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Workfare and the Non-Profits:
Myths & Realities

by Mimi Abramovitz, with Task Force on Welfare Reform, NYC Chapter, National Association of Social Workers.
(December 1997)

An estimated one million welfare recipients nationwide will be expected to be at work or involved in some kind of work from home activity by October 1997. During the next five years, another million recipients of Temporary Aid To Needy Families (TANF) ( formerly Aid To Families With Dependent Children or AFDC) will fall into this category. Although the new welfare law allows but does not require states to have a workfare program, workfare is expected to expand nationwide, placing new pressures on nonprofit agencies to increase their workfare participation This fact sheet highlights some of the dilemmas that non-profit agencies can be expected to face.

Workfare is not a new concept! Ever since towns in colonial America auctioned-off the poor to work for the lowest bidder or placed them in a workhouse, welfare officials have periodically resurrected the controversial practice of requiring public assistance recipients to exchange their benefits for "work."

The emphasis on work in the new welfare law and the lack of low-skilled lack of jobs in many communities has placed a high premium on expanding the current workfare program.1 In 1994, only 30,000 out of 5 million public assistance recipients nationwide had a workfare assignment.2

By mid -1997, the number of workfare slots in New York City alone stood at 37,000, up from 21,000 in 1996. In 1997-1998, the city expects to fill 65, 000 positions. Since each recipient must work at least 20 hours a week, to fill all the slots the city called-in more than 120, 000 adults during fiscal year 1996-1997. Another 180, 000 are expected to rotate through workfare "jobs" in fiscal year 1997-1998.3

New York and other cities will continue to place most workfare recipients in city agencies where thousands already sweep streets, clean parks, and perform clerical tasks in exchange for their welfare grant. However, the mounting pressure to expand workfare --along with the political fire that workfare attracts--has sent city officials scrambling for more workfare slots elsewhere. Of the 65.000 workfare placements planned for 1997-1998, 10,000 are targeted for non-profit institutions.4

The growth of workfare within non-profits has already sparked an intense debate in New York City which currently operates the largest workfare program in the nation, called the Work Experience Program (WEP). Some non-profit agencies are eager to take on workfare "workers" believing they can do well by them. Others are ambivalent. Still others--more than 70 churches, synagogues and non-profit institutions--have refused to cooperate with the city's workfare program because they find it morally unjust.5

Here are some of the issues.

----1----

MYTH: Any Welfare Recipient Who Wants A Job Can Find One

FACT: Job Seekers Exceed Available Jobs In Many Areas. The NYS Department of Labor predicts that New York City's will have 91,170 new job openings a year until 2002--less than one job for every eight job seekers. Similarly, California has projected some 269,000 new jobs per year through 2005, but expects job seekers to outnumber available jobs in all but one county.6

According to one calculation, if every new job in New York were given to a welfare recipient (470,000 in 8/96), it would take 21 years for all recipients to be absorbed into the paid work force.7 While there are some 355, 000 entry level jobs in New York City, welfare recipients will have to compete for them with 278, 000 jobless workers and countless numbers of employed people seeking additional part-time jobs Of the new jobs created since January 1997, many of the 22,000 that required higher skills are being filled by suburbanites who have flocked to the city whose official unemployment rate reached 10% despite the robust economy.8

The NY Times found that the vast majority of the 8000 women who completed the city's four week job-readiness clubs "pounded the pavement with resumes and newly fire dreams," but most failed to find work.9

DILEMMA: Nonprofits that accept workfare placements participate in a punitive system that raises the employment expectations of welfare recipients,10 but does not address the need for job creation. Despite their best efforts, it will be very difficult for non-profits to offer real jobs to the vast majority of workfare participants.

----2----

MYTH: Non-Profits Provide Workfare Participants With A "Better" Experience

FACT: Not On All Fronts! The belief that non-profit workfare slots are "better" than public agency assignments rests on two faulty assumptions: (1) that non-profits give recipients white and pink collar rather than blue collar placements; and (2) that filing paper and answering phones is uplifting, while de-littering the parks is demeaning and degrading. 11

In addition, depending on the non-profit agency's overall personnel policy, their workfare participants may or may not qualify for seniority, promotions, family and medical leave, payroll deductions for Social Security and Unemployment Insurance, the Earned Income Tax Credit or other fringe benefits.12 Workfare participants may or may not be covered by collective bargaining laws.13

DILEMMA: While non-profits may genuinely seek to treat workfare participants with dignity they are limited both by laws and policies which create strong incentives to take advantage of welfare recipients and by staff who may treat workfare recipients disrespectfully because they lack the status of regular workers. The harsh realities of workfare cannot be smoothed over by the belief that white collar workfare assignments in non-profits are "nicer" than blue-collar city work. There is no such thing as demeaning work, only demeaning pay and working conditions.

