Americans who follow the fortunes of working families will be sobered by a cascade of worrisome trends and statistics in recent weeks. The most startling announcement came last Wednesday when the Kaiser Family Foundation reported that health insurance premiums for a family of four now run an average of $10,880 per year – $168 more than the annual wages of a full-time minimum-wage worker.
The soaring cost of health insurance for families is even more troubling in the light of the finding that only 60 percent of companies even offer health coverage to their employees, down from 69 percent five years ago. As a result, 7 million fewer people get their insurance through their jobs today than did in 1999.
Vanishing health benefits
The Kaiser study is buttressed by a recent U.S. Census Bureau report that a million Americans lost employer-sponsored health coverage in 2004 alone, even as the economy expanded. The Census reported that 46 million Americans, or 15.7 percent, lacked health insurance last year, compared to 15.6 percent in 2003. The only reason the situation wasn’t much worse is that the decline in workplace health insurance was largely offset by higher enrollment in government subsidized programs, primarily Medicaid.
So, more workers are losing employer-health coverage and replacing it with Medicaid and similar programs. That may be statistically almost a wash. But Medicaid is typically a program of last resort and it’s troubling to see that one of the principal benefits of work, health insurance, is diminishing just when an aging workforce is in greater need than ever. The reason for those lost workplace benefits isn’t hard to find: health insurance costs for employers jumped an average of 12 percent last year, five times faster than wages, according to the Kaiser study.
Sad to say, Colorado fares substantially worse than the national average. According to the U.S. Census, the number of uninsured Coloradans rose by 21,000 to 767,000 last year, or 17.1 percent of the state population, up a half-point from the 2003 report.
Health insurance is only part of the bleak picture in the recent Census report indicating that the current four-year economic expansion has done little if anything to benefit the typical American household. The numbers showed a $93 decline in median family income in 2004 to $44,389. The drop may not be statistically significant, but median income is now at its lowest point since 1997 after adjusting for inflation.
Eight-year wage freeze
From a political perspective, the stagnant status of many families is illustrated by the fact that it has been eight years since the last increase in the federal minimum wage. Since that 1997 boost to the current $5.15 an hour, the purchasing power of the minimum wage has fallen by 17 percent, hitting the second lowest level since 1955. In the last four decades, only 1989 saw the minimum wage buy even less than it does today.
A study by the Economic Policy Institute notes that the minimum wage now equals only 32 percent of the average wage for private-sector, non-supervisory workers – the lowest point since 1949. During the 1950s and ’60s, the minimum wage averaged about half the average wage of workers in these non-supervisory positions.
Poverty is growing
Against that background, the Census Bureau says that poverty has increased for the fourth year in a row to the highest level since 1998. Nearly 37 million Americans, or 12.7 percent, lived below the official poverty line in 2004, a rise of 1.1 million people from 2003, when the poverty rate was 12.5 percent. A total of 5 million additional Americans have fallen below the line since 2000.
As expected, female-headed families fared worst, with 28.4 percent of such families living in poverty. An analysis of the census numbers by the Center on Budget and Policy Priorities showed that between 2003 and 2004, real median annual earnings of full-time female workers shrank, for the second year in a row, to $31,233. There was one apparent glimmer of good news for women, in that the gender wage ratio rose slightly to 76.5 percent. But that supposed improvement occurred only because men’s earnings dropped even more than women’s did, by 2.3 percent, to $40,798.
The Census says that not only are more Americans poor and uninsured, but the depth of poverty has increased. More than 40 percent of America’s poor are now in dire poverty, earning 50 percent or less of the federal poverty threshold.
Colorado, with a median family income of $50,152, is relatively fortunate, with 9.8 percent of our residents in poverty. By comparison, the Gulf Coast states, even before Hurricane Katrina, all suffer poverty well above the 12.7 percent national average. Mississippi fares worst, with median income of $33,659 and a 17.7 percent poverty rate. Louisiana, with a median income of $35,523, has a 17 percent rate. Alabama, with a $33,111 median income, has 15.5 percent of its residents living in poverty. Those rates will likely rise in the months ahead with the loss of employment and property because of Katrina.
Pensions at risk
It never rains but it pours. Pensions, the other major non-wage benefit long cherished by American workers, are increasingly at risk. An Aug. 28 report in The Denver Post by Colleen O’Connor and Kelly Yamanouchi noted that in the past three years, more than 3 million American workers have lost pension benefits. Embattled United Airlines eliminated commitments to more than 35,000 retirees and nearly 60,000 employees. The federal Pension Benefit Guaranty Corp. will pick up a fraction of those obligations, but it discounts benefits heavily for higher-paid employees and those who retire before age 65. Pilots, who are forced by law to retire at 60, could thus take a double hit in their retirement plans.
Now Delta and Northwest Airlines have entered bankruptcy. More than 3,500 retired pilots and executives at Delta alone may face cuts in their pensions, though most of Delta’s 28,191 retirees and dependents will continue getting their benefits.
There are still 30,000 pension plans in place at U.S. companies, but the millions of workers who depend on them are understandably nervous about their futures.
Torpor in Congress
Some state governments, including Colorado’s, have tried to help residents obtain health insurance coverage. Thirty percent of the money in Referendum C on Colorado’s Nov. 1 ballot will be earmarked for health care for elderly, low-income and disabled Coloradans, as well as programs to lower health insurance costs for individuals and small businesses.
In woeful contrast, the worsening plight of American workers has thus far failed to bestir Congress – as its stubborn hibernation on the minimum-wage issue demonstrates. Since the federal minimum wage was first established in 1938, there has been only one other period, from 1981 to 1990, in which the minimum wage has remained unchanged for more than eight years.
Perhaps Congress and the Bush administration are indifferent to issues such as the minimum wage, health care and pension reform because workers are ill-organized and showing no signs of the solidarity that led to laws favoring workers in the 1930s, including landmark legislation such as the National Labor Relations Act and the Social Security Act. The recent defection of several large unions from the AFL-CIO has triggered much hand-wringing about the decline of the U.S. labor movement. In 1955, unions represented 35 percent of the workforce. In 2004, it was just 12.5 percent of the workforce nationwide – and a scant 7.8 percent in Colorado.
Unions are stronger in the public sector, where they represent 36.6 percent of Americans employed by federal, state and local governments. But in the private sector, union membership has nose-dived from 35.7 percent in 1953 to just 7.9 percent today.
The decline of unions means that most American families these days are dependent upon the trends of the labor market for their welfare. The plight of minimum-wage workers, lost health insurance and vanishing pension benefits underscore that those mercies aren’t always so tender.
The doleful statistics in the new Census and Kaiser reports and the callous attitudes in Congress underscore that Americans have their work cut out for them.
