Starting from scratch in the minimum wage system

[jacob]

I recently (re)read Nickel and Dimed by Barbara Ehrenreich, which makes the point that it is impossible to work oneself out of poverty. This was followed by reading Scratch Beginnings by Adam Shephard, which repeats the experiment but makes the opposite [counter]point. Shepard's project was triggered by him reading Ehrenreich's book. Of course both books seek to prove something anecdotally.

What's most interesting to me are the things they agree on. Both are surprised to realize that the minimum wage economy for lack of a better word treats labor as fungible and vice versa. Employers are "always hiring" under the expectation that employees might not show up tomorrow for any number of reasons. Employees generally aren't invested in staying with a particular employer, like careerists would be. As such the undercover authors quickly shed the notion of filling out applications and take a more personal approach (taking above and beyond initiative). This fact also seems to be known by the for lack of a better word "minimum wage class", but it is obviously a surprise to the college educated authors.

I think the "nickel and dimed" problem comes from intermediate employers inserting themselves to remove this uncertainty. These are basically temp or daylabor agencies that charge a high fee (30-40%) to ensure that N number of people show up at the job. E.g. a contractor might need 10 people for 6 hours and pay the agency $10/hr (these were 2000-2005 prices) for a total of $60/person. The agency will deliver those workers in a van and charge for that too. Lets say a $5 van fee paid by the worker. So ultimately a worker might end up with $6/hr for 6 hours minus the $5 van fee minus $3 for the bus ticket to get to the agency for a total of $28 for the day (still 2000 prices).

Ultimately, the economic efficiency and therefore effective wage is low because lots of time is wasted waiting and traveling to random jobs. A "good job" in this regard is 40hrs a week, not going through an agency. The income here would be the full $10/hr, so $400/week.

The things they disagree on is what leads to the different conclusions because it begets different strategies. Ehrenreich starts with some "minimum standards" she believes that people deserve. This usually means renting a mobile home in a mobile home park on a weekly basis and getting a car. This eats up her entire income (coupled with a bunch of decisions that aren't exactly frugal ... like spending money on fast food because buying a frying pan is too expensive (yes, that's in the book!). She does eventually start shopping at Goodwill.) thus leading to the conclusion that the situation is inescapable: "People simply do not make enough with that particular "working/living"-ratio to get out of it. It's a trap.

Whereas Shepard is more hardcore (shops at Goodwill, walks 3 miles instead of spending $3 on the bus, washes clothes in the shower, ...you know the type ) and therefore gets to see a wider piece of the map: He starts out in a homeless shelter with $25 in his pocket, a sleeping bag, and the clothes he's wearing. The shelter is interesting because it contains two types of people. First are those who are content to live there even if the shelter deliberately makes living there "uncomfortable", because in return they get to come and go or work as they feel like, one day at a time. This is a minority though. Of those who want to get out, there are two types. We can call them the Ehrenreich-type and the Shepard-type.

From a personal finance perspective, the Ehrenreich-type moves out too soon. Their reach exceeds their grasp. Signing up for rentals that cost 60%+ of their income, spending money on treats because they had a bad day, taking risks w/o having the savings by e.g. buying a car w/o having the means to maintain it. Basically trying to fly before they're ready to launch. The Shepard-type pinches their pennies and live below their means even when their means are tiny. They have a long-term plan, a strategy for getting there, and the will to sacrifice the short-term. In both cases it seems like the two types find their respective tribes, regarding the other tribe as either hopeless or privileged, respectively.

I think the disagreement comes down to attribution-bias and its reverse. Attribution-bias implies taking credit for one's successes while blaming failures on society. It's reverse---call it humble-bias---is giving credit to society or the team for one's successes while ascribing one's personal fortunes to luck. Different people have different set points for this bias, which comes down to agency. Still, even without this bias, my conclusion is that they're both right but right about different things. Thus the endless disagreements.

Ehrenreich is correct that low-wage labor is getting nickel and dimed. This is also Shepard's experience. However, Shepard shows that there's a way out of this trap (Cave?) by finding the people who have followed the strategy and following it himself.

There are thus two different solutions:
The individually-oriented one is to somehow teach people this strategy (aka personal finance)
The collectively-oriented one is to somehow get rid of the "nickel and dimed" system.

I expanded my sociological map a bit reading the two books. I recommend reading them side-by-side.

[zbigi]

I think the "nickel and dimed" problem comes from intermediate employers inserting themselves to remove this uncertainty. These are basically temp or daylabor agencies that charge a high fee (30-40%) to ensure that N number of people show up at the job. E.g. a contractor might need 10 people for 6 hours and pay the agency $10/hr (these were 2000-2005 prices) for a total of $60/person. The agency will deliver those workers in a van and charge for that too. Lets say a $5 van fee paid by the worker. So ultimately a worker might end up with $6/hr for 6 hours minus the $5 van fee minus $3 for the bus ticket to get to the agency for a total of $28 for the day (still 2000 prices).

