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In urging the Fair Labor Standards Act of 1938, Franklin Delano Roosevelt said, "No business which depends for existence on paying less than living wages to its workers has any right to continue in this country. By living wages I mean more than a bare subsistence level. I mean the wages of a decent living."
It was the last piece of New Deal legislation passed, signed into law in 1938 after 36 years of lobbying by Eleanor Roosevelt and others. The Fair Labor Standards Act established a 40-cent minimum wage, a 40-hour work week, and prohibited child labor.
Over 65 years later, close to 750,000 New Yorkers are making between $5.15 and $7.15 an hour, or between $10,712 and $14,872 per year, while the national poverty threshold is set at $18,848 for a family of four. But even for families making more than that in the Mid-Hudson Valley, where according to county officials a livable wage is about $15 an hour, it is difficult to survive.
One of those families is Lisa Green's (not her real name), who lives with her fiancé, Damien, their eight-month-old daughter, and Damien's mother, who is recently disabled, behind one of the most infamous social service motels in Ulster County. The door to their apartment sits beneath a sagging roof and looks more like a utility shed than a home. The four of them share one room with no kitchen for which they pay $600 a month. But this is not a welfare family. They receive nothing but Medicaid for the baby. For $6.50 an hour, Lisa cleans the entire motel six days a week. She receives no benefits or sick days. Damien makes $9 an hour at a large mall retailer. They make too much to be eligible for public assistance, yet not enough to move their family out of their current living situation. They are stuck in the gap between welfare and a livable wage like many others in the Hudson Valley and across New York State, which has the third-largest number of workers earning federal minimum wage or less, behind only Texas and Florida.
On July 29, Pataki vetoed the Fair Minimum Wage Act of 2004 that would have gradually raised Lisa's salary to a mandatory minimum of $7.15 by 2007. The rate would have increased to $6 an hour in 2005, then to $6.75 in 2006 before hitting its peak. Furthermore, the bill would have provided a gradual minimum wage increase to $4.60 for waiters and bartenders, who now receive a maximum of $3.30 an hour. In his veto, Pataki stated that he would prefer to wait for the federal minimum to be raised, so that New York businesses would not be put at a competitive disadvantage with those in nearby states. He suggested that state businesses would have to close or cut back, and their workers would leave for other jobs in New Jersey and Pennsylvania, where the minimum wage is still $5.15. The Bush administration has made it clear that a federal minimum wage raise is out of the question, even going as far as to propose "state flexibility" that would allow states to opt out of future federal minimum-wage increases. But for the first time in the seven years since the minimum wage was last raised, both the Assembly and Senate expressed overwhelming bipartisan support by voting in large majorities to pass the bill. The Assembly quickly voted to override Pataki's veto, but the Senate has until December 31 to do so and, according to several senators, will likely wait until after the elections.
This is the second-longest stretch of inactivity since the minimum wage was established. The longest was under Ronald Reagan, who denied a raise through his entire eight years in office. Today, due to inflation, the minimum wage is worth a lot less than it was when established. A simple comparison: In 1938, a minimum wage worker could buy a loaf of bread for about a nickel. That's eight loaves of bread for an hour's work. Today, a minimum wage worker can buy two, possibly three loaves with an hour's pay.
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"Other states that have raised it have seen a decrease in poverty levels. Statewide there are 750,000 workers who make between $5.15 and $7.15 an hour. For those workers it would make a big difference," she said.
Even Republicans like Senator John Bonacic (R-Albany), strongly support the Fair Minimum Wage Act.
"How can someone making $10 an hour survive here? To give people money for basic food and housing so they can live in dignity is a no-brainer," Bonacic said.
According to Bonacic, arguments that business will suffer don't hold true for the Mid-Hudson Valley because the area is growing and business is good; employers could absorb the cost, he added. But he did concede that the economy farther upstate where there is little if any growth and where farmers already face extinction, might be harder hit.
Chris Koetzle, a vice president at Support Services Alliance, a Schoharie-based business group that represents 15,000 businesses from Buffalo to Rockland, argues against the increase. He said wage inflation would cause prices to rise as more workers, especially unions, demanded a comparable wage increase.
"The minimum wage is just a minimum, it's not a living wage," he said. "We believe the market will pay what it needs to. For example, you see the Wal-Marts and McDonalds of the world paying above [the minimum] because that's what the market demands. So we should let the market determine the wage."
Local McDonald's franchise owner William Mayer said that a raise of those proportions would mean devastation for many small business owners. It's the teenagers who make $5.15 an hour, he said, while most of his employees, many of whom work two jobs, make between $7.75 to $8 an hour. Finding employees at all has gotten more difficult over the last few years, he added. While Mayer would not disclose how much he makes between the two McDonald's restaurants he runs in Saugerties (an article in Smart Money earlier this year estimated that a typical McDonald's franchise profits about $100,000 a year), Mayer did offer that an override of Pataki's veto would cost him personally about $40,000 to $50,000 a year.
