Wage stagnation plus pandemic hits hourly workers the hardest

American Rescue Plan will help these people most with extended unemployment benefits, rent assistance, $1,400 checks and child allowances.

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Editorials

March 16, 2021 - 11:13 AM

Six-year-old Isabella Harnett works on her tablet as her mom, Jennifer Ortiz helps her other daughter Gianna Bright, 8, with schoolwork Wednesday at their Allentown, Pa., home. The pandemic's strain on families is real.

Some remember when a single income could provide for an entire family.

Whether it was a job at Lehigh Cement or teaching school, Gates Corporation or IMP Boats, single incomes were sufficient to support a middle-class lifestyle. 

That hasn’t been the case for 40 years.

According to a recent report by the Economic Policy Institute, earnings for most have barely budged from 1979 to 2020. Only those in the 90th percentile of incomes have seen their salaries increased, handsomely. Top-tier incomes have increased more than twice as fast as those at the median level and nearly five times as fast as those for low-income workers.

The middle class, which once comprised the clear majority of American workers, is shrinking due to advances in automation and the off-shoring of jobs. That’s not going to change.

From 1970 to 2018, the share of aggregate income going to middle-class households fell from 62% to 43%, according to the Pew Research Center. 

Nearly half of all workers do not earn enough, on their own, to be financially secure.

Upper incomes, however, increased from 29% to 48%, during the same period.

That’s how we’ve become a country of the haves and have-nots.

It’s also why today two-thirds of families rely on two incomes to get by.

More than anything, the COVID-19 pandemic has laid bare the tenuous livelihoods of many when one wage-earner loses their job.

A Pew Research Center survey found that 36% of lower-income adults and 28% of middle-income adults had lost a job or taken a pay cut due to the coronavirus outbreak.

Young mothers, especially, have suffered because the pandemic not only disproportionately affected their jobs in the retail, food service and hospitality industries, but also closed their children’s’ schools and daycare centers. Many were left with no choice but to quit their jobs in order to take care of their children.

In January, the United States hit a 33-year low for the percentage of women in the labor force. Not only is this lost income a hit to families, but also to communities who rely on their spending power, stifling the economic recovery we all so badly need.

If families can’t afford to pay rent or mortgage, pay for healthy food, or child care, then the landlords, retailers, and child care providers feel the impacts, too. 

IN MANY industrialized countries, their governments provide “allowances” for raising children. Shortly after World War II, Canada began its program where families receive monthly “child allowances.” Today, families there receive up to $450 a month per child up to age 18. Great Britain began a similar program decades ago, averaging monthly payments of $150. Germany’s is about $260 a month up to age 25.

The fear of welfare-like programs has held back any such investment in young families in the United States. Here, only wage earners receive benefits in the form of child tax credits, leaving an estimated 30% of children short-changed. The result is staggering childhood poverty. An estimated 57% of U.S. children live in homes that are either considered “low income” or impoverished; 25% of children live in outright poverty.

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