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Affording Health Care and Education on the Minimum Wage
The current value of the federal minimum wage — $7.25 per hour — is often compared to the cost of living, the average wage in the economy, or the productivity of the average worker. By all of these benchmarks, the current federal minimum is well below its historical levels.
But the current minimum wage looks even worse when compared with two kinds of purchases strongly associated with a middle-class standard of living or the ability to move up to the middle class: health insurance and a college degree.
The table below shows the results of a simple exercise. We ask how many hours did a minimum-wage worker have to work to pay for a year of college education (at various kinds of institutions) or a year of health insurance (for an individual or a family). The table compares the experience facing a minimum-wage worker in 1979 — when the minimum wage was $2.90 per hour — with that of a minimum-wage worker in 2010 or 2011 — when the minimum wage was $7.25. (All wages and prices, here and below, are in current dollars — that is the actual dollar value at the time, without any adjustment for inflation. The point is to compare the minimum wage in place in each period with the actual cost of health and education services at the same point in time.)
A minimum-wage worker in 1979, making $2.90 per hour, had to work 254 hours in a year to pay the $738 annual cost of tuition at a public four-year college in that same year. By 2010, minimum-wage workers at $7.25 per hour had to spend 923 hours to cover the $6,695 annual tuition at a public four-year college. (All our calculations ignore taxes and subsidies. More on that later.)
In 1979, a four-year private college required 1,112 hours of work at the minimum wage. By 2010, the cost in minimum-wage hours had increased so much that it was no longer possible to pay for a full year of a private four-year college — 3,201 hours — by working full-year, full-time (2,080 hours) at the minimum wage.
Even the minimum-wage hours needed to pay tuition for one year at a two-year college almost tripled between 1979 and 2010, from 156 hours to 403 hours.
Health-insurance premiums have also increased enormously when expressed in terms of the minimum wage. In 1979, one year of individual health insurance coverage cost a minimum-wage worker 130 hours. By 2011, the same coverage cost 749 hours.
The cost of family coverage increased from 329 hours in 1979 to 2,079 hours in 2011. These figures imply that after paying for family health insurance coverage, a minimum-wage worker would have just one hour of work left over to spend on other goods and services after working 40 hours per week for 52 weeks in a year.
Of course, this analysis does not factor in taxes paid (or the effects of the Earned Income Tax Credit, which was introduced in 1975). The actual number of after-tax hours required would be higher than the pre-tax hours used here; though the Earned Income Tax Credit can offset the cost of taxes for some low-wage workers, particularly those in low-income families with children. (For a discussion of the relevant workings of the EITC, see this recent CEPR report.) Nor do the numbers in the table capture important differences over the period in the effective costs of college tuition and health insurance facing minimum-wage workers.
In the case of college tuition, federal grants and loans are more generous today than they were at the end of the 1970s. As a result, the increase in the costs of college tuition, net-of-federal-grants, is lower for the average minimum-wage worker than is suggested by the chart. Nevertheless, the increases in grants have not kept pace with increases in tuition (as well as room and board, books, and other expenses, which we do not include in our analysis). Meanwhile, the substantial increase in the use of student loans has meant that many minimum-wage workers today would leave college (with or without their degree) with a much higher level of debt than was typical at the end of the 1970s.
The health insurance costs in the table are based on the premiums for employer-provided health-insurance policies, which are group plans that minimum-wage workers can use only if their employers offer a plan. But, the share of low-wage workers with employer-provided health insurance has fallen from 42.9 percent in 1979 to 25.9 percent in 2010. Only a small share --about 8.1 percent-- of low-wage workers purchase their own individual health-insurance policies. Nor do the health insurance figures here factor in the availability of publicly provided health insurance, such as Medicaid and CHIP (Child Health Insurance Program). Public health-insurance coverage for low-wage workers did increase somewhat, from 8.8 percent of low-wage workers in 1979, to 12.8 percent by 2010.
