Austin American-Statesman, June 16, 2008: Economy hurts minimum wage workers

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Monday, June 16, 2008

For six years, Santos Morales has been making good money driving a taxi across Austin.

He and his family went to the movies and bought videos. They paid their rent on time. They bought their favorite foods at the grocery store.

That all ended in April.

Because of climbing gas prices, cab drivers like Morales can see profits that after expenses barely scrape $50 a day. After a 12-hour day working for Austin Cab Co., that’s about $4.16 an hour.

“It gets frustrating,” said Morales, 35. “I’m ready to call it quits, but it’s hard because I’ve already committed to other bills and my schedule is built around the cab.”

All across the country, Americans are feeling the pressure of the rising prices of gas, food and other essentials. But for workers living on minimum wage or less, the pinch stings more acutely. The federal minimum wage is $5.85 an hour.

Experts say that financial stress could hit low-wage workers in the form of late rent payments, unpaid bills and even homelessness.

“We’re at the beginning of it,” said Don Baylor, a senior policy analyst with the Center for Public Policy Priorities, which is an advocate for low-income Texans. “I think people have been able to deal with the crunches of the past few months, but we’re going to see more pain down the line.”

In Texas, 221,000 hourly paid workers earned minimum wage or less in 2007 4 percent of the state’s hourly workers according to the U.S. Bureau of Labor Statistics. Only Louisiana and Mississippi had higher percentages of such workers: 4.3 percent and 4.5 percent, respectively.

In Austin, about 9,300 families of two or more related people earn less than $15,000 a year, said Brian Kelsey, economic development coordinator the Capital Area Council of Governments,a regional planning group.

Low-wage workers have long struggled to find housing in Austin. The average monthly rent for a one-bedroom apartment is $716, according to Austin Investor Interests, a company that tracks trends in the real estate market.

Morales, who has three children and a wife with a disability, said he would not be able to make his rent payment of $700 a month without a second job. In that job, Morales works with children on probation in the criminal justice system. He earns $9 an hour, but because he drives across the county, the cost of gas makes this job less profitable.

Sometimes, he can’t pay his rent, he said, but his landlord has given him extensions.

“Sometimes the month is slow, and he gives me a break,” Morales said.

Last week, gas prices shot up to more than $4 a gallon in some parts of Austin. Food prices are expected to jump 4.5 percent to 5.5 percent this year, according to the U.S Economic Research Service.

Meanwhile, the cost of nonfood staples is also rising. Last month, manufacturer Kimberly-Clark announced that it would raise prices 6 percent to 8 percent on Kleenex facial tissue, Cottonelle and Scott bathroom tissue, Viva paper towels, Huggies diapers and Pull-Ups training pants.

“I think one of the things you’re going to see is quality of life is going to deteriorate significantly,” Baylor said.

One bright spot for minimum-wage workers: On July 24, the federal minimum wage will increase almost 12 percent to $6.55 as part of a three-part congressional plan to raise wages across the country. When the wage increased to $5.85 an hour last year, it was the first increase since 1997. Next July, in the final stage of the effort, the hourly wage will increase to $7.25.

Austin bartender Jay McLellan said that increase will help. McLellan, 31, earns minimum wage at Vin Bistro on 38th Street and depends on tips to provide for his family. But his tips have dropped 25 percent to 30 percent since January, he said.

He has sold a shed, an armoire and other items on to raise money. And he is buying his groceries in bulk: chicken, hamburgers, frozen vegetables, rice.

“We’re having a lot of those meals right now,” McLellan said.

Morales can relate. His wife prepares baked chicken and sandwiches instead of the red meat they used to enjoy. They scour grocery bills for savings. And Morales said he plans to go back to school to become a juvenile probation officer.

“The money situation doesn’t look bright,” he said. “I need to pursue something else that will be worth it.”; 912-2506

Jobs that generally pay less than $6 per hour


Ushers, ticket takers$5.65

Restaurant servers$5.66

Home care aides$5.71


Crossing guards$5.86

Fast food cooks$5.88

Service station attendants$5.91



Source: Capital Area Council of Governments

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