“We find that nearly two million private sector employees working on behalf of America earn wages too low to support a family, making $12 or less per hour. This is more than the number of low-wage workers at Walmart and McDonald’s combined.”
At the very least, argues a recent report from Demos, the American government owes employees on its payroll a livable wage. Demos, a research and policy center focused on economic stability, defines low-wage work as “a job paying $12 an hour or less, equivalent to an annual income of about $24,000 for a full-time worker. Nationwide, a family of four trying to subsist on $24,000 a year hovers near the poverty level. Even a single worker with no dependents would find no room in a basic budget for health coverage, a retirement nest egg, or building emergency savings.”
Using this definition, employment figures from a National Employment Law Project report, and estimates of the share of low-wage workers at each business, Demos calculated that McDonald’s (NYSE:MCD) and Wal-Mart (NYSE:WMT) employ a combined 1.48 million people at a wage too low to support a family, afford healthcare, or save for retirement. By itself, this number may not necessarily be shocking. Demos places the companies in a bucket of corporations “aiming for the highest possible profit at the lowest possible cost.”
The federal minimum wage is currently $7.25 per hour, and it’s unsurprising that employers in the retail and food services industries would take advantage of the low rate. However, what Demos finds ethically dubious is that the American government directly or indirectly employs 1.99 million people that fit under the same low-wage definition.
“These are employees working on behalf of America, doing jobs that we have decided are worthy of public funding — yet they’re being treated in a very un-American way.”
“When our tax dollars underwrite bad jobs, the economy as a whole is weakened and all of us are negatively affected,” states the Demos report. “There is a ripple effect as low-paid workers and their families have little money to spend, hindering economic growth that could be creating more jobs.”
The purchasing power of the current minimum wage is 30 percent lower today than it was in 1968, and by all accounts, the cost of American labor has failed to keep up with the cost of living in America. The negative feedback loop incubated by such a low minimum wage has only magnified in the wake of the financial crisis.
The National Employment Law Project showed that while low-wage occupations accounted for 21 percent of recession-era job losses, they accounted for 58 percent of recovery job gains — and while mid-wage occupations accounted for 60 percent of recession losses, they accounted for just 22 percent of recovery growth.
To be clear, government payrolls at the local, state, and federal levels have declined even during the recovery period. As an “industry,” government is alone in posting net job losses since the recovery began. All in all, the data paint a picture of a labor market environment for low-wage government employees that is highly pessimistic.
Here’s how the Dow Jones Index, S&P, Nasdaq, Wal-Mart and McDonad’s have traded in 2013:
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