Some economists emphasize the rapid decline over the last century in the relative price of agricultural products and manufactured goods (such as televisions and air conditioners). These analyses, however, inevitably ignore or downplay the large relative increases in the price of crucial services such as education and healthcare. Minimum-wage workers today may be able to buy DVD players that did not exist in 1979, but at the current level of the minimum wage, they are also far less able to cover college tuition or health-insurance premiums.
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28 Comments so far
Show AllAnd the good news is that all those minimum wage workers without employer-sponsored health insurance (which would be most of them) will be forced to purchase it from the for-profit insurance industry, starting in 2013! Don't have enough $$ after taxes to pay your rent, car payment, electric bill, phone bill, food, gas, car insurance? Well tough shit! On top of those little things, you also MUST buy health insurance, whether you can afford it or not!
Obama: the best thing that has happened to Wall Street and the Insurance Industry ever.
Although Team Obama is funding an expanded IRS to enforce penalties on those who do not purchase insurance, no Federal agency will make sure that insurance companies are delivering the coverage they promise...that task is left up to each state. With most states borderline bankrupt, there will be no funds to police the insurance companies.
Although they pretend to disdain Obamacare, the GOP loves the individual mandate as much as the Dems do.
Exactly. Think about it: forcing Amereichans to buy a for-profit corporation's product, and making it illegal NOT to! This is the ultimate Plutocrat/Corporatist/Capitalist wet dream!! What member of Congress would NOT like this law??? Imagine making it a law that all Amereichans - whether they can afford to or not - MUST purchase a new 40" LCD TV every year from one of 4 major for-profit corporations. If they don't, they get fined bigtime and can boast having a federal crime on their permanent record. Corporate HEAVEN!!
No Dem/Repub in the entire country hates this law. The only reason Rethugs are "against" it publically is to continue the charade that there are "two" parties. In reality, both wings of the Corporate Plutocracy LOVE this legislation!
Begin forwarded message:
The act, pushed through a Democratic Congress by President Obama in 2010, is a disaster, a cobbled-together set of measures that was fatally corrupted by the insurance lobby and other parts of the nation’s medical-industrial complex, which leaves millions uninsured, continues to tether workers to their employers like indentured servants, and undermines the Medicare program, which should be the cornerstone of a real health reform.
By killing this monstrosity of political expedience and lobbyist strong-arming, the Supreme Court’s conservative wing could give us a good chance to finally move the country to a real national health reform which would reduce costs substantially, provide quality health care to all, and finally drive a stake through the heart of the health insurance industry, the real “vampire squid” of American capitalism which has been sucking money out of American’s wallets and driving many into bankruptcy for decades (family health crises are the major single cause of bankruptcies and homes foreclosures in the country).
Whole article:
http://www.counterpunch.org/2012/03/26/why-the-supreme-court-should-kill-obamacare/
Hospitalized Children Without Insurance Are More Likely to Die, a Study Finds - NYTimes.com
“If you take two kids from the same demographic background — the same race, same gender, same neighborhood income level and same number of co-morbidities or other illnesses — the kid without insurance is 60 percent more likely to die in the hospital than the kid in the bed right next to him or her who is insured,” said David C. Chang, co-director of the pediatric surgery outcomes group at the children’s center and an author of the study, which appeared today in The Journal of Public Health.
http://prescriptions.blogs.nytimes.com/2009/10/30/lacking-insurance-hospitalized-children-more-likely-to-die/
Trying to Catch His Breath With a Hole-Ridden Safety Net | EvoEcoLab, Scientific American Blog Network
My family includes four of the 49.1 million uninsured people in the United States
Uninsured people look just like everyone else. They might look like they can easily afford the premiums and in fact might earn salaries similar to yours. But every family’s situations and employment-based coverage options are unique and this goes far beyond stereotypes of the “working poor”. My son could have suffocated from his pneumonia had we not sucked it up and rushed him to the hospital on Tuesday morning. If we were able to see a doctor a day earlier, he perhaps could have been treated at home as an outpatient with antibiotics. I don’t know what our final bill will be when we leave tomorrow morning, right now I don’t care. All I know is my son got better under the supervision of a wonderful team of nurses and pediatricians. My community has income-based charity care which will hopefully reduce our bill to a much more manageable sum. All minor details when the stakes are as high as your children’s lives. Plus, we can sleep in beds without motors.
