Cranial Soup

What Republicans Do Not Want You To Know About Poverty and Taxes

2011-09-25T23:12:00.001-04:00

The poverty line in 2010 for a family of four was $22,314.

The Fair Labor Standards Act, which sets the minimum wage at $7.25 per hour, is one of the most violated of all the federal labor laws.

About 15% of all wage earners in the US are earning at or below the minimum wage.

The average full time minimum wage worker earned about $15,000. ($7.25 per hour x 40 hours x 52 weeks = $15,080)

She paid at least 20% of her income in taxes.

Even though it might be true that she had no federal income tax liability, she still had other taxes to pay.

Payroll taxes such as

Social Security
Medicare
Disability
Unemployment
State income tax
sometimes local income tax

She also had additional taxes such as

sales tax
excise tax on fuel
USF surcharges on
- telephone service
- natural gas
- electricity
property taxes, even if she rents (it would be hidden in the cost of her rent)

Additionally, she pays for her healthcare out of her pocket because minimum wage jobs do not come with healthcare benefits. She pays a higher price for a doctor's office visit than the insurance companies do. ($75 self pay vs. $35 paid by insurance) If she ever needs to go to the hospital, it could easily cost her over $4500*, even more if she has to be admitted.

She also does not get retirement benefits and is looking at a reduction in her income down to about $600 per month when she is too old to work and begins collecting Social Security, and will be expected to pay a portion of that to receive Medicare benefits. And that is only if there is still a Social Security system by the time she is old enough to collect.

A typical minimum wage worker is not a teenager from a middle-class family flipping burgers for some extra pocket cash to buy CDs, movie tickets, lipstick, nail polish, and video games.

Most minimum wage workers are women, standing on their feet all day working various jobs within the service industry. They are some of the hardest working people in this country.

Many are single mothers with more than one child, and many of those are receiving little or no child support to help offset the costs of raising those children. They also have the additional costs of child care, if they have no family support system capable of providing free care so that they can work.

And Republicans think they make too much money and need to have their wages cut, by either reducing or eliminating the minimum wage. They also want to cut or eliminate the social programs that help them to survive. They actually think this will help the poor and lift them out of poverty.

* I do not have medical insurance. I pay out of my pocket for all of my medical care. Back in 2006 I passed out in my kitchen, which resulted in a head injury requiring 8 staples to close the wound. I was taken by ambulance to the nearest hospital, which resulted in a bill that was just over $3000. This did not include the additional charges for physicians fee, lab work, or the MRI. Those were billed separately and were an additional $1500. My town is one of the small number in this area that provides a free ambulance service to its residents, but if they didn't, the ride would have been an additional $300.

If you don't pay these bills, the hospital may sue you, which could result in garnishment of your wages, which has the potential of knocking a minimum wage worker's pay down to about $150/week until the debt is paid off (with interest, court costs, and lawyers fees). There is also the very real possibility that instead of or in addition to garnishment, the court may seize your bank account (woe to you if you just made a deposit to pay your rent) and/or the local Sherriff may come in, seize and sell off the contents of your home, leaving you with no more than $1000 in personal assets and possessions.

The American Spaghetti Crisis: Part 2 (Our Nation's Starving Students)

2008-07-27T01:10:00.007-04:00

I touched on this issue before in a previous rant about out of control food prices and how it is affecting the poor of this country, but one group that I did not take into consideration when I wrote it, was college students. This is why I felt the need to write a Part 2.

Due to the rise in student poverty, you may now add them to both the group of kids sufferring from malnutrition, unable to concentrate in school due to their growling stomachs, and also to the group that is struggling with unemployment and the lack of available jobs.

College students are a group of people that are traditionally strapped for cash and live on tight budgets, with ramen being a staple of many of their diets. (It's not just a joke...it's real!)

It is difficult to make ends meet when you have to go to school all day, spend a substantial amount of time studying, and make sure you get enough rest in order to perform well in school the next day.

It doesn't leave that much free time for employment, and if students are employed, it's usually only part time for minimum wage. And with many businesses currently feeling the crunch and cutting their workforce, those jobs are becoming more scarce and the competition for them rising.

In many communities, students are competing with families that have kids to feed, for those fewer available low paying jobs. And during the summer, they may even be competing with their temporarily unemployed teachers, who also need more money to make ends meet and survive through the summer, till they return to work again in September.

Forget the stereotypes of the typical college student wasting all their money on booze and partying it up all the time. It just isn't true, any more (if it ever even was true). The vast majority are working themselves to death and rarely have the time, money, or energy for booze and parties.

And forget the stereotypes of students being able to just hit mom & dad up for more cash. Most parents have set a strict budget for their kids in college, if they are even willing or able to give them any help at all with personal expenses. And the parents that are willing to help, are feeling the squeeze themselves, with the rising food and gasoline prices eating into their extra cash they might normally have and be willing to contribute to support their children away at college.

The truth is, most students are more or less on their own for providing for their personal needs above and beyond their tuition, books, and housing; with many living well below the poverty line, and drowning in debt.

And because their parents can still claim most of them as dependants, statistics are based upon the income of the parents and not the actual cash the students have available at their disposal, so most of these poverty stricken young adults are not even included in the statistics that refer to students living below the poverty line. They are this nation's hidden poor.

The rise in food prices isn't helping things, and are driving students to drain the already scarce supplies of the local food pantries that are already struggling to keep up with the burden of demands from poorer families, while donations dwindle, as the middle class cuts back on "unnecessary" spending.

This has got to be affecting the poor, that were relying on food pantries long before the students started showing up. There is only so much food available, and it's not enough to go around. The rising number of students in need, is making the problem much worse.

