January 9, 2006
Falling behind | More low-income Maine workers need assistance to make ends meet. How can Maine stop the slide of the working poor?
By Taylor Smith
In a typical week, the Good Shepherd Food-Bank in Auburn counts on volunteers filling between 300-350 shifts to help sort through the more than eight million pounds of food donated each year from companies like Hannaford Bros. in Scarborough and Portland-based Barber Foods. During their shifts, volunteers attend to various tasks around the warehouse, sweeping floors and wrapping box-stacked pallets with plastic for delivery to one of the more than 525 agencies in Maine that Good Shepherd supplies with food.
In return for working each three-hour shift, volunteers can spend time "shopping" among a few aisles in Good Shepherd's warehouse, filling brown fruit crates with food and other items, like diapers or toothpaste, to take home to their families. That's why the bulk of Good Shepherd's volunteers are elderly folks on fixed incomes and low-income people exchanging a few hours of work for a break on their weekly grocery bills, according to JoAn Chartier, the food bank's education coordinator and spokesperson.
But Chartier says that during the past few months, the number of volunteers coming into the food bank has spiked considerably, averaging about 415 weekly volunteer shifts in November and early December. Meanwhile, Chartier and Michelle Gosselin, Good Shepherd's development director, note that many of the agencies the food bank serves have reported 25%-50% increases in the number of clients coming through their doors.
Chartier says both those increases are largely due to an across-the-board hike in the cost of living, thanks to such things as rising energy prices and higher health care expenses. "Medication, oil, gas ˆ everything keeps going up," says Chartier. "[Volunteering] helps them stretch their dollars."
And it's not just Good Shepherd that's seeing increased demand for food assistance: Miriam Mitchell, who with her husband, Jack, runs the Brownfield Food Pantry, one of the agencies supplied by Good Shepherd, says they serve on average 110 families a month. In November, that number rose to 140, and Mitchell expected similar results in December. "These are the working poor that are coming," she says. "Where they were able to manage on a minimal basis, all of a sudden all their expenses have gone up significantly. People just can't manage. They need a great deal more at this time."
While there's no strict way to count Maine's working poor, the Maine Center for Economic Policy estimates that nearly one in three Mainers last year weren't earning enough to cover the cost of living, which the center defines as earning 200% of the poverty wage level. In Maine, 28.8% of workers in 2004 earned less than $30,134, or double the federal poverty level. While that's lower than the national average of 31.2%, it lagged the 24.1% average in New England. Meanwhile, workers stuck at the low end of the state's job market are more likely to have wages that are growing more slowly than wages for other workers. A recent MECEP report noted that low-wage workers saw income growth of only two percent during the five years through 2004, while inflation rose 9.7%.
With the rising cost of living becoming more difficult for a growing number of working Mainers to handle, there's more demand for available assistance, whether groceries from local food pantries or subsidized heating assistance through local and federal programs. In many ways, however, these social services are a palliative treatment, a way to provide short-term relief to a problem that, for many, is anything but. The real challenge facing many in the state ˆ from policy analysts and economists to business leaders and politicians ˆ is how to tackle the root issues that keep some workers struggling. From a changing economy and job market to the increasing need for higher education, Maine's working poor face circumstances that can't be fixed by anything but long-term policy changes and creative initiatives. "It's hard to point your finger at one or two things, because they all work in concert [to create the problem of working poor]," says Edmund Cervone, a policy analyst at MECEP.
Paycheck math
Conventional wisdom says a direct way to help the state's working poor is to raise wages across the board. After all, the more money in each employees' paycheck, the more money available to pay outsized heating bills or health insurance premiums.
Sen. Ethan Strimling (D-Portland), co-chair of the Maine Joint Standing Committee on Labor, recently voted in favor of raising the state's minimum wage from $6.50 to $7.00 over the next two years, which he says is likely to make a lasting impact. "Increasing the minimum wage will do a tremendous amount for the working poor who are in entry-level jobs in Maine," Strimling says.
Besides helping workers weather sudden shifts like this winter's spike in heating costs, increased wages also would help with chronic problems such as the high housing prices that affect workers in some parts of Maine. A family renting a two-bedroom apartment in Portland, for example, needs an annual household income of $37,320 to afford such housing at fair-market prices, according to the National Low Income Housing Coalition. That means having a job with an hourly wage of nearly $18 an hour. By contrast, a worker earning the current minimum wage of $6.50 would have to punch in for 113 hours a week in Portland to afford that rent, and 78 hours to rent a similar apartment in Bangor.
