(The following was in this past Sunday's Concord Monitor. Startling to me is that low wage workers have seen a 5% percent decrease in wages adjusted for inflation since 1979, while cost of living has increased to the extent that low wage workers cannot afford to live here. Politicians spend a lot of time addressing many different social issues, but most do little to help working families. They are popular among some voters, so they get the most attention. What though do we do about a vital part of our workforce who can't even afford to live modestly? It's easy to say that they should go to school or learn a new trade, but when they work multiple jobs and have kids to raise, it is not an easy task. What mechanisms do we have available, or should make available, so that low wage workers can have the opportunity to improve their lives? This goes way beyond raising the minimum wage. Many companies pay wages that are higher than minimum wage, but well below a living wage. The minimum wage bar is set very low after all.
What is happening in Concord to address this? Investing in our workforce is not a terrible idea and should be an issue able to cross party lines, but sadly it probably will not.)
For a single parent of one child to live modestly in the Concord area while working one full-time job, he or she needs to be paid about $26 an hour. On the New Hampshire Seacoast, it’s $30 an hour.
Those figures were surprisingly high, even for David Cooper, an analyst for the Washington, D.C.-based Economic Policy Institute, which created the Family Budget Calculator that derived the estimates.
Cooper was among a group of analysts who spoke at a conference called Making Ends Meet, attended by more than a dozen state legislators Friday.
In comparison with the rest of the country, the cost of living in Concord is similar to the Chicago metro area, Cooper said, and the Seacoast is similar to the metro areas of Philadelphia and New York City.
Especially in light of the $7.25 minimum wage here, the analysts at the conference painted a bleak picture for the lowest-paid Granite Staters, whose income they said has effectively stagnated or fallen for decades. New Hampshire has the lowest poverty rate in the country, but for the relative few who are just scraping by, housing and transportation costs make life even harder.
Cooper said the federal poverty line is “woefully inadequate” to describe what it costs to get by, and the EPI’s calculator uses localized costs to estimate life on the “bottom rung of the middle class,” including a rented apartment, one car per family and minimal food and health insurance costs, with nothing left for savings.
“Even though New Hampshire, in a lot of ways, is better off than a lot of other states, it takes a lot more to have that modest but adequate standard of living here,” said Cooper, a Hampton native.
Compared with the median-cost city of Des Moines, Iowa, the Concord area is 13 percent more expensive and the Seacoast is 30 percent more expensive. Housing on the Seacoast is 85 percent higher, health care is 30 percent higher and other necessities – such as household supplies and internet service – are 43 percent higher.
“This was actually shocking to me when I was putting together the slides,” Cooper said.
A relatively high and rising cost of living becomes a problem when workers’ salaries aren’t increasing to match productivity, Cooper said. Sometime in the 1970s, hourly compensation nationwide “flatlined,” after keeping pace with productivity for decades.
Since 1979, the typical American worker’s wages have grown by 6 percent, adjusted for inflation, while the lowest-paid workers have seen their wages fall by about 5 percent, Cooper said.
“This is part of the challenge we’re facing now. This is why folks at my organization and other organizations in Washington would say the problem with stagnating wages is really the key economic challenge facing the United States today,” he said. “It underlies all of our other challenges.”
Local to New Hampshire, the average worker has done far better than the rest of the country, with a 22 percent increase since 1979, but the lowest-paid workers’ wages are “basically the same.”
“So what that means is that for the last 45-plus years, even though our ability to generate goods and services per hour has gone up by about 70 percent, the person in the lowest-paid job today has the exact same material standard of living as somebody a generation ago,” he said.
Even before the recession hit in 2007, wages were effectively falling, Cooper said. Local poverty rates that increased during the recession have struggled to recover.
For the people who advocate raising the minimum wage in an effort to combat this trend, a Washington Center for Equitable Growth economist at the conference said most evidence suggests such a policy wouldn’t significantly affect employment.
Ben Zipperer, a research economist, said most studies have shown there’s no trade-off between employment and raising wages, and an increased minimum wage has a “spillover effect” for employees who make more than the minimum wage.
In New Hampshire, the difference between the median wage and the minimum wage is much higher than in other states, which means the policy has a very weak effect on the rest of the economy. But it wasn’t always that way, Zipperer said.
“In 1979, the bite in the minimum wage was very strong in New Hampshire . . . much higher than most states,” he said. “The lesson from this is New Hampshire, more than many states, has a lot of scope to actually raise its minimum wage. The labor market in New Hampshire . . . can handle a higher wage more easily than a lot of other states."