Driving the working poor into the dust

“Charles, can you print off my last four pay stubs? I need them for….”

Since I made my career change to the restaurant business, this has been a frequent, regular request I get from some of my employees.  Why? Because they need them to qualify for various government related benefits: primarily food stamps and medical care for their children. Honestly, until recently it’s not been something I’ve given a lot of thought to. They ask, I print the pay stubs out, and off they go.  But lately I’ve been pondering the implications of this, and I want to talk about what it says about the working poor, about our national attitudes toward them.

I’ll be up front. I’m not an economist. My last brush with serious economic thought, other than desperately trying to move money from one account to another before a check bounced, was in high school AP Economics.  Very long time ago. So I’m not going to make any kind of reasoned economic argument here. Rather, I’m going to look at some simple facts. Take them for what they are worth.

First, I want to draw a picture.  Imagine a typical waitress. She works 35-40 hours per week. If she’s lucky, here in Georgia, here hourly wages will be between 2.50 and 3.50 per hour. Yes, you read that correctly.  So, after, a weekly paycheck at the  very best might be $80 or so dollars.  Figure in another $200 in tips, which is pretty typical for a casual restaurant.  That works out to about 280 per week.

Imagine a cook, a job which generally pays minimum wage or slightly higher.  Maybe 8 buck per hour for a really experienced cook, or even 9 in some cases.  Again, for a 40-hour work week, after taxes you’re looking at less than $250 per week.

Imagine supporting a family on that kind of money.

These are folks who are on their feet 8 hours a day, running back and forth, delivering food, taking orders, scrubbing and cleaning, and sometimes putting up with the worst indignities from customers who think it’s funny to be nasty to waitresses, who think it is generous to leave a 50 cent tip after typing up a table for two hours. And yes, some of them are young, and it is their first job. Some of them are there because they didn’t finish college, or they made some choice earlier in life that led to this kind of work. But that doesn’t take away from the fact that they work harder than anyone sitting in an office, any day of the week. That doesn’t take away from their humanity. And personally, I’m sick of seeing the working poor portrayed by politicians and pundits as the dregs of our society. Because they are more honest and hard-working that most anyone else I know.

I’m management, so I do all right, but I also pay my employees in cash every week, so I know exactly what they are taking home. The above figures are insanely optimistic. Most of them don’t make that much. Not even close. And I can’t do anything about it, because I don’t set pay rates.

So: $250 per week, $1000 per month. At most.

Now figure in some expenses.  Rent for a two-bedroom apartment in metro Atlanta runs $800.  Gas to get back and forth to work is $50, optimistically.

That leaves $150. To pay the electricity bill, gas bill, sewage, water. To buy groceries to feed your family. Clothes.  What I’m driving at here is simple enough: it’s not enough. You can easily work very hard for 40 hours per week and end up in the hole without even thinking about it. This isn’t people who have to give up their expensive phones and big screen TVs, as some of our raving radio pundits might suggest. These are people who have to decide between putting food on the table this week, or sending the kid to the doctor. Because they cannot afford to do both.

A lot of people suggest that government benefits like food stamps goes to a bunch of uneducated, lazy people who are just stealing money from the wallets of people who work harder than they do.  And you know? That makes me crazy angry. Because, with the perspective of having now been in three separate careers, I can tell you that my employees work harder than anyone I’ve ever seen. But the fact is, they can’t make it on $1000 a month.  So, most of them, especially the ones with kids, rely on one or more forms of government assistance.

The biggest one, of course, is health care. Most of them don’t have insurance, and they can’t afford it.  I pay insurance premiums of $600 per month to cover a family of four.  But do you seriously think that would be possibly if it was fully 60% of my pay?  I don’t think so.  So those that have any health care at all are on the cheapo plan, the one that has a $1,000 annual benefit cap.

You know how many hospital visits $1,000 will cover?  Exactly none.

So, most of them get health care for themselves and their families through emergency room visits or, if they qualify, through services available through the county. If they qualify. Because, believe it or not, some of them actually make too much money.

Apparently child-care is no longer available for full-time working mothers, at least here in Georgia.  At least that is the response that my employees are getting.  Could they go to a private day care? Back in 2001, last time I had a kid in private day care, we paid something like $200 per week.

