The Rise of the Working Poor Assignment | Online Assignment Help

Read Richard B. Reich’s “The Rise of the Working Poor” beginning on page 749 in the book. (excerpt attached)

Then, write a response essay that includes the following:

A summary of Reich’s credentials and article using the skills on summary writing we’ve learned in class
-An analysis of Reich’s argument for validity using the argument analysis skills we’ve learned in class
-Your response to his claim and argument: do you agree with his claim? Is it something you feel you need to act on? Something you completely disagree with? Or are you somewhere in the middle? Explain fully and specifically, using examples to support your response.
– The response writing needs to be 750 – 1000 words and utilize all the best practices of essay development, structure, clarity and correctness that we’ve covered in class. Don’t forget to follow MLA formatting guidelines and include a Work Cited page.

Save your writing in a Word or PDF file and upload it here

ROBERT B. REICH

The Rise of the Working Poor

Robert B. Reich is a professor of public policy and economics at the University of California at Berkley. Besides serving as Secretary of Labor for President Bill Clinton, he is a prolific author who has a very public presence on social media, with an active blog and widely shared posts on Facebook, Twitter, and Tumblr. His documentary Inequality for All explores themes in this reading, which is drawn from Reich’s book Saving Capitalism for the Many, Not the Few (2015). While this selection, like all of Reich’s writing for the public, is intended to make economic concepts accessible to noneconomists, you may find yourself rereading paragraphs and looking up words. In fact, doing this demonstrates that you are reading as a careful academic writer should.

Reich uses a paradoxical introduction (see Chapter 11): “The standard assumption that work determines worth—and validates one’s personal virtue and social responsibility—is further confounded by a substantial increase in the number of people working full-time who are still poor, and a simultaneous surge in the comparatively smaller ranks of people who do not work at all but are rich” (para. 1). What do you make of this fact? The rest of the reading is an explanation of why this has come to be the case and the implications for the “working poor,” an important phrase for Reich (para. 2).

Reich provides a quick economic history of the policy shifts that have led to this situation of so many U.S. workers living in poverty. Keep track of all the reasons Reich offers, from outsourcing work (para. 4) to suppressing the minimum wage (paras. 4–10) to welfare reform (para. 12), which have “reduced the number of poor people who are jobless, while increasing the number of poor people who have jobs” (para. 13). All these changes, Reich argues, have added up to fewer opportunities for the poor to climb into the middle class. The parallel effect on increasing educational inequalities is an additional thread through Reich’s argument (paras. 17–23).

As a numbers expert, Reich supports his claims with statistics. Consider marking all of the statistics in a different color so that you can see where he uses them in relation to each of his points. You may even want to see if you can gather some updated statistics (about the minimum wage or other information of interest to you). Clearly, Reich’s position is not neutral. If you find yourself agreeing with him that the current situation is unfair, be ready to explain why. If you disagree with him, also be ready to explain why. Numbers tell one kind of story, but it is up to us to decide what those numbers mean.

The standard assumption that work determines worth — and validates one’s personal virtue and social responsibility — is further confounded by a substantial increase in the number of people working full-time who are still poor, and a simultaneous surge in the comparatively smaller ranks of people who do not work at all but are rich. It is difficult to hold firm to the belief that people are “worth” what they earn when more and more people who are working full-time do not earn enough to lift themselves and their families out of poverty, while another group of people at the opposite end of the income spectrum have so much wealth — much of it inherited — that they can live comfortably off the income it generates without ever breaking a sweat.

Until quite recently, poverty was largely confined to those who did not work — widows and children, the elderly, the disabled and seriously ill, and those who had lost their jobs. Public safety nets and private charities were created to help them. It was rare for a full-time worker to be in poverty because . . . the economy generated a plethora of middle-class jobs that paid reasonably well and were inherently secure. This is no longer the case. Some politicians cling to the view, as expressed, for example, by Speaker of the House John Boehner in 2014, when he said the poor have “this idea” that “I really don’t have to work. I don’t really want to do this. I think I’d rather just sit around.”²⁶ The reality is that America’s poor work diligently,²⁷ often more than forty hours a week, sometimes in two or more jobs. Yet they and their families remain poor.