"That's a huge problem for any small business person. Any small business that hires people at minimum wage to $7.15, that's a huge range. Any employee between that range is going get a raise, and that affects the profitability and salary of the business person. And he's going to find other ways to cut back on expenses or raise prices. There really aren't any alternatives. The payroll taxes have gone way up in New York State and we've been paying an unemployment surcharge since 9/11. There'd be an awful lot of people who couldn't be in business. How could they survive?"
Abel Garraghan, President of Heritage Energy, a family-run, Kingston-based energy company in existence since 1929, said the Senate's decision would not affect his business because he pays all of his 81 Ulster and Sullivan county employees well above minimum wage. Market demand, but mostly work quality, drives this decision. He said he expects his employees to live off these wages, and as a local, knows even $7.15 wouldn't cut it.
"In this state, it's not realistic," Garraghan said.
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According to the New York State Department of Labor, the average salary in the Mid-Hudson Valley is about $17 an hour, just under the state average of $20.65. About a third of the privately employed Hudson Valley, including Westchester, works either in the retail industry, which pays an average salary of $25,331, or in the health care and social assistance industries, which pay an average wage of $34,260. On the bottom of the food chain are food and drink services, which constitute about six percent of the employed population and which carry an annual average salary of $14,717.
Senator Bonacic said he believes that the positives of increasing workers' wages outweigh the negatives, and that such an increase will decrease the gap between low- and middle-income wage earners.
"What happens when we bump up minimum wage is everybody else who's making above that will see an increase. It improves the paychecks of working men and women. It's not only the working poor but the working middle class that are struggling," he said.
One of the biggest debates between minimum wage supporters and opponents is who actually fills these jobs. Opponents argue that teenagers make up the majority of people earning $5.15 an hour. Koetzle of the Support Services Alliance said most members report paying minimum wage only to teenagers making their first entrance into the working world.
"It's not really going to impact the person who is trying to live off the minimum wage," he said.
Bonime, on the other hand, said that 75 percent of the workers earning between $5.15 and $7.15 in New York State are adults. And according to the 1999 Economic Report of the President's Council of Economic Advisers, "most minimum wage workers are adults from lower income families, and their wages are a major source of their families' earnings."
But in a release criticizing the bill, the Employment Policies Institute - a nonpartisan Washington, DC-based policy research group - pointed to research by Richard Burkhauser of Cornell University, which showed that only 14 percent of the benefits from the wage hike will go to poor families. The proposed wage hike would cost New York employers and consumers $880 million a year. Of this, only $122 million would go to poor families, while $528 million would go to families earning more than twice the poverty line, research showed.
In his veto, Pataki also argued that many of New York's minimum wage earners qualify for government benefits such as the Earned Income Tax Credit (EITC), Medicaid coverage, and Child Health Plus and Family Health Plus programs. He points to the Cornell University study, which shows that when the EITC is factored in, the actual hourly wage earned by a minimum-wage worker in a low- income family with two dependents is $7.83.
But what constitutes poverty is also widely debated. Simply calculated, in order for a family of four with one full-time wage earner to meet New York's poverty threshold of $18,848, the minimum wage would have to be raised to $9.06 an hour.
This figure was deemed accurate by a woman emptying trash and cleaning up after shoppers in the Food Court at the Hudson Valley Mall. Speaking in Spanish, she said that she was the mother of three children. Her husband was recently disabled at work, but had not yet been approved for disability benefits. Her job at the mall paid her $6.50 an hour, but it would take at least $9 an hour to meet her family's basic needs, she said.
Local statistics show similar gaps between the livable wage and actual wages in the Hudson Valley. A "Self-Sufficiency Standard" study conducted by Dutchess County in 2000 found that one adult with no children needs to earn $9.45 an hour, to meet basic living standards in Dutchess County. According to Fawn Tantillo, head of Ulster County's Office of Employment and Training, in 2002 the Workforce Investment Board found that a single person needs to make a minimum of $15 an hour to live in Ulster County. Yet Tantillo said that deciding whether or not to raise the state's minimum wage is a "tough call."
"Minimum wage is really for unskilled workers," she said. "Hopefully, once they're trained, they'll earn more. A labor shortage in Ulster County is inevitable because the workforce is aging and we have youth flight. Smart businesses will pay over the minimum wage."
Tantillo pointed to the county's job-training and prescription-drug programs as resources available to those making less than the livable wage. But the county's One Stop job-training program is not available to people making more than $15,612, and problems like childcare and transportation must be worked out before one enters the program. In addition, federal and state funding for these programs has been cut by half since their inception in 1998, Tantillo said.
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Tantillo said when Imperial Schrade, a knife manufacturer, closed its Ellenville factory earlier this year, over 700 people lost their jobs, 260 without warning. Ulster County's One Stop program retrained them for "demand occupations," Tantillo said, which included health care, medical billing, home health aides, clerical, and commercial driving. The problem is that many of those workers were used to making $15 to $20 an hour, she conceded. Demand occupations may also mean low-wage occupations.
