Published in Nonprofits

Economic, community development officials call for action to raise wages

BY Sunday, March 15, 2020 03:30pm

significant and expanding group of people in Michigan are working but still not bringing home a paycheck big enough to cover their basic expenses. 

Now, economic and community development leaders from around the state are calling on state policymakers to make raising income minimums a state priority.

As the United States continues riding an economic expansion that has lasted more than a decade, Michigan’s overall economy is strong. However, many are being left behind, said Maribeth Groen, marketing manager at Heart of West Michigan United Way

“For the past few years, we have been raising awareness around people who are working hard but still struggling to make ends meet,” Groen told MiBiz

According to a study released last year by the Michigan Association of United Ways, 14 percent of Michigan’s population lives below the federal poverty level. Another 29 percent are “asset-limited, income-constrained, employed” (ALICE), a measure of people who earn more than the federal poverty level but less than the cost of living in their area.

Together, this means that 43 percent of Michigan households could not afford necessities like housing, child care, food, transportation, health care and technology in 2017, the most recent year for which data are available.

“The data shows we need to work even harder to ensure that people and families are not struggling to live in our community,” Groen said. 

Challenges remain

Unemployment is still hovering around an all-time low in Michigan, but in some counties, including five in Southwest Michigan — Calhoun, Branch, St. Joseph, Cass and Berrien — unemployment actually increased in 2019. At the same time, average weekly wages went down in Calhoun and Ottawa counties. 

In St. Joseph County, where 47 percent of the population earns wages below the ALICE threshold, both residents and village officials say the recent shuttering of an International Automotive Components plant in Mendon means uncertainty for the community and other businesses in the area, said Annika Doner, outreach director at Priorities Michigan

The plant closure will affect about 240 workers in the area. 

“Many employees have worked there for decades because the pay is better than that of other jobs in the area,” Doner said. 

Still, the average wage for a union employee at the plant was only $20 an hour, she added. 

Low-wage jobs

The ALICE study lays out an average “survival budget” for a single adult or a family with two young children based on costs in each county in the state. According to the research, an average single adult living in Michigan needs to bring home a little more than $20,000 while the family of four would need more than $60,000 per year to cover the costs.

Even without the cost of child care, which is often the top expense in a young family’s budget, a family of four would still need one wage earner making an average of at least $23 per hour to keep from falling behind.

Low-wage jobs dominate the employment landscape. A recent analysis by the Brookings Institution found that 44 percent of all American workers earn a median wage of just $10.22 an hour, or $18,000 a year. In Michigan, 61 percent of all jobs pay less than $20 per hour, according to the ALICE data. 

At the same time, the cost of the average family budget in Michigan increased by 27 percent from 2010 to 2017, which compares to 12 percent inflation nationwide over the same timeframe.

The state’s per capita income from wages and employer-provided fringe benefits is 14 percent below the national average, according to Priorities Michigan. By comparison, in 2000, before the auto industry endured a decade of turmoil, wages and benefits for Michigan workers were 1 percent above the national average.

And despite a strong statewide recovery from the Great Recession, the income of the median household in Michigan, adjusted for inflation, is still well below what it was in 1999. 

A call to action

Even in an election year, when economic disparities are hot political topics, as many as 57 percent of Americans said they do not expect their finances will improve in the near future, according to a survey by Bankrate LLC

A large group of economic and community development leaders from around Michigan issued a call to action last week urging state economic policymakers to make rising income for all an economic priority.

The leaders who authored the call to action — including Birgit Klohs of The Right Place Inc., Tony Lentych of the Traverse City Housing Commission, Faye Alexander Nelson of the W.K. Kellogg Foundation and Jennifer Owens of Lakeshore Advantage — came together because of a common concern that “in every region of the state,” too many people are struggling economically. 

“We believe a primary goal of state economic policy should be rising household income for all Michiganders. Rising household income for all is different from the most often-used measure for economic success, low unemployment,” they wrote in the letter. 

A low unemployment rate will not increase wages, benefits and hours enough to substantially dent the proportion of households unable to pay for the basics, according to the group. 

Raising wages is the “prime economic challenge of our times,” they added. 

“There isn’t a single county in Michigan that has fewer than 30 percent of households that are unable to pay for basic necessities right now,” said Groen of Heart of West Michigan United Way. “This is a time when we all need to come together to turn that tide. When more individuals and families are stable, our community as a whole will prosper.”

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