Wage Gap Grows

Only one out of 10 job seekers in the Pacific Northwest will find an available job that pays enough to live on. Nine out of those 10 will struggle to make ends meet.
That's according to an economic study out this week by the Northwest Federation of Community Organizations.
Its authors say the report takes on new meaning in light of the economic downturn and ballooning numbers of laid-off workers across the region.  
Advocates say that while private sector jobs are being wiped out, the state budget shortfall promises to pink-slip significant numbers of public sector workers – an economic double-whammy.
Gerald Smith, who helped write the study, lists its findings like a menu of misery.
"A single adult with two children, only 23 percent of jobs would pay a living wage to support a family of that size, and a family with two adults one of them working with two children, only 28 percent pay a living wage," he says.
"The most alarming number in the report is the ratio of job seekers to living wage job openings," Smith said. "For a single adult the ratio is three to one — that means there are three times as many job seekers as there are living wage openings.
"For a single adult with one child, the ratio is six to one – there are six times as many job seekers as there are job openings that offer that living wage."
According to the study, household finances people who lose work will reach a crisis stage in Washington if the proposed budget cuts to critical social services for low-income people are passed. Those include the state's Basic Health Plan, which faces cuts of 7,700 slots.
"So as a summary, the results show that there's not nearly enough job openings in the economy that pay a sufficient salary for a family or an individual to afford a basic standard of living," Smith says. "For many families and individuals hard work is simply not enough to provide a basic standard of living."
In Oregon, the report indicates households are being squeezed even harder, as the cost of living is the highest among the four states of the Pacific Northwest.
According to the report, the minimum hourly wage needed to sustain a single adult in Montana in 2007 was $10.95; in Idaho, $11.49; in Washington, $12.27; and in Oregon, $12.39.
The minimum living wage for a single adult with one child was $18.38 in Montana; $19.63 in Washington; $20. 57 in Idaho; and $21.18 in Oregon.
For two adults, both working, with two children, the combined wage per hour required to sustain a household was $29.97 in Montana; $33.59 in Washington; $31.90 in Idaho; and $34.18 in Oregon.
He says the report's statistics are based on 2007 data, so the impacts of the current recession have not been reflected.
"Which means that in all likelihood these numbers are underestimates, particularly in terms the number of job seekers for the number of job openings," he says. "So the picture is even more bleak."
"This report underscores the entire reason why our nation is in economic crisis right now," says Dennis Eagle, of the Washington Federation of State Employees.
 "In the supply and demand model, the demand side is drying up, people that are trapped in substandard jobs can't buy stuff, and that's why the whole economy is in trouble."
He says the important thing is how governments respond.
"The first response for government is to do no harm — that means don't lay a bunch of people off and don't slash critical public services because that only fuels the fire," Eagle says. "Laying off workers and slashing public services is essentially an anti-stimulus approach."
Eagle argues that government agencies can fix the economy by "priming the pump" through spending.
"Government needs to be hiring people, it needs to be purchasing goods and services. It needs to be building things, and it's by doing those two things – first by doing no harm then by priming the pump – you can actually increase the number of consumers out there who will buy things and get our economy moving again. But if we don't take appropriate action, the job gap is just going to get worse."
Jeff Johnson of the Washington State Labor Council says the region needs an unprecedented level of economic investment.
That includes increasing the readiness to build infrastructure projects, and ramping up apprenticeship programs as well as energy efficiency.
"We need to expedite any transportation infrastructure projects that can be ready to go within the next six to nine months," he said. "We need to invest in affordable employment-based housing, again using apprenticeship utilization so that we can bring our young people into the workforce into a highly skilled way and use energy efficient standards."
He also says that if government agencies increase unemployment benefits, that money will quickly circulate throughout the economy, lifting business and government sectors.
"This state would like to see unemployment checks go up by $50 a week for every unemployed worker out there," he said. "If we were to do this using October figures, that would pump an additional $500 million a week into the economy, with a simple multiplier, about $10.7 million of additional purchasing power per week for the economy in Washington State.
"Over six months that's nearly $300 million in purchasing power, and the great thing about it is people are unemployed everywhere so there's a good geographical spread on this in stimulating this aggregate demand."