----3----

MYTH: Non-Profits Can Provide Workfare Participants With Effective Training

FACT: Workfare Interferes with Better Education and Training Opportunities. New York City regularly sends recipients to workfare placements without assessing their literacy levels, English proficiency, educational attainment, recent work history or job interests.14 Presuming that everyone on welfare needs a "work experience" to become "job ready," skilled recipients are made to answer the phone, serve food or sweep the floor.

While people with limited literacy or highly marginal job skills may benefit from learning how to find a job," "write a resume" or" show up at work on time," this is not the case for many others such as the laid-off Coney Island Hospital nurse who ended up cleaning the parks.( NYT? ) In addition to undercutting existing skills, workfare obligations prevent recipients from developing new ones.

The City sends most recipients to workfare rather than to programs which offer real training and job placement. Workfare has caused many recipients to drop out of GED, literacy, GED, and English as a second Language (ESL) programs. It has also forced some 9000 recipients attending City University of New York ( CUNY) out of college. Many like one mother of three with a 3.72 grade point average had to give up studying to become a teacher to take a workfare assignment.15 Allowing CUNY to be a workfare worksite will help individual students. But it does not change the punitive nature of workfare.

DILEMMA: Some non-profit agencies provide useful training experiences for one or more workfare participants, but cooperating with workfare program may bring harm to the large marjority of recipients. Can the non-profits train all the 10, 000 workfare participants in the non-profit pipeline? What about those among the thousands of recipients who are in less protected settings in non-profit or city agencies? Do the benefits for a few outweigh the human costs of a program that keeps the poor from large scale education and training programs that might actually lift them out of poverty and off welfare.

----4----

MYTH: Having Workfare "Workers" Helps Non-Profits Make Up For Budget Cuts.

FACT: Workfare Participants Are Not Cost Free. Non-profits participate in workfare to help recipients. They also hope workfare will stretch already tight budgets and allow them to restore important services that have been guttted by government cutbacks. Nonetheless, the directors of 1380 well-established non-profit agencies in 13 US cities with large welfare caseloads, and good experience with workfare participants, report that the cost of staff time and the training and supervision of workfare participants has made them cautious about accepting workfare placement.16

New costs may also be incurred now that the US Department of Labor has ruled that workfare recipients are in fact employees. If the ruling is enforced, non-profit agencies will incur added cost such as documenting the hours of workfare participants, placing them on the payroll at the minimum wage rate (which includes cutting a regular check), paying overtime, and buying additional liability coverage. Finally, depending on their personnel policy, agencies may also incur added fringe benefit costs.

DILEMMA: Although many non-profits take workfare recipients to help them become more employable and/or to make up for staff shortages, dwindling funds, reams of welfare department red tape, and new costs leave many agencies wondering if the demands of workfare will compromise their ability to treat workfare participants fairly and to provide proper service to clients.17

In addition to the requiring more organizational resources, acceptance of workfare allows the city to expand the workfare program with minimal opposition and permits city, state and federal officials to downplay the impact of government cutbacks and ignore the true causes of poverty: race and sex discrimination, the lack of jobs, and the absence of a living wage.

----5----

MYTH: Non-Profit Workfare Assignments Yield Permanent Jobs

FACT: The Prospect of Moving From Workfare to a "Real" Job is Slim. The available data indicate that a mere 1.6% of NYC workfare participants working for a non-profit found a job through that site: 6% found employment on their own.18 Other reports show that from July 1995 to August 1996, only 5% of 80,000 work eligible home relief recipients found a public or private sector job, including job secured independently.19

New York City reported that 18.5% of all AFDC and 15.1% of all Home Relief recipients assigned to workfare and other work program moved into regular jobs. However, instead of actually tracking what happened to participants, the city counted as "successfully placed in employment" cases that were closed for any reason after being called into a work activity, as well as applications for public assistance that were rejected and withdrawn.20

DILEMMA: Workfare not only fails to produce much permanent employment for most recipients but it can cost "regular" employees their jobs. Workfare may help financially strapped agencies lower their labor costs. But accepting 10, 000 more workfare participants into the non-profit sector will mean fewer paying and permanent jobs for all workers. It may also lower agency morale, as waged workers begin to fear for their own jobs.

