June 18, 2018
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No savings, no retirement, no relief: The plight of so many low-wage workers

George Danby | BDN
George Danby | BDN
By Mary Gatta and Luisa Deprez, Special to the BDN
Updated:

The most recent U.S. Census reports that nearly 20 percent of Maine’s population is over 65 years of age and 23 percent are between the ages of 50 and 64, right around the corner from aging. As the oldest state in the country, the prospects of retiring or being able to retire weighs heavily on the minds of many. Those with the heaviest burdens, and those with the least prospects of being able to stop work before they die, are low-wage workers. For them, insecurity looms frighteningly close.

A grim reality facing Maine and the rest of the U.S., is that more and more American workers will not be able to retire. Maine’s low-wage labor force, for example, is older than is assumed. The National Employment Law Center found that between 2005 and 2015, the labor force participation rate for seniors age 65 and older in Maine increased by nearly 47 percent — from 14.5 percent to 21.3 percent. This increase, which is documented by the Maine Department of Labor, was caused, in part, by financial need as more and more seniors cannot afford to retire and must continue working into their 60s and 70s, often in low-paying jobs.

Sadly, for far too many residents over 65, the economic insecurity they face will, as much research has shown, significantly impact their daily experiences. People cringe as they hear horrific stories of those who, although working, have to decide between food or medicine; accrue massive credit card debt; work multiple shifts without any control over their schedule; go to work sick because they will be fired if they don’t come in; commute on several bus lines for hours to get to their minimum-wage job because they can’t afford a car; and lose their homes to live among the growing population of the employed homeless. This is the reality for many low-wage workers and these scenarios reveal an impending serious economic and moral crisis.

Today, many Americans live without the savings needed to ensure their security both during their working years and beyond. Many have spent their lives in traditional low-wage work and did not earn enough income to save. Increasingly, middle-wage workers find themselves in a similar economic situation. The Federal Reserve found that 44 percent of Americans could not cover an emergency expense of $400 that might arise at some point in their lives. While this savings gap is distressing, the lack of a savings reserve becomes even more significant as one ages.

A 2015 Government Accountability Office report found that among all working households, almost half — 45.3 percent — have no retirement savings accounts. This reality is quite jarring when we look across age groups, particularly at those close to the non-working ages: 43 percent of workers 45 to 54 years old and 40 percent of those 56 to 64 years old have no retirement savings. Many say they will have to work until they die.

Maine’s low-wage workers are facing this crisis at alarming rates. Indeed many workers—restaurant, hotel, retail and health care workers—are struggling to get by each day and not able to save at all. According to the Maine Center for Economic Policy close to one in three of Maine’s working families live below, or near, the poverty line. If they are not getting by while working, how are they expected to cover their living costs when they can no longer work — either because of age discrimination, health problems or just plain exhaustion?

The Elder Economic Security Index estimates the income a senior will need to have basic economic security when they can no longer work. In Maine, a single senior who rents a one-bedroom will need $22,848; and an elder couple with a mortgage needs $39,240 per year. For those working low-wage jobs, that is impossible.

The recently passed GOP tax bill did, however, come with a promise of relief for American families and individuals. In reality though, low-wage workers gain nothing in the tax bill; seniors confront conceivable decreases in both Social Security and Medicare benefits. Both face increased taxes and the shrinking of services that enable them to get from day to day. The promised relief in the GOP tax bill will, in fact, pass them by bringing them ever closer, not to a more secure life, but to the brink of disaster.

Mary Gatta is an associate professor of sociology at City University of New York- Stella and Charles Guttman Community College and the author of the forthcoming book “Living and Dying in Economic Insecurity: Aging in Low Wage Work.” Luisa S. Deprez is professor emerita of sociology and women and gender studies at the University of Southern Maine. She is a member of the Maine chapter of the national Scholars Strategy Network, which brings together scholars across the country to address public challenges and their policy implications. Members’ columns appear in the BDN every other week.

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