Minimum Wage

I have been writing a paper about the minimum wage for our microeconomics course, and I found the topic quite interesting. Most of the public favors raising the minimum wage (Dube, 2013), which is not surprising given that the real value of the minimum wage has fallen since the 1960s even as worker productivity has doubled (Krugman, 2013). The current federal minimum wage is $7.25, and some state minimums are higher.

One of the arguments against raising the minimum wage is that the increased cost of labor has a negative effect on employment. However, much of the evidence seems to suggest that negative effects on employment are small or non-existent (e.g., Blanchard, Jaumotte, & Loungani, 2014; Dube, Lester, & Reich, 2010; Leonard, Stanley, & Doucouliagos, 2014). For context, note that the Congressional Budget Office (2014) estimates that raising the minimum wage to $10.10 per hour would increase the earnings of 16.5 million workers and lift 900,000 people out of poverty while costing the economy 500,000 jobs. Given this estimate, it seems favorable to raise the minimum wage. It is worth mentioning that a debate is still ongoing regarding the best methodology to use in this line of research.

Some opponents of raising the minimum wage claim that the Earned Income Tax Credit (EITC) is more effective at assisting low-income workers. The EITC is a refundable tax credit that is available to low-income households that earn income from wages, salaries, tips, business or farm revenue, or disability income (IRS, 2014). Interestingly, the EITC puts downward pressure on wages, and the minimum wage helps to mitigate this (Dube, 2013). Thus, the EITC and the minimum wage are complementary policy tools.

Furthermore, some claim that the minimum wage only benefits teenagers from well-to-do families. Cooper and Hall (2013) provide demographic information for low-income workers that debunks this myth. Nearly 88 percent of workers earning the minimum wage are over 20 years old, around 55 percent work full-time, nearly 45 percent have some post-secondary education, and nearly 70 percent of workers’ families earn less than $60,000 per year. Furthermore, the average minimum wage worker earns nearly half of their household income.

Given this evidence, it seems that raising the minimum wage is a good idea. Doing so would provide security to working families and may lift a significant number of workers out of poverty. Some of the arguments against raising the minimum wage seem out of date given the knowledge that we now have regarding the effects of such a policy choice. Please see this blog post, written by SOC 350 students Victoria Wood and Lioma Terrero Soto, for local context.

-Jason Wright

Blanchard, O. J., Jaumotte, F., & Loungani, P. (2014). Labor market policies and IMF advice in advanced economies during the Great Recession. IZA Journal of Labor Policy, 3(2), 1-23. Retrieved from http://www.izajolp.com/content/3/1/2

Congressional Budget Office. (2014) The effects of a minimum-wage increase on employment and family income [Publication 4856]. Congress of the United States, Congressional Budget Office. Retrieved from http://www.cbo.gov/sites/default/files/cbofiles/attachments/44995-MinimumWage.pdf

Cooper, D., & Hall, D. (2013, March 13). Raising the federal minimum wage to $10.10 would give working families, and the overall economy, a much-needed boost. Washington, DC: Economic Policy Institute. Retrieved from http://www.epi.org/publication/bp357-federal-minimum-wage-increase/

Dube, A. (2013, November 30). The great divide: The minimum we can do. The New York Times. Retrieved from http://opinionator.blogs.nytimes.com/2013/11/30/the-minimum-we-can-do/

Dube, A., Lester, T. W., & Reich, M. (2010). Minimum wage effects across state borders: Estimates using contiguous counties. The Review of Economics and Statistics, 92(4), 945-964.

Internal Revenue Service. (2014, February 25). Do I qualify for EITC? Retrieved from http://www.irs.gov/Individuals/Do-I-Qualify-for-EITC%3F

Krugman, P. (2013, February 17). Raise that wage. The New York Times. Retrieved from http://www.nytimes.com/2013/02/18/opinion/krugman-raise-that-wage.html?_r=0

Leonard, M. L., Stanley, T. D., Doucouliagos, H. (2014). Does the UK minimum wage reduce employment? A meta-regression analysis. British Journal of Industrial Relations, 52(3), 499-520.

Context and Poverty: Mental Health

An observation about American political life that leaves me perplexed and saddened is that we, as a society, seem to ignore the influence of context on individuals. I generally consider “context” in this discussion to mean factors both internal and external to the individual over which they have no control. This observation is most readily detected in debates surrounding poverty in which some argue that the impoverished are responsible for their plight. Yet, contextual factors are strong. For instance, perhaps two children have similar medical conditions that affect school performance but only the family of child A can afford insurance. Child B may not have the same educational opportunities later due to interference from their untreated ailment. Loss of educational opportunities may, in turn, leave child B vulnerable to financial strain or extended poverty. This is an extreme hypothetical case, but we can all find less salient examples of the influence of contextual factors if we are honest about our own lives.

