The road to poverty is paved with good intentions
Image licensed under Creative Commons
Last September, I wrote an article where I called for wage ratio limits as a better solution to income inequality than the minimum wage system. As a proposed increase to the minimum wage became part of the COVID Relief bill, then later scrapped, my subconscious pointed out a flaw in my thinking. I had a vivid dream where I was talking to numerous business owners who are a part of our vibrant local food scene. Many of these restaurateurs, farmers, and value-added food producers make $50,000 per year or less while paying the current minimum wage, or slightly more. Paying workers based on a wage ratio limit would not necessarily guarantee a living wage, so in the dream they were asking me what they should pay. What would be a competitive pay rate?
When it comes to food based businesses, a minimum wage is essential. While chains should abide by wage ratio limits, their implementation is a long way off (although wage ratio was brought up by Rep. Tim Ryan (D) from Ohio’s 13th District when he spoke passionately regarding the COVID Relief Bill). We might be more likely to see legislation to introduce a guaranteed basic income first, and that is likely a long way off.
I do believe that we need to eliminate the separate minimum for tipped workers. There should only be one minimum wage, and getting to $15 an hour should be the goal, but if we can make this a reality sooner by having language in a bill that says the federal minimum wage will go up to $11 per hour this year, and up to $15 an hour by 2024, then that is the route that should be taken. Whatever we can do to increase economic security sooner, that is what we should do.
That said, I don’t believe that this change in policy should exist in any piece of legislation that doesn’t also increase Social Security payments. President Biden promised to support Senator Warren’s proposal of increasing Social Security payments by $200 per month. He also promised to increase Supplemental Security Income (SSI) to ensure that SSI recipients receive at least 100% of the federal poverty rate, which is currently $1,073 per month for one person. It is my understanding that $1,073 would then be the amount used in the formula to determine eligibility, so many more Social Security beneficiaries would become eligible. SSI is currently based on $750. The long and the short of it is that no Social Security beneficiary should receive less than 100% of the federal poverty rate.
If COVID Relief has taught us anything, it is that the government can find a way to give people the money they need to live. We live in one of the wealthiest nations. There should be no citizens of this nation that cannot afford the basics, and people who work full time should always be able to pay for all basic and safety needs. Yet I’ve known people who earned more than the current minimum wage who had to go without car, renter’s, or homeowner’s insurance.
A big part of the problem where food-based businesses are concerned is the way the government manipulates food prices. This manipulation occurs because big agriculture receives government subsidies. Small and mid-size farms don’t receive the same amount of assistance, and therefore are forced to either sell for prices that barely deliver any profit, or get out. This manipulation occurs because of an economic model that ensures one month’s income for a median wage earner is enough to purchase one year’s worth of food. These measures came into being through efforts to alleviate hunger many decades ago.
Every dollar put into the Supplemental Nutrition Assistance Program (SNAP – formerly known as food stamps) is tethered to subsidies for big agriculture. SNAP is one of the most effective poverty alleviation programs made available through our government, and still many recipients struggle with food security.
The value of food needs to based on the true costs, including the human cost, of producing it. More than 20 years ago, I read David Masumoto’s Epitaph for a Peach. The book chronicles the farmer’s difficult decision to stop growing an organic peach variety because the price he was expected to charge for it would not cover costs. He wrote about how he relied on migrant workers willing to accept low wages in order to price his fruit low enough so that he could sell to grocers. The grocers wield a lot of power in setting food prices, but not as much as the government. If there is a subsidized item that you are competing with, even if your product is certified organic, heirloom, small-batch, or carries any other value-added connotation, there will be a price point where stores will simply pass. Something is only worth what someone is willing to pay for it, and when so many people expect to spend only 10% of their income on food, that means that others are forced to spend a much greater percentage of their income on it; the ones who can least afford it.
If we are ever going to solve the problem of income inequality, and the more urgent problems of poverty and sub-poverty, we need to start with raising both the minimum wage and Social Security benefits. We must require more from wealthy Americans, including eliminating the cap on wages subject to taxation for Old Age, Survivors and Disability Insurance (OASDI – the tax that supports Social Security). These are only the first steps down a new road; one that’s foundation is built with evidence-based practices.