http://blogs.scientificamerican.com/evo-eco-lab/2012/02/10/trying-to-catch-his-breathe-with-a-hole-ridden-safety-net/
What's even worse about OB Don'tCare "insurance" is that they're not going to even discuss the details of actual benefits until 2013 or 14. All the noise up to then will be about the damned exchanges which are simply reshuffling what is already out there.
Nothing about what affordable means, what premiums and co-pays will be, what will actually be covered (early signs are that women are going to have to jump through all kinds of hoops for basic abortion, birth control and pre-natal services).
Nothing about these mandatory sonograms and such...nothing about what Medicare, Medicaid and TriCare (military) will look like.
Nothing about mental health...
Nothing about rural services...
Nothing about the few public health measures we do have...
Except we know that the most costly health insurance on Earth will even become more costly. And Congressional insurance won't be harmed a bit. The rich, of course, will do what they always do -- buy what they want. If they're smart, they'll buy into Canadian Medicare.
Rangoon78
You well and truly nailed it -- BRAVO!
Your account of your son's pneumonia emergency is a harrowing tale indeed and one that is multiplied tens of thousands of times a day across this declayed and rotting land where health care is dangled before us as one more bright-shiny thing that few people one can afford without flirting with bankruptcy and oftentimes experienced among those who actually have health insurance.
I'm so glad that your son is better -- that really is all that matters.
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It looks as though life is going to change for a lot of people. We will need an exchange program to bring in destitute people from places like Chad to teach our down and outers how to make it in hard times. Our county extension service people need to develop some classes on basic homeless survival.
What county extension people? Our county phased most of them out years ago. We don't even have a state run employment office in our county anymore. What we have is an office run by a private supposedly "non-profit" company.
This looks like the GOP's answer to dealing with healthcare and education
of our nations lower classes is the Ziclone-B method. Maybe the Dem's also...
Chris Rock on Minimum wage:
You know what that means when someone pays you minimum wage? You know what your boss was trying to say? It's like, "Hey if I could pay you less, I would, but it's against the law."
It's important that it's known that 'Obama-care' is actually Massachusetts' Romney-care rolled-out nationally & enforced by the IRS. The mandate that every individual adult buy corp 'health'{NOT} insurance [Obama{Romney}care is actually a bailout for so-called 'health' insurance corps] should be un-Constitutional! BUT- Don't expect any redress from a corporate friendly Supreme Court which legalized unlimited corp bribery of poly-tricians w its 'Citizen United' ruling [it actually goes back to at-least when the Court allowed living organisms to be patented by corps in 1980 - which opened the door for GMO crops]!
This article shows just how much the working-class / working-poor has fallen behind in the past 3 decades by showing what it took for the minimum wage to buy health insurance & college tuition in 1979 compared to now. Most fair-minded [Not NeoCON / Neo-Liberal] economists say that the minimum wage should be at-least $10/hr or more. Of course rolling-out Medicare for all would eliminate the need for folks to individually buy so-called 'health' insurance.
Compare this to Canada which has FREE universal healthcare and college tuition costs that are a fraction of what they are here in the U.S. and yet the public in Canada still considers their minimum wage of over $10 an hour to be a subsistent wage. If the U.S. had a government that was truly representative of the people, it would immediately raise the minimum wage to around $18 an hour while simultaneously preventing corporate America from outsourcing everything from manufacturing to call centers to the third world with its slave labor, corrupt governments and lax environmental laws. Instead we are stuck with a government that has pledged an allegiance to the investor capital class who is determined to undermine the 99% at every turn. None of the statistics quoted here will make it into the MSM. As a result a misinformed and frustrated public will flock to the polls in November to cast their ballots for one of the two corporate parties thereby legitimizing their own decline. Pathetic.
these are good ideas, & if we had a Congress that was responsive to the people, they would be doing many things that would aid the poor & middle class.
