“Cost of Living” is a Relative Term

I read an interesting article today that claims one must earn at least $100,000 annually just to get by living in a major international city such as New York, London or Tokyo.  To live comfortably, the article states, one must earn $200,000 annually.

And I thought California was expensive.

The author points to an interesting dichotomy that illustrates the vast differences in living standard that occupation and location can entail.  While, on one hand, earning $100K annually would place one within the top 10% to 15% of incomes in the United States, on the other hand, incomes of that caliber are now standard in New York City for a first year finance industry associate, doctor or lawyer.  And about that seemingly elusive $200K income?  Pretty much the norm for a 30- to 32-year old second year associate in one of the above-mentioned professions.

Don’t choke on your beverage, please.  Breathe.

I am not sure how to place this information in perspective.  I have a law degree and have worked in management for decades but don’t earn a fraction of those six-figure incomes.  But at least I have a job.  Of course, I’m a do-gooder who works in the public sector and I reside in Sacramento, not New York.  The cost of living here, which seems sky high to me, is nowhere near what one must bear to live, say, two hours down the road in San Francisco.

Growing up in New York, I never thought about money.  I know I didn’t have adequate appreciation for the fact that my parents each worked demanding jobs in the public schools and, together, probably just earned enough to get by.  This was true even though the price of their brand new 1967 station wagon was $2,700 and the price of a new home on a ¾ acre lot was about ten times that.  Most people couldn’t swing that kind of money and, like my aunt and uncle, continued for decades to live in tiny, roach-infested, rent-controlled apartments from which you could walk to the subway.  When my parents were just about ready to finish their 30-year suburban mortgage, they sold their house and moved to California.  By that time, the house was already starting to fall apart.  But that was more than 20 years ago, and the couple to whom my parents sold their house still own it, according to Zillow.  I’ll drive by it when we’re in New York next month and let you know what it looks like these days.

When I graduated from college in 1980, I applied for a job in New York City that came with a salary of $5,000 annually.  My father told me not to bother with it, as it would cost me that much just to commute from our suburban home, where I was living for free, into Manhattan every day.  I would essentially be working for nothing, donating my labor.  Instead, I took a job at a local print shop, pulling night shift for more than twice what I would have earned in the city.  After a year, I moved over to a union shop that paid more than eight dollars an hour.  I thought I was rich.

How times have changed.

To counterbalance the inflated salaries earned by professionals in New York (and to counteract the effects of my agape visage that was letting in flies), I read another article about how some New Yorkers get by on an income of zero.  You read that right, zero.  And I’m not talking about homeless individuals, either.

There will always be resourceful people who manage to “squat” in vacant apartments.  I imagine that the temptation to go this route must be high among low- or no-income New Yorkers who are willing to rough it a little (or a lot).  I think of the Manhattan home that author Jeannette Walls’ mother made for herself (as described in Walls’ best selling memoir The Glass Castle).  She was a freegan, also known as a dumpster diver, as was Marie, the zero-income New Yorker described in the article linked to above.  Marie was not a squatter, but instead had a great living situation in a three-story home.  She took care of the place and, in return, was allowed to live there for free.  So, technically, The Guardian is incorrect in characterizing Marie as having had no income.  Although she did not receive a paycheck, she obtained what the IRS calls “in kind income.”  Then again, I doubt that Marie, who was in this country illegally, ever paid a dime in federal, state or city taxes.

Most industrialized nations do not have a homelessness problem on the scale that the United States does.  This is partially due to the fact that, in most countries, you don’t need a six-figure income to get by (nor does one need that kind of income in many areas of the United States).  Another factor is that the deeply-ingrained American consumerist culture doesn’t exist in many parts of the world, so the concept of “getting by” has an altogether different meaning there than it does here.  Yet another factor is that most developed nations recognize that having a roof over one’s head is a right, not a privilege.

Unlike in Sacramento, municipal law in New York City does recognize a right to housing, even if that means sending an entire family to squeeze into a tiny motel room out in the hinterlands by JFK Airport.  Of course, New York still has a large homeless population, among which are many who are mentally ill and/or are alcoholics or addicts who are unwilling or unable to follow the rules by which one must abide to remain in a shelter or other city housing arrangement.