I dunno about the US, but here in EU these daylabor agencies mainly provide ability to skirt around labor laws (of which there are many, and many of them are very costly to employers) and to bring in out-of-EU immigrants which were already pushed through the immigration bureucracy and have thus permits to work. I don't think large companies would be ok with increasing their labor costs by 30-40% just to smooth out some flaky employees - they already have hundreds or even thousands of people per shift, so they can safely assume that some percentage of that pool will randomly not show up each day, and just compensate with increasing shift sizes.


On your wider point of being able to escape powerty on US minimum wage, let's not forget that there are a couple million of illegal immigrants in the US, many of them making minimum wage or less, who nevertheless are able to save up some money and send it back to their home country (or take it with them upon return). They can do it in spite of being at tremendous disadvantage, often not speaking the language very well, not having access to public services and literally being hunted by the US government.

[jennypenny]

I had the pleasure of hearing Ehrenreich in person. It was before the book came out but she must have been writing it at the time because a lot of her talk was about traps. To give some context to help understand her perspective, she definitely viewed the issue of traps through a traditional feminist view from that time (90s). Her view was that women escaped the traps of the 1950s, only to end up trapped being single parents in the 1980s, to then trapped in low wage jobs with no support by that time (1998?).

She definitely thought certain things that were traditionally women's tasks should be provided for or outsourced if a woman wanted to get ahead (the 90s were the first attempts at state-sponsored preschools and childcare). Things like meals and childcare were definitely tasks that she thought modern women should delegate to further themselves economically. It's funny to think about that talk now, since I didn't grasp the irony of her advice at the time. Her position today would be seen as privileged and white, which isn't wrong, but back then she was seen as trailblazing. It's been a long time since I read the book but I remember thinking her astonishment came from the fact that smart women could end up stuck, even if they weren't saddled (her word from the talk) with a husband and children to care for, so that must mean there is something wrong with the system as a whole.

I'll have to read Shephard's book and reread Ehrenreich.

[ffj]

I just got off the phone with the program director for the electrical technology program of our local community college. As a requirement for licensure, a worker has to work 4 years under a Master Electrician, in addition to the classwork, with a beginner classified as a "helper".

I asked him what a typical helper made per hour which surprised him for some reason. Oh, around $10 to $14 an hour I would guess was his response.

These are wages that were the norm 30 years ago. I'm not so sure with the cost of goods and services today, plus inflation, that someone making that low a wage could support anything other than a young, individual, healthy self with a lot of bootstrapping. It really pains me to write this because not everyone is capable of upward mobility.

[daylen]

It is probably an order of magnitude more difficult to get back on your feet if you have a drug addiction of some kind. Drugs tend not to be too difficult to find in many parts of the world unless highly controlled by your government. Together with prostitution and pimping you get self-perpetuating homelessness cultures that eventually become slums.

Reversing such a trend either requires a drug war or a multi-decade struggle to individually convince people to go to shelters and recovery centers. Which are usually short-staffed though have been successful in some countries/cities.

[zbigi]

Reversing such a trend either requires a drug war or a multi-decade struggle to individually convince people to go to shelters and recovery centers. Which are usually short-staffed though have been successful in some countries/cities.

There's a guy on youtube who's done hundreds of interviews with the US homeless. He said that 99% of them had some major early life trauma. Often multiple instanced (e.g. molested by father, beaten by stepfather who came later, and later still thrown out of the house to live on the street). If we deny such people drugs, they'll just go to alcohol. Which is probably an improvement, because self-destruction it causes is slower than what many drugs will do with people. But, the real problem is the childhood trauma.

However, anecdotally, the only homeless person I personally know is a guy my age who lived a couple floors above me when we were children. As far as I can tell, there was no abuse in that family. Instead, the main problem was very weak upbringing - they allowed those children (the guy had an older brother whose life path was similar and who is alreay dead) to do anything and were making excuses for them (e.g. when they threw heavy pots on people who walk outside their windows, their mother did not discipline them for it etc.). 20 years later, he grew up to be a huge narcissist who thinks the world should revolve around him. He was never able to hold onto any job for long, because he always got into beef with the manager who did not show him enough respect etc. In his thirties, his mother died and his father finally kicked him out of the house. The guy is homeless ever since. He drinks a lot btw.

[jacob]

The two books above makes it possible to contrast/compare strategies connecting the "shelter-level" to the "starter-rental" and eventual "lower middle class". In both cases, the authors start w/o dependents, mental diseases, or addictions, which is a whole other problem that adds yet another confounding factor. For example, those with high-income can afford therapy, rehab, and/or daycare, so these issues aren't dominating in terms of their possible life-strategies.

