In addition to holiday cheer, December brings with it a yearly controversy over hourly wages at big box retailers. And while the wages that these companies pay their workers is a major contributor to the phenomenon of the “working poor,” State Representative Ruth Jones McClendon (D – Bexar County) explains how policies that contribute to underemployment in Texas may be just as significant a contributor – and need to be reconsidered.
There are over 520,000 underemployed workers in Texas, meaning they are looking for full-time work but cannot find it “for economic reasons.” Businesses commonly reduce the number of hours their workers can work so that they can consider them part-time and avoid paying certain benefits. But in the end these workers often turn to government benefits like SNAP (food stamps) or Medicaid to make ends meet, which shifts the burden to the tax payers.
Read Rep. McClendon's op-ed below the jump.
It's Time to Stand Up for Underemployed Workers
By State Representative Ruth Jones McClendon
Recently, celebrity Ashton Kutcher scolded Wal-Mart in his “tweet” about the need for Wal-Mart employees in Canton, Ohio to hold a food drive for their coworkers at Thanksgiving. Wal-Mart responded that most of its employees work full-time earning over $25,000 a year, and 75 percent of managers earn between $50,000 and $170,000 a year. This misses the point.
To the people at the bottom of the pay-scale, it does not matter what the overall average pay is, or what the managers earn. In Texas, the Bureau of Labor Statistics (BLS) reports there are over 520,000 underemployed workers, single or married, with or without kids, who want to work full-time, but employer policies prevent that. The BLS considers these workers “underemployed for economic reasons,” excluding students or adults not seeking full-employment pay. That exceeds the population of Lubbock, Beaumont, Waco and Nacogdoches combined.
Wal-Mart and other mega-employers like McDonald's employ a huge workforce and are generous with charitable efforts. Mr. Kutcher's point is well-taken, though. Many hourly workers draw before-tax earnings below poverty level. This goes against the American work ethic that if you are willing to work, you can succeed. Not any more, it seems.
This wage and hour gap has been building for 20 years or more, ever since many major employers began cutting work hours to 35 or less to avoid providing required benefits for full-timers. Before that, hourly wage employees commonly worked 20-hours part-time or 40-hours full-time, or maybe two 20-hour jobs. Texas employees now qualify as “full-time” at only 30 hours per week.
A single Texan working at minimum wage ($7.25 an hour) for 30 hours for 52 weeks without absences earns a gross annual income of $11,310. The federal poverty level (FPL) is $11,490 for one worker and $15,510 for two persons. If the employer requires a “flex-time” schedule, work hours and income can decrease further, making monthly take-home pay unpredictable. Working for minimum wage, a parent with one child would need to work more than 41 hours per week, 52 weeks a year, to rise above poverty level and not seek Medicaid or SNAP benefits to make ends meet. Underemployed workers qualify for taxpayer-supported aid programs when their hourly wage times their work hours means their income is below poverty level. HHSC reports that Texas spends $457/month for adults in Medicaid; SNAP food benefits cost $120 per adult per month.
Friends, involuntary underemployment undermines workers, families, and our economy. It is time for businesses and Chambers of Commerce in Texas to stand up for underemployed workers and taxpayers. Employers could choose to offer 40-hour work weeks, raise the hourly wage, or both. Business managers and owners should take stock of how many of their “underemployed employees” earn incomes below poverty level. Profiting from the efforts of the poverty-level underemployed ought to be embarrassing. It reflects poorly upon a company's values when employees rely on taxpayer supported assistance programs to make up the difference.