----6----

MYTH: Non-Profits Can Become Workfare Sites Without Compromising Humanitarian Values.

FACT: Workfare Is Not A Win-Win Situation. Many non-profits accept workfare participants hoping to provide them with a good experience or at least to help recipients hold onto their welfare grant. However, non-profits may end up policing the very people they want to help.21

Non-profits must monitor the attendance of workfare partici-pants, report on their behavior, and provide other information to the city that can result in severe penalties for recipients. From July to December 1995, 13,563 out of 50,094 workfare participants were sanctioned and stood to lose their cash, Food Stamp, and Medicaid benefits for some period of time.22 Since then, the number of sanctioned cases has grown enormously.23

DILEMMA: Instead of being seen as an ally or advocate, clients and communities may conclude that the non-profit agency is an extension of an already intrusive bureaucracy or just one more social control agent.

----7----

MYTH: Everyone on Welfare Can Work.

FACT: Not All Welfare Recipients Are In The Same Situation: Nationally, about 70% of women on welfare leave the rolls within 2 years. Others combine welfare and work.24 But many women return to welfare due to layoffs, inadequate wages, domestic violence, lack of health benefits, child care services, or transportation. The ongoing decline of apparel manufacturing employment in New York and slowed growth in health care services, means less jobs for women with few skills.

Still other women on welfare cannot work due to insufficient education and training; a mismatch between their skills and available jobs; illness, disability, emotional problems; or the presence of old, young or sick relatives at home who require their care.

DILEMMA: Workfare rules place non-profits in collusion with a system that does not recognize the impact of labor market changes on the work opportunities for low-skilled women nor the individuality of recipients and their families.

----8----

MYTH: Workfare Does Not Displace Regular Workers.

FACT: Workfare Recipients Typically Do The Work Previously Done By Waged Workers Earning Full Wages. New York City promised not to replace laid-off unionized workers with workfare participants. Instead some 20,000 full-time city jobs were eliminated through attrition and aggressive severance packages and replaced with 37, 000 half-time workfare slots. Workfare workers now comprise about 3/4 of the Parks Department and 1/3 of the Sanitation Department's labor force.25

The same anti-displacement rules apply to the non-profits. In May 1997, unions filed a court case against the city that, while still pending, asserts that workfare violates the state law prohibiting workfare assignees from displacing or performing work ordinarily done by regular employees.26

DILEMMA: Replacing waged workers with workfare partic-ipants not only shrinks the supply of regular jobs in New York City but is deeply divisive. Workfare recipients resent being blamed for the city's meanspirited effort to lower its labor costs and weaken trade unions by using welfare recipients to get the job done.

Having been denied coats and protective gloves, exposed to hazardous materials, and blocked from other real training opportunities, some workfare participants say they feel like "indentured servants.27 Meanwhile regular city workers cannot help but resent workfare workers for taking the "jobs" of their former colleagues and fearing the same for themselves.

---9----

MYTH: Workfare Increases "Self-Sufficiency."

FACT: Workfare Subsidizes Poverty. A New York mother with two children working off her welfare benefits in a city or non-profit agency receives her basic monthly welfare grant of $577 from TANF and $256 from Food Stamps. This $9996 yearly welfare income falls far below the 1997 official $13,330-a-year poverty line for a family of three. Childless adults on home relief receive $352 a month in benefits and $110 in Food Stamps or $ 5544 a year compared to the poverty line of $7890 for a one person family.28

In addition to low benefits for recipients, former city workers who were replaced by workfare participants may find them-selves in lower-paying jobs, jobless, or on welfare them-selves. The recent ruling by the State Supreme Court that workfare violates NY State's prevailing wage law (which states that "payment credits" for work done by workfare participants engaged in "public works" projects be made at the State minimum wage or, if higher, at the wage paid to regular employees for compar-able work) underscores the meagerness of the benefits.29

The City appealed because the higher prevailing wage rate would reduce the number of hours WEP workers must work in exchange for their benefits. In an attempt to undermine the Court decision, the New York State legislature changed some, but not all, of the provisions of the social service law on which the case rested. Advocates continue to pursue prevailing wage protections in the courts.

DILEMMA: Workfare keeps participants poor and can impoverish former city workers. Public sector employment historically was a route into the middle class for women, immig-rants and persons of color whom the private sector refused to hire. The expansion of workfare and the shrinking of the City's unionized workforce, has all but eliminated this option for dis-advantaged groups. Will workfare place the non-profit sector on the same troublesome path?