But many say the solution to simply raise wages is too pat, and ignores the complex ripple effect that such a wage increase would have on the state's business community. Some, like the Maine State Chamber of Commerce, say that a government mandate to raise the state's minimum wage would result in a weakening of Maine's already dismal business climate. That's because being forced to offer a higher wage than out-of-state competitors might put a company at a distinct competitive advantage or turn off companies looking to move to Maine. (New Hampshire's minimum wage, by comparison, stands at $5.15.) "So many of our people pay more than minimum wage," says Chamber President Dana Connors. "But the minimum wage becomes more of a business climate issue that haunts us."
At the same time, a failure to raise wages for Maine workers may have negative consequences for Maine's business community. Maine State Economist Catherine Reilly notes that Maine is dependent on consumer spending as an economic driver, and that the issue of the working poor poses a significant challenge to the state's business community. She says that if Maine doesn't have a large population with enough disposable income to support local businesses, it's difficult for those businesses to grow. "If incomes are going down," she says, "then that is a very challenging fiscal situation."
While wages aren't necessarily declining across the board in Maine, the state's working poor are likely to be the hardest hit by stagnant wages in certain sectors of the economy. According to a U.S. Bureau of Labor Statistics report released last March that profiles the working poor on a national level, more than 65% of the population classified as working poor by the U.S. Department of Labor were working in three occupational groups: service; sales and office; and production, transportation and material moving. Of the 21 million-plus U.S. workers in the service sector ˆ including maintenance workers and restaurant cooks ˆ 10.6% of them received wages below the poverty level in 2003.
That bodes poorly for Maine, where the state's labor market in recent years has undergone a dramatic shift towards service industry jobs. Maine Department of Labor projections note that the state will lose more than 9,000 manufacturing jobs through 2012. Meanwhile, the service sector is expected to see a net gain of 70,000 new jobs, a rise of 14.3%. A recent MECEP report notes that the Maine Department of Labor estimates average weekly wages in the good producing sector, which includes manufacturing, at $752. That compares to $583 in the service sector ˆ a difference of 29%. "There are people who can fall through the cracks very quickly if there's a lack of employment," says Chartier of the Good Shepherd Food-Bank.
Coming up empty
Stoneham resident Floyd Pike knows this story well. Pike, who is currently unemployed, works from April through November on the maintenance crew at the Fryeburg Fair. His wife, Amy, teaches part-time in a Head Start program in Bridgton. The Pikes make the 40-mile trip to the Good Shepherd Food-Bank three or four times a month to volunteer, and take advantage of food assistance when money's tight.
Pike expects that their combined income this year will come in at "well under" $20,000. That's a big change, he says, from the $35,000 combined salary before his wife's hours were cut back ˆ due to what Pike says were budget cuts from the federal No Child Left Behind program ˆ and he was still working as a social services case manager at group homes in Oxford County a few years ago.
And with rising costs to heat their house ˆ he spent $600 in November on heating oil, and estimates that his tank's already half empty ˆ Pike has had to resort to collecting what little snow he can gather from his yard and piling it against the house for insulation. He and his wife also have tried to reduce their utility bills by keeping the television off and limiting the amount of time they use their stove. "But it seems like whatever you do, you can't save money because everything keeps going up," he says.
Pike also has had a difficult time finding gainful employment in Oxford County as a result of the area's changing employment landscape, where relatively well-paying manufacturing jobs have given way to scads of low-paying retail positions. "I grew up in Oxford, and it was all industrial stuff ˆ shoe shops, manufacturing, stuff like that. Over time, it's changed almost all to retail," he says. "If you take those $11-an-hour jobs away [from people] and make them do the $6-an-hour jobs at Wal-Mart, it just doesn't add up."
Global economic forces have played a significant role in that changing job market, as cheap foreign labor has made it more attractive for Maine companies to outsource manufacturing work overseas. Still, lawmakers in Augusta are expected to address the issue of Maine's job market with renewed vigor in the coming year. Baldacci recently announced that the Legislative session that begins this month will include a handful of economic development proposals, including an increase in the state's research-and-development spending. (For more on this, see Capitol Update, page 12.)
Meanwhile, Rep. Arthur Lerman also is working with a legislative committee that will urge the state to make "significant" economic development investments to aid its small businesses, which he says are underfunded. "We think that this approach will help out in terms of spreading the job opportunities across the state," Lerman says. "The old manufacturing mills that closed down in many communities in Maine ˆ in both urban and rural communities ˆ need to be replaced by small businesses and the next generation of ideas."