My father longs for the old days, when no one received a handout and everyone was entitled to exactly what their earnings would purchase and not a penny’s worth more.  He told me that he likes the way that the homeless were summarily driven in a police car to the city limit and informed that if they ever returned, they would receive free housing in a jail cell.  My thought was:  This explains “hobos.”  You had to move from place to place if no place would allow you to stay.

I’m glad we live in a (somewhat) more compassionate society today.  Here in Sacramento, homelessness seems to have blown up as a major issue in the news lately.  This is at least partially attributable to the publicity surrounding the destruction of homeless encampments by law enforcement both here and in the Central Valley (Sacramento has an “anti-camping” ordinance).  It also helped that some of those displaced by the police demonstrated their ire by camping out at city hall.  Many were arrested but, upon release, immediately returned to city hall with their sleeping bags or tents.  Out came the TV camera crews and, all of a sudden, homelessness is in the news again.  While homelessness is right under our noses every day, we choose to ignore it in “emperor’s new clothes” fashion.  So it is refreshing that homelessness has lately become a popular topic of discussion in our local area.

I often make self-deprecating remarks about the fact that I live in a two-room mouse hole and pay handsomely for the privilege.  But at least I don’t have to own a sleeping bag or a shopping cart and I don’t have to lie down on the sidewalk in the rain and the cold, as many do downtown each evening.

And I don’t have to get my dinner from a dumpster.

 

The Underground Economy

If you’re interested in the effects of long-term unemployment and the ways that out-of-work people manage to get by, I highly recommend the Longreads selection that was Freshly Pressed this past week:  “Mango, Mango! A Family, a Fruit Stand and Survival on $4.50 a Day.”  Douglas Haynes, whose piece was originally published in Orion magazine, takes us through a day in the life of families who eke out a living by selling snacks in the squalor of Managua, Nicaragua’s sprawling Mercado Oriental.  While some of the tiny businesses that set up folding tables are licensed, most are not.  With so many thousands of stands cropping up and disappearing daily, selling everything imaginable, the government can’t even begin to keep track.  For most of these mom and pop entrepreneurs, the profits are barely enough to feed their families.

In Nicaragua, as in the United States, working “under the table” means that nothing is put into the government’s established economic institutions and nothing is taken out of them.  These are people who work without paying taxes into the public coffers and without the ability to draw social security benefits once they are no longer able to work.  And, as Haynes point out, they suffer all the disadvantages of the self-employed — no paid vacation, no sick leave, no health insurance.  Still, in societies in which there are tens of thousands of people out of work, it is a way to survive.

Several years ago, I read an excellent book about residents of the South Side of Chicago who provide goods and services to the community on street corners, in alleyways, out of parking lots and abandoned buildings.  In Off the Books, author Sudhir Venkatesh refers to this phenomenon as “the underground economy.”  Operating in the shadows, these informal businesses fill a void in that they provide a way to obtain desired goods and services in areas that may be underserved due to a deteriorating economic establishment in the wake of poverty, crime and the participation of “legitimate” business owners in white flight.

In the public eye, the underground economy is often associated with illegal activity.  Indeed, criminal enterprises, such as prostitution or the sale of drugs, necessarily remain outside of the mainstream.  But the fact that they’re not counted by the government doesn’t make them any less a part of our economy.  As long as there are those willing to pay cash or barter for these goods and services, there will be enterprising folks willing to evade the law to sell them.  I think of when I lived on Broad Street in downtown Hartford, where cars would slowly approach each other from opposite directions and stop for just a moment, in broad daylight right in front of the brownstone I called home, to make their exchanges through open windows.

However, a significant part of the underground economy consists of legal activity, such as the sale of sliced watermelon, bottles of Coke and fried platanos in Managua or the automotive repair and oil change businesses that operate out of back alleys in Chicago.  In an economy in which there aren’t enough jobs to go around, the point of such efforts is to earn a dollar or two in profit to allow one to get through another day — to put some kind of food on the table for the family, even if it’s just rice and beans in Nicaragua or peanut butter and jelly in the United States.

Indeed, it’s sad to say that unemployment is starting to make the United States look more and more like Latin America or Africa.  With a large segment of our population descending into third world conditions, it’s no wonder that the Occupy movement railed so mightily against the “one percent” just a few years ago.