----10----

MYTH: Workfare Takes Children Into Account.

FACT: Workfare Increases Caretaking Burdens. Workfare initially targeted single, child-less adults receiving Home Relief. Now, pressed by the new federal law to place 50% of single mothers on TANF into work activities by 2002, states are assigning mothers, grand-mothers, and even foster parents who qualify for public assistance to workfare.

Many parents will have to choose between abiding by workfare rules or raising their children, until their five year time limit is up when they will be kicked off the rolls altogether. Some women will manage, but the pressures combined with ordinary stresses of grinding poverty, ensure that many more children will end up in the more costly and already beleaguered foster care system because their mother cannot provide for them or because they have been neglected or abused.30

DILEMMA: Workfare risks depriving thousands of poor children proper care in their own and in foster homes. Non-profits will be faced with the troublesome reality that accept-ing workfare placements exacerbates the city's already severe foster parent shortage. The stiff work requirements interfere with the ability of foster parents on TANF to care for children and threatens to discourage others on public aid from stepping forward to serve as foster parents.

----11----

MYTH : Workfare Comes With Sufficient Child Care Services.

FACT: Workfare Increases But Does Not Meet the Demand For Child Care Services. As tens of thousands of welfare mothers are pushed into jobs and work programs, the demand for good child care services is soaring. New York is expected to need more than 500,000 additional child care slots for children over age 5, but federal welfare law does not guarantee child care for this group.31

Given the existing shortage of child care centers and their high costs, some states now register, but do not license family day care providers, who care for the children in their own home. Other recipients rely on friends, relatives or neighbors, unlicensed informal providers who are not monitored by the city and who may lack training, experience, aptitude or have a criminal record. Even with additional state funding welfare and other low income mothers have been pitted against each other in the race for child care.

DILEMMA: Stiff work rules have increased the demand but not the supply of services provided by (1) licensed home are providers, many of whom are satisfying their own work re-quirements; (2) for-profit and not-profit child care centers that often hire former welfare recipients; and (3) unlicensed caretakers who may or may not offer quality care. Officialdom seems to trust women on welfare to care for any child but their own.

----12----

MYTH: Workfare Provides Battered Women With The Opportunity To Flee Abusive Relationships.

FACT: Workfare undercuts a women's ability to deal with male violence in the home. Researchers have recently learned that from 30% to 75% of women in welfare- to-work programs are being physically or emotionally abused by part-ners and that forcing women to work may precipitate male violence.

Mounting evidence suggests that abusive or cont-rolling partners, who may be threatened by a woman's efforts to gain financial independence through education or job training, find ways to sabotage her participation in these programs. They nay fail to provide promised child care, harass her on the job site, or inflict serious injuries to prevent her from leaving home. Workfare rules do not account for this or the lasting emotional and psychological scars of abuse that can impair a woman's future employability.32

DILEMMA: Workfare's strict rules, along with time limits and child support enforcement promise to place women at greater risk for abuse or increase sanctions for lateness and absenteeism that often follow battering. Many non-profit agencies accepting workfare participants also run shelters for battered women or otherwise provide them with services.

Will assisting the workfare program increase the number of women who show up battered at the agency's own doors? In sharp contrast, the availability of the meager welfare grant can provide a woman with a way out of an abusive relationship when the lack of money is keeping her there.

----13----

MYTH: Workfare Saves Tax-payers Money.

FACT: Workfare Is Expensive And May Generate Additional Costs. The NYC Independent Budget Office (IBO) projected that a workfare placement would cost $6100 a year in add-ition to the household's public assistance and food stamp benefits.33 The Congressional Budget Office, (CBO) estimated that it would take $6300 a year beyond the cost of the welfare grant to cover a recipient's work-related and child care expenses as well as the supervisory and administrative costs of a workfare slot. Federal grants budget less for more useful job creation programs34

DILEMMA: Funds could better be spent by providing resources to non-profits to expand support services, job training, and job placement services and by funding government programs that create jobs and increase economic security .

----14----

MYTH: Workfare Helps New York's Economy.

FACT: Workfare Depresses Wages, Weakens Labor Stand-ards, Lowers Tax Revenues And Otherwise Harms NYC's Economy. Workfare and other work requirements are flooding the labor market with droves of hungry people, making it easier for employers to depress wages and harder for unions to negotiate good contracts for any low-paid worker.

