Save the date! CAHS will be hosting a forum on remedial education reform and college access on March 21st. We will be presenting our latest report on Connecticut´s developmental education reform, PA 12-40, with a special focus on its impact on low-income and adult students.
- Senator Beth Bye, Appropriations Committee Chair, vice-chair of Higher Education Committee.
- David Levinson, Vice President for Community Colleges, Board of Regents.
- Susan Bickerstaff, Postdoctoral Research Associate, CCRC- Columbia.
- Roger Senserrich, Policy Coordinator, CAHS.
The forum will take place March 21st from 11 am to 1 pm in the Capitol in Hartford, Room 310 (Old Judiciary Room).
Yesterday afternoon President Obama stopped by Central Connecticut State University in New Britain where he made his case for increasing the federal minimum wage to $10.10 (current federal minimum wage is set at $7.25, Connecticut's minimum wage is $8.25). Flanked by Governor Dannel Malloy, as well as the Governors from Massachusetts, Vermont, and Rhode Island, the President called on Congress to "give America a raise" and highlighted how the increase would help women and young people.
In our previous post, we discussed the the benefit a wage increase has on both our lowest-earning workers and the state's budget. Several news reports following the event, that can be viewed here and here, featured quotes from Democratic lawmakers indicating the high probability of the legislature passing a minimum wage increase during this legislative session. Tom Foley, the likely Republican candidate in this fall's governor's race, has stated he favors a minimum wage increase. There is also overwhelming public support, with the latest Quinnipiac poll showing voters backing the measure 3-to-1.
An increase in the minimum wage is an important first step in helping our state's families move out of poverty and towards economic security. In future posts, we will discuss other aspects of the President's economic agenda for 2014, which includes a more robust earned income tax credit with new support for single adults, additional job training programs, and expanded early childhood education opportunities.
The minimum wage is one of the most hotly debated topics on economics, and there is an extensive literature on the subject to rely on. Here is what we know on the effects of a minimum wage increase, and why it is good policy for Connecticut:
- Low wages have a direct cost from the state: we end up subsidizing employers as workers have to apply to government benefits to make ends meet. Wal Mart is probably thebiggest welfare queen in the country, in many ways.
- This graph is still the best reason to raise the minimum wage. Right now, most economists think raising it is a good idea.
- From last year: Wade Gibson and Matt Santacroce´s report on who earns the minimum wage in Connecticut, and how it will help the state´s economy.
- There is a widespread consensus that raising the minimum wage reduces poverty, according to this literature review by Arin Dube at UMass Amherst.
- The classic study on how minimum wage increases affects jobs is this one by David Card and Allan Kruger. The found that the evidence that it killed jobs was almost non existent.
- Since then, further research has shed some additional light on the effects of the minimum wage. Mike Konczal has a good review here. Most evidence still points in the same direction: minimum wage increases raise incomes and reduce poverty without destroying jobs.
- For the truly dedicated, the operational word on why this happens is monopsony. The labor market is "special" as "buyers" of labor (that is, employers) have more market power than sellers (that is, workers). Follow the link to see some basic economic modeling.
- The CBO recently published an analysis on the effects of raising the minimum wage to $10.10 at the Federal level. Their take is that it would increase the earnings of 16.5 million workers, and move 900.000 individuals out of poverty. The only families that see a (very modest) drop of income are those making six times the federal poverty level. The report does say that the increased minimum wage might eliminate some jobs (500,000, to be exact), but the tradeoff in terms of families with higher incomes (and which families get those incomes - mostly working poor) is probably worth it.
We at CAHS support the increase - any potential costs are modest, and the benefits greatly outweigh the drawbacks. Any economic policy has trade offs. An increase in the minimum wage greatly favors those that are the most in need.
If you are looking for some effective policy proposals to help low income families thathappen to have broad bipartisan support, Washington has not been the best place to look of late. After the SNAP cuts approved last week in the House, it is hard to believe there is much interest in helping low income families in the short term.
There is one policy that it is both very effective and that has been receiving plaudits from both sides of the aisle of late, however: the Earned Income Tax Credit, or EITC. The Center on Budget and Policy Priorities has a great article about the EITC, a policy that both works and has some Republican Senators arguing that it need to be expanded. The data certainly shows its effectiveness:
Next to Social Security, the EITC combined with the refundable portion of the Child Tax Credit constitutes the nation’s most powerful anti-poverty program. These two credits lifted 10.1 million people out of poverty in 2012, including 5.3 million children (see chart). As AEI’s Michael Strain points out, the EITC “is a very effective anti-poverty tool because it supplements earnings and incentivizes employment. Expansions of the EITC have been very successful at encouraging work, particularly among single mothers during the 1990s.”
We were very vocal, in fact, arguing for a state EITC. The state tax credit was cut last year due to the tough budget situation from 30 to 25% of the federal refund. Governor Malloy has promised restoring the state EITC to 27.5% this budget year (and to 30% in 2015), and CAHS will work to ensure this program is restored.