Unfortunately, we have a bunch of corrupt political hacks who don't care about anyone other than Corporations, the elites & themselves. The only time they solicit voters is prior to an election, at which point promises are made, & then broken the day after the election. The U.S. has an ignorant & ill educated electorate that continues to vote against their own interests, over & over.
David Mamet, the admired playwright, who was a liberal, until his conversion to conservatism and subsequent writing of "The Secret Knowledge" justifying his conversion also would emphasize that the lower-class is better off because the elite has the capital to make valuable products, such as DVD players and cell phones affordable to the impoverished. That is true, one sees many people in the US with portable DVDs, smartphones, etc. However, if you talk to them, you discover they have no health insurance. The iPods and smartphones help them numb the pain and deny that their lives could end any day simply because they haven't had preventive health care or won't get a competent surgeon if they collapse with a serious disease.
From above, see: "Some economists emphasize the rapid decline over the last century in the relative price of agricultural products and manufactured goods (such as televisions and air conditioners). These analyses, however, inevitably ignore or downplay the large relative increases in the price of crucial services such as education and healthcare. Minimum-wage workers today may be able to buy DVD players that did not exist in 1979, but at the current level of the minimum wage, they are also far less able to cover college tuition or health-insurance premiums."
I am part of the 99 percent looking at a shorter lifespan because I can't see a doctor as much, if at all, and can't be referred to a specialist as much (likely at all) to check any pains or weaknesses I may feel during my life. I also have a child who needs very specialized speech therapy, which is not covered by our so-called health insurance and won't be provided at public schools. Her whole life will be affected. Instead of passing an audition for Broadway, for which she has the musical and dancing chops, she may flunk it because she can't speak quickly and grammatically correct. The therapy she needed probably is past due; it is most effective during the first 10 years of life. She is 11.
This is perverse in our rich country (which now qualifies as a failed state, says Chomsky) and in a country that my great-grandparents, grandparents, parents, and myself helped build by our workaholic ethics.
My wife and I used to be middle class. Because of the Recession, we now make minimum wage. I hope the elite is aware that they are standing on my ancestors' shoulders (fat chance).
These numbers don't reflect the fact that an insurance policy today is a junk product compared to decades ago.
I ran across this comment over at Raw Story published by a citizen named nunya. It looks like MAYBE the requirement that insurance companies must actually spend 85% of premium dollars on patient care MIGHT, EVENTUALLY, lead to single payer.
"When the Affordable Health Care Act was passed progressives complained the law didn't offer at the least a public option, but it seems as though that the law had a hidden trigger that may very well pave the road to single payer health insurance system or Medicare for all. That trigger is the medical loss ratio. This is the part of the law that makes the health insurance industry use at least 85% of your premiums to cover medical expenses. This is something the for profit health insurance industry detests, because it limits the amount of dollars you pay into the system to go toward CEO pay, bonuses, lobbying and advertisements.
Well, it turns out that the MLR (Medical Loss Ratio) is working rather quickly.
Among the many companies that are dropping out of the business rather than comply with the MLR requirements that would force them to actually spend an appropriate share of the premium monies received from customers on real health care are some of the nation's largest carriers.
Principal Financial Group had already announced late last year that they were leaving the health insurance business, impacting on some 840,000 insured.
Another key player in the business, Cigna, has decided to quit the small business market in states like California, Connecticut, Florida, Georgia, Hawaii, Illinois, Kansas, Missouri, New Hampshire, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas and Virginia. In Colorado and Michigan, insurance giant Aetna is bailing on both the small business and individual markets."
In fact, even further into the MLR requirements is the fact that Aetna is estimating they will have to pay out $100 million dollars to their subscribers in 2012 for failing to meet the 85% threshold.
