work to do.
    Family issues are a major factorPdxMark
    Nov 20, 2003 3:08 PM
    Single parenthood (either through divorce or out-of-wedlock children) does seem to be a major factor. Hence the large numbers of children in poverty. In addition to the costs of feeding, clothing & housing them, children limit work options that parents might otherwise have. I still cringe though whenever a poor single mom is charged with child neglect if something happens to her kids while she's away at work.

    This is a case where numbers could help explain things a bit. It would be interesting to know what percentage of the "poor" include children in their households. Not that child-rearing should be reserved to the middle & upper class, but it would be enlightening to see if single parenthood is a contributing factor to poverty. I might have to search the census website when I get more time to fool around... (Of course, such raw numbers wouldn't establish that children cause poverty, but it would be a start to understanding the issues.)
    AndTJeanloz
    Nov 20, 2003 3:17 PM
    Note that if you have an extended family living arrangement, with, say three generations living together (as was quite common), you almost always have an adult at home to look after the kid(s).

    The child neglect for leaving kids alone hits pretty close to home for me - I had the privilege of visits from the DSS when I was a little kid because my parents left my sister and I home alone as a matter of routine. It continues to amaze me how freaked out people get by children left alone. I can see not leaving an infant alone, but by the time I was 6 or 7, I had things pretty well under control.
    whoah...I can't imagine leaving my 8 year old home alone! (nm)ColnagoFE
    Nov 20, 2003 3:54 PM
    But if you make $6 an hour, how do you give a sitter $3.50?Cory
    Nov 20, 2003 4:11 PM
    That's an easy thing to say, but if you're serving fries or making beds in a Motel 6 for minimum wage, how do you afford a sitter? Here in Reno, there's a huge underclass of people doing service jobs for zip wages. It's fine to say they should go to school, improve themselves, get better jobs and not have kids until they can afford them, and I agree with all that. But not everybody is as smart and far-sighted as you and I are, and we have to deal with the world as it IS, not as we think it should be.
    you only pay your sitter $3.50/hr?ColnagoFE
    Nov 21, 2003 8:32 AM
    Man that's a deal. Around here it's more like $10/hr. I have no living relatives in the area so babysitting is a huge expense for us. People with relatives willing to take the kids for a while should count their blessings. I don't propose to have the answers and it's unfortunate that kids get caught in this mess.
    people make bad decisions that affect the rest of their livesDougSloan
    Nov 21, 2003 9:43 AM
    What social/political philosophy should we have concerning helping people who have made bad decisions that negatively affect the rest of their lives? If people drop out of high school, burn out because of marijuana (or whatever), have sex at age 15 and 3 kids by age 22 -- unwed, move out from their family's house to go it alone, etc., all situations that are largely voluntary and avoidable, and which make it difficult to support themselves, much less children, and then never better themselves? [man, that was a long sentence] Why it may be common for people to have kids unwed, at an early age, to forego schooling or job training, does that make it right? As an employer or tax payer, why should I be required to make up the slack because of other's bad choices? Just because an unwed mother needs $12 an hour to pay her bills, that does not mean she's worth it to my business. That just plain sucks.

    I'm not talking about avoidable consequences like your company shutting down, injury or illness, etc. But, think we have gone too far down the road of people simply expecting that someone will bail them out no matter how bad their choices are. It's gotten so bad that it's almost impossible to even discuss the bad choices. "Damn, you must be an uncaring misogynist to even suggest that a 22 year old unwed mother of 3 not be paid $30k a year by the goverment in various programs to stay at home and raise her kids," right? Isn't that generally how it goes now? You can't even bring up the fact that without people dropping out of school, having babies until they can care for them, or even bothering to get married, the problems will be largely reduced. Yes, that is the world as it is, but that does not mean we should encourage it or not try to change it.

    Doug
    But what about the children!!!!dr hoo
    Nov 21, 2003 10:04 AM
    Sorry, couldn't resist.

    The kids are the big problem. We can ask about the deservingness of the parents all we want, but if we do nothing those kids are very likely going to be doomed to a life of poverty. Perhaps crime. And that costs us a LOT more money in the long run. What is prison cost, 20-30k a year?