CAHS, through our very successful VITA program, has also worked for years to make the help families get access to the program. You can learn more about our VITA program here - and get information on all sites in the state by calling 211.
Barry Ritholtz, in Bloomberg, ask a a simple question: What should it mean to be employed full time in America?
He is interested, specifically, in Wal Mart, and why a huge, profitable, wealthy mega corporation does not pay its workers enough to makes ends meet. First, let's go over how large Wal-Mart is:
Wal-Mart has 2.2 million employees, including 1.3 million hourly workers. It employs 1.2 million people in the U.S. alone. Gross revenue is $475 billion, generating profits of $17.20 billion. It dominates the discount retail space, and according to Bloomberg, has a 66.70 percent market share (...). . Each week, it has 200 million customers at more than 10,400 stores in 27 countries. If the company were an independent country, it would be the 25th largest economy in the world.
The problem is, this gigantic economic colossus does not pay its workers enough to make ends meet. In fact, Wal-Mart Employees receive $2.66 Billion in government help every year.
Wal-Mart's low wages have led to full-time employees seeking public assistance. These are not the 47 percent, lazy, unmotivated bums. Rather, these are people working physical, often difficult jobs. They receive $2.66 billion in government help each year (including $1 billion in healthcare assistance). That works out to about $5,815 per worker. And about $420,000 per store.
Here at the CAHS blog we talked about this issues last November - a family of four with two adults working full time at Wal-Mart in Connecticut would only get less than two thirds of their income and benefits from the company; the state and federal governments would be footing the bill for the rest, with SNAP, Husky, Care 4 Kids and other benefits.
Can Wal-Mart increase its wages? Ritholtz does the math, and yes, it can:
Can Wal-Mart afford to increase employees’ salaries? Let's crunch the numbers. The retail giant does $474.88 billion a year in sales; across their 2,200,000 employees, that nets out to $213,255 sales per employee. Given a 5.93 percent operating margin, that nets out to $12,646.02 profit margin per employee. Adding $3 per hour per full-time employee would consume almost half of that profit. But that before any potential increase in productivity, reduced turnover costs and higher revenues.
The full article is here, with plenty of links showing why low wages are one of the reasons why Wal-Mart has very high staff turnover and very low productivity per employee. His analysis of McDonalds, another large corporation prone to dumping part of its labor costs on the tax payers, is here.
The obvious solution is, of course, an increase of the federal minimum wage, something that we have advocated for years. The economic benefits of an increase would be immediate, but Congress doesn't seem to eager to move in that direction.
Connecticut passed in 2011 a paid sick leave law. It was the first state in the country to do so; although paid sick leave is common in other countries, our state took the first step in the US. The law applies to 400,000 workers in business with 50 or more employers, allowing them to earn five paid sick leave days a year.
The law was greeted with a great deal of skepticism from a business community (to put it mildly) that feared an increase in labor costs. Two years after it took effect too economists, Eileen Appelbaun (CEPR) and Ruth Milkman (CUNY), surveyed 251 Connecticut employers and interviewed 15 business managers. Their preliminary findings are striking:
The authors found that the law had minimal effects on businesses. A large majority of employers reported that the law did not affect business operations and that they had no or only small increases in costs. Businesses most frequently covered absent workers by assigning the work to other employees, a solution which has little effect on costs. Just 10 percent of employers reported that the law caused their costs to increase by 3 percent or more. Since the implementation of the paid sick days law, Connecticut employers saw decreases in the spread of illnesses and increases in morale, among many more effects [PPT].
About 89 percent of employers already offered paid sick days to some or all of their employees prior to the law. An important effect of the law is that paid sick days coverage was extended to part-time employees who previously lacked such paid time off. The sectors with the largest changes in coverage to employees were hospitality, retail, and health, education, and social services.
Eighteen months after the law took effect, over three-fourths of employers reported that they were very supportive or somewhat supportive of the paid sick days law. Find out more in the authors’ presentation [PPT].
As Bryce Covert points out, business in other cities with paid sick leave legislation have experienced similar results: no effect in business relocation, largely positive results. Currently four states are considering similar legislation (Massachusetts, Oregon, New Jersey and Oregon), and they should be encouraged by the Connecticut results. Currently 40% of private sector workers do not have access to paid sick leave; the US stands alone among developed nations in this regard.
The Connecticut Association for Human Services (CAHS) started the Access Benefits Online (ABO) program in February 2010 to improve access to work supports. ABO is built on two main ideas:
- To offer quality application assistance for public benefits in Community Based Organizations (CBOs) across the state.
- A focus on serving hard to reach populations.
Our model is based in the following:
- Many CBOs have built trust within the community. We rely in this trust to reach out to clients that would otherwise not apply for public benefits.
- We train our CBO partners so they become a reliable, trusted access point to public benefits, with up to date information, a powerful software screening tool that can check eligibility for 12 public benefits (SNAP, TFA, Husky A, B, C and D, among others ) and good, reliable data to track their performance.
- The whole process should be seamless: the application is completed and sent to DSS by the CBO staff.
