Rethinking low-wage workers: Colorado Fiscal Institute calls underpaying ‘a free ride for employers’
January 3, 2018
Colorado’s average low-wage worker is not a teenager flipping burgers in a fast-food joint, as we might have thought, says the Colorado Fiscal Institute.
The average age of all Coloradans working low-wage jobs is 34 years old. Many are female minorities.
“This is contrary to the commonly held belief that most low-wage workers are teenagers who are working to earn some extra spending cash,” said Chris Stiffler, economist with the Colorado Fiscal Institute.
The study, “A Look at Low-Wage Employment in Colorado,” defines low-wage jobs as those paying less than a full-time worker would need to live above the federal poverty level for a family of four. Adjusting for inflation, that $12 threshold in 2014 is now $12.48 in 2018 dollars.
By that definition, just more than a quarter of jobs — up from 20 percent in 2010 — in Colorado are classified as “low-wage.” That is 634,000 of the total 2,507,680 jobs in Colorado in 2016.
The percentage of Colorado’s low-wage workers has been increasing since 2010. At the same time, real wages (adjusted for inflation) for the median wage worker in Colorado are lower today than they were in 2000, Stiffler said.
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In his study, Stiffler found that:
• The bottom 20 percent of wage earners have seen their wages rebound in the past two years, regaining the loss from the Great Recession.
• Women, Hispanics and African-Americans are more likely to hold low-wage jobs than other demographic groups.
• The portion of Colorado’s total jobs that are classified as “low wage” is smaller than most states, particularly when comparing cost of living and wages across states.
• For some of the largest segments of low-wage jobs, the cost of housing consumes more than half of the paycheck of those workers, particularly in the Denver Metro Area and resort communities.
• National figures show that 89 percent of workers who would benefit from a $12 minimum wage are at least 20 years old.
Hawaii has the highest portion of low-wage jobs in the country, data driven largely by the high cost of living in the island state. A Hawaiian worker needs to earn $23.06 an hour to have the same purchasing power as $12.48 in Colorado.
That $12.48 in Colorado has the same purchasing power as $11.13 in Alabama and $16.74 in California, Stiffler’s study found.
More than 40 percent of jobs in California are categorized as “low-wage” by this definition.
In North Dakota, fewer than 20 percent of the jobs in the state are categorized as low-wage.
The typical cashier in Adams County, Colorado, earns $10.15 an hour and needs to work 22 hours per week to pay monthly rent of $965 for a one-bedroom apartment.
In Eagle County, that same cashier has to work 22 hours at $11.41 an hour to pay the $933 monthly rent for a one-bedroom apartment.
Head to Pitkin County, and that cashier has to work 25 hours at $11.41 an hour to pay the $1,242 rent for that one-bedroom apartment.
That data comes from the U.S. Department of Housing and Urban Development, based in Washington, D.C.
MIT’S DATA SOARS HIGHER
The Massachusetts Institute of Technology, MIT, crunched some of that same data and found that if you’re an adult supporting yourself and one child, then a living wage is $26.49 an hour in Eagle County. MIT defines living wage shown as the hourly rate that an individual must earn to support their family, if they are the sole provider and are working full time, 2,080 hours per year.
Colorado taxpayers pay the cost of low wages, Stiffler said.
“Work that pays too little isn’t just a struggle for people trying to get by and a drain on the economy. It’s also a free ride for employers because taxpayers foot the bill for the public assistance people need when their jobs don’t pay enough to make ends meet,” Stiffler said.
The state and federal governments fund Medicaid jointly.
In 2014, Medicaid in Colorado cost $5.8 billion. Of that, $3.5 billion came from the federal government, $1.7 billion from the state budget’s general fund and another $550 million from other state cash funds.
Of the $1.7 billion in Colorado state tax dollars spent on Medicaid in 2014, $304 million went to covering low-wage workers or their children.
“That is $304 million that wasn’t available for schools, colleges, child protective services, transportation and other important state priorities. It is money that could have gone for those things if more Colorado employers paid their workers enough to get by,” Stiffler said.
Staff Writer Randy Wyrick can be reached at 970-748-2935 and email@example.com.