An even scarier part of all of this is how more than half of the states in the US will run out of available funds to pay unemployment insurance claims within the next year, and some will run out within the next 6 months. Most states still had not fully recovered from the last two recessions, from the 80's and 90's, when this one hit. And the federal government recently extended the length of time in which the unemployed can collect by 12 weeks, which will further drain the available funds that states have left.

Any state that runs out of funds must, by law, borrow the money to pay unemployment insurance claims. They can't just not pay them. Since you can't just borrow without ever paying back, this money must come from somewhere, eventually. Guess who will end up paying for it.

You, your parents, and your children, in the form of higher taxes and less services, as the states try to make up the money that they had to borrow from other programs, to cover the cost of supplying benefits to the unemployed. And the higher the unemployment rate rises, the more they will have to raise taxes, borrow money, cut budgets, and cut spending in other areas, like services to the elderly and educating our children.

So students will be hit, yet again, with rising education costs at public universities, as they raise the price of tuition in order to make up for lost funding from the states.

And at the lower grade levels, as well, as states cut spending on programs that benefit down to the youngest of our nation's students, setting off a domino effect of rising property taxes at the local level, decreases in the quality of education provided, increases in the cost of supplying remedial help to those students that need it, an increase in the number of students that will need remedial help, and less opportunities for high school students to obtain scholarships to help pay for college; as art, music, athletic, and other extra-curricular program budgets are cut or even eliminated.

Parents will not only be expected to pay the higher taxes, they will have to voluntarily contribute more to cover the costs of supplying the extra-curricular activities that enrich and give their children any sort of advantages in college and beyond.

And it is not just the parents that will have to pay the higher taxes. Elderly home owners will have to, as well. They are not exempt from paying local property taxes just because their children are all grown up, moved out, and on their own. And I am sure they didn't plan for this mess when they were planning for their retirement. And services they rely upon will also be cut, such as transportation, social services, senior housing, and other programs normally provided and paid for by local communities.

And since part of the problems we are facing today, are the result of a recession that happened around 20 years ago, can anyone say with all honesty and confidence that things will improve and fix themselves within the next 20 years? What will the child that is born today have to face, when they are old enough to go to college? How many will even be able to afford it, if their parents have to save even more for retirement because if the issues that plague Social Security? If they can't go to college, how will the US be able to compete in the global marketplace?

Read More:
American Spaghetti Crisis: Part 1
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The American Spaghetti Crisis: Part 1

2008-06-26T14:46:00.011-04:00

While the world's eyes are focused on the global rice shortage, skyrocketing rice prices, and how it is affecting 3rd world countries, there is another issue that seems to have slipped by relatively unnoticed: the skyrocketing price of pasta in the US.

Over the last year there has been an extreme increase in the price of spaghetti and most other macaroni products. In some cases it has been an almost 300% price hike.

Around this time last year, I was able to purchase 3 packages of spaghetti for $1, regular price. Now I am lucky if I can get 1 package at that price, on sale.

And the price for a box of macaroni & cheese has gone from $0.49 to $0.89..

A case of ramen used to be $1.99. It is now $2.50.

All of this within the last 12 months.

While rice may be the staple food for the poor in many 3rd world countries, pasta is also a food heavily consumed by the poor, in the US. And even though the price of rice has increased drasticly, it is still by far much cheaper to buy than spaghetti currently is.

I believe that it is quite possible that the rising cost of macaroni products can make the global rice shortage even worse than it already is, as more lower income families switch from pasta to rice, to save money, thereby increasing the demand for rice.

What is even worse, is that the rising prices of food in general will cause a rise in prices that restaurants charge for a meal, causing more middle income families to eat at home rather than going out to eat. This loss of business to restaurants translates to a loss of jobs and income for many lower income families that depend upon minimum wage restaurant jobs to support themselves.

The poor that rely on the Food Stamp program are running out of money before the end of the month because of the increase in food prices, but no cost of living increase in their monthly allotment of funds. They are being forced to turn to local church run food pantries for help feeding their children.

Pasta is a staple of many local food pantries that supply the poor with free food. As prices go up, the poor can afford less, and rely on these food pantries more & more to keep from starving. And as prices go up, donations made by the middle class to these food pantries decreases, and then they don't have enough to meet the demands of the poor they are feeding.

Poor children are eating cheap, high fat, high sugar, low nutrient junk food to keep from being hungry. They are not getting the nutrients they need to grow strong & healthy. They are getting sick and missing school more. The ones that are in school are too busy thinking about their growling stomachs to pay attention to their work. Their health & education are sufferring, and they will pay for it in the future by never acquiring the means to rise above their current poverty status. At the same time, as a result of bad nutrition, they are becoming a bigger burden to the free government provided Medicaid healthcare system, that is paid for by the tax dollars of the middle class.

And why exactly are the food prices so high? Could it be the price of gas affecting the shipping costs and driving everything higher? Could it be that the economy really sucks right now and businesses are raising prices in order to turn a profit and keep their doors open? Bad weather killing off crops? A combination of things?

Whatever the reason for the increase in prices, this much you can be sure of: the prices are not going to come back down, whenever the problem that is driving the increases goes away. I have never known a business to lower prices after an economic slump. They usually just keep them at what they are, raising them again when the next crisis hits, that eats their profits. Your dollar is shrinking fast, and it's likely to stay shrunk, even when the economy improves.

The amount of low income families in America is increasing, the bar that marks the poverty level is rising, the middle class getting smaller as they slip down below that bar, the number of elderly increasing, the amount of tax dollars needed to support social services & healthcare for the poor and elderly increasing, the amount of tax dollars available to fund it all decreasing, the amount the middle class needs to make ends meet increasing, the amount in their paychecks after taxes decreasing.

This is a serious long term crisis, and a $300 economic stimulus check ain't going to fix it.

Read More:
American Spaghetti Crisis: Part 2
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