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What's the real poverty rate in Minnesota? Higher than you think

If you, like Brian Rusche, hear news reports about the poverty rate in Minnesota being about 10 percent and think: "Is that all it is?'' read on.

Rusche, who makes his living advocating for the poor, has helped devise what he thinks is a more telling way of demonstrating the health of the American economy.

Called the Job Market Failure Index, this analysis includes both the numbers of unemployed and those who are working but not earning a "living" wage. "Over time this index has been getting worse and worse,'' said Rusche, who heads up the Joint Religious Legislative Coalition, an interfaith, public-interest lobby group.

"Everybody in their gut knows this is going on…that the number of families that are struggling mightily and are working" is not reflected in the usual unemployment numbers, Rusche told me Friday following his posting a piece called "Job Market Failure" to explain in more detail the concept he'd talked about on a local radio show. 


The numbers of unemployed have risen along with the numbers of jobs not paying what is called a "family supporting wage,'' he explains. 

By this standard, 39 percent of jobs in the Minnesota region pay less than living wage. By his calculations, the Job Market Failure Index in Minnesota in 2009 was 47 percent, compared to a Job Market Failure Index of 38 percent in 2002. 

A living wage was determined by the JOBS NOW Coalition and is "very sparse, stripped down expense budget,'' using 2009 data they compiled on the cost of living in Minnesota, he says.

Cost of living
From the JOBS NOW Cost of Living fact sheet posted on their website:

"The average annual cost of meeting basic needs for a family of four with two workers in Minnesota is about $58,000.

"To cover these costs each worker must earn $14.03 per hour.

"Thirty-nine percent of jobs in Minnesota — more than a million jobs — pay less than a family-supporting wage of $14.03 per hour.

"At the minimum wage of $7.25 per hour, a couple with two children would have to work 155 hours a week to meet basic needs."

The last election was all about jobs, Rusche said, but "we have to face up to the question of whether the jobs [being created] are good.''

"We want jobs that provide for food and shelter and stability,'' Rusche said, not jobs that require government to pay workers rent and food assistance.

We need to factor in, he said, whether or not labor is sufficiently rewarded, "whether the business model makes sense for the good of the community.'' He added: "If I hire somebody but don't pay them enough to put a roof over their head, I've used them, in, I think, an immoral way.''
 
The Joint Religious Legislative Coalition is authorized and governed by the Minnesota Catholic Conference, the Minnesota Council of Churches, the Jewish Community Relations Council of Minnesota and the Dakotas and the Islamic Center of Minnesota.

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Comments (8)

A family of 4 should not be working for minimum wage. That wage is for entry level employees, usually part time, usually for students or retirees. A family of 4 should have both parents working, hopefully they have been at jobs long enough, with a high school diploma that they can support themselves. Planning is very important before you start a family.

It is easy to say what a family of four "should" do, but the devil's in the details. I work in a homeless shelter where important details count. These details include: whether the worker or the worker's children has a mental or physical illness, past criminal, financial or rental problems, inadequate education, a car to search for employment or must rely upon employment near public transit. I agree, planning and good decision making is important, but even with those prerequisites it is darn difficult to get a job anywhere let alone a reasonably paying job.

Well Barbara, let's just run out there and tell all those families of 4 where one or both of the parents lost their job over the last two years, or was laid off for a period of time, or had their wages cut to below the living wage that they're going to have to give up the kids. They should have thought about the posssibility of those things happening before they had kids.

And those who got a divorce and no longer have two working parents in the household and possibly one parent not paying child support, well, what do we tell them? You should have thought about that possibility before you had kids??

Get real! I have friends who have Ph.D.s who had their wages cut by a third over the last two years so that their companies could at least keep people employeed. For the most part these people are still making a living wage, but they are doing without the housekeeper, the gardener, etc. People who may have been making a living wage and are now unemployed.

It would be nice if everyone lived in your neat little fantasy, but unfortunately reality is messier and life doesn't always go according to a plan.

