Fallacies about jobs and poverty

A selection of points that are useful in addressing some common media fallacies concerning work, welfare, poverty – addressing both the US and UK:

• UK – Since 1970, national income (GDP) has doubled, but the low-paid are worse off in real terms. In 1970 the bottom 10% of workers earned 67.3% of median earnings – equivalent in today's terms to a minimum wage of £6.55 per hour, or £262 a week, compared to the pathetic £164 of the current minimum wage (at the time of writing).

• US – To put the wage gains of the late 1990s in perspective: they were not sufficient to bring low-wage workers up to the amounts they were earning a quarter of a century earlier, in 1973. In the first quarter of 2000, the poorest 10 percent of workers were earning only 91 percent of what they earned in the distant era of watergate and disco music. Relatively well-off workers in the eighth decile, or ten-percent sized slice, where earnings are about $20 an hour, are making 106.6 percent of what they earned in 1973.

• UK – Tony Blair's promise of greater "opportunity" and "social mobility" looks like a fallacy. Research* comparing children born in 1958 and 1970 found a sharp drop in social mobility between the two generations – ie less chance of movement up the social or wages scale.

• US – It takes on average nationwide, an hourly wage of $8.89 to afford a one-bedroom apartment (National Coalition for the Homeless, 1998) and the odds against a typical welfare recipient landing a job at such a "living wage" are about 97 to 1 (according to the Preamble Center for Public Policy). Nearly 30 percent of the workforce toils for $8 an hour or less – (Washington-based Economic Policy Institute, 1998).

• UK – The government-funded ESRC's Future of Work Programme finds people working harder and longer, with only 16% happy with the hours they work (half as many as in 1992). 81% work long hours not because they enjoy it but because they need the money. (ESRC stands for Economic and Social Research Council).

• US – There has been a steady decline in the number of affordable apartments nationwide. In 1991 there were forty-seven affordable rental units available to every one hundred low-income families, while by 1997 there were only thirty-six such units for every one hundred families.

• UK – Study after study shows a sharp increase in hours worked, causing rising stress and a matching sharp decrease in work satisfaction in the last decade, reaching right from professional and managerial down to low-paid jobs.

• US – If there seems to be general complacency about the low-income housing crisis, this is partly because it is in no way reflected in the official poverty rate, which has remained at a soothingly low 13 percent or so. The reason for the disconnect between the actual housing nightmare of the poor and "poverty" as officially defined, is simple: the official poverty level is still calculated by the archaic method of taking the bare bones cost of food for a family of a given size and multiplying this number by three. Yet food is relatively inflation-proof, at least compared with rent. In the early 1960s, when this method of calculating poverty was devised, food accounted for 24 percent of the average family budget and housing 29 percent. In 1999, food took up only 16 percent of the family budget, while housing has soared to 37 percent. So the choice of food as the basis for calculating family budgets seems fairly arbitrary today; we might as well abolish poverty altogether, at least on paper, by defining a subsistence budget as some multiple of average expenditures on comic books or dental floss.

• UK – There are more working poor than there are unemployed.

• US – Federal Reserve chief, Alan Greenspan, informed congress in July 2000 that the forecast seemed largely trouble-free. He went so far as to suggest that the economic laws linking low employment to wage increases may no longer be operative, which is a little like saying that the law of supply and demand has been repealed. Some economists argue that the apparent paradox rests on an illusion: there is no real "labor shortage", only a shortage of people willing to work at the wages currently being offered. You might as well talk about a "lexus shortage" – which there is, in a sense, for anyone unwilling to pay $40,000 for a car.

• UK – 70% of the low-paid are women.

*Sources:
(UK) Hard Work, Polly Toynbee (Bloomsbury Publishing 2003)
(US) Nickel and Dimed, Barbara Ehrenreich (St Martins Press 2002)