In most other parts of the world, the “underground economy” goes by the name “System D.”  The “D” stands for the French term la débrouillardisme, which is most often translated as “resourcefulness,” although that word fails to capture the true nuance of the French.  The original phrase embodies some combination of “schemes to get by,” “living by one’s wits,” “knowing how to get around the system” and one of my favorite terms from back in the 1970s, “gettin’ over on the man.”  In France, to say that someone is très débrouillard is an expression of high admiration.  It means that you are able to figure out a way to get what you need, even when the odds are stacked against you, wink, wink.

I have come to realize that, here in the United States, System D takes on numerous forms, including learning how to work the system and learning how to live outside it.  Some combination of these is what enables the unemployed to keep going without a steady paycheck.  For example, it is perfectly legal for a person to earn a certain amount of money while drawing Food Stamps.  Your EBT card will rarely feed the family until the end of the month; even if you can supplement it with some canned goods from the local food bank or the occasional dumpster dive, that isn’t going to help if your kid needs a pair of shoes.  So the unemployed frequently supplement whatever kind of benefits they are receiving by selling goods or services on the side.  This could mean anything from setting up a table at a swap meet to babysitting to fixing things as a handyman.  Haynes describes bus drivers who pay a man a few cents to shout out the bus route number in the crowded marketplace.  Such informally obtained income is generally taxable, but of course, most people don’t bother declaring it.

Further strengthening the underground economy, those who find themselves in poverty often exchange good will by patronizing each other.  “I know a guy who knows a guy” is what everyone wants to hear.  And when there’s not enough money to pay the guy, there’s always barter.  Change the oil in my car and I’ll bake you some pies.  Venkatesh mentions Chicago shop owners who can’t afford a security guard and instead “hire” a homeless person to sleep in their tiny storefronts at night.

Understanding how the underground economy works in one’s community often makes it possible for the poor to get hold of the things they need.  The main thing, of course, is that you don’t ask too many questions.  Back in New York, I remember that there were always guys who knew how to get stuff that “fell off a truck.”  The retired guy who might be willing to fix your leak or the out-of-work teacher who can tutor your kid probably doesn’t have ads in the Yellow Pages (although, these days, they might have one on Craigslist).  It’s very much a word of mouth thing.  Here in our little relatively rural community, many people have little gardens where they grow various things — could be cucumbers or cantaloupes or cannabis, you never know.

I think of the three homeless guys who we’ve tried to help out here at the church.  Homeless Guy #1 is in jail, awaiting trial.  His needs are being provided for by the judicial system.  Homeless Guy #2 has done a lot of couch surfing and has now found a place to stay for a month or so.  Sometimes he works as a day laborer or fix-it guy or painter.  Other times, he doesn’t, particularly if there’s alcohol to be had.  He figures out ways to trade his services for whatever he needs.  Homeless Guy #3 sleeps on someone’s porch or under a tree, and begs sandwiches at the door of the parsonage when his Food Stamps run out.

His EBT was replenished yesterday, so we weren’t surprised to see him walking along the road with a full plastic bag from the local dollar store this afternoon.  When he passed by the panhandler who stands at the freeway entrance with the “homeless and hungry” sign, we saw him give the guy some money.

It’s funny how those of us who have the least are often the most generous.

 

Long-Term Unemployment: A Matter of Bad Timing?

Tomorrow will mark eight months since I was laid off.  This means that I have been among the ranks of the “long-term unemployed” for two months now.

I suppose that a recent pair of articles in The Washington Post and The New York Times should make me feel better about my unsuccessful job hunt.  Paul Krugman and Matt O’Brien assure me that it’s not my fault.  As it turns out, I’m just unlucky.

O’Brien ran a regression analysis that shows that becoming long-term employed is largely a product of being laid off at the wrong time.  Apparently, if you lose your job when the economy is bad, you may be out of work for a very long time.  If you lose your job when the economy is good, another company is likely to pick you up in short order.

This seems like common sense to me.  When the economy is bad, your employer is suffering and you’re more likely to lose your job.  But all the other employers are suffering too, so you’re not likely to find another one.  Lose your job when the economy is good and, big deal, the company next door and the one down the street are both hiring.

Despite the appeal of this logic, this theory hasn’t panned out for me personally.  O’Brien states that you were really out of luck if you lost your job in 2009, when unemployment peaked at 10% nationally.  If you were laid off in that year, he says, you had a 30% chance of becoming long-term unemployed.