However, in the two books any problem under that umbrella would preclude the starting conditions. The shelter did not admit drugs. Mental issues weren't worse than "weird but not detrimental". The mobile home park required a deposit (say $500) to get shelter and typically a drug test to get a job.

Thus: Starting from scratch with a mental disease or a drug addiction is a different kind of problem. It could be argued that having dependents just ups the challenge since you're now working for two people or more. Doubling down on the strategy that works for one might work. More interestingly, this is where different people decide their level of filial responsibility. For example, family is everything to Purple; to Orange it's more of a calculated priority.

[loutfard]

Books added to my reading list. Thank you for suggesting them, Jacob.

[7Wannabe5]

Oh, man, I love me a literary contrast/compare like this. Kind of like reading "The Rational Optimist" along with "Going Dark" or "Food Isn't Medicine" along with "Prescription for Nutritional Healing."

It's been a number of years since I read "Nickel and Dimed" and I've only read the beginning (which I could download for free) of "Scratch Beginnings" and I already filled a couple pages with my notes towards my response. This likely going to be a multi-poster

My first note would be that Ehrenreich is far and away a better, more experienced, writer than Shepard. Shepard entered into his response project on his own and was initially self-published. Ehrenreich was asked to take on the concept by Lewis Lapham (Editor-Emeritus of Harper's Magazine for whom I developed deep sapiosexual crush at age 16.) So, this in part informs the fairly large difference in "rules" attached to the experiment each of them devise from the get-go. Ehrenreich wasn't willing to take it on without retaining some middle-class-ish amenities

I would suggest that another major factor in the difference in the rules-of-the-experiments or concept-of-minimum-standards-to-uphold would be that Ehrenreich is a middle-aged. reasonably fit/healthy woman and Shepard is a very fit (weight-lifter/athlete) young man. Thus their basic requirements for "safety and privacy", as Ehrenreich describes her minimum standards for the experiment, would differ. I would also note that the fact that because Shepard conceived of his experiment in part as a reply to Ehrenreich, his choice to alter the rules-of-the-experiment from the get-go is rather telling. In my own lifestyle "experiments" in frugality, I have taken risks along the lines of riding the Detroit bus system to neighborhood on the more dangerous side of 8-Mile, and then walking a couple blocks to a school where I taught during daylight hours, but there is no way in hell I would attempt to walk through that neighborhood by myself at 11 PM in order to save myself bus fare, which is basically what Shepard attempts at the beginning of his experiment, in large part because he is able to think to himself that he could take on a stranger who chooses to become aggressive with him, although not a group of aggressive strangers, whereas me and Barb both know that the median aggressive stranger could take us on one-to-one with little difficulty.

That said, I agree with Jacob's take that the Shepard strategy/perspective is more likely to achieve success (in Modern terms- $$ and other stuff readily measured and managed) than the Ehrenreich strategy/perspective given that the individual attempting the experiment is what I would describe as a Broke Adult. ((Cut to conversation I overheard recently between two of my 6 year old students as they attempted fun assignment of drawing me a picture of a birthday cake with 59 candles on it. ))

Child 1: (sad)My Daddy is gone and he's never coming back. He's not dead, but I can't say where he's gone.

Child 2: (cheerful) Is he in jail? My Daddy's in jail. He can't come to my house, but I can talk to him on video-phone.

Child 1: (cheered up a bit) You do that too? Sometimes I talk to my Daddy on videophone too.

So, one of the main points I will attempt to push forward at (hopefully) Systems Level of analysis is Broke does not equal Poor.



End post 1

[jacob]

So, one of the main points I will attempt to push forward at (hopefully) Systems Level of analysis is Broke does not equal Poor.

Here's an old (but good?) framework: https://earlyretirementextreme.com/weal ... broke.html

[7Wannabe5]

@jacob:

Wealthy is what you can do.
Rich is what you do do.
Broke is what you can’t do.
Poor is what you don’t do.

That's an interesting framework, but the uses to which you have assigned the terms are not (I believe, may be wrong) entirely consistent with what I meant by my statement. What I meant was more like:

Broke: Has no or very little readily convertible financial assets. Has other forms of capital that are closely related and may readily/eventually be converted to financial wealth. In the U.S. and similar realms this is often a temporary situation due to negative feedback loop.

Poor: Low in money and other closely related forms of capital which may readily be readily/eventually converted to financial assets, and this reality is likely to be multi-generational due to positive feedback loop.

For example, in "Erotic Capital", Hakim makes the point that laws and cultural conventions that inhibit the conversion of Erotic Capital to Financial Capital are discriminatory against young attractive females who may be "broke" or otherwise "poor." For example, the size 4 female Ukrainian refugee who lived for free with one of my former partners for a year while she became more fluent in English was able to save up enough money to get her own place when she dumped him. As jennypenny noted, Ehrenreich is of a certain generation of feