Minimum-wage pressure grows along with low-wage sectors

Los Angeles TimesDecember 22, 2012 

— Before the recession, Amie Crawford was an interior designer, earning $50,000 a year patterning baths and cabinets for architectural firms.

Now, she’s a “team member” at the Protein Bar in Chicago, where she makes $8.50 an hour, slightly more than minimum wage. It was the only job she could find after months of looking. Crawford, now 56, says she needed to take the job to stop the hemorrhaging of her retirement accounts.

In her spare time, Crawford works with a Chicago group called Action Now, which is staging protests to raise the minimum wage in a state where it hasn’t been increased since 2006.

“Thousands of workers in Chicago, let alone in the rest of the country, deserve to have a livable wage, and I truly believe that when someone is given a livable wage, that is going to bolster growth in communities,” she said.

If it seems that workers such as Crawford are more prevalent these days, protesting outside stores including Walmart, McDonald’s and Wendy’s to call for higher wages, it may be because there are more workers in these jobs than there were a few years ago.

Of the 1.9 million jobs created during the recovery, 43 percent of them have been in the low-wage industries of retail, food services and employment services, whose workforces include temporary employees who often work part time and without benefits or health insurance, according to a study by Annette Bernhardt, policy co-director of the National Employment Law Project in New York.

Working for less

At the same time, many workers, such as Crawford, who have been displaced from their jobs are experiencing significant earnings losses after getting a new job. About one-third of the 3 million workers displaced from their jobs from 2009 to 2011 and then re-employed said their earnings had dropped 20 percent or more, according to the Bureau of Labor Statistics.

“What these protests are signaling are that working families are at (a) breaking point after three decades of rising inequality and stagnant wages,” Bernhardt said.

The rise of low-paying jobs in the recovery, experts said, has cut the spending power of workers who once worked in middle-class occupations. Construction workers who made $30 an hour during the housing boom, for example, may now find themselves working on a temporary basis.

“You see workers trading down their living standards,” said Joseph Brusuelas, a senior economist for Bloomberg, who studies the U.S. economy.

Now, Brusuelas said, there’s an oversupply of workers who are willing to take any job in a sluggish economy, even if they’re overqualified. That includes temporary jobs without benefits, and minimum-wage positions such as the one Crawford took.

Although the 2012 election might have brought income inequality to the forefront of voters’ minds, efforts to increase wages for these workers are sputtering in an era of austerity when businesses say they are barely hiring, much less paying workers more.

State efforts falling short

The New Jersey state legislature handed Gov. Chris Christie a bill to raise the state’s minimum wage to $8.50 an hour from the federal minimum of $7.25 this month, but he hasn’t signed it and has signaled he might not. An earlier effort in New Jersey to tie the minimum wage to the Consumer Price Index was vetoed by the governor. According to news reports, another pending bill would let the state’s voters decide the issue next November.

Democratic lawmakers in Illinois also are trying to push a bill that would increase the minimum wage after an earlier effort this year failed. The Legislature last voted to raise its minimum wage in 2006, before the recession, and the governor agreed.

“A higher minimum wage means a person has to pay more for each worker,” said Ted Dabrowski, vice president of policy at the Illinois Policy Institute, which opposes raising the minimum wage. “Companies have a few choices – increase prices, reduce the number of people they hire, cut employee hours or reduce benefits. When employees become too expensive, they have no choice but to reduce the number of workers.”

The Center for Economic and Policy Research in Washington, however, says there is little indication from economic research that increases in the minimum wage lead to lower employment, and, because higher wages mean workers have more money to spend, employment can actually increase.

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