"We need to factor in, he said, whether or not labor is sufficiently rewarded" Which is why we shouldn't raise the minimum wage to $14, because then we will be over-rewarding entry level positions. I think the real question is, how do we ensure a trained and prepared workforce? That is the only way the state is going to move ahead. Not by subsidizing wages.

We all agree that more jobs need to available for all who want to work. We all agree that getting an education is a plus and we want an educated work force. What we don't agree on is the fact that we will always need workers to mop, clean, care, and dig ditches, and that a good society would make work pay. We need a economic system which honors all workers with wages that allow them to live with dignity. So when the leglislature opens and job creation strategies are rolled out let us include in the disussion about making work pay. We do live in a land of plenty and we need to make sure everyone benefits.

"a trained and prepared workforce"

Trained and prepared to do what?

As long as policy makers continue to be in thrall to the ardently-believed-in but repeatedly-failed notion of "trickle-down" economics, this will continue to be a problem. For the vast majority of businesses, the primary cost factor is personnel, and paying the absolute minimum necessary to get people to do the work, whether it's digging ditches or writing computer code, is usually job #1 of the egregiously misnamed "human resources" department at companies big enough to have such a group. Smaller companies do the same thing, but usually less formally.

Frankly, unless and until we manage to construct a genuinely new economic model, much of the discussion of jobs, especially those that pay a living wage – especially if you’re going to use the word “dignity” in association with "living" – seems likely to be purely academic. Polaris has announced that it will lay off 500 non-union workers in Osceola, WI, close their plant there, and moved those jobs to Mexico, where the company can pay Mexican workers one-third of what they were paying their Wisconsin workers. It won’t make any difference how “trained and prepared” those Wisconsin workers might be. How many people reading items on this website can "make a living" on one-third of their current income?

Ask a GOP legislator what s/he proposes to do about that situation and the answer will be that we shouldn't regulate "the free market," or if we do, we should start by lowering burdensome taxes on that company, which will allow it to hire more employees, though that won't happen, or pay them better, though that won't happen either, or something else that relies on the supposed "magic" of the market. Mostly, they’d like us not to question their view of the market and how it works. Ask a Democrat, and the answer may well be legislation that forbids the company from moving its operation out of the country, or requires that it pay its workers a living wage according to the formula above, or some variation thereof. Those solutions are likely to be so expensive that the company can’t compete with its products, goes bankrupt, the workers lose their jobs anyway, and a new company is created in Mexico – or Sri Lanka, or the vast, untapped labor market of Africa – to make the same product.

The flaws in large-scale industrial capitalism seem more and more evident, but so far, we've not been able to devise a better – by which I mean more fair and equitable, as well as more stable – system. It remains to be seen whether the Chinese can make some sort of hybrid work in a society that is decidedly NOT democratic. Other attempts, whether the Soviet Union or the latest Latin American junta, have ranged from clumsy and unworkable to outright catastrophic failure, often with incalculable human and environmental costs.

Economics is a social science, but not the only one. Relying on economics alone - more accurately using it as an excuse - created the social situation America and Minnesota is in now.

The solution is the one Alexander Hamilton outlined at the begining of the American experiment: the government sets broad economic policy and the private sector implements. This idea was thrown out the window in early 1980s by the Reagan notion of "government is the problem." The wages of average Americans stagnated. Two wage earners, not one as previously, were needed to make a middle-class family viable. Average Americans' wages have been stuck for thirty years, while overall productivity and prosperity have continuously increased because the vast majority of new productive capacity has moved out of the country.

In a sense, China is making good now following the American plan. The Chinese government sets policy and their private sector implements it. The big difference is that the communist single-party system is in tight control. In America, the government is elected by and represents the will of the people. We've done it to ourselves by successively electing government majorities that support the ideal of pure free markets over the practicality of the private sector supporting all Americans by sharing a bit of the prosperity with all Americans.