As more and more health insurance companies refuse to use 85% of their billions of dollars in premiums to pay for your medical care, they will drop off the face of the earth and will ultimately pave the way for the American government to expand Medicare for everyone."
I take the same position on this as the Palestinians do on the ruling for Israel to dismantle some of it's settlements. I'll believe it when I see it.
Tell us something we don't know. This piece does absolutely nothing to describe what a minimum livable wage for workers and a minimum livable income for those who are unemployed (for whatever reason) would look like.
Worse, Schmitt who is a consultant to ACILS (an affilate of the AFL-CIO labor federation largely funded by the USG) fails to take labor to task for its silence about a livable minimum wage and/or income and the failure of Congressional Democrats to even discuss livable wages and incomes.
Affordable Health Care -- NOT
We didn't get health care reform with Obamacare -- we got "market reforms" with a mandate and the IRS acting as the enforcer.
If the authors at CEPR want to document and explain the reason that affordable and accessible and comprehensive health care is not available to all Americans -- and will not be accessible and affordable under Obamacare -- here is the essential data that should have been included in your research:
AHIP (America's Health Insurance Plans)
http://www.ahip.org/
Here is a video of Karen Ignani, President and CEO of AHIP, on Bloomberg TV this morning talking about the need for the "linkage" of the mandate in Obamacare which makes the "market reforms" work:
InBusiness with Margaret Brennan
http://www.ahipcoverage.com/2012/03/26/ahips-karen-ignagni-discussing-thelink-on-bloomberg-tv/
Health insurance stocks posted big gains today -- investors must feel confident about the U.S. Supreme Court ruling on Obamacare in ways that will enhance their bottom lines and those of their shareholders, to wit.
New York Stock Exchange -- Closing Bell Today:
http://www.marketwatch.com/
CI (Cigna): Price: 46.97 -- Change + 1.13 -- Change + 2.47%
AET (Aetna): Price: 47.00 -- Change + 1.40 -- Change + 3.07%
UNH (UnitedHealthGroup/AARP): Price 55.10 -- Change +1.44 -- Change + 2.68%
WLP (Wellpoint/Blue/Cross): Price 68.63 -- Change + 1.95 -- Change + 2.92%
HUM (Humana): Price 87.99 -- Change +2.08 -- Change + 2.42%
The all-important "linkage" that Karen Ignani refers to in the Bloomberg interview refers to the 30 million new suckers who will be forced to purchase inferior, overpriced, high-deductible, high co-pay, inadequate (no dental or vision) health insurance from one of the big health insurance monopolies listed on the New York Stock Exchange, because that cartel will control the "exchanges" in every state and will act as gatekeeper between you and your health care provider(s), and no other public option entity will be allowed to complete on that corporate playing field.
But Wait! There's More!
PhRMA
http://www.phrma.org/
List of Member Pharmaceutical Companies
http://www.phrma.org/about/member-companies
Like the AHIP cartel, the individual PhRMA companies are publicly traded on the New York Stock Exchange and can be looked on up MarketWatch, Bloomberg, or by using the Google.
Suffice it to say that the PhRMA companies stand to reap windfall profits from Obamacare, because Obama and the Democrats killed the Dorgan Amendment which would have introduced real competition through reimportation of FDA approved drugs from Canada and Europe and bulk purchase discounts for Medicare and Medicaid. Obama and Dems were fierce advocates for PhRMA's profits
In the United States -- the most backward of the OECD countries -- the private for-profit "free-market" capitalist health insurance cartel is the monster in the room -- taking up all the oxygen and all the cash -- which the think tankers never seem to mention in their research and analysis. Those multimillion-dollar CEO salaries and stock options and private jets ought to be factored into any health care system meta analysis.
D'oh! -- is the obvious just too complicated for the liberal "progressive" policy research think tankers? Hint: the minimum wage, however inadequate, is a feeble issue when up against the corporatocracy and the bought-and-sold politicians in the House and Senate who serve the rich and super rich and their interests.