Well, it just happens that I lost my job in 2009.  It took me eight months to find another, so technically I had slipped into the ranks of the long-term unemployed, proving out O’Brien’s theory.  What did I do to find that job?  For one thing, I filed 133 job applications in a total of 26 states.

After working at that job for three years and three months, I was laid off in the fall of 2013.  While the economy was not what one would consider wonderful at that time, it was a lot better than it was in 2009.  As I have been making just as concerted an effort to find another job as I did last time around, under O’Brien’s theory I would have expected to find work by now.  But it hasn’t turned out that way for me, or apparently, for anyone else.

“There’s never been this much long-term unemployment before, at least not since they started keeping records in 1948,” states O’Brien.  “Right now, 35 percent of all unemployed people have been out of work for at least six months.”  This figure reflects the fact that many who lost their jobs in 2009 are still unemployed in 2014.  By comparison, I was lucky.

So what of all my fellow “2009ers” whose job search efforts have been in vain and who have remained out of work until this day?  They have now been unemployed for five years, which is forever in the job market.  Their skills are no longer current, and their prospects of securing employment have dwindled right along with their self-esteem.  Not to mention the fact that prospective employers discriminate against them for that incriminating gap in their résumés.  Because they drew the short straw by becoming unemployed at the wrong time, they are likely to remain unemployed forever.  These people are forced into retirement, making a national economic recovery more difficult with the permanent loss of their skills.

“It’s the economy, stupid!” writes Krugman in his Times opinion piece.  Running the numbers gives the lie to “the alternate story, which is that the long-term unemployed are workers with a problem.”  This, of course, is code for lazy, stupid, can’t follow basic rules, don’t want to get out of bed in the morning, aren’t trying hard enough, would rather live off a government check, etc.  These are the kinds of qualities that conservative Republicans in the House of Representatives attribute to the long-term unemployed and use an excuse for denying unemployment benefit extensions.  The fact that none of this is true doesn’t seem to matter.  It is a little too convenient for them to ignore the fact that there simply aren’t enough jobs to go around and that, ultimately, the economy is the cause of so much long-term unemployment.

But Congress would prefer that we stop confusing them with the facts.

The Minimum Wage Debacle

minwage

When the clock ticks past midnight on New Year’s Eve and the calendar flips over to 2014, the minimum wage here in California will increase by a dollar from eight dollars per hour to nine dollars per hour.

You can’t get very far on $8 or $9 an hour, but this is what a lot of us have to contend with, year in and year out, with no relief in sight.  This is what the smiling server at the counter or the drive-through window of your favorite fast food place earns.

At one time, some of us justified this paltry compensation on the grounds that fast food provided part-time jobs for high school students, not only providing them with spending money, but also inducting them into the workforce, providing opportunities for advancement and indoctrinating them into the Protestant work ethic.  National fast food chains even received special exemptions from the federal minimum wage, allowing them to pay “subminimum” rates as a reward for providing jobs for large numbers of the hard-core unemployed.

It’s a nice theory, and maybe it held purchase, up to a point, thirty or forty years ago.  But today, that server who you can barely understand through the crackly drive-through speaker and who you gripe at for messing up your order is probably not saving up to buy a prom dress or to finance a Saturday night date.  More likely, she is a single mother with a couple of kids at home, scraping by with an emaciated paycheck that places her family below the poverty line.

Many fast food workers have to resort to public assistance to keep themselves and their families afloat.  Some fast food employers make a point of encouraging employees to take advantage of whatever aid may be available from local charitable organizations and federal or state assistance programs.  Why not?  Let’s get someone else to help them out so that we don’t have to pay them more and we don’t have to reduce our profit margins.

Please think twice before shooting dirty looks at the person in line in front of you at the supermarket who is paying with an EBT card.  You may be thinking that this lazy person is living off the dole and sucking the taxes right out of your pocket.  Chances are, however, that this person is employed and contributing to the American economy, just like you are.  Only he or she is trying to support a family on minimum wage or less and probably needs to make a trip to the local food bank when the paycheck is spent and the EBT balance reads 25 cents at the end of the month.

