Op Ed: No One Should Work Full-Time & Live in Poverty

In December 2013, President Barack Obama stated that deficit of opportunity is a bigger threat than our fiscal deficit and the growing income inequality in the US is the “defining challenge of our time.” Americans and the leaders of our country are concerned about economic recovery and stability. Moreover, stagnant (and dropping) wages combined with globalization and de-unionization, strips workers from the bargaining power and economic power they once possessed. No one should work full time and live in poverty. Raising the minimum wage for workers will not only help close the income gap, but also get local economies moving, benefit millions of families, and improve the overall health of our citizens and country.

Indicators of an Insubstantial Minimum Wage:

Over the past 50 years, we have seen a $5.65 increase in the nominal federal minimum wage from $1.60 in 1968 to $7.25. However, in real value, that $1.60 minimum wage in 1968 was actually $10.69, almost 50% more than the current minimum wage.  In comparison, workers making minimum wage are nominally per hour making almost one third of the average private sector earner (who makes $20.31/hr). This vast inequality affects 28 million workers, of which 19 million would see a direct increase in their wages from an increased minimum wage. Right now, a full time minimum wage worker makes $14,500 a year which leaves families far below poverty lines for families of 2, 3, and 4. 

Five years and counting…

So why hasn’t the federal minimum wage changed in five years? A lot of the stagnation has to do with the public perception of those in poverty, the fear of “big government”, and the belief that higher wages are bad for the economy. For most of history there has been a distinction between the deserving and undeserving poor, or that poverty is a matter of choice. Reagan once stated that (in terms of homelessness) some people choose to sleep on grates.This school of thought holds that those in poverty are there not because of government failings, but rather because of poor choices. Viewing the cause of poverty as an intentional or inadvertent action taken by citizens.  In essence, this reasoning blames the victim for their misfortune and poverty. Others may fear government intervention citing simple economic theory as reasons for why regulation of wages fails workers, but we have seen that living wages are in fact better for the community. Dan Mitchell, senior fellow at Cato Institute has said “Businesses are not charities and that they only create jobs when they think a worker will generate net revenue. Higher minimum wages, needless to say, are especially destructive for people with poor work skills and limited work experience.”  This sentiment has been a common one within the opposition of raising the wage. The rhetoric of missing a rung on the ladder, free market economies, and exaggerated minimum wage examples like $50 or $100 are employed to diminish the importance of a wage mandate. However, the rhetoric used comes mainly from those who are not making the minimum wage, or leaving in poverty, but from elites. Those with the power and resources to help solve poverty would not benefit from changing the structural and institutional causes of it, and might even jeopardize their power. [9] 

Connecting Poverty & the Minimum Wage:

A stagnant minimum wage is failing workers and failing the United States by stripping millions of people from the bargaining and economic power they once possessed, it has contributed to the collapse of the working class, and has far reaching negative consequences. In the US, nearly 50 million people are considered poor. In March, Sen. Bernie Sanders said, “Unfortunately, despite our great wealth, more of our citizens are living in poverty than ever before and we have the highest rate of childhood poverty of any major country in the industrialized world. We have a moral responsibility to end childhood poverty in America.” More than 1 in 5 children in America live in households that lack consistent access to adequate food because their parents don’t make enough money. Michael Reisch, a professor of social justice at the University of Maryland, has said that “Poverty not only diminishes a person’s life chances, it steals years from one’s life.”  Frequently news stories appear discussing the alarming effects of poverty on health including increased occurrences of cancer, high rates of obesity, high levels of stress, and more. In fact, a recent study has shown that even those who “pull themselves up by their bootstraps” cannot escape the long term, ill-health effects of poverty. Raising the minimum wage would provide a sound foundation to build a system that could begin to reverse and end the deleterious effects of poverty.

Based on the Fair Market Rent for a two-bedroom unit, raising the wage to $10.10 could help minimum-wage workers ($7.25/hr) afford more than 6 months of rent. Workers making $10.10 an hour rather than $7.25 would afford families 36 weeks of groceries. Raising the wage to $10.10 could help minimum-wage workers afford 103 tanks of gas each year (1 tank = 15 gallons, which is the average for a mid-size car.). Raising the wage to $10.10 could, over a year’s time, help minimum-wage workers afford the equivalent of 3.5 years of electricity.

The government has a duty to invest in the wellbeing of its citizens, raising the federal minimum wage would benefit workers and in turn their families. After five years of stagnation, where the minimum wage hasn’t been adjusted to living costs, and an unprecedented, widening income inequality gap, it is time for a more comprehensive, up-to-date labor and wage policy. A policy that holds corporations more accountable and better protects employees.