The economic development proposals Lerman expects to put before the Legislature are part of a larger batch of recommendations coming out of his committee, which was charged with defining a livable wage in Maine. Along with that calculation, which pegs a livable wage at roughly $14 an hour for a single household with two dependents, Lerman says the committee has a laundry list of recommendations that are likely to emerge as a package of proposed legislation. For example, Lerman says the committee is recommending that the state create an earned income tax credit for low-income workers, and that companies paying a livable wage are given special consideration when bids for state contracts are evaluated.
Another committee recommendation Lerman points to is increased access to higher education in Maine. That's something that Catherine Reilly endorses: She says that a lack of education can be a primary stumbling block for people stuck in low-paying jobs. According to the U.S. Department of Labor, 14.1% of people without a high-school diploma in 2003 were classified as working poor ˆ more than twice the percentage as those who had graduated from high school. And just 3.2% of people with an associate's degree and 1.7% of those with a four-year college degree were classified as working poor.
Maine's rate of high school graduates is among the highest in the country, according to MECEP. But the group also notes that Maine is lagging when it comes to the percentage of its population with a bachelor's degree or better. Just 25.3% of Maine residents have such degrees, compared to 36.2% for New England and 28.8% nationwide. But Reilly says the state has made significant inroads to address this issue, including the state's recent overhaul of its community college system and the Maine Compact for Higher Education's College for ME program, which aims to get Maine in line with New England higher education rates in the next 15 years. "As we continue to transition from manufacturing to a service economy across the country ˆ not just in Maine ˆ there's a certain demand for certain types of skills," says MECEP's Cervone. "That's going to help them be more self sufficient and not have to worry if the kid gets sick this month, if the car breaks down or if oil goes through the roof."
The hope is that by providing resources in the form of improved jobs and more access to higher education, the state's working poor will be better equipped to handle short-term issues like rising energy prices or increased health care costs. Through these efforts, people who are teetering on the edge of financial stability will have a better chance of moving onto more solid ground. "We like to refer to it as a cliff effect," Cervone says. "Everything is lined up and accounted for, but one push of wind can push them off the edge from functioning to out of luck."
Still, Floyd Pike isn't sure that changes at the state level will do much to help him and his wife ˆ at least not in the short term. So for Pike, it will be a steady regimen of cutting back and hoping for the best. "I don't see it getting any better," he says. "When your standard of living goes down, you can't do much. We'd like to go to the ocean in the summer, but you can't do that if you don't have much money."
In return for working each three-hour shift, volunteers can spend time "shopping" among a few aisles in Good Shepherd's warehouse, filling brown fruit crates with food and other items, like diapers or toothpaste, to take home to their families. That's why the bulk of Good Shepherd's volunteers are elderly folks on fixed incomes and low-income people exchanging a few hours of work for a break on their weekly grocery bills, according to JoAn Chartier, the food bank's education coordinator and spokesperson.
But Chartier says that during the past few months, the number of volunteers coming into the food bank has spiked considerably, averaging about 415 weekly volunteer shifts in November and early December. Meanwhile, Chartier and Michelle Gosselin, Good Shepherd's development director, note that many of the agencies the food bank serves have reported 25%-50% increases in the number of clients coming through their doors.
Chartier says both those increases are largely due to an across-the-board hike in the cost of living, thanks to such things as rising energy prices and higher health care expenses. "Medication, oil, gas ˆ everything keeps going up," says Chartier. "[Volunteering] helps them stretch their dollars."
And it's not just Good Shepherd that's seeing increased demand for food assistance: Miriam Mitchell, who with her husband, Jack, runs the Brownfield Food Pantry, one of the agencies supplied by Good Shepherd, says they serve on average 110 families a month. In November, that number rose to 140, and Mitchell expected similar results in December. "These are the working poor that are coming," she says. "Where they were able to manage on a minimal basis, all of a sudden all their expenses have gone up significantly. People just can't manage. They need a great deal more at this time."
While there's no strict way to count Maine's working poor, the Maine Center for Economic Policy estimates that nearly one in three Mainers last year weren't earning enough to cover the cost of living, which the center defines as earning 200% of the poverty wage level. In Maine, 28.8% of workers in 2004 earned less than $30,134, or double the federal poverty level. While that's lower than the national average of 31.2%, it lagged the 24.1% average in New England. Meanwhile, workers stuck at the low end of the state's job market are more likely to have wages that are growing more slowly than wages for other workers. A recent MECEP report noted that low-wage workers saw income growth of only two percent during the five years through 2004, while inflation rose 9.7%.