There exist tangled webs of relationships and befuddling patterns of causation that surround the development and maintenance of poverty. To explore this may induce headaches, but it is worth doing. Why, you might ask? If we fully reject the influence of context and instruct the impoverished to “pull themselves up by the bootstraps,” then we write them off as a loss and do not feel compelled to help. This is misguided at best and inhumane at worst. Yet, intuitively we know that contextual factors are not the only ones involved. Reality lies somewhere between these extremes. Exploration of this issue through research allows us to better understand the complex nature of poverty and to develop more effective ways of addressing this social ill. I am planning on posting multiple times regarding this issue, but I thought that I would start by examining mental health and poverty.

A social gradient in mental and physical health exists (Reiss, 2013), which means that health status depends on socioeconomic status such that the poorest citizens have the worst health. Unfortunately, this phenomenon can be observed around the world in both poor and rich nations (World Health Organization, 2014). Please see the graph below for an example of the social gradient. It shows self-reported health status by income for the state and select cities. The data in this graph come from the Massachusetts Community Health Information Profile (MassCHIP), which is managed by the Massachusetts Department of Health.

Consistent with the social gradient, research suggests that poverty-related stress increases the risk for mental illness and that severe mental illness increases the risk of experiencing poverty (DeCarlo Santiago, Kaltman, & Miranda, 2013). The former illustrates the power of the external context of poverty (e.g., increased stress, lack of social support) over the individual, and the latter underscores the impact of “internal context.” Again, I define “internal context” as an attribute of the individual over which they have no control. Moreover, this bi-directional relationship suggests a vicious cycle in which an individual could easily become trapped in poverty. This may have the strongest effect on children in poverty, as development of a mental illness as a child would likely have lifelong negative effects. What can research tell us about the social gradient in mental health in children?

Reiss (2013) reviewed studies published in either English or German that examined the relationship between low socioeconomic status (SES) and mental health issues in individuals between the ages of four and 18. Of the 55 studies reviewed, 52 found an inverse relationship between SES and mental health such that children experiencing poverty were two to three times more likely to develop mental health issues than their peers. Sadly, the review also found that the gradient was strongest in early childhood. Importantly, mental health problems were reduced by an increase in SES, suggesting that societal intervention can be beneficial to children in poverty. Thus, we can short-circuit the bi-directional relationship mentioned above.

In sum, there are complex relationships surrounding the issue of poverty in America. While we often downplay the role of context in our political debates, it is an influential force in the generation and perpetuation of poverty. Development of a mental illness is not a choice, but rather the result of an intricate set of interactions between genetic predispositions and physical and social context. The social context of poverty contributes to the development of mental illness, but mental illness itself is a contextual factor in the social condition of poverty. This bi-directional relationship can be overcome, which has strong and positive implications for efforts to raise children out of poverty.

-Jason Wright

References
DeCarlo Santiago, C., Kaltman, S., & Miranda, J. (2013). Poverty and mental health: How do low-income adults and children are in psychotherapy? Journal of Clinical Psychology: In Session, 69, 115-126. doi: 10.1002/jclp.21951

MassCHIP, Massachusetts Department of Health. (2014). Behavioral Risk Factor Surveillance System: General health status. Retrieved from http://www.mass.gov/eohhs/researcher/community-health/masschip/general-health-status.html

Reiss, F. (2013). Socioeconomic inequalities and mental health problems in children and adolescents: A systematic review. Social Science and Medicine, 90, 24-31. doi: 10.1016/j.socscimed.2013.04.026

Poverty Demographics for Fall River & New Bedford, Massachusetts

Poverty, like many other economic phenomena, does not affect all population sub-groups equally. Historically marginalized populations like racial minorities, women and youth are often disproportionately affected by poverty. This is especially true in Southcoast Massachusetts cities Fall River and New Bedford.

Data from the US Census Bureau shows that 23.2% of Fall River and 21.6% of New Bedford residents live below the poverty line. However, in Fall River, 36% of youth live in poverty, and in New Bedford, 31.1% of youth live in poverty. The highest poverty rates are among Hispanics (59.7% in FR and 39.9% in NB) and single mothers of 3 or 4 children (77.8% in FR and 72% in NB).

The charts below present poverty data by race, family type and age group, gathered from the American Community Survey’s 2008-2012 5-year estimates. The percentages depicted represent varying rates of poverty among different demographic groups that compose a portion of total city population.