I’ve had at least two full-time employees end up homeless in the last year. While working. Couch surfing, sleeping in their cars. One of them was a young single mother. It was a major ordeal for her to simply get someone to watch her baby so she could come to work.

Ron Paul, among many others, thinks we should simply abolish the minimum wage. But let’s think about this for a moment. According to the Bureau of Labor Statistics, as of 2010 4.4 million workers made minimum wage or less. Women are overrepresented: about 7% of women make minimum wage, and about 5% of men.

If the various social programs that those workers absolutely rely on for survival were eliminated, would the companies that pay minimum wage be able to?  Not in a million years.

The companies that employ those 4.4 million minimum wage workers rely just as much on social programs as their employees do. What it amounts to is a gigantic federal subsidy, to the tune of many billions per year, for companies primarily in the service industries. It’s a fact that they couldn’t operate the way they do if those programs didn’t exist.

I’m not necessarily knocking the companies here.  One look at my profit and loss statement shows that payroll makes up more than 30% of our expenses. After you take out the cost of food, overhead, keeping the lights on, everything else, there’s very little profit. The fact is, the single biggest factor driving low wages is low menu prices. Because the only way to possibly pay more would be to jack up prices higher and higher.  And Americans don’t want to pay more than we already do.

I don’t have any easy answers for this. For sure I believe the minimum wage should be higher than it is. But even if you raised it, say from the current $7.25 up to $10 per hour, it still, realistically, would be impossible to support a family.

One solution that makes sense to me is finally biting the bullet and creating a single payer health plan paid for by our taxes. And before you start saying “Oh my God death panels,” consider what it is like to get your insurance company to actually pay for anything. I don’t know about you, but with my insurance, it’s like pulling teeth.  I’ve had one former employee who was killed by an aggressive cancer this year, and another one on the way. If either one of them had actually had health insurance, they might have considering going to the doctor and been diagnosed early enough to treat it. That’s not just a tragedy, it is unspeakable. As far as I’m concerned, it is a crime that in the 21st century a full-time employed worker cannot afford to go to the doctor, or send their children.

The gap between the rich and the rest of us has been on everyone’s mind thanks to Occupy Wall Street, and I think that’s a good thing. But the problems the working poor face aren’t new, they didn’t arrive with the market crash in 2008 or the financial crisis. They’ve been there all along, getting worse, year by year. The fact is, our lifestyle and our economic structure as it stands today is grinding the working poor into the dust.  And I don’t know what the answers are.

8 Comments on “Driving the working poor into the dust

  1. I think one of the root problems with health care is that it is a government sponsored monopoly without price controls. Electrical utilities are the same, but there are price controls. Essentially, you either need price controls or competition or you get fleecing. Right now, the insurers and government prevent competition amongst providers (most states have one or two choices tops), government allows hospitals to merge and buy out their competitors and the AMA works hard to ensure a very, very limited number of doctors graduate from a very small number of colleges to work in the few monopoly hospitals. Add all of that up and you get the high prices.

  2. This is really interesting, thanks! It got me thinking… (I am not an economist either, so I might be missing something basic here).

    You mentioned that you have to pay such low wages, because your menu prices are so low, and you need to keep them low, because people won’t pay high prices. How would your menu prices be affected if the minimum wage was raised, and you were forced to pay higher wages? I assume you would need to raise them. But then, wouldn’t that hurt the customers, who would need to pay more? Or maybe they would just not eat out as much, so you wouldn’t need to hire as many employees? Would that help or hurt the employees in the long-run?

    Clearly there is a big problem if people who work full-time cannot afford to make ends meet without government assistance. I know you don’t claim to have all the answers, and neither do I, but I just wanted to bring up this question to further the discussion.

  3. It would certainly hurt if menu prices went up. The restaurant business tends to be cyclical, and when business is slow, the waitresses make less money, I cut people’s hours so the cooks make less money, and so on. When business is good, they can do quite well. And I didn’t even get into the chronic problems–the fact that once caught in this cycle, it’s near impossible to get out. When tuition for a single class costs a thousand dollars, few of them can dream of getting a college degree unless they take on a mountain of debt. Opportunities to move up are there, but they are few and far between.

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