There are several reasons for the growth of America’s working poor. First, wages at the bottom have continued to drop, adjusted for inflation. By 2013, the ranks of the working poor had swelled to forty-seven million people in the United States, one out of every seven Americans. One-fourth of all American workers were in jobs paying below what a full-time, full-year worker needed in order to support a family of four above the federally defined poverty line.²⁸ The downward trend of low wages continued even in the so-called recovery following the Great Recession. Between 2010 and 2013, average incomes for the bottom fifth dropped 8 percent, and their average wealth declined 21 percent.²⁹ According to a study by Oxfam America,³⁰ more than half of America’s forty-six million users of food pantries and other charitable food programs in 2013 had jobs or were members of working families.

It is doubtful that all these working people came to be “worth” that much less, except in the tautological sense that their pay dropped. In reality, the decline has had a great deal to do with their lack of economic and political power. CEOs seeking profits in a lackluster economy have continued to slash labor costs, often by outsourcing the work, substituting automated machines, or forcing workers to accept lower wages. This process has pushed many previously middle-class workers into local service jobs that pay less than the jobs they once had. Low-paying industries such as retail and fast food accounted for 22 percent of the jobs lost in the Great Recession.³¹ But they generated 44 percent of the jobs added between the end of the recession and 2013, according to a report from the National Employment Law Project.³² Employers in these industries tend to be virulently anti-union and have fought successfully against any efforts to organize their workers.

Meanwhile, the real value of the federal minimum wage has been steadily eroded by inflation. Congress (to be more precise, Republicans in Congress) has chosen not to raise it to compensate for this decline. The National Restaurant Association and the National Retail Federation, along with the largest fast-food chains and retailers that support them, have lobbied against any increase in the federal minimum wage, which is tantamount to allowing it to erode even further. By 2014, its real value ($7.25 an  hour) was below the level to which it had been raised in 1996,³³ when, as secretary of labor, I had led the political fight to raise it. Had the minimum wage retained the value it had in 1968, it would be $10.86 an hour.³⁴ And, of course, by 2014 the nation’s economy was far larger than it was then, and far more productive.

Some have claimed, nonetheless, that any attempt to restore the real value of the minimum wage will cause employers to fire workers at the lowest rungs, because such workers would no longer be “worth” the cost. In June 2014, at a conference for the Republicans’ largest donors hosted by Charles and David Koch at the luxurious St. Regis Monarch Beach Resort in Dana Point, California, Richard Fink, the Kochs’ in-house economist, sounded off against the minimum wage. “The big danger of minimum wage isn’t the fact that some people are being paid more than their value-added,” he said. “It’s the five hundred thousand people that will not have a job because of minimum wage.”³⁵ Fink warned that such a large group of disillusioned and unemployed people would become “the main recruiting ground for totalitarianism, for fascism.”³⁶ The conference-goers presumably nodded in sober agreement before getting back to their foie gras.

The mythology that a minimum-wage increase (or, in real terms, restoring it to its 1968 level) would cause employers to reduce employment is a common trope. A corollary is that getting rid of the minimum wage altogether and allowing employers to pay what employees are “worth” will reduce or even eliminate unemployment. As former congresswoman Michele Bachmann once put it, if the minimum wage were repealed “we could potentially virtually wipe out unemployment completely because we would be able to offer jobs at whatever level.”³⁷ Theoretically, Bachmann is correct. But her point is irrelevant. It is no great feat for an economy to create a large number of very-low-wage jobs. Slavery, after all, was a full-employment system.

In fact, evidence suggests that few if any jobs would be lost if the minimum wage were to be increased at least to its 1968 level, adjusted for inflation. Unlike industrial jobs, minimum-wage retail service jobs cannot be outsourced abroad. Nor are these workers likely to be replaced by automated machinery and computers, because the service they provide is personal and direct: Someone has to be on hand to help customers or dole out the food. In addition, and significantly, the gains from a higher minimum wage extend well beyond those who receive it directly. More money in the pockets of low-wage workers means more sales in the places where they live, which in turn creates faster growth and more jobs. Research by Arindrajit Dube, T. William Lester, and Michael Reich³⁸ confirms this. They examined employment in several hundred pairs of adjacent counties lying on opposite sides of state borders, each with different minimum wages (one at the federal minimum, the other at a higher minimum enacted by a state) and found no statistically significant increase in unemployment in the higher-minimum-wage counties, even after four years. (Other researchers who found contrary results failed to control for counties where unemployment was already growing before the minimum wage had been increased.)³⁹ Dube, Lester, and Reich also found that employee turnover was lower where the minimum wage was higher,⁴⁰ presumably saving employers money on recruiting and training new workers.

