and economists would call you underemployed if you work full-time but live at or below the poverty line; if you have multiple part-time jobs; or, if you need to work a full-time job and perhaps one or two other part-time jobs to make ends meet. For the most part, underemployed people have taken jobs that don’t utilize their skills, experience, or training, because they are desperate to just cover their bills. They might work as many as sixty hours per week at part-time jobs and completely miss opportunities for health insurance, sick time, vacation time, and retirement plans. In the twenty-first-century economy, a growing segment of the US population has been relegated to work that does not provide a basic level of self-sufficiency. They are suffering from structural changes in the economy that have created chronic underemployment.
Low-wage work is the primary driver of underemployment and economic struggle. For example, the largest employer in the United States today is Walmart: 2.3 million people work for Walmart. Although it primarily hires part-time workers, even its full-time workers need (and qualify for) federal assistance provided by the Supplemental Nutrition Assistance Program (SNAP).8 Full-time Walmart employees earn between $20,738 and $21,632 – less than the $25,149 the Walton family earns in dividends in a single minute.9 The Walton family gets $4 million richer every hour. By 2018 they had topped the list of the world’s richest families with $191 billion.10
The fact that Walmart pays its full-time workers an annual wage that places them at or below the federal poverty line is not an accident or an oversight. It is a business plan. A study by Americans for Tax Fairness found that Walmart’s low wages across the country cost taxpayers $13.5 billion in food assistance provided by SNAP in 2013 alone.11 By 2015, the business practice of underpaying workers had enabled the Walton family to amass more wealth than 42% of American families combined.12 The second and third largest employers in the nation, Amazon and Kroger are also less than worker friendly. Amazon recently increased its warehouse wage to $15 an hour but still demands unsustainable levels of productivity from workers (more on this in a moment). Meanwhile many of the workers at Kroger, the third largest employer, are paid so little they also are forced to rely on SNAP.13 Whole Foods, a subsidiary of Amazon, announced in 2018 that it would cut medical benefits for its entire part-time workforce – the annual saving produced by this was about equal to what Jeff Bezos makes in two hours.14 These are only three examples from a much longer list. But the bad news actually gets worse.
It seems like common sense that if a company pays workers so badly that they need SNAP benefits, or demands levels of worker productivity that consistently result in injury, then cities and states would shun them. Who wants to bring jobs like that to town? Apparently, a lot of highly paid government officials. In 2019, Amazon donated more than $1 million to the campaigns of city council members it judged to be compliant with its agenda.15 Thanks to deals local governments have negotiated with corporations, taxpayers not only subsidize these companies by providing food assistance to underpaid workers, we also subsidize them when local governments agree to provide them with huge tax breaks, fee waivers, and cash grants. As cities compete against each other to bring in Amazon, successful bids start at $1 billion (Atlanta) and go as high as $7 billion (Newark).16 Given the company’s explicit requests for economic enticements, you might believe that Amazon was a great employer. The question should be great for whom? Politicians point to the number of new jobs the company creates and the increased tax revenue. While Amazon recently raised its wage to $15 an hour, that increase has been offset by injuries to workers caused by a quota system that demands they scan more than 300 items per hour over the course of their ten-hour shifts.17 Conditions in Amazon warehouses have long been under scrutiny. Like all business, it does promise to generate valuable tax revenue, but that promise is undercut by billions of dollars in tax breaks. Maryland’s Montgomery County is reported to have offered Amazon $6.5 billion in tax incentives.18 This way of doing business is shocking and deserves a book-length analysis on its own. For now, I can only say that this kind of economy makes sense only to the super-rich who benefit from it. To bring these businesses to town, elected officials have to sell out workers – often the very people who voted for them.
When politicians boast of a strong economy and a low unemployment rate, they mask the reality of working people’s lives. A more accurate assessment of the quality of life experienced by millions of people needs to focus on self-sufficiency and underemployment. It would seem fairly basic to recognize that any person who has full-time work and does not earn enough to meet baseline living expenses is underemployed. I would also argue that they are underemployed if they don’t have the economic stability to cover unexpected expenses like car repairs. How well our families are doing depends not only on what we are earning but also on what we are spending – most especially on housing.
Framework 2: Housing – Fair Market Rent vs Affordable Housing
Across the country, the cost of housing is rising faster than wages. A study of US government data by the United Way Alice Project shows that 43% of all households “can’t afford a basic monthly budget for housing, food, transportation, childcare, health care and a monthly smartphone bill.”19 The US Department of Housing and Urban Development (HUD) considers anyone who pays more than 30% of their income on housing to be cost burdened.20 Yet HUD’s own figures show that millions of households spend between 50% and 70% of their income on housing. The widening gap between income and housing costs has created a crisis for families across the nation. Just fifty years ago, it would have been unimaginable that hundreds of thousands – by some counts millions – of people in the US would be unable to afford housing. Yet the rise of tent cities that began in the 1980s has become a living testimony to the pervasive lack of affordable housing. The cost of housing obviously compounds the problem of low wages.
In 1974 HUD developed the concept of Fair Market Rent (FMR) in order to determine standardized payments for their housing voucher program, known as Section 8 Housing, to support extremely low-income families. HUD determines FMR for an area and provides a rent subsidy so that families pay only 30% of their annual income on rent. That’s how it works in theory. In 2018, 3 million families were on voucher waitlists.21 In 2019 only seventeen states had any open waitlists at all. Yet HUD continues to conduct surveys to determine FMR, and since its numbers are widely used by other organizations concerned with rental costs, it is worth understanding what is meant by FMR.
HUD uses regional surveys of rent and designates rents falling in the 40th percentile as FMR. This means that 40% of rents are either at or less expensive than the FMR and 60% are more expensive.22 As bad as that might sound, even FMRs tend to be out of reach for many. For example, a survey by the National Low Income Housing Coalition found that on a minimum-wage salary, it is impossible to afford fair market rent for a one-bedroom apartment in all but twenty-two of the nation’s 3,000 counties.23 And there is no relief in sight. In 2019 the White House proposed to slash $8.8 billion from HUD’s most important programs and to loosen the caps on rents for landowners enrolled in the federal voucher program.24
The government, nonprofits, and businesses also use a term called “affordable housing” to describe housing for which the total cost of rent (or mortgage) plus utilities is no more than 30% of one’s pre-tax income. It makes sense that the government thinks in terms of money when considering what counts as affordable housing. That is the easiest calculation for affordability, but it isn’t exactly right. It doesn’t, for example, take into account things like the quality of the housing, neighborhood schools, public safety, and public transportation. A family might find housing they can afford but that requires a long commute for work. A long commute then increases the length of the workday, the cost of transportation, and the cost of childcare. In addition, living in one community and working in another adds more stressors, like not being able to get to the children’s school if there is an emergency. None of these factors fit neatly into the spreadsheets used to calculate affordable housing.
In an effort to provide affordable housing to residents, cities have tried two strategies: rent
