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The Working Poor

by Linda Ostreicher, Nov 18, 2004
 Last year, about one in three low-wage full-time workers in this city experienced one or more of these hardships:
  • their gas, phone, or electricity was turned off because they couldn’t pay the bills;
  • they used a food bank or pantry to avoid going hungry;
  • they couldn’t pay the rent;
  • or a prescription cost too much for them to fill it.

In The Unheard Third: Bringing the Voices of Low-Income New Yorkers to the Policy Debate, the Community Service Society and the United Way of New York City document the street-level effects of New York’s inadequate minimum wage of $5.15 per hour. Many of the working poor saw their wages or tips go down last year, had their hours cut back, or lost their jobs entirely. Statewide, over 88 percent of families supported by low-wage workers are headed by at least one adult over the age of 25; the minimum wage is not limited to teenage workers.

Those earning the least also receive the fewest employment benefits, which are taken for granted by higher-paid workers. Nearly two-thirds of low-wage workers reported having no paid vacation days or sick days. Almost half had no health coverage, with the majority lacking prescription coverage for themselves and/or health coverage for family members. The working poor have no need of financial advisors: Only one-third are offered a pension or 401(k) retirement plan, and most have less than $500 in savings.

There is little margin for emergency needs here. A parent who misses work to care for a sick child loses money every day and risks being fired. A few extra dollars a month for subway fare, or a four percent rent increase, means the family must do without another essential item.

Food Stamps Are Back in Favor

Under the Giuliani administration, food stamps were considered a form of welfare, and the city sought to “wean” working recipients from them. The Bloomberg administration has indicated more willingness to extend food benefits.

The city’s Human Resources Administration is collaborating with a food stamp outreach initiative of the Community Food Resource Center, with participation by Pathmark Supermarkets. The center will post advocates at supermarkets to educate shoppers about food stamps, screen them for eligibility, and help them fill out applications.

Little Help from Education and Job Training

While federal job training programs have a good record of helping graduates find and keep jobs, they are not reaching those New Yorkers who need them most. Statewide, less than one-third of 1% of adult high-school dropouts complete job training programs.

The city’s Local Law 23 mandated access to job training and education for welfare recipients, but the Bloomberg administration has not implemented the law, nor has it complied with a 2003 court order to provide a list of approved training programs to welfare recipients interested in enrolling. Nearly 80% of welfare recipients didn’t know that there were educational programs open to them, according to a survey by the Urban Justice Center and Families United for Racial and Economic Justice. For every two respondents who attended school last year, another seven were interested in doing so, but did not.

One unemployed woman had enrolled full-time in college before becoming eligible for welfare. She reported that a welfare worker told her that she would have to give up school in order to meet the work requirement. This was a direct violation of the city’s obligation to make a reasonable effort to accommodate the class schedule of a recipient enrolled in school.

Over 300 welfare beneficiaries were surveyed for the report, at ten of the city’s Job Centers. Such a survey would be more difficult today, now that an appeals court has upheld the city’s ban on the presence of advocates in job centers, unless they are on “official business,” as defined by the Human Resources Administration. [See “A Ban On Welfare Advocates At Welfare Centers,” by Emily Jane Goodman, Gotham Gazette, September, 2004.]

Better Days Are Not Ahead for the Working Poor

Currently, the working poor have limited opportunities to climb out of poverty, according to Between Hope and Hard Times: New York’s Working Families In Economic Distress (In PDF Format) , by the Center for an Urban Future and the Schuyler Center for Analysis and Advocacy.

The authors found that even before the recent recession, median household income dropped in all four outer boroughs during the 1990s. While the United States as a whole saw a slight drop -- 1.3 percent -- in the number of low-income households during that decade, New York State had an increase of 2.7 percent in its number of low-income households.

The hardships faced by low-income households are increased by New York City being one of the two most expensive places to live in the country. The cost for just three commodities—education, housing, and child care—illustrates the difficulty of working your way out of poverty.

A community college degree adds an average of $7,000 to a worker’s annual income, but tuition increases keep moving education further out of reach. New York City community colleges raised tuition to $2,800 a year in 2003. Students who work and go to school part-time aren’t eligible for the major source of financial aid: the Tuition Assistance Program.

Planned Shrinkage of Housing for the Poor

New York City’s permanent housing emergency continues to grow worse. Large new public housing projects are no longer being built. Poor tenants have come to increasing rely on Section 8, a federal program of vouchers that pay part of the rent, but there is a long waiting list for the program, and a likelihood that its funding will be cut next year. (See Affordable Housing in 2004 by Joe Lamport)

Inadequate Child Care

The city provides child care subsidies for 105,000 children; it is estimated that another 100,000 are eligible, but not receiving a subsidy. Low-income parents usually turn to unregulated care, such as leaving children with a relative or neighbor. Even among families using subsidized day care, 38,000 children are in unregulated care. Unregulated settings rarely offer the learning activities provided in more formal child care settings, so children entering school from unregulated day care start out with a disadvantage.

Work Supports as a Subsidy to Employers

Housing vouchers, child care subsidies, food stamps, and publicly funded health coverage can be seen as subsidies that benefit employers by allowing them to hire workers at salaries too low to live on. If government chooses to use tax dollars to help employers, there should be some criteria for this assistance. Perhaps businesses could be required to pay a living wage, with essential fringe benefits, unless they passed a means test based on their profit margin or on the salary of the highest-paid executive.

Linda Ostreicher, a former budget analyst for the New York City Council, is a freelance writer and consultant to nonprofits. 

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