With the rising cost of living becoming more difficult for a growing number of working Mainers to handle, there's more demand for available assistance, whether groceries from local food pantries or subsidized heating assistance through local and federal programs. In many ways, however, these social services are a palliative treatment, a way to provide short-term relief to a problem that, for many, is anything but. The real challenge facing many in the state ˆ from policy analysts and economists to business leaders and politicians ˆ is how to tackle the root issues that keep some workers struggling. From a changing economy and job market to the increasing need for higher education, Maine's working poor face circumstances that can't be fixed by anything but long-term policy changes and creative initiatives. "It's hard to point your finger at one or two things, because they all work in concert [to create the problem of working poor]," says Edmund Cervone, a policy analyst at MECEP.
Paycheck math
Conventional wisdom says a direct way to help the state's working poor is to raise wages across the board. After all, the more money in each employees' paycheck, the more money available to pay outsized heating bills or health insurance premiums.
Sen. Ethan Strimling (D-Portland), co-chair of the Maine Joint Standing Committee on Labor, recently voted in favor of raising the state's minimum wage from $6.50 to $7.00 over the next two years, which he says is likely to make a lasting impact. "Increasing the minimum wage will do a tremendous amount for the working poor who are in entry-level jobs in Maine," Strimling says.
Besides helping workers weather sudden shifts like this winter's spike in heating costs, increased wages also would help with chronic problems such as the high housing prices that affect workers in some parts of Maine. A family renting a two-bedroom apartment in Portland, for example, needs an annual household income of $37,320 to afford such housing at fair-market prices, according to the National Low Income Housing Coalition. That means having a job with an hourly wage of nearly $18 an hour. By contrast, a worker earning the current minimum wage of $6.50 would have to punch in for 113 hours a week in Portland to afford that rent, and 78 hours to rent a similar apartment in Bangor.
But many say the solution to simply raise wages is too pat, and ignores the complex ripple effect that such a wage increase would have on the state's business community. Some, like the Maine State Chamber of Commerce, say that a government mandate to raise the state's minimum wage would result in a weakening of Maine's already dismal business climate. That's because being forced to offer a higher wage than out-of-state competitors might put a company at a distinct competitive advantage or turn off companies looking to move to Maine. (New Hampshire's minimum wage, by comparison, stands at $5.15.) "So many of our people pay more than minimum wage," says Chamber President Dana Connors. "But the minimum wage becomes more of a business climate issue that haunts us."
At the same time, a failure to raise wages for Maine workers may have negative consequences for Maine's business community. Maine State Economist Catherine Reilly notes that Maine is dependent on consumer spending as an economic driver, and that the issue of the working poor poses a significant challenge to the state's business community. She says that if Maine doesn't have a large population with enough disposable income to support local businesses, it's difficult for those businesses to grow. "If incomes are going down," she says, "then that is a very challenging fiscal situation."
While wages aren't necessarily declining across the board in Maine, the state's working poor are likely to be the hardest hit by stagnant wages in certain sectors of the economy. According to a U.S. Bureau of Labor Statistics report released last March that profiles the working poor on a national level, more than 65% of the population classified as working poor by the U.S. Department of Labor were working in three occupational groups: service; sales and office; and production, transportation and material moving. Of the 21 million-plus U.S. workers in the service sector ˆ including maintenance workers and restaurant cooks ˆ 10.6% of them received wages below the poverty level in 2003.
That bodes poorly for Maine, where the state's labor market in recent years has undergone a dramatic shift towards service industry jobs. Maine Department of Labor projections note that the state will lose more than 9,000 manufacturing jobs through 2012. Meanwhile, the service sector is expected to see a net gain of 70,000 new jobs, a rise of 14.3%. A recent MECEP report notes that the Maine Department of Labor estimates average weekly wages in the good producing sector, which includes manufacturing, at $752. That compares to $583 in the service sector ˆ a difference of 29%. "There are people who can fall through the cracks very quickly if there's a lack of employment," says Chartier of the Good Shepherd Food-Bank.
Coming up empty
Stoneham resident Floyd Pike knows this story well. Pike, who is currently unemployed, works from April through November on the maintenance crew at the Fryeburg Fair. His wife, Amy, teaches part-time in a Head Start program in Bridgton. The Pikes make the 40-mile trip to the Good Shepherd Food-Bank three or four times a month to volunteer, and take advantage of food assistance when money's tight.
