This Week in Poverty: Obama’s Budget, Your Server’s Budget

This Week in Poverty: Obama’s Budget, Your Server’s Budget

This Week in Poverty: Obama’s Budget, Your Server’s Budget

If Obama wants his actions to match his rhetoric about helping the poor, he needs to show a lot more leadership.


Obama’s Budget

Let’s review: on January 24, President Obama delivered his sixty-five-minute State of the Union address and decided poverty—the p-word—merited barely a mention. One week later, Republican presidential front-runner Mitt Romney did him a solid by announcing, “I’m not concerned about the very poor.” The very next day, in a stroke of luck I’m sure some would be hard-pressed not to attribute to divine intervention, Obama had the good fortune of attending the annual National Prayer Breakfast, where the specter of Romney stuffing coal in children’s stockings still hung in the air.

For the president, a preternatural campaigner, it was carpe diem.

“Living by the principle that we are our brother’s keeper. Caring for the poor and those in need. These values are old,” he said. “It also coincides with Jesus’ teaching that ‘for unto whom much is given, much shall be required.’ It mirrors the Islamic belief that those who’ve been blessed have an obligation to use those blessings to help others, or the Jewish doctrine of moderation and consideration for others.… They are values that have always made this country great—when we live up to them; when we don’t just give lip service to them; when we don’t just talk about them one day a year. And they’re the ones that have defined my own faith journey.”

Just over a week later, Obama’s faith journey would arrive at the release of his 2013 budget—for what is a budget if not a moral document, a statement of principles and priorities? Would he live up to the standard he laid out at the prayer breakfast? Or was the breakfast “one day a year” when he gave “lip service,” quickly receding when the political moment passed.

The short answer is: depends whom you ask. It seems for the majority of antipoverty advocates the president’s budget is mostly good news.

“Overall, the president’s budget underscores that poverty reduction and deficit reduction can be accomplished simultaneously,” writes Melissa Boteach, manager at Half in Ten, a campaign to reduce poverty by 50 percent over ten years.

“The budget sets up pivotal choices,” argues Debbie Weinstein, executive director at the Coalition on Human Needs. “[It] calls for investments aimed at helping those with low or moderate incomes, paid for in large part by asking more of upper-income people, who are now being taxed at historically low levels.”

These advocates and others point to smart investments that create pathways to opportunity such as subsidized jobs and training for low-income and long-term unemployed workers, and disconnected youth; a fund that would help states establish paid leave programs, vital especially for single mothers, 35 percent of whom live in poverty; childcare and early education funding that reflects an appreciation for the relationship between early brain development and future outcomes; maintaining the maximum Pell Grant, making recent improvements to the child tax credit and earned income tax credit permanent, and preventing pending cuts to food stamps.

But there are some items that would cause real pain and contradict Obama’s stated goal in his 2011 State of the Union address not to balance the budget “on the backs of our most vulnerable citizens.”

Perhaps first and foremost is a cut of nearly 50 percent to the Community Services Block Grant (CSBG), utilized by more than 1,000 community action agencies to help people move toward economic security through job training, employment, reliable housing and transportation. The need is reflected in the numbers: last year, the CSBG network helped 159,000 low-income people find employment; 3.2 million maintain a cost-effective and independent living situation; and 5 million children receive medical, education, nutrition or other supports to assist their development.

“We’re appalled to see this attack on vulnerable Americans,” said Steve Payne, board president of the National Association for State Community Service Programs. “In order for people to move out of poverty we can’t create further barriers to their economic security.”

Another huge disappointment is a $452 million cut to the Low Income Home Energy Assistance Program (LIHEAP), a vital part of the safety net that helps people who spend a disproportionate amount of their income on energy bills. Tom Stovall, board chair of the National Fuel Funds Network (NFFN) and executive director of a community action agency in Dubuque, Iowa, didn’t mince words.

“At a time when one in every seven Americans is living in poverty, reducing funding for LIHEAP can only be described as either callous and cold-hearted or misguided,” he said. “Funding cuts of the magnitude proposed by the President will leave millions of people, including many who are elderly or disabled, facing the prospect of trying to live without the most basic of needs.” (NFFN has launched a petition to restore funding to the currently authorized $5.1 billion.)

There is also a somewhat bizarre call for a new mandatory minimum rent of $75 for the poorest families in subsidized housing—might not sound like much but it is when you’re living in poverty.

All in all, Obama’s budget would do a lot to help tens of millions of low-income people access opportunities—the childcare assistance, EITC and child tax credit provisions alone are significant. But there is plenty of room for improvement if he’s truly committed to living the gospel he preaches—“unto whom much is given, much shall be required.” He’s been given the bully pulpit, after all. He’s yet to seize it and state clearly and unequivocally, “We know how to dramatically reduce poverty and we’re going to do it”—and then point to a budget that shows us exactly how.

Your Server’s Budget

Insane fact of the week: the federal minimum wage for tipped workers is $2.13 per hour and it has been since 1991. Since then, it has lost 40 percent of its value in real terms, while the minimum wage for non-tipped workers has risen to (also a paltry) $7.25.

Fortunately, Democratic Congresswoman Donna Edwards has introduced a bill that would finally raise that wage to no less than $5.50 an hour, and a new report from ROC-United—a national restaurant workers’ organization dedicated to improving wages and working conditions for the low-wage restaurant workforce—explains some of the reasons why this is so vital, especially for women.

According to the report, 52 percent of all restaurant workers are women, including 66 percent of all tipped workers. Servers in the United States—71 percent of whom are women—are three times more likely than the general workforce to be paid sub-poverty wages and twice as likely to need food stamps.

“The people who serve our food can’t afford to eat,” said Saru Jayaraman, co-founder and co-director of ROC-United, at a report briefing on Capitol Hill this week.