Michael Berg, executive director of the Kingston-based Family of Woodstock, said that the minimum wage does not come close to a surviving wage in Ulster County because of the high cost of housing. Other factors include the shortage of public transportation, which means many people must also factor in the cost of maintaining and insuring a vehicle.
"It makes it very difficult to survive on low-income jobs," Berg said. "And many of the jobs we're seeing are limited in the number of hours so employers don't have to pay benefits. People have no protection, yet they are earning enough not to qualify for any social services."
Berg referred to the now infamous American Candle Factory in Saugerties, which prompted a visit from Pataki and was hailed by him as a major boost for the local economy when it opened, and which was recently shut down for major safety violations. Workers were paid $7 an hour or less, Berg said, and the company had trouble finding local people to fill those jobs.
"They were bussing people in [from as far away as New Jersey], so it's evident that people can't even afford to live on $7 an hour. The government has to make a statement by moving [the minimum wage] up. But it won't have a tremendous impact on our county. I think it's very difficult to survive. People are working two jobs, they're asking family members to watch the kids, or leaving kids alone in situations where they shouldn't but they can't afford childcare. They don't have health insurance. They're making hard decisions on whether to pay the rent or put food on the table. It's part of why we have so many homeless families."
Brian Riddell, executive director of Dutchess Outreach, said that most of the people it helps with emergency services like rent, food, clothing, diapers, and prescription assistance, are employed. Social services don't do much to help. Welfare as we know it is over, and the welfare-to-work program pays $353 a month plus food stamps, he said. "To me, it's an ethical issue, not just an economical one," Riddell said.
The increase in working families needing assistance is a problem throughout the Hudson Valley. According to the Hudson Valley Food Bank, 67 percent of adults requesting emergency food aid are people with jobs.
"FDR is rolling over in his grave right now. So is Eleanor," said Debbie LeFebvre from behind her desk at the Dutchess County BOCES Transportation office, which sits in the same building as Riddell's. In a few months, she will receive her paralegal degree. But eight years ago, she was a single mother on welfare. After a divorce left her with custody of two children and no financial stability, LeFebvre took out a Stafford loan and went to college to get a degree. Meanwhile, she took a short-lived job with a law firm making $175 a week. Childcare for her kids cost $250 a week. And while her ex-husband's weekly child support checks of $120 still did not make child care affordable, it made her ineligible for a public childcare subsidy. She left her job as a legal assistant, went back to bartending and delivering pizza, and spent the next four years on and off welfare."These low-paying jobs are like a revolving door back to public assistance," she said.
James, a 40-year-old man who says he has a graduate degree in business and has traveled the world, ate lunch one day in late September in the Dutchess Outreach kitchen after walking off a $6.50-an-hour job hauling oak doors up two flights of stairs. The job offered no insurance, and James said it was not worth the risk to his back. As a licensed plumber who is used to getting $32 an hour, James said it turns his stomach to think he has to rely on the public for anything. But work has been unsteady and social services turned him down because they deemed him "employable." So he is trying to do what he can within reason, he said.
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"Most European countries handle these problems better than we do by providing decent insurance, support for single parents, and health care. We're very backwards [in this country], promoting policies that make it worse - like Bush's tax cuts, for example."
Policies like these are not integral to a healthy capitalist economy, she said. For example, Finland, a capitalist country, provides a generous social welfare system and has the highest economic growth rate in Europe.
"If we had a minimum wage closer to the actual living wage, it would be more like $15 an hour, and that's not likely to happen," Ehrenreich said. "As soon as you start talking about raising wages, the conservatives say you'll destroy the economy, raise inflation and unemployment. In other words, nothing can be changed. Yet we never hear outrage when executives get their annual bonuses. Small businesses would find that it is good business to pay better and retain their employees, rather than train new ones."
There are some states here that are taking the initiative to establish a progressive-minimum wage system. Washington state and Oregon now increase their minimum moderately each year to keep pace with the rising cost of living. It may be that predictable and small annual increases would soften the impact of sudden, larger increases on businesses. Berg recommended a system like the military's, which indexes wages from state to state based on cost of living. "To really have an impact, we have to somehow relate it to the cost of living," he said.
Although the possibility of the Senate overriding Pataki's veto is greater now than ever before, the federal minimum wage will likely be decided by the November elections. Massachusetts senator and presidential candidate John Kerry has expressed support for a minimum wage of $7, stating that such an increase would help seven million working people escape poverty.
Lisa Green said she will likely not be one of those people. For now, her job as a room cleaner is too convenient to quit since it eliminates the need for a second vehicle and outside childcare. A 65-cent raise will not move her family out of the motel. When asked what it would take, she said she had no idea. The idea itself was overwhelming.