Reforming the reform

(from Shipler’s chapter ‘Skill and Will’)

Shipler basically says that it will take will to make real changes in our country’s priorities to address the problems that face the poor and those trapped in low-wage employment. He also says that without great skill, on the part of individuals (read human capital) and those in the business of helping them increase it, it won’t happen. Here are some specific suggestions:

  • Any reform must be holistic and comprehensive. For instance, getting a household a break on their housing costs may not help much independent of a need for health insurance, counseling/therapy for drug/alcohol addiction, dealing with domestic violence, etc.
  • Change from the ballot box (political change). Ah, the paradox of power: there are roughly 40 million that ‘qualify’ as poor–nearly 1 in 7 Americans–and that is with a definition of poverty that scholars consider woefully inadequate and outdated. Shipler makes a pretty compelling argument that the potential for the poor to benefit from public services is greatest. Ironically, though, attitudes about government don’t reflect this (and there is as we’ve discussed a lot of corporate welfare going around). However, since most people can’t afford lobbyists to influence Congress, voting is one of those tools of accountability upon which democracies depend. Yet as income decreases, so does the likelihood of voting, as the following table shows pretty clearly:

(Go to) Reported voting and registration of family members by family income

Now the 2020 election showed that voters can make a difference. It was a very high turnout, even Trump in defeat received more votes than any other candidate. Of course there are more Americans in 2020 than ever before, and at the same time, here it is December and the election’s loser is still claiming fraud and a stolen election and trying to get the courts to overrule a 6-million vote margin.

Go figure . . . those countries whose governments took a turn to the left, such as Venezuela under Hugo Chavez, Bolivia under Evo Morales, Chile under Michelle Bachelet, etc., were often portrayed in commercial US news media as radical. In some cases they have turned corrupt–and the corruption tied to their left-leaning policies (rather than the leaders promoting them). The NY Times regularly condemned Chavez on its editorial page. And as leaders can be prone to do, some of the movements that started out as populist took a turn towards authoritarian.

As for Americans and their dreams, Shipler points out that Americans who do bother to vote don’t really seem to represent the interests of their economic class. A Time magazine survey found that 19% of Americans think they might be in the top 1% of income earners. Another 20% think they’ll eventually get there. That’s 39% that will likely be critical of, for instance, more progressive income tax reform.

  • Reforming the wage structure. As Shipler (p. 290) puts it, ‘Business executives have the skill but certainly not the will to compress salary differentials by raising the bottom and making sacrifices at the top . . . Government has the skill to legislate a big boost in the minimum wage, but it lacks the political will, largely because most low-income Americans don’t vote their interests or don’t vote at all, and can’t compete with private industry’s sophisticated lobbying and campaign contributions’ (what argument would you use to kill an increase in the minimum wage?). Some states have reformed the wage structure. Here’s a look at what states have done. Oregon’s is $10.75 (in 2018, $11.25 in July 2019, compared with $7.25 for the federal level), but will increase steadily over the next few years to $15 in urban areas, $13.50 in rural areas. Several states have also passed progressive laws:
  • District of Columbia ($14 in July 2019)
  • Washington ($12.00 in 2019)
  • California ($12 in 2019)
  • Massachusetts ($12 in 2019)
  • Colorado ($11.10 in 2019)
  • New York ($11.10 in 2019)

Wyoming, Georgia, Louisiana, Tennessee, Alabama and South Carolina have either no minimum wage laws at the state level, or are below the federal level ($5.15). Arkansas and Minnesota have found some loopholes.