Most workers earning the minimum wage are no longer teenagers seeking additional spending money. According to the Bureau of Labor Statistics, the median age of fast-food workers in 2014 was twenty-eight, and the median age of women in those jobs, who constituted two-thirds of such workers, was thirty-two. The median age of workers in big-box retail establishments was over thirty. More than a quarter of them have children. These workers are typically major breadwinners for their families, accounting for at least half their family’s earnings.

Needless to say, a higher minimum wage would also reduce the necessity for other taxpayers to pay for the Medicaid, food stamps, and additional assistance these workers and their families need in order to cope with poverty. A study by my colleagues at the University of California, Berkeley and researchers at the University of Illinois at Urbana-Champaign found that in 2012, 52 percent of fast-food workers were dependent on some form of public assistance, and they received almost $7 billion in support from federal and state governments.⁴¹ That sum is in effect a subsidy the rest of American taxpayers pay the fast-food industry for the industry’s failure to pay its workers enough to live on.

Whatever wage gains these workers receive are rarely passed on to consumers in the form of higher prices. That is because big-box retailers and fast-food chains compete intensely for customers and have no choice but to keep their prices low. It is notable, for example, that in Denmark, where McDonald’s workers over the age of eighteen earn the equivalent of twenty dollars an hour, Big Macs cost only thirty-five cents more than they do in the United States.⁴² Any wage gains low-paid workers receive will more than likely come out of profits — which, in turn, will slightly reduce returns to shareholders and the compensation packages of top executives. I do not find this especially troubling. According to the National Employment Law Project,⁴³ most low-wage workers are employed by large corporations that, by 2013, were enjoying healthy profits. Three-quarters of these employers (the fifty biggest employers of low-wage workers) were generating higher profits than they did before the recession.⁴⁴ Between 2000 and 2013, the compensation of the CEOs of fast-food companies quadrupled, in constant dollars, to an average of $24 million a year.⁴⁵ Walmart, too, pays its executives handsomely. In 2012, Walmart’s CEO received $20.7 million.⁴⁶ Not incidentally, the wealth of the Walton family — which still owns the lion’s share of Walmart stock — by then exceeded the wealth of the bottom 40 percent of American families combined, according to an analysis by the Economic Policy Institute.⁴⁷

Another reason for the rise in the number of working poor is a basic shift in the criteria used by the government to determine eligibility for government assistance. As I noted, assistance used to be targeted to the nonemployed. Now, those who are out of work receive very little. By 2014, only 26 percent of jobless Americans were receiving any kind of jobless benefit.⁴⁸ Typically, recipients of public assistance must be working in order to qualify. Bill Clinton’s welfare reform of 1996 pushed the poor off welfare and into work, but the work available to them has provided low wages and offered few ladders into the middle class. The Earned Income Tax Credit, a wage subsidy, has been expanded. But here, too, having a job is a prerequisite. Although it’s not necessary to have a job in order to get food stamps, it turns out that a large and growing share of food stamp recipients are employed as well. (The share of recipients with earnings has risen from 19 percent in 1980 to 31 percent in 2012.⁴⁹ And since about a third of food stamp recipients cannot work because they’re elderly or disabled, far more than 31 percent of those able to work are employed.)

Overall, the new work requirements have not reduced the number or percentage of Americans in poverty. The poverty rate in 2013 was 14.5 percent,⁵⁰ well above its levels of 11.3 percent in 2000 and 12.5 percent in 2007. In effect, the new work requirements have merely reduced the number of poor people who are jobless, while increasing the number of poor people who have jobs.

An additional and perhaps more fundamental explanation for the increasing numbers of working poor is found in what has happened to the rest of America. Some would rather deny such a connection and assume the shrinking middle class and redistribution of income and wealth to the top have no bearing on what has happened to those at the bottom. The question we ought to be asking, according to Harvard economist Greg Mankiw, is “How do we help people at the bottom, rather than thwart people at the top?”⁵¹

Yet the issues are inseparable. As more of the gains have gone to the top, the middle class has lost the purchasing power necessary for ensuring that the economy grows as quickly as it did as recently as the early 2000s. Once the middle class exhausted all its methods for maintaining spending in the face of flat or declining wages⁵² — with wives and mothers surging into paid work in the 1970s and 1980s, everyone putting in longer hours in the 1990s, and households falling ever deeper into debt before 2008 — the middle class as a whole was unable to spend more. The inevitable consequence has been fewer jobs and slower growth. Both have hit the poor especially hard. Those at the bottom are the first to be fired, last to be hired, and most likely to bear the brunt of declining wages and benefits.