Pike expects that their combined income this year will come in at "well under" $20,000. That's a big change, he says, from the $35,000 combined salary before his wife's hours were cut back ˆ due to what Pike says were budget cuts from the federal No Child Left Behind program ˆ and he was still working as a social services case manager at group homes in Oxford County a few years ago.
And with rising costs to heat their house ˆ he spent $600 in November on heating oil, and estimates that his tank's already half empty ˆ Pike has had to resort to collecting what little snow he can gather from his yard and piling it against the house for insulation. He and his wife also have tried to reduce their utility bills by keeping the television off and limiting the amount of time they use their stove. "But it seems like whatever you do, you can't save money because everything keeps going up," he says.
Pike also has had a difficult time finding gainful employment in Oxford County as a result of the area's changing employment landscape, where relatively well-paying manufacturing jobs have given way to scads of low-paying retail positions. "I grew up in Oxford, and it was all industrial stuff ˆ shoe shops, manufacturing, stuff like that. Over time, it's changed almost all to retail," he says. "If you take those $11-an-hour jobs away [from people] and make them do the $6-an-hour jobs at Wal-Mart, it just doesn't add up."
Global economic forces have played a significant role in that changing job market, as cheap foreign labor has made it more attractive for Maine companies to outsource manufacturing work overseas. Still, lawmakers in Augusta are expected to address the issue of Maine's job market with renewed vigor in the coming year. Baldacci recently announced that the Legislative session that begins this month will include a handful of economic development proposals, including an increase in the state's research-and-development spending. (For more on this, see Capitol Update, page 12.)
Meanwhile, Rep. Arthur Lerman also is working with a legislative committee that will urge the state to make "significant" economic development investments to aid its small businesses, which he says are underfunded. "We think that this approach will help out in terms of spreading the job opportunities across the state," Lerman says. "The old manufacturing mills that closed down in many communities in Maine ˆ in both urban and rural communities ˆ need to be replaced by small businesses and the next generation of ideas."
The economic development proposals Lerman expects to put before the Legislature are part of a larger batch of recommendations coming out of his committee, which was charged with defining a livable wage in Maine. Along with that calculation, which pegs a livable wage at roughly $14 an hour for a single household with two dependents, Lerman says the committee has a laundry list of recommendations that are likely to emerge as a package of proposed legislation. For example, Lerman says the committee is recommending that the state create an earned income tax credit for low-income workers, and that companies paying a livable wage are given special consideration when bids for state contracts are evaluated.
Another committee recommendation Lerman points to is increased access to higher education in Maine. That's something that Catherine Reilly endorses: She says that a lack of education can be a primary stumbling block for people stuck in low-paying jobs. According to the U.S. Department of Labor, 14.1% of people without a high-school diploma in 2003 were classified as working poor ˆ more than twice the percentage as those who had graduated from high school. And just 3.2% of people with an associate's degree and 1.7% of those with a four-year college degree were classified as working poor.
Maine's rate of high school graduates is among the highest in the country, according to MECEP. But the group also notes that Maine is lagging when it comes to the percentage of its population with a bachelor's degree or better. Just 25.3% of Maine residents have such degrees, compared to 36.2% for New England and 28.8% nationwide. But Reilly says the state has made significant inroads to address this issue, including the state's recent overhaul of its community college system and the Maine Compact for Higher Education's College for ME program, which aims to get Maine in line with New England higher education rates in the next 15 years. "As we continue to transition from manufacturing to a service economy across the country ˆ not just in Maine ˆ there's a certain demand for certain types of skills," says MECEP's Cervone. "That's going to help them be more self sufficient and not have to worry if the kid gets sick this month, if the car breaks down or if oil goes through the roof."
The hope is that by providing resources in the form of improved jobs and more access to higher education, the state's working poor will be better equipped to handle short-term issues like rising energy prices or increased health care costs. Through these efforts, people who are teetering on the edge of financial stability will have a better chance of moving onto more solid ground. "We like to refer to it as a cliff effect," Cervone says. "Everything is lined up and accounted for, but one push of wind can push them off the edge from functioning to out of luck."
Still, Floyd Pike isn't sure that changes at the state level will do much to help him and his wife ˆ at least not in the short term. So for Pike, it will be a steady regimen of cutting back and hoping for the best. "I don't see it getting any better," he says. "When your standard of living goes down, you can't do much. We'd like to go to the ocean in the summer, but you can't do that if you don't have much money."
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