Employers are required to pay the difference between a worker’s tipped wages and the minimum wage if the pay comes up short, but that simply isn’t enforced and there’s no accountability. Even “zero dollar paychecks” aren’t uncommon, where the server doesn’t earn enough to cover taxes, pay out other staff, etc.

It certainly doesn’t need to be this way. The restaurant industry is one of the largest and fastest-growing sectors of the US economy. For 2012, the National Restaurant Association projects record-breaking revenues of over $635 billion and that one in ten Americans will be working in the industry. Unfortunately, restaurant occupations are seven of the ten lowest-paid occupations in the nation, with women filling a disproportionate number of those low-wage jobs.

Discrimination makes matters even worse. Full-time, year-round servers who are women are paid just sixty-eight cents on the dollar compared to their male colleagues. That adds up to $17,000 versus $25,000 annually—the difference for a family of three or four between living in poverty or living above the poverty line. That also means the female server is paid $320,000 less over her career—think car, home, maybe college. It’s worse for black women who are paid 60 percent of a male server’s wages, for a difference in career-earnings of $400,000.

People often associate jobs working for tips with college students trying to make some extra bucks, or young people working summer jobs. But 27 percent of all female restaurant workers are mothers, and over 10 percent are single mothers.

A modest raise in the minimum wage can make a real difference. Seven states have a higher minimum wage for tipped workers than the federal standard, and the poverty rate for servers in those states is 30 percent lower (13.6 percent compared to 19.4 percent). According to ROC, raising the subminimum wage to just $5.08 would provide immediate relief to 630,000 female tipped workers, many of whom live below the poverty line. It would also raise the wage floor for over 10 million restaurant workers and decrease the gender pay equity gap by one-fifth.

Think it can’t be done successfully? Seven states have already eliminated the subminimum wage, including California, which has the largest restaurant industry of any state. Los Angeles employs 300,000 restaurant workers—more than any other US city.

But increasingly the industry is dominated by chains with Wall Street interests and a powerful lobby that fights to keep wages low and benefits virtually nonexistent. For example, just after the National Restaurant Association released its revenue projections, restaurant lobbyists in Florida began pressing for a reduction in the state’s subminimum wage from $4.65 to $2.13 an hour.

“People have said this is a real long shot,” Congresswoman Edwards said of passing her bill. “But across this country there are families trying to sustain themselves on this subminimum wage, and I think there’s a lot of power in our organizing—not just with the 10 million people who work for tips, but the tens of millions of others of us who remember working for tips. There’s no time like the present.”

As the hours continue to add up for restaurant workers, and the ends continue to not meet, this is a fight we all should take part in.

A Notable Study

Over 9/10 of Entitlement Benefits go to Elderly, Disabled or Working Households,” Arloc Sherman, Robert Greenstein, and Kathy Ruffing. Contradictory to the alarmist rhetoric about the US becoming an “entitlement society,” a new analysis shows that more than 90 percent of the benefit dollars that entitlement and other mandatory programs spend go to assist people who are elderly, seriously disabled, or members of working households.

In Case You Missed It (Like I Did)

Paid Family Leave Leads to Positive Economic Outcomes,” Center for Women and Work at Rutgers. New parents who take paid leave after the birth of a child are less reliant on public assistance and food stamps than parents who take no leave after the birth of a child. For new mothers, taking paid leave is associated with a greater likelihood of remaining in the labor force post-birth and a greater likelihood of earning higher wages post-birth.

General Assistance Programs: Weakening Despite Increased Need,” Liz Schott and Clare Cho. State General Assistance programs are a safety net of last resort for those who are very poor and do not qualify for other public assistance. Beneficiaries are mostly individuals without minors, not disabled enough to qualify for the Supplemental Security Income program (SSI), and not elderly. The programs have weakened considerably in recent decades and continue to do so, despite increased need from the recession. There are only thirty states remaining that have General Assistance programs, and only twelve of these states provide any benefits to childless adults who do not have some disability. In most of the programs the benefit falls below one-quarter of the poverty line. (The poverty line for a single individual is about $11,000 annual income.)

Further Reading

Still Hungry in America,” Marian Wright Edelman
Poll: Americans Split on Concern for Very Poor,” Ronald Brownstein
Thinking Big on Poverty,” Secretary of Labor Hilda Solis and Wade Henderson
Budget Simply Needs to Create Jobs,” Congressman Raúl Grijalva

Get Involved

Tell Senator Bernie Sanders Your Story: Affordable Dental Care
Extend Minimum Wage and Overtime to Home Care Workers
Raise the Tipped Minimum Wage
$5.1 Billion for LIHEAP
National Partnership for Women & Families

Vital Statistics

US poverty (less than $22,300 for a family of four): 46.2 million, 15.1 percent of population.

Children in poverty: 16.4 million, 22 percent of all children.

*Children under age 18 in female-headed families in poverty: 46.9 percent

*Children under age 5 in female-headed families in poverty: 58.7 percent

Deep poverty (less than $11,157 for a family of four): 20.5 million people, 6.7 percent of population.

*Increase in deep poverty, 1976-2010: doubled—3.3 percent of population to 6.7 percent.

*Families with children under 18 in deep poverty: 11.7 million people.

*Same as above but also headed by a single woman: 7.3 million people.

[*from US Census Bureau via Peter Edelman]

Quote of the Week

“Any budget worth its name should make reducing the number of very poor Americans one of its top focuses. The sight of our own neighbors going hungry should not be common enough to slide into the background. It should still prick our consciences.”
    —Congressman Raúl Grijalva

This Week in Poverty posts every Friday morning. Please comment below, e-mail me at [email protected] and follow me on Twitter.

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