The Incredibly Shrinking Middle Class
Unemployment Is Low, But So Are Wages
Reports of Colorado’s low unemployment rate has been heralded over the past month. But the economy still doesn’t work for working families, says the head of the state AFL-CIO.
Recent economic status reports and personal observation lead Sam Gilchrist to conclude that many Coloradans are still struggling and suffering.
One report, by the Colorado Center on Law and Policy, points out the unemployment rate of 4.3 percent masks chronic under-employment and income inequality. Another report, from the Pew Research Center, finds the nation’s middle class is no longer a majority of the population.
At the same time, a national organization representing both consumer and business interests blames international trade agreements for stifling economic growth.
“When we look at the employment rate, we have to ask what the jobs are that people are doing, and if those jobs are really paying a living wage,” says Gilchrist, in exclusive comments for Greater Park Hill News.
“Anyone who has been unemployed is rightfully happy to be back at work,” says Gilchrist. “But jobs may pay less than people need to earn, people may struggle with the complications of a low-wage job, lack of consistent scheduling, and certainly a lack of decent benefits.
“So-called job growth is fragile, if the jobs don’t pay decent wages,” he continues. “The state minimum wage of $8.23 an hour is unsustainable, and, by keeping the minimum low, the state is essentially subsidizing large employers who pay lower wages.”
Inequality greater than ever
The Center on Law and Policy Report validates the difficulty, pointing out that much of the economic growth is in lower-paying and less-than-full-time work. The report also confirms that wages for working women are still about 80 percent of what men earn in comparable positions.
“We have working families in Colorado who are working in low-paying jobs who are in poverty or just above poverty level, and that’s a real problem,” says Gilchrist. “We need a higher minimum wage, better pay, and better employment practices. For example, if someone is juggling two or three part-time jobs, that person needs consistent scheduling.”
The federal poverty level for a family of four is about $32,000 per year. A study several months ago showed that a homebuyer in Denver needs to earn $70,000 to afford a house.
Government officials are quick to tout new businesses bringing new jobs. But very little, if anything, is said when businesses cut hundreds of jobs. Even small business job losses can be meaningful. For example, three well-known Denver restaurants − Tom’s, Fuel, and Buenos Aires Pizzeria − recently closed, leaving workers to seek new jobs.
“For the first time in three generations, the middle class is smaller than ever,” says Gilchrist. “Income inequality is greater than ever and growing. Colorado’s economic future is in grave danger unless we begin to think about the type of jobs being created. If we don’t have better legislation allowing workers to bargain for better jobs, new growth is unsustainable.”
Already, only the construction and high tech industries show signs of vitality. Even the usually vigorous petroleum business is shrinking.
“Politicians need to understand that policies which work against families ultimately hurt our state’s economy,” says Gilchrist. “We can only achieve economic security through strong legislation that ensures living wages, access to good jobs, health care, and decent scheduling to allow working people to sustain their families.”
A million jobs displaced
The Coalition for a Prosperous America (CPA) says multi-national trade agreements have caused the middle class decline.
“The Pew Report reveals how trade agreements like the Trans-Pacific Partnership have gutted the U.S. middle class,” says CPA Executive Director Michael Stumo in an interview. “We are losing the international competition for good paying jobs.”
According to Stumo, the 25-year-old North American Free Trade Agreement (NAFTA) displaced nearly a million jobs in the United States, instead of meeting a promise to create domestic job opportunities. Similarly, the U.S. Free Trade Agreement with Korea (KORUS) was supposed to create 70,000 jobs. Instead, it destroyed 75,000 American jobs.
Korea continues to flood the U.S. market with autos, appliances, and tech devices, while very few of those products are produced in the United States and exported to Asia.
“Through trade agreements and China’s entry into the World Trade Organization, we lost thousands of middle income jobs,” says David Anderson of Colorado Springs, a founding board member of CPA. “In our area alone, that’s 15,000 jobs with a multiplier of four that we need to sustain our economy and prevent the kind of fiscal problems we’ve had in the last 25 years.
“Congress is causing the kind of inequality that allows the rest of the world to become serfs,” Anderson says. “We don’t have much future if we don’t solve this problem.”
Anderson says he had to close his 800-worker electronic assembly business because domestic producers can’t compete with low wages and bad business practices.
“Ordinary Americans understand what D.C. politicians don’t; trade agreements hurt U.S. families and make our future less secure,” says Stumo. He says more than five million manufacturing job losses in the U.S. between 1997 and 2014 and growing trade deficits are attributable to sending work overseas through trade agreements.
Coloradans are also at the forefront of campaigns to improve wages and working conditions for traditionally low-paid workers in fast food, home health care, airport services, and those dependent on tips.
“A growing number of restaurants are getting rid of tips,” notes Linda Meric, National Executive Director of the Denver-based 9to5 organization. “These decisions are the result of years of speaking out to raise the awareness of the two-tiered wage system.”
Getting rid of tips
The federal minimum wage for tipped workers has been stagnant at $2.13 an hour for almost 25 years. Coloradans do better with a $5.21 per hour tipped minimum wage.
The United States is the only industrialized nation where workers depend on tips to make their wage.
“9to5 supports elimination of the tipped minimum wage while raising the minimum wage for all industries so restaurant servers, delivery drivers, valet attendants, and all workers are assured of an income on which they can live,” says Meric.
9to5 member Christine G. (who didn’t want her last name used for fear of retribution) works at a high-end bar in Denver as a server. She says she manages a “decent” income, but it comes at the expense of “constantly being objectified and harassed by customers.”
She adds that her scheduling is unpredictable on a weekly basis, and found that she had to take another non-tipped job – which means she works 60-70 hours per week.
According to 9to5, tipped workers are three times as likely to live in poverty compared to the overall workplace.
Since women and people of color are disproportionately represented in the tipped industries, the sub-minimum tipped wage contributes to the gender and race wage gap cited by the Colorado Center on Law and Policy report.
The Colorado affiliates of the Service Employees International Union (SEIU) continue to strive for better economic opportunities for lower-paid workers, particularly by focusing attention on the “Fight for $15” hourly wage.
Dave Felice is an At-Large Board Member of Greater Park Hill Community Inc. He is a member of National Writers Union, Local 1981, and recipient of an award this year from the Society of Professional Journalists for news column writing. He can be contacted at gelato321@aol.com.