Labor economists predict that the ex-pansion of workfare in NYC will displace thousands of workers and lower wages for the bottom third of the workforce by 15.4%, or some combination of both.35 Workfare programs also lower labor standards and weaken unions that protect all workers. The combination of displaced jobless workers, non-taxed work-fare recipients, and stagnant wage rates across the labor market also lowers tax revenues available for municipal services used by all of us.

DILEMMA: Lower wages harm the economy by reducing the purchasing power of all city families. Lower tax revenues reduce the funds spent on social services, including those provided by non-profits, just when government funders and regulators are increasing expectations and pressing them for more services.

----15----

MYTH: Workfare Recipients Favor Workfare.

FACT: Workfare Workers Are Fighting For Change: While some workfare recipients in New York City report that workfare got them going. Others have deplored the program, they did so long before the death of a workfare recipient who was assigned to the Parks Depart-ment even though heart disease had previously forced her to quit a secretarial job. The opponents in the workfare ranks have gone public.

They testify at public hearings and educational forums about their horrific working conditions and organized protests at welfare offices--despite the risk of losing their benefits for doing so. In July 1997 ACORN, a community group that works with the poor, recently collected signatures from nearly half of the City's 37,000 workfare

participants who demanded to form a union. District Council 37, AFSCME, the union of 120,000 municipal employees has also begun to unionize these WEP workers.36 The AFL-CIO has also announced its support of these organizing efforts.

DILEMMA: If workfare workers are willing to risk their benefits by speaking out, can the non-profits do any less?


REFERENCES

1According to the Personal Responsibility and Work Opportunity Act of 1996, In 1997, 25% of adult recipients must work or participate in work activities for 20 hours a week. By 2002, it will be 50 % of the caseload, for 30 hours a week. States that do not meet these work participation requirements risk losing a share of their federal welfare funds.

2 New York Times, November 30 ,1994, p A1, Cited by. cited by Workfare: The Real Deal II, Community Food Resource Center( hereafter CFRC) NY, NY, July, 1997, p. 4.

3 Mayor's Management Report( 1997) cited in Workfare: The Real Deal II .CFRC, NY, NY 7/97 p.4

4 ibid.

5 Greenhouse, Steven "Nonprofit and Religious Groups Vow to Fight Workfare Program" NY Times, 7/24/97, p. A.1; Steven Greenhouse, "2 Well-Known Churches Say No To Workfare Jobs," NY Times, 8/4/97, p. B3.

6 California Budget Project, "Are There Enough Jobs For All Who Must Work? May 1997, p. 3-4 . 921 11th. St. #701, Sacramento, Ca, 95814.

7 Alan Finder, "Welfare Clients Outnumber Jobs They Might Fill," NY Times, 8/25/96, p. A1

8 Thomas Lueck, "Job Boom In NYC Excludes City Residents, "NY Times, 8/15/ 97, p. B6

9 Rachel L. Swarns, "In Bronx Club, Welfare Mothers Prepare For Jobs, & Then Wait," NY Times 8/31/97, p.1,30.

10 ibid

11 Urban Justice Center, Some Common Questions and Answers About Non-Profits & Religious Congregation Becoming WEP Sites, NY, NY. 7/97, p.2.

12 Workfare: The Real Deal II, CFRC. NY, NY, 7/97 pp.11-12.

13 National Employment Law Project and WEP Workers Together Unite. It's The Law--Workfare Participants are Workers Too. cited by Workfare: The Real Deal II, CFRC. NY, NY 7/97 , p 12.

14 Urban Justice Center, National Employment Law Project, Welfare Rights Initiative ,Welfare, Jobs and Workfare: An Educator's Guidebook, NYC ,7/97, p.10.

15 "Judge Orders Assessments For Workfare Recipients," NY Times, 3/26/97, p. B3.

16 Joint Center for Political and Economic Studies, "Workfare Requirements Under the New Welfare Block Grant: Can Non-Profit Organizations Provide the Jobs" pp. 2-3.( 202-789-3500)

17 Joint Center for Political and Economic Studies, "Workfare Requirements Under the New Welfare Block Grant: Can Non-Profit Organizations Provide the Jobs" pp.5, 6 ( 202-789-3500); Steven Greenhouse, "Nonprofit & Religious Groups Vow to Fight Workfare Program" NY Times, July 24, 1997, p.B6

18 Information obtained through City Council member Steve DiBrienza's office by the Freedom on Information Act, cited in Workfare: The Real Deal II, CFRC, NY, 7/97 p.9.