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image(4)                                  *High margin of error for families with 5+ children, small sample size

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*Very high margin of error for families with 5+ children, small sample size, not included

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Data comes from the US Census Bureau, American Fact Finder. 2008-2012 American Community Survey 5-year Estimates. Access at http://factfinder2.census.gov.

View data tables below.

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Women & wages in New Bedford

This morning, I presented data on what it takes to earn a living wage in New Bedford, and what barriers city women must overcome to afford the expenses of their families. The full presentation can be viewed here:

Women & wages in New Bedford

Introduction: Trevor V. Mattos, Research Intern

I began working as an intern with the Urban Initiative nearly one month ago (September 2014) today, and have since had the privilege of contributing to the great applied work going on here and at the Center for Policy Analysis. I currently hold a bachelors degree from Gordon College in International Development and Public Health, and I’ve recently started the Master of Public Policy program here at UMass Dartmouth.

As an undergraduate, I worked closely with a nonprofit, Clinics of Hope, to design and coordinate a community-level public health research program in Togo, West Africa. Then, after graduating in 2012, I decided to explore my heritage in Lima, Peru. For a little over a year, I taught English and volunteered with the Latin American nonprofit, TECHO. My academic interests are deeply connected to, and driven by these real world experiences. I believe in the power of applied research to shape public discourse, leading to creative solutions for sustainable, inclusive social and economic development.

In the past month, I have worked on unemployment data sets for the SouthCoast Urban Indicators Project and assisted with the Acushnet Avenue Economic Impact Study. I am really grateful for this opportunity, and for the way my colleagues have welcomed me into the community.

 

Trevor V. Mattos

Master of Public Policy Program, 2014-2016

 

 

Acushnet Ave Economic Impact Project Update

After the first meeting of the steering committee, we are moving on to the next phase in our study of Acushnet Avenue’s economy. For early September, our research team is drafting a survey to be distributed to business owners in the Acushnet Avenue commercial corridor. After incorporating helpful comments from our colleagues at the CEDC, who have extensive knowledge of the Avenue’s business climate, we will begin surveying business owners. A major challenge is keeping the survey brief enough to be manageable for busy owners to complete in a short time, but also extensive enough to get an understanding of the challenges facing businesses in the area, where they get materials and employees, their working capital, earnings, access to technology, and opportunities for growth and future investment. Hoping both for a large response rate and meaningful answers from those who do respond, we will open the survey period later this month and conclude in mid-October. 

Since the report will also examine the role place plays in the Acushnet Avenue economy, we have contacted New Bedford’s Office Housing and Community Development. Eddie Bates is hard at work analyzing GIS information so we can have better understanding of the physical and built environment of the Avenue and it’s side streets. The data we receive from Housing and Community Development will show the location of trees, street lighting, public spaces, benches, and give us a detailed look at the housing density surrounding the commercial corridor. The office will also be aiding us as we investigate occupancy and vacancy rates. I’m very interested to see if we can determine vacancy by floor, as well as by building. Although getting street level space occupied is still a challenge for building owners along the Avenue, upper level tenants (whether mixed-income residential or commercial) will be key in securing long-term vitality for the neighborhood.

As the survey period wraps up, I will be going over Census and business records for the study area. With this analysis, I am hoping to show how the make up of the neighborhood’s residents and businesses has changed over time. Culling through the wealth of information we obtained from the ReferenceUSA historical business database, I have already noticed an increase over the last five years in grocery stores serving the needs of Central and Latin American immigrants.

Check back in for updates on the survey process and on our one-on-one discussions with steering committee members.

Jason Wright, 2014-15 Graduate Research Assistant

By Jason Wright, Graduate Research Assistant, UMass Dartmouth Urban Initiative

I graduated from William and Mary in 2009 with a Bachelor’s degree in psychology.  My background is in psychological research, and I have served as a research assistant and research coordinator at both the state and federal level. Through these positions I had the opportunity to work on a number of projects dealing with intimate partner violence, PTSD, and substance use. I am passionate about efforts to reduce poverty. This interest has developed as a result of personal experiences as well as exposure to vulnerable populations and data suggesting socioeconomic status as a risk factor for things like PTSD and intimate partner violence.

This is my first semester in the MPP program, and I am looking forward to learning more about the policymaking process, expanding my set of research skills, and narrowing my research interests. Furthermore, I am excited to be involved with the Urban Initiative working on meaningful projects that benefit the residents of the Southcoast and our Commonwealth. The team here has been friendly and welcoming, and I look forward to our journey together.