Meanwhile . . . . Banking giant AIG used federal bailout money to pay out $165 million in executive bonuses, after which Congress legislated a 90% tax on those bonuses. Goldman Sachs paid out $23 billion in executive bonuses in 2009. Yes, $23 billion. Presumably to keep those high quality executives who helped steer our economic ship into the troubled waters of the worst economic downturn since the Great Depression. Shipley also says that living wage laws–and there are living wage laws in several large US cities–don’t target the people with the fewest skills trying to get a leg up in the job market. In other words, wage reform is a blunt tool for the job. Maybe necessary, but insufficient. And here’s an interesting quote (p. 292, back to Gans, one supposes):

The country’s prosperity relies on badly paid workers–that’s a fact that is not going to disappear. So the best way to improve a worker’s wage is through promotion and upward mobility; new laborers will flow in beneath to take the low-wage positions, and ideally (emphasis added) , most of them will eventually climb into decent pay scales.
  • Job training. Not just any job training, but the kind he describes in his book. It’s sophisticated, takes skill to pull off, takes a holistic approach that requires more than just placing people into entry-level positions (in other words, considers some of the other factors that may be increasing people’s struggles: addiction, parenting issues, lack of self-confidence, and as he says ‘the ravages of low skills’). This kind of job training does not come cheap–it would be part of a transformation of the welfare system, in fact. You might even call it welfare reform. But not reform that assumes that people lack a work ethic or personal responsibility. It recognizes structural inequalities that lead to inequality of opportunity, while recognizing that individuals also have the most roles to play in acquiring their human capital.
  • Education. The K-12 system is funded in arcane ways that tend to disadvantage those living in poor neighborhoods and communities. The US public education system is becoming more and more racially segregated–one-sixth of the country’s black students attend non-white schools, while one in seven white students attend multiracial schools (p. 294). When school funding is based on property tax revenues, wealthy areas do well, poor areas not so. Oregon uses revenue from income taxes and ‘vice taxes,’ meaning that school revenue can be unstable as incomes rise and fall with the economy, and that poor people are likely disproportionately funding these public services as they are disproportionately likely to smoke or play the lottery. And those can be correlated with educational attainment. Again, go figure.
  • Funding successful programs. Head Start is one. It has never been fully-funded, even though this pre-school program has been successful at helping those children in lower income classes to not fall behind before they start kindergarten. Shipler also mentions successful treatment programs for alcohol and drug addiction, depression and mental illness. Adequate housing for the income-challenged has been a serious problem since the 1980s, and many families and individuals live in a state of crisis. It is estimated that in Los Angeles alone, 90,000 people live on the streets. Hard to count, but nationwide estimates range for 600,000 to 2.5 million. And that doesn’t include those on the verge of losing housing, the housing insecure, so to speak. State health insurance programs (here’s Oregon’s) have filled important gaps where people do not qualify for Medicaid, or where Medicaid funding is lacking.
  • We know that just funding outreach workers increases use of the welfare system for those who qualify for assistance. In Oregon, a food stamp outreach program was very successful in increasing use of the program and decreasing food insecurity. Alas, there is always bureaucratic pressure to control costs, putting state agencies in a squeeze between doing outreach and staying within budget.
  • Health insurance. Shipler’s discussion is somewhat dated–he labored under the delusion of a possible single payer plan for the uninsured. What the US has ended up with is a hybrid, run through private insurers  (that falls well short 20-30 million) of universal coverage, and that the post-Obama era will likely see repealed or severely scaled back. The US is the only industrialized country that does not provide some basic health insurance for all its citizens, and in 2018 it backslid considerably, as Pres. Trump promised during his campaign (but Congress did not vote to repeal it).

If this doesn’t seem much like the welfare reform that Sharon Hays examined, the ‘personal responsibility and work opportunity’ act, well, you’re right. Shipler’s suggests take into account the relationship between the welfare system and the low-wage work world. Welfare reform treats the low-wage work world as the escape hatch for the poor and those on welfare. Shipler’s more clear-eyed analysis, along with Ehrenreich’s, and our discussion of the trend towards McDonaldization, suggest that low-wage employment, a growing sector of the economy, may be as much the problem as it is the solution. But, there will likely always be a segment of the workforce engaged in ‘dirty work,’ and there will (hopefully) always be small businesses that an across-the-board minimum wage law might disadvantage, given the uneven playing field in the business world, and the ability of large corporations to externalize many of their costs and send labor overseas. In any case, to perceive the low-wage work sector as a wellspring of opportunity and the salvation of the poor is, as Shipler and Ehrenreich convincingly convey, beyond delusional.