Measuring New York City's Wage Adequacy

Public policy in recent years has stressed the primacy of employment over public support to address poverty, yet too many of New York's jobs simply do not pay enough.
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Last week saw the release of the 2010 New York City Self-Sufficiency Standard, a report that determines how much it takes to get by in the city. The report looks at the cost of basic needs: housing, child care, food, health care, and transportation. A modest allowance is made for miscellaneous items such as clothing and telephone service, and the impact of taxes and tax credits is accounted for. The Standard's budget assumes no private or public sources of support, save for tax credits.

The cost of living in the Self-Sufficiency Standard is calculated for each of the boroughs, with separate calculations for the northern and southern halves of Manhattan. Budgets are determined for single individuals, couples, and many types of families, reflecting the particular costs associated with raising infants, preschoolers, school-aged children, and teenagers.

For example, a Brooklyn family with two adults, a school-aged child, and a preschooler needs $68,288 a year ($5,691 a month) in 2010 according to the Self-Sufficiency Standard. Child care is the largest expense ($1,428) in this family's monthly budget, followed by housing ($1,244 for a two-bedroom unit) and taxes ($810 net of credits). By contrast, the Federal Poverty Guideline, used to determine eligibility for particular government programs, is only $22,050 for a family of this size, less than one-third of the Self-Sufficiency Standard level.

The Self-Sufficiency Standard represents an extremely bare-bones budget. It does not allow for any savings or debt re-payment. There is no room for a major purchase, such as that of a washing machine or a car. The occasional meal out in a restaurant does not make the cut, and vacations are out. There is no fat in this budget, let alone any cushion.

Starting from the assumption that all adults in the household are employed fulltime, the Self-Sufficiency Standard provides a measure of wage adequacy. How far do wages go in meeting these most basic of needs? The adults in the Brooklyn family above both require an hourly wage of $16.17 to reach the Self-Sufficiency Standard. Earning $16.00 (approximately the median wage in New York City, i.e., half of New Yorkers earn less), nearly brings this family to the Standard's level. If both adults earn the minimum wage--$7.25--the family's earned income comes to well under half of the Standard.

Where there is a shortfall in achieving wage adequacy based on earnings, the Self-Sufficiency Standard (and its online, interactive calculator) maps out what public supports, such as Food Stamps and subsidized child care, are available to individuals and families based on their income and family composition. (It should be noted that there are extensive waiting lists for subsidized child care in the city, and eligibility does not guarantee access.)

The report also points out the existence of a "policy gap"--those cases in which a family's wages fall below the Self-Sufficiency Standard yet are high enough to disqualify the family for programs such as subsidized health care, subsidized child care, and nutritional assistance.

Thus, the Self-Sufficiency Standard is a valuable tool, telling us what it costs to meet basic needs across the city and across family types and the extent to which public supports may help bridge the difference between those costs and a family's earnings.

So, how does New York City measure up with respect to wage adequacy?

Wages for many workers haven't been keeping up and are far from adequate. The report found that the Self-Sufficiency Standard for a family with two adults, one preschooler, and one school-aged child rose by 33 percent across the city between 2000 and summer 2009. Contrast this with a 16 percent increase (not adjusted for inflation) in the typical earnings of a New York City resident over this same period.

Looking at the ten most common occupations in the city, the report found that median wages for six of them do not meet the Self-Sufficiency Standard measure for a single adult without children living in Brooklyn, $28,367 (or $13.43 an hour). (A seventh occupation--that of janitor--just cleared the threshold.)

For the Brooklyn family with two adults, a school-aged child, and a preschooler, only two occupations in the top ten--executive secretaries/administrative assistants and registered nurses--would allow the combined earnings of two fulltime workers earning the median wage to meet the Self-Sufficiency Standard level.

Retail salespersons represent the most prevalent occupation for the city's residents, with more than 100,000 New Yorkers holding one of these positions. Yet median wages for these workers are only 77 percent of the Self-Sufficiency Standard for a single Brooklyn adult. In other words, half of retail salespersons fall below 77 percent of the Standard.

With a school-aged child and a preschooler in the picture, wage adequacy for two retail salespersons earning the median wage drops to 64 percent for a Brooklyn family with two adults employed fulltime.

What are the other most common occupations in New York City? Besides retail salespersons, the top ten includes six other largely low-wage occupations: office clerks, janitors, home health aides, security guards, cashiers, and home care aides.

The findings of the report imply a stark future for the city if most of its largest occupations do not pay median wages that allow an adult employed full-time to meet basic needs, let alone to support a family. Public policy in recent years has stressed the primacy of employment over public support to address poverty, yet too many of New York's jobs simply do not pay enough for workers to raise themselves and their families to a modest standard of living.

The report acknowledges the importance of education and training in helping workers to gain a foothold on the path to self-sufficiency and, eventually, a reasonable level of economic security. Indeed, public policy should ensure adequate education and training opportunities are available, and workers should take advantage of them.

But it is not enough to exhort workers to invest in their skills when most of the jobs among the top ten occupations do not meet the test of wage adequacy even for a single person in Brooklyn. The prevalence of low-wage jobs is not a problem individual workers can solve, and the city's policymakers must actively address this issue.

Legislation, such as the recently-introduced Fair Wages for New Yorkers Act, that requires a wage floor for recipients of some of the city's generous economic development subsidies and their tenants, is a start. When the city uses public resources to subsidize retail malls and commercial office buildings, it should not subsidize low-wage employers.

Many more efforts in this vein are required, though, if New Yorkers are serious about tackling the challenge of the wage adequacy of the city's jobs.

A 2010 Self-Sufficiency Standard Report for New York State is also available.

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