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Screwing the Poor: Medicaid Expansions and the Minimum Wage

by: DocJess

Tue Mar 12, 2013 at 05:57:04 AM EDT


We know two things that would greatly help the poor are a Medicaid expansion in all states and a raising of the minimum wage. Of course, single payer would be a better thing for legitimately raising all boats, but that's another post.

When one has a low paying job, often there are no sick days. Which matters because people come to work sick, as they cannot afford to lose the income. This is bad because diseases are often shared. For non-communicable diseases like diabetes and heart disease, there is no coverage for medical care, and it's just disastrous. Higher wages would enable the afflicted to afford co-pays and medications. Some amount of coverage would help to keep those co-pays lower. 

This doesn't even touch the point that when people are paid very low wages, the taxpayers making higher wages subsidize costs associated with those workers and their families. Multiple studies have been done which show that Walmart workers disproportionately receive SNAP funds, plus their kids often qualify for SChip. Don't get me wrong, I'm personally glad to help support people in need with my tax dollars, I just think employers should pay a living wage so that tax dollars could flow to other things, like education.

In Florida, Rick Scott finally came around to supporting the Medicaid expansion. It's a good deal for all the states who take it as the expansion is funded 90% by the Feds. But at the time of this writing, the state house and senate are looking at overriding his choice. There's an interesting study from the Florida Center for Fiscal and Economic Policy. (Whole report here.) It shows how the rejection of the Medicaid expansion not only hurts workers, but also ends up costing employers of low wage workers MORE than if Medicaid was expanded.

Now let's talk about minimum wage and workers. We all know that President Obama recommended raising the minimum wage from $7.25 to $9.00. The Democrats in Congress want $10.10. What you may not know is that these raises, while a step in the right direction, leave out two groups of people, one of which is much more fragile than the overall pool of minimum wage workers.

The first group is tip-earners, mostly waiters and waitresses. Currently, their hourly wage is $2.13. While there are differences from state to state, and within certain cities, the idea of Federal legislation is that the waitpeople should make enough tips to raise their hourly wage to at least $7.25. This doesn't usually happen. First, often tips are pooled, with some portion being accorded to busboys (who do make minimum wage), sometimes the kitchen staff, and sometimes front of the house (like hosts/hostesses) and even management. Starbucks, for example, was successfully sued ($14 million) for tips going to managers. Wherever the tips go, taxes are deducted from the waitperson's intake, even if they don't get to keep it. In addition, a lot of times, waitpeople work hours before/after the restaurant is serving, to do side work. There are no tips in those hours. In a lot of places, if a customer puts the tip on a credit card slip, taxes are deducted directly before the money goes to the waitperson.

The proposed legislation would raise tip-earning minimum wage to 70% of the full minimum wage. This would help, but there needs to be more fairness in the tip system overall.

The worst-affected group, however, is that of the disabled. There are approximately 420,000 Americans with major disabilities who work for a sub-minimum wage in sheltered workplaces. The original intent, when the program was established in 1938 was a good one: pay a little money to the disabled to teach them a skill, so that they could be able to find real employment. Sadly, currently only 5% of the sheltered workshop employees end up getting out, the rest remain, being paid several cents an hour. An example of these types of employers is Goodwill, which pays 20 cents per hour. Full report here. Here's another take:

In addition to the segregation and poverty engendered by sheltered workplaces, many advocates say workers with disabilities often face exploitation. In 2009, Iowa shut down a “bunkhouse”--essentially, a shed--where 60 men with disabilities employed by the meat processor Henry Turkey Services were forced to sleep. The bunkhouse was unheated, poorly insulated and infested with cockroaches. The company deducted $10,000 a week from the paychecks of the workers housed in the bunkhouse.

Aside from the deplorable housing conditions, the 60 workers with disabilities were paid only $0.41 an hour to work alongside abled workers who were earning between $9 and $12 an hour.

41 cents and hour, times 40 hours a week times 52 weeks is an annual wage of $852.80. Before payroll taxes. In 1938 the average annual salary was $1,700, so $850 was doable. Back then, one could get a house for about $6,000 dollars and a car for well under a grand. Things have changed: wages for the disabled in sheltered workshops has not.

So what does this all mean? As we move forward with the discussions of minimum wage and the expansion of health care, we need to remember those who truly need our voices. We need to raise wages for ALL, and insure health coverage for ALL. 

You know what's next: call your reps. Tell your friends. Only public pressure will make a difference. 

DocJess :: Screwing the Poor: Medicaid Expansions and the Minimum Wage

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