This is also the person who doesn’t work a regular schedule, eight hours a day, like you do.  Your neighbor’s work schedule changes all the time, based on shifting patterns of customer volume and the whims of a young assistant manager.  If business slows down unexpectedly, this employee will probably be sent home, further reducing the week’s wages.  To help make up for this unreliable stream of income, he or she may be working two or three jobs just to pay the rent, keep the heat and lights on, and put food on the table.  The kids may be receiving free breakfast and lunch at school, thanks to federal programs, but they still have to be fed dinner and on the weekends and during school vacations.  It’s a struggle to plan and prepare healthful meals when you’re always working and have to kiss goodbye a large part of what you earn to pay for child care.  The temptation to buy cheap crap full of sugar and sodium is ever-present.  Stick it in the microwave and, voilà, dinner.  Because you’re just so tired.  And it never ends, Lord, it never ends.

So it should come as no surprise that fast food workers around the country skipped work shifts to stage protests today, calling for a minimum wage of $15 per hour.  The fast food industry thinks such demands are ridiculous, citing a significant increase in the prices of their products that would result from such a measure.

Of course, this argument is very convenient for the fast food industry.  Careful what you ask for, people, because your favorite Big Mac or Whopper will end up costing you ten dollars.  Your beloved Dollar Menu will now be the $4 Menu.

I don’t have to tell my smart and insightful readers that the fast food industry is full of shit.  They care not what their prices are as long as the public continues buying and their profits continue to increase.  Their only concern is that some consumers may be priced out of the market and reduce the frequency with which they take the kids to visit Ronald at the Playplace.

The fast food industry also cites the likely paradoxical effect of job cuts should protesters get what they want.  Now there’s an interesting argument.  Are they saying that they are currently overstaffed but can afford to keep more employees than necessary on the payroll due to the low wages paid?  Why does this sound as if they are lying?  No employer is going to carry surplus employees when cutting out the fat could result into the additional profits going into their pockets.  I realize this is a highly simplistic explanation of a complex economic phenomenon, but there you have it.

I suppose I should stop picking on the fast food industry in general, and on its poster child, McDonald’s, in particular.  There are plenty of other industries around that subject employees to the same minimum wage indignities.  Fellow blogger and Californian Michael from Sophoxymoria tells a blunt and brutal tale of what it’s like to work in the Central Valley feed mills.  He’d like to find more lucrative work but realizes that this is easier said than done.  “I’ve been debating what to do,” he writes.  “I saw my paycheck and they bumped me back down to 8 bucks an hour, yes that is minimum wage, if they could pay me less I’m sure they gladly would.”  Michael goes on to gripe (and sometimes laugh) about uncaring supervisors, the disposability of temporary employees, and employers that look the other way rather than address rampant on-the-clock drug use and sexual harassment.  (And he is a connoisseur of the taco trucks in Turlock, Modesto, Keyes and Denair.)

Some of the news reports are indicating that participants in today’s protests were able to skip out on their shifts at fast food restaurants because protest organizers paid them $50 for the day, about what they would have earned at their jobs.  Beyond the minimum wage issue, protesters are asking for the industry to unionize.  So it is no surprise that some employers are blaming the hullabaloo on outside organizations who have their own agendas.  This conveniently allows low-wage employers to dismiss their own roles in creating the problems that resulted in the protests in the first place.

Here in California, we have it better than in many parts of the country.  True, six states have higher minimum wages than California’s, but at least we’re doing better than the federal minimum wage, which has been stuck at $7.25 per hour for the past 4½ years.  Five states in the deep south have no state minimum wage at all, and four states have minimum wages lower than $7.25 per hour (employers there must still follow federal minimum wage requirements).

What about other countries?  Everyone knows that the United States is the richest country in the world and that the freedoms we enjoy have immigrants from the four corners of the earth banging down our doors to get in.  Yet our federal minimum wage is lower than that of many industrialized nations, including Great Britain, Ireland, the Netherlands and Australia.

Come 2016, California’s low-wage workers will get yet another dollar per hour in their paychecks when the state minimum wage reaches $10 per hour.  Unless, of course, activists are successful in their efforts to convince Congress to double the federal minimum wage before then.

In the meantime, Michael and thousands of his fellow low-wage workers will continue to barely survive on their meager earnings, taxing already underfunded government antipoverty programs and further squeezing churches and charitable organizations doing their utmost to prevent hunger and homelessness.

Happy holidays.