Lessons from Pennsylvania’s Medicaid Expansion

The Obamacare Medicaid expansion became less of a political football last month as Pennsylvania Republican Governor Tom Corbett struck a deal with the Obama administration to expand the state’s low income health care program. 

Pennsylvania is the latest in a series of Republican-led states to accept one of the central aspects of Obamacare after negotiating flexibility from the Obama administration.  In conversations going back to 2013, Pennsylvania has asked for 24 waivers from traditional Medicaid rules in exchange for providing health care coverage to an estimated 300,000 state residents below 138 percent of the Federal Poverty Level.  As in other states, the administration has accepted some of Corbett’s proposals while sidelining others.  Here is how the deal shakes out.  

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Source: Center on Budget and Policy Priorities

Beginning January 1, 2015, Pennsylvania will provide health insurance coverage to those newly eligible through health plans called the Private Coverage Option (PCO). According to the waiver approval, these PCOs look like the coverage options provided to most Pennsylvania Medicaid recipients through the state’s managed care program.  This sets Pennsylvania apart from another waiver state, Arkansas, and traditional Medicaid expansion states in terms of insurance offerings.  Traditional Medicaid expansion states have offered coverage through the state’s fee-for-service Medicaid programs, while Arkansas beneficiaries purchased care through the Affordable Care Act Marketplace in the state.  

The state will be allowed to charge monthly premiums to beneficiaries above the poverty line starting in 2015.  These premiums will not be allowed to be more than 2% of a patient’s income, and these premiums can be reduced by getting an annual physical, although the waiver does not specify how much those who get the check-ups will save.  Pennsylvania joins Iowa in requiring premiums from those above the poverty line.  Michigan also requires a monthly financial commitment from beneficiaries, but this money goes towards a personal health savings account.  

Pennsylvania also joined Iowa in receiving a one year waiver for providing a benefit common to Medicaid known as Non-Emergency Medical Transportation (NEMT).  This benefit provides transportation to routine medical appointments to patients who do not have reliable transportation.  Pennsylvania will have to provide NEMT in the second year.  

Finally, the administration rejected a Corbett proposal to require that Medicaid beneficiaries have or be in search of a job to receive Medicaid benefits.  Although over half of those estimated to receive Medicaid under expansion are already working, Corbett proposed tying Medicaid to work.  

There are a few lessons for other states considering Medicaid expansion in the wake of the Pennsylvania decision.  First, states should not expect to receive approval for tying work requirements to the receipt of Medicaid. States like Utah and Missouri, which are considering expansion, have indicated their interest in a work-requirement provision.  Traditional Medicaid does not allow a work-requirement to receive benefits, and the administration reaffirmed that the Medicaid waiver process will not allow them either.  

Second, Medicaid already has a significant presence of private insurers, and Medicaid expansion can be a route to continuing that trend.  Between 2002 and 2011, the number of Medicaid beneficiaries who received coverage through Managed Care increased from 57% to 74%.  Some states insure large portions of their low income population through commercial Managed Care Organizations like Florida, Virginia, and Wisconsin (all currently non-expansion states).  Other non-expansion states like Georgia, Tennessee, and Texas insure a significant number of people through Medicaid-only MCOs.  Pennsylvania will be relying on its current network of Managed Care providers to implement it’s Medicaid expansion, and it is possible for other states to do the same.  

Finally, states have leverage with the Obama administration in designing traditional Medicaid expansion alternatives.  The approaches taken in Arkansas, Iowa, Pennsylvania, Michigan, and the proposed Indiana plan are all unique.  The administration has some concessions it will not make (like work requirements and expanding to only part of the eligible population) but the structure of expansion is largely left up to the states.  States should take advantage of this leverage to craft expansion proposals that fit their state’s needs and address needed reforms without hurting beneficiary access to care while the federal government is paying for 90 cents on every dollar.  

As the political fire that is Obamacare turns to embers, states should begin to engage in a real debate about making Medicaid expansion work in their states.  Pennsylvania just did. 

Bobby Jindal’s Common Core Lawsuit Will Fail, But That’s Not What He Wants Anyway

In late August, as students across Louisiana bought their school supplies, packed their backpacks, and enjoyed the last days of summer, Louisiana Governor Bobby Jindal was preparing a slightly different plan to kick off the new school year. With all the fanfare of an ambitious young politician, Jindal, a likely 2016 Republican contender, announced a lawsuit against the Obama administration to block the Common Core State Standards, which were scheduled to go into effect during the 2014-2015 school year.