CAHS has steadily built a network of community partners across the state, from eight CBOs in 2010 to 35 sites this year. 2013 has been a year of growth, thanks to our partnership with the Community Health Center Association of Connecticut. Thirteen community health centers across the state use ABO to screen their clients for SNAP, Medicaid, Husky and other benefits, help them fill their applications and track enrollments. This has greatly increased the volume of clients we serve every month, from 266 screenings/month in 2012 to close to 800 this past year.
In 2013 CAHS and our partners screened more than 9,000 households for benefits covering more than 20,000 individuals. More than 8,000 were referred to DSS to apply for benefits. As the end of September, 3,709 households had been enrolled to at least one benefit, completing more than 6,200 benefit enrollments. ABO partners successfully focused on traditionally underserved groups: 46% of our clients were Hispanic, 17% African American. 28% spoke a language other than English in their household; 39% of them were under 18 years old.
Next year CAHS will continue working with our community partners and DSS to further improve and streamline benefit access in Connecticut. The Affordable Care Act will add many people to Medicaid, and CAHS will be there, helping them get the benefits they need.
To that, however, we need your help. Please support CAHS to help us provide these services that low income families rely on and have a better new year. With your donation we will be able to be in more place, help more families, make a bigger difference. And all with your help.
The Volunteer Income Tax Assistance program (VITA) is CAHS´longest running initiative. For VITA, coordinates several coalitions of community based organizations in several
cities across the state to offer free tax preparation services to low income families. CAHS works as a convener, helping our partners recruit volunteers, prepare marketing materials, seek funding, coordinate efforts with IRS and train and certify volunteers. Our objective is to help working families get their tax returns filled for free, avoiding costly for profit tax preparers.
Our VITA work has informed our policy work since the start. One of our aims is to help families that are eligible for refundable tax credits (like the Earned Income Tax Credit or the Child Tax Credit) receive the full amount. Our advocacy for a state EITC derives from our experience promoting its federal version, and seeing how effective it is.
Our VITA program is growing. During the 2012 tax season CAHS coordinated a ne
Our work with VITA is not restricted to just tax returns, however. We are working with several of our partners to incorporate asset building and financial education to the services offered by our VItwork of 47 sites that completed close to 11,000 tax returns. These filings brought $18 million back to Connecticut in tax refunds; 38% of fillers were eligible to receive the Earned Income Tax Credit. For the 2013 tax season we will be working with 53 sites; we are expecting to complete more than 12,000 tax returns. About a third of
TA sites. In others, we are also pairing tax preparation with benefit screening.
The 2014 tax season will start by the end of January - and we are still looking for volunteers. You can sign up here, if you are interested. If you want to help CAHS bring this service to more people across the state, or you want to boost our current efforts, you can also make a year end contribution to support this program. You can do it online here - it is tax deductible, and we will appreciate your support.
CAHS hosted today an introductory webinar to explain how the Affordable Care Act ("Obamacare") is being implemented in Connecticut. Deb Polun, from the Community Health Center Association of Connecticut, and Kate Gervais, from Access Health CT, were the main presenters, going over the legislation and how Connecticut residents can access to the new benefits.
You can download the full presentation here (WMV, 133 MB - there is a bit of a pause in the middle - wrongly muted microphones). Here is Deb's presentation on the basic structure of the Affordable Care Act (PowerPoint); here is Kate's slides on how the new law is being rolled out in Connecticut, and how people can apply for benefits or get help if they need assistance with the process (PowerPoint).
As we get close to the end of the year, it is time to have a look back and see the results of our work. We had a very busy year here at CAHS, with some of our programs having big expansions and others having a lot of bold, new ideas to move them forward. This week we will have a look back at each of our programs, and some of our plans for next year. Today, we will focus on the Connecticut Money School.
The Connecticut Money School:
The CT Money School (CMS) opened its virtual doors in 2009. CMS is our financial education program. CAHS partners with community based organizations across the state, connecting them with volunteers that we have recruited and trained to provide financial education classes. Our aim is to help our partners improve their services, building financial education to their menu of services, and enabling them to connect to volunteers that can help them to build up these programs.
Between November 1st 2013 and October 31st 2013 (it is not quite the end of the year yet, so bear with me having non-calendar year numbers!) CAHS has partnered with 15 community agencies in Hartford, Bridgeport, Bristol, New Britain, New Haven and Plainville to offer more than 30 financial education workshops. 336 people enrolled and attended classes; 69% of them to a budgeting class. Two thirds of the students were female; 23% Hispanic and 19.5% Black.
We want to thank Citizens Bank for their funding for this program, and their trust and support. We have made many changes to CMS during 2013, and their support has been invaluable.
These numbers, however, only tell part of the story. CMS is creating a network of partners that can provide financial education services; our focus is not just processing as many students as possible, but building up the capacity of our partners. This is bot We are also extending our Financial Avenue program for younger students, with very exciting results, as well as combining CMS with the rest of CAHS' programs. More on that tomorrow.