19 "Long Odds,"New York Newsday 6/14/961 p. A3 ,cited by Workfare: The Real Deal II, CFRC, NY, NY. July 1997, p.8,

20 Mayor's 1997 Management Report in Workfare: The Real Deal II,CFRC. NYC, 7/97,p.7

21 Joint Center for Political and Economic Studies, "Workfare Requirements Under the New Welfare Block Grant: Can Non-Profit Organizations Provide the Jobs" p.6. (ph: 202-789-3500)

22 Workfare: The Real Deal II, CFRC, NY, NY 7/97, p.9.

23 TV Interview, Atty Peter Cicchino, from the Urban Justice Center in New York, Jim Lehrer New Hour, 8/ 13/97.

24 Committee on Ways & Means, House of Reps

Overview of Entitlement Programs ( 1994 Green Book) Wash. DC. : GPO, 7/15/94, pp. 441-442; Roberta Spalter-Roth, Income Packaging: An Alternative Anti-Poverty Strategy For Women, Institute For Women's Policy Research, Wash. DC. 5/21/94.

25 Urban Justice Center, Background Sheet: New York City's Work Experience Program, NY, NY 1997. p. 2.

26 In Melish et al v. City of New York, unions representing painters and carpenters claim that the City has assigned workfare participants to do painting and carpentry work that had been done by civil service employees at the Parks Department, cited by. Workfare The Real; Deal II. CFRC, NY, NY July 1997, p.13

27 James Butler, President of the Municipal Hospital Workers Union, Local 420, Testimony Before City Council of New York, March 1996 .cited in Workfare: The Real Deal II, CFRC, NY, NY, 7/97, p11.

28 David Firestone, Little Effect Seen on Giuliani's Workfare, "NY Times, 7/30/97. p. A17, The HHS Poverty Guidelines Federal Register Vol. 62, No 46, 3/ 10/ 97, pp. 10856-10859.

29 Brukhman V Hammons, No 407215 136 ( NY Sup.Ct. 5/20/97 in Workfare: The Real Deal II, CFRC. NY,NY 7/97, p.13

30 Adam Fifield & Evan Halper, "Welfare's Foster Scare" City Limits, 5/97,p17-19.

31 Statewide Youth Advocacy, What About the Children? 12/18/96. p.6; Joe Sexton, "Informal Child Care for Welfare Mothers Stirs Questions," NY Times, 10/14/96, p. B1.

32 Jody Raphael, Prisoners of Abuse: Domestic Violence and Welfare Receipt . Taylor Institute, Chicago, Illinois, April 1996; Catherine T. Kenney and Karen R. Brown, Report From the Front Lines: The Impact of Violence on Poor Women, NOW Legal Defense and Education Fund, NY 1996..

33 The NYC Independent Budget Office, The Fiscal Impact of the New Welfare Law on New York City, 10/96

34 Federal Register, Notices,

V. 51, No 107, 6/3/96, p.27956

35 Tilly, Chris. Workfare's Impact on the New York City Labor Market: Lower Wages and Workers Displacement. NY: Russell Sage Foundation, Working Paper #92, p. 11, in Workfare: The Real Deal, II , CFRC, NY,NY 7/97 p.13

36 Greenhouse, Steven "Petitions Seek Vote on Union for Workfare, NYTimes, 7/3/97. p. B1____________________.

* Professor, Hunter School of Social Work.

Copies can made be made and distributed. Additional Fact Sheets are available from NASW, 50 Broadway, 10th Fl., New York, NY 10004. Ph: 212-668-0050; FAX: 212-668-0305.


The reality of Minimum Wage

In May 2007, Congress approved legislation raising the minimum wage to $7.25 per hour by the end of 2009. They raised the wage from $5.85 to $6.55 in July 2008. Minimum wage earners were paid a base salary of $10,712, this will raise their base salary to a whopping $13,624.

But let's take another look. $10,712 in 1997 should be $14,604 in 2007 just to keep up with inflation, not counting exploding inflation of 2008. The inflation calculator shows $5.15 an hour in 1997 should be $6.74 in 2007.

$2.00 in 1974 would be $9.24 in 2007;
$3.10 in 1980 would be $8.75 in 2007;
$4.25 in 1991 would be $6.66 in 2007;
$5.15 in 1997 would be $6.74 in 2007.

Yet, minimum wage just went to $6.55 in 2008! $2.00 an hour in 1974 should be $9.24 in 2007. Even at $6.55 in 2008, minimum wage has lost almost one-third of its value since 1974 as of 2007. The working class is being hammered from all directions. Most jobs "created "in this area (East Tennessee, Southwest Virginia) pay under $8 an hour.

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