Obama is a corporatist whore and so are the Democrats who passed that ridiculous Rube Goldberg contraption known as Obamacare and then tried to convince the public that their putrid sow's ear was really a silk purse. Sorry, but no sale.
Obamacare = Sow's Ear Health Care at Silk Purse Prices.
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Thanks for the great information, Sarah B. Opharmacare.
Gr8 well-researched piece. Thank You.
It would appear nothing has "trickled down". The elite have simply purchased bigger "buckets".
What happens when the 99% can't afford to support the 01% anymore? Do you think they'll eat their own?
What's amazing is working Americans although our President and the rest of the 01% don't think we're as smart, educated or productive as the Chinese, have managed to find a way to work 4 times as hard as we used to in order to meet the new mandates we're all forced to purchase and attempt to grab just a small crumb of what's left of the "American dream".
And they wonder why we're willing to camp out in parks for months at a time in order to be heard?
It would be interesting to add a column to those charts showing how many hours executives have to work for those same things. But then their wealth comes from capital gains and return on investment not "work". But CEOs are salaried so let's see how many hours they have to work to pay for insurance and education.
http://sickforprofit.com/ceos/
Might mandating the purchase also Mandate the corporate required regimen?? Think vaccinations, statins, anti-depressants, chemo, etc. Non-compliant and you are dropped from services. Surely not Medical Facism.
Recently rec'd certified letter from physicians group informing me of just such a punitive reality. With mild hypertension, and elevated cholesterol (only determined by last year's new guidelines), was told I must have return office visit and resume statins. Four mths after last visit, rec'd cancellation of services notice from multi-doctor practice. Must now travel 20 miles to adjacent county as healthcare corp maintains a local monopoly.
As early-retired schoolteacher, state premiums up 30% and co-pays up 35% over last year. I'm grateful for what I am able to access. But where will it end??
That is definitely one of my concerns. I can imagine fat people being forced to enroll in preventitive programs on their own dime as well. It was bad enough under HMOs being told what you could or couldn't not receive by the insurance companies not your physician.
If you are old enough to remember HMOs were touted as the solution to escalating costs by Congress. Apparently they didn't work out all that well.
http://www.thefreemanonline.org/featured/blame-congress-for-hmos/
"...the lower animals on Animal Farm did more work and received less food than any animals in the county."
...""Comrades!" [Squealer the pig] cried. "You do not imagine, I hope, that we pigs are doing this in a privilege of selfishness and privilege. Many of us actually dislike milk and apples. I dislike them myself. Our sole object in taking these things is to preserve our health. Milk and apples (this has been proved by Science, comrades) contain substances absolutely necessary to the well-being of a pig. We pigs are brainworkers. The whole managment and organisation of the farm depend on us. Day and night we are watching over your welfare. It is for your sake that we drink that milk and eat those apples. Do you know what would happen if we failed in our duty? Jones would come back! Yes, Jones would come back! Surely, comrades," cried Squealer almost pleadingly, skipping from side to side and whisking his tail, "surely there is no one among you who wants to see Jones come back?"
George Orwell, Animal Farm
We've learned nothing.
YEP! How much do you spend on food at the supermarket a week? Even if you spend only $12. a day for 2 people on food that's $84 a week $7.25 / hr X 40 is $290. Take out taxes that's $250 minus food leaves you $166. You now have $660 left to pay for utilities, transportation and rent.? THE UNITED STATES HAS INSTITUTED SLAVERY.
$11,000,000 a year - that's about $5,000 an hour give or take $500 or $600.
$31,000,000 a year that's $15,000 an hour give or take 1,000 and hour
You got guys like the Koch brothers who make $60,000 - $100,000 an hour spending a couple a days wages
Keeping workers in Wisconsin from making from $10 - $20 an hour
& the Koch brothers don't even live in Wisconsin.