As the income ladder has lengthened and many of its middle rungs have disappeared, moreover, the challenge of moving upward has become more daunting. A smaller middle class yields fewer opportunities for joining it. Shortly after World War II, a child born into poverty had a somewhat better than fifty-fifty chance of becoming middle class by the time he or she was an adult.⁵³ Today, 43 percent of children born into poverty in the United States will remain in poverty for their entire lives.⁵⁴

Some continue to believe that the poor remain poor because they lack ambition. But what they really lack is opportunity and the political power to get the resources needed to realize that opportunity. It begins with inadequate child care and extends through primary and secondary schools, which helps explain the growing achievement gap between lower- and higher-income children. Thirty years ago, the average gap on SAT-type tests between children of families in the richest 10 percent and bottom 10 percent was about 90 points on an 800-point scale.⁵⁵ By 2014 it was 125 points. The gap in the mathematical abilities of American kids, by income, is one of the widest among the sixty-five countries participating in the Program for International Student Assessment. On their reading skills, children from high-income families score 110 points higher, on average, than those from poor families.⁵⁶

The achievement gap between poor kids and wealthy kids isn’t mainly about race.⁵⁷ In fact, the racial achievement gap has been narrowing. It’s a reflection of the nation’s widening gulf between poor and wealthy families, of how schools in poor and rich communities are financed, and of the nation’s increasing residential segregation by income. According to the Pew Research Center’s analysis of the 2010 census tract and household income data,⁵⁸ residential segregation by income has grown over the past three decades across the United States.

This matters, because a large portion of the money to support public schools comes from local property taxes. The federal government provides only about 10 percent of all funding, and the states provide 45 percent, on average.⁵⁹ The rest is raised locally. Most states do try to give more money to poor districts,⁶⁰ but most also cut way back on their spending during the recession and haven’t nearly made up for the cutbacks. Meanwhile, real estate markets in lower-income communities remain weak, so local tax revenues are down. As we segregate by income into different communities, schools in lower-income areas have fewer resources than ever. The result is widening disparities in funding per pupil,⁶¹ to the direct disadvantage of poor kids.

The wealthiest, highest-spending districts are now providing about twice as much funding per student as are the lowest-spending districts, according to a federal advisory commission report.⁶² In some states, such as California, the ratio is greater than three to one. What are called “public schools” in many of America’s wealthy communities aren’t really public at all. In effect, they’re private schools, whose tuition is hidden away in the purchase price of upscale homes there, and in the corresponding property taxes.

Even where courts have required richer school districts to subsidize poorer ones, large inequalities remain. Rather than pay extra taxes that would go to poorer districts, many parents in upscale communities have quietly shifted their financial support to tax-deductible parents’ foundations designed to enhance their own schools. About 12 percent of the more than fourteen thousand school districts across America are funded in part by such foundations. They’re paying for everything from a new school auditorium (Bowie, Maryland) to a high-tech weather station and language arts program (Newton, Massachusetts). “Parents’ foundations,” observed The Wall Street Journal, “are visible evidence of parents’ efforts to reconnect their money to their kids”⁶³ — and not, it should have been noted, to kids in another community, who are likely to be poorer.

As a result of all this, the United States is one of only three out of thirty-four advanced nations surveyed by the Organization for Economic Cooperation and Development (OECD) whose schools serving higher-income children have more funding per pupil and lower student-teacher ratios than do schools serving poor students (the two others are Turkey and Israel).⁶⁴ Other advanced nations do it differently. Their national governments provide 54 percent of funding, on average,⁶⁵ and local taxes account for less than half the portion they do in America. And they target a disproportionate share of national funding to poorer communities. As Andreas Schleicher, who runs the OECD’s international education assessments, told The New York Times, “The vast majority of OECD countries either invest equally into every student or disproportionately more into disadvantaged students. The U.S. is one of the few countries doing the opposite.”⁶⁶

Money isn’t everything, obviously. But how can we pretend it doesn’t count? Money buys the most experienced teachers, less-crowded classrooms, high-quality teaching materials, and after-school programs. Yet we seem to be doing everything except getting more money to the schools that most need it. We’re requiring all schools to meet high standards, requiring students to take more and more tests, and judging teachers by their students’ test scores. But until we recognize that we’re systematically hobbling schools serving disadvantaged kids, we’re unlikely to make much headway.

In all these ways, poverty among those who work and their political powerlessness are intimately connected.