June 2007 No. 25Table of ContentsRich and PoorIN’s minimum wage goes up in July |
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Governor Daniels signed HEA 1027 linking IN’s minimum wage rate to the federal minimum wage. In late May, Congress included an increase in the federal minimum wage rate in a compromise bill giving stopgap funding for the war in Iraq. It will go to $7.25/hr over the next two years. The federal minimum wage was first set in 1938 when it started at 25¢ an hour. It rose 25 times, with varying rates for farm and nonfarm workers, until it stopped at $5.15/hr in 1997—that change included a sub-minimum of $4.25/hr for workers under 20 yrs old during their first 90 days of employment, just the thing for summer fast food jobs.
A year-long, full-time job at the $7.25/hr wage generates $15,080 in pre-tax income. That’s 10% more than today’s federal poverty level (FPL) for a family of two. Yet, economic studies by the Indiana Institute for Working Families calculate that Hoosier families need an income twice the FPL to get by. You can find your county’s “self-sufficiency standard” for various house-holds at www.region4workforceboard.org/calculator/selfsuffcalc.cfm.
What UWs should do. As employers, United Ways and other nonprofits must post and provide information on the new state minimum wage to current and prospective employees. The IN Dept. of Labor says the state will begin the new federal minimum wage of $5.85 starting July 24. You can get details on what to do at www.in.gov/labor in mid-July.
WellPoint’s Larry Glasscock got $14.5 Million in compensation last year, reports The Indianapolis Star. If that was for a 40-hour/wk job, it would be almost 1,000 times the new minimum wage. Of course, his job is not 40-hrs/wk, and his pay is an aggregate of salary, incentive plans, stock, and other options. And he’s not flipping hamburgers. Yet the economic gap between rich and poor Hoosiers could hardly be more graphic.
Indeed, there were 27 top executives of publicly-held IN companies with $1+ Million in total compensation last year. Their perks included seats in company-purchased suites at Colts games, country club memberships, cars, top-flight health care, and great retirement plans. Heads of privately-held companies do even better, but this information is not public.
Philanthropy. It is no wonder that persons of this level of wealth are notable philanthropists. Most steer corporate giving. Many endow their own family foundations. Almost all at some time sit on university, hospital, and other nonprofit boards. United Way of America reports that the 20,000+ members of the nearly 400 Tocqueville Societies across America gave a total of $400 Million in 2005/6.
The world’s second richest man—Mexico’s Carlos Slim Helú—says neither philanthropy nor government spending is the way to tackle poverty. “You fight it with health, education, and jobs,” he says. Instead, he is devoting 11% of his $53 Billion fortune on building dams, hospitals, universities, and toll roads that he says will create more jobs than the charitable projects backed by the world’s #1 richest man—Bill Gates.
Slim Helú’s wealth exploded with the resurgent Mexican stock market. He owns 90% of his country’s phone lines, 40% of its famous ceramic floor-tile production, and dozens more companies. His new for-profit Latin American Development Employment Generator—acronym IDEAL in Spanish—is aimed at creating jobs for the 40% of Mexico’s population that live in poverty. Time will tell whether his approach is a solution or an excuse for not being philanthropic.
Preliminary data for tax year 2005 reveals adjusted gross income (AGI) for Americans totaled $7.5 Trillion (a million million), up 8.9% over 2004. Taxable income increased 9.5% to $5.1 Trillion, and total income tax rose 11.8% to $928.3 Billion. Net capital gains jumped 36.7%, deductions rose 8.4%, and tax credits offset income by $54.3 Billion. The total earned income tax credit (EITC) also increased 6.1% to $43.1 Billion.
According to the Tax Foundation, the top 1% of the 130 million tax filers for 2004 paid 37% of the nation’s total income taxes; their AGI was 19% of the USA taxpayer total. The top 50% of taxpayers had 87% of total AGI and paid 97% of total income taxes. Thus, the bottom half of American tax filers lived on 13% of the nation’s total AGI.
The gap between the rich and poor has been growing steadily for the past quarter-century. In 1980, the top 50% of taxpayers had 82% of total AGI compared to 2004’s 87%.
Only in Mexico and Korea do taxes take up less of a nation’s gross domestic product (GDP) than in the United States, reports Citizens for Tax Justice (CTJ) in a report on the 30 nations of the Organization for Economic Cooperation & Development (OECD). In most of the industrialized world, the portion is far more than the 26% in the USA. The Scandinavian countries have the highest 2005 total taxes as a % of GDP, but then again they provide the most comprehensive public healthcare and the lowest infant mortality rates worldwide. So there are trade-offs.
In the USA, total taxes were 24% of GDP in 1965. That peaked at 30% in 2000, although it made the USA only 27th of the 30 OECD nations. And then, the USA entered its most recent recession that year. In 2005, the USA was also 28th of the OECD nations for corporate taxes as a % of GDP. Check the CTJ report at www.ctj.org/pdf/oecd07.pdf.
The #1 reason that people call 211 in Central IN is to get information and referrals around housing issues. And in 2006, those calls focused on rent/mortgage payments (31%), shelter (30%), and low-cost or subsidized housing (24%), reports Connect2Help (C2H).
Calls about housing made up 19% of the 112,000 made in the metropolitan Indianapolis area, followed by utilities (12%), food (10%), and mental health or addictions (8%)—totaling half of the calls last year.
In the last 5 years, combined with switching over to using the 2-1-1 code, annual C2H calls jumped 250%. They also take most of the state’s 24/7 calls, but this dramatic increase is typical of the impact that the new 3-digit number has made on caller awareness. And 211 has not yet been aggressively marketed across IN.
Calls to C2H from Spanish-speaking area residents also doubled from 2002 to 2006. C2H has several bilingual staff and tracks caller location by zip codes. Legal issues were the top reason for Hispanic calls.
Callers receiving food pantry referrals concentrated in the older central zip codes of Marion County. C2H worked with the food pantries to transition away from the call center staff making the direct contact on the callers’ behalf to giving callers referrals to at least 2-3 pantries in their area for them to contact themselves.
Utility assistance needs also doubled over this 5-year period. Unfortunately, 41% of these requests were recorded as “unmet” by C2H specialists. For the full report, see www.connect2help.org/Reports.html.
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