03 September 2013

Purchasing power declining in Michigan

Story originally appeared on the Lansing State Journal.

In many ways, Ramona Jackson reflects Michigan’s changing labor force.

Earning $7.70 an hour as a cook, the Lansing woman finds it difficult to provide for her household that includes two children and five grandchildren. Earning about $16,000 a year at a Pizza Hut restaurant, the 52 year old joined a handful of employees earlier this week outside the chain’s south Lansing location to picket for higher wages.

“We’re not asking for a whole lot,” Jackson said. “Just enough to sustain, run a household. Some of us are having trouble making rent.”

Despite employment gains statewide in recent years, more Michigan workers such as Jackson are being squeezed by low or falling wages since 1982, according to an annual report from the Michigan League for Public Policy.

Michigan’s median wage of $15.89 an hour in 2012 is down 7 percent since 1982, when adjusted for inflation — the second-highest drop among all states, according to the report. In 1982, the median wage was $7.44 an hour, but in 2012 dollars it was $17 an hour. Only Alaska experienced a larger drop.

That decline in purchasing power is a sharp contrast from the early 1980s, when the state’s automotive industry was going strong.

In 1982, Michigan had the fourth-highest median wage in the nation. But hundreds of thousands of higher-wage automotive jobs were eliminated during the recession that started in December 2007 and stretched into 2009, and state median wages nosedived.

As a result, more Michigan workers are being forced into lower-paying retail or restaurant jobs, and often have to work two jobs to make ends meet, said Gilda Jacobs, president and CEO of the Michigan League. To address falling wages, the report recommends the state expand higher education opportunities for Michigan youth and increase the state’s minimum wage of $7.40 to an unspecified level.

In recent years, the fiscally strapped state has slashed funding for higher education, leading to tuition increases at most universities.

“We were once a high-wage state,” Jacobs said. “Despite the fact that we are staring to build up our economy, we have a lot of people who can’t make ends meet. We need to change that.”

But Michael LaFaive, director of the Morey Fiscal Policy Initiative for the Mackinac Center for Public Policy,a free-market think tank, said raising the minimum wage would only force businesses to lay off employees.

The report also found the wage decline has been sharper for blacks than whites. In 2012, blacks had a median wage of $12.65 in Michigan — 25 percent lower than the $16.85 median wage for whites. That’s the biggest gap between the two groups in the 34 years in which the data has been tracked.

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