Those who have been following the rollout of Common Core will appreciate the irony in Jindal’s suit. Just two years ago, after volunteering his state to adopt the standards, he claimed that they would “raise expectations for every child.” Now Jindal has reversed his position, indicating the extent to which the politicization of the Common Core State Standards has turned education reform into an ideological battlefield. 

By all looks and appearances, Common Core is a palatable solution. It aims to combat the meager race-to-the-bottom standards states adopted in the No Child Left Behind era. It is a bipartisan initiative with widespread support from both sides of the political aisle. Better yet, it is a truly state-led program, spearheaded by the National Governor’s Association and other sub-national leaders. 

Despite these accolades, the Common Core standards are getting a bad rap. According to a recent Education Next poll, 53% of the public supports the standards – still a majority, but significantly less than the 65% favorable rating the standards got last year. The split is also divided on party lines. In 2013, support for the standards was about equal: 57% of Republicans and 64% of Democrats favored the standards. Since then, Republican support has dropped to 43% while Democratic favorability has remained about the same. 

The standards’ unpopularity is largely due to the perception that the Obama administration has forced States to accept Common Core through backdoor deals and manipulations without public consultation. So could Bobby Jindal’s lawsuit be the federal education showdown we’ve all been waiting for?

Short answer: no. Jindal’s suit is merely a political stunt, designed to win him the Common Core Crusader reputation he so covets, but his case is built on tenuous grounds at best. Jindal claims that the U.S. Department of Education coerced states to adopt the standards. While this isn’t exactly untrue – the Obama administration requires states to adopt “college and career ready standards” to receive Race to the Top funds – this kind of policy coercion has a strong historical precedent.

Education has historically been an issue under the purview of state and local governments. It is one of the nebulous public services protected under the tenth amendment to the U.S. Constitution, but that doesn’t mean the national government will keep its fingers out of the soup. 

Ever since FDR’s New Deal era, the national government has shifted its weight around in an attempt to influence local policy. This isn’t a bad thing. Just look at the interstate highway system. Prior to 1956, individual states were largely responsible for creating their own system of interconnected highways, which predictably resulted in a disorganized tangle of roads—each with their own signs, laws, quality, and maintenance. By the mid 1950s, there was a need for a more unified highway system, not only to facilitate interstate commerce, but also to ensure efficient mobilization of troops in the event of an invasion. 

The Constitution reserves to the states the right to create transportation and highway policy, but Congress needed a plan that would wrest this power away from state governments and enforce a national standard. Rather than passing regulations, which would require a Constitutional amendment, Congress authorized a grant program through the National Interstate and Defense Highways Act that would cover 90% of the construction of an interstate highway system. The grant program was irresistible to states: it significantly decreased the cost of construction, requiring States to pay only ten cents to the dollar. As expected, these grants came with strings attached.

All states that accepted the Interstate Highways money would be required to adhere to specific regulations, allowing the national government to elbow its way into state policy. Congress later used highway money to push the states to unanimously increase the legal drinking age from 18 to 21, a move upheld by the Supreme Court.

All this is to say that federal coercion in state policymaking is not new. President Eisenhower leveraged federal funds in the 1950s with the Interstate Highway System. President Johnson did the same in 1965 when he passed an amendment to the Social Security Act to create Medicaid. The Bush-era No Child Left Behind act also relied on federal pressure. Transportation, healthcare, and education are all services left to the states, but the national government has a knack for pulling strings to get what it wants.

So will Bobby Jindal’s lawsuit succeed? No. At least, it’s very unlikely. Back in 2005, a coalition of school districts from three states – Michigan, Texas, and Vermont – along with the National Education Association (NEA) and several NEA affiliates, tried unsuccessfully to challenge No Child Left Behind. The plaintiffs argued that the law failed to sufficiently cover the costs of implementation and was, thus, an unfunded mandate. Long story short, the suit failed. The Court argued that the statutes did not prohibit Congress from “offering federal funds on the condition that States and school districts comply with the many statutory requirements, such as devising and administering tests, improving test scores, and training teachers.” Basically: if you take our money, we get to call the shots.

Louisiana is one of 19 states that have received money through the Race to the Top grant program. If Bobby Jindal is going to accept federal funds for education in Louisiana, then he will have to stomach the fact that they come with strings attached. 

Jindal’s lawsuit will fail—but that’s not what he wants anyway. Jindal is betting that the 2016 Republican primary electorate will lean far to the right and reward his hard stance against perceived federal overreach. By then, Louisiana Common Core will be in its second year – for better or for worse.