    I am not a big fan of welfare, but I do think programs should be evaluated in terms of how well they do in raising the CHILDREN out of poverty and off welfare as adults, and turning them into contributing members of society.

    As far as non-disabled adults, I say let them work or starve. But being the good, classical liberal that I am, I am all for eliminating the constraining effects of poverty on children's life chances, if we can. Kids should be free to develop to the best of their abilities, and if they are not eating well, their brains will not develop. More examples are easy to give, but that is a pretty big one.

    Or we can use Nixon's reasoning: giving the poor a bit of money will stop them from taking to the streets. It's a relatively cheap form of social control.
    I know; that's what's toughDougSloan
    Nov 21, 2003 10:16 AM
    I guess we need to figure out solutions that help the children, but don't encourage the situation. Give them food at school, etc., but nothing the parent can use or abuse. If you don't do enough to discourage it, we'll be needing to help more and more children. Don't have the answer.

    Doug
    Define "aviodable".czardonic
    Nov 21, 2003 10:12 AM
    Not every kid who screws up his or her life does so because they expect the Government to bail them out.

    I don't know about mysogynist, but it is certainly uncaring to punish a woman's three children for her mistakes. Off the top of my head, I can't think of any instance where vindictiveness is constructive. Perhaps there some, but I doubt that public policy is one of them.
    Why?TJeanloz
    Nov 20, 2003 4:13 PM
    It freaks a lot of people out, but my family's mantra has always been: what's the worst that could happen?

    I suppose there are some pretty bad things that could happen, and some kids were in no condition to stay home alone. But for us, it was completely normal. Of course, we lived in a rural community, and our parents office was a little more than a mile away - easily within walking distance, and a quick phone call away if there was a problem.
    I think it is illegal, probably for a good reason.czardonic
    Nov 20, 2003 4:34 PM
    Or at least as good a reason as any number of other laws on the books.
    I suppose it depends on the kidColnagoFE
    Nov 21, 2003 8:47 AM
    Though the reasoning that just because it worked for you doesn't neccesarily mean it's a good idea. I grew up in a rural area and I think a lot of those kids grow up faster out of nessecity. Lots of them are working on a family farm or the like at a very young age and that seems to make them more self-sufficient than other kids that aren't in that environment.
    historical context? Like, how long?dr hoo
    Nov 20, 2003 3:30 PM
    If you talk 100 years, then things are pretty good right now. But if you look at the last 25 years or so, things have gotten worse for the working poor. I have some good information at my office, depending on the level of detail you want. But this good, hardworking socialist government representative has some data that shows the trends:

    http://bernie.house.gov/economy/today.asp

    Charts and stats use inflation adjusted dollars. And no, I don't have his page bookmarked! Its just that trying to find an article that I have in my office on google, bernie's page kicked up near the top of the list. The numbers match what I remember from the article I was looking for.

    The numbers are actually a bit worse than this shows in terms of impact on life, as the costs for health care, housing, education, and transportation have gone up faster than inflation since 1973.

    Unlike TJ, I don't have work to do right now. But I have worked all day, including getting the gardens mulched before the snow flys, so....
    Interesting Cosco article a while backColnagoFE
    Nov 20, 2003 3:52 PM
    Talked about how starting wage there was $10/hr and after a year they were eligible for promotion to something like $44k/yr. CEO says his strategy is give customers a good deal and treat employees right and they will both stick around. Seems to be working for them though I imagine most places like this don't pay very well at all.
    Would be interesting & very cool, if it's truePdxMark
    Nov 20, 2003 4:17 PM
    Especially if coupled with arecent article discussing how Costco is (by some arbitrary standard) beating up on Walmart on per store sales numbers
    that was the same article that mentioned the pay scale (nm)ColnagoFE
    Nov 21, 2003 8:49 AM
    Huh?Spoke Wrench
    Nov 21, 2003 9:53 AM
    $10.00 per hour equates to $20,000 per year. Promotion from that after a year to $44,000? I don't think so.
    sorry that was over 4 years and $40k--still not badColnagoFE
    Nov 21, 2003 1:55 PM
    http://www.fortune.com/fortune/investing/articles/0,15114,538834,00.html

    "He offers the best wages and benefits in retail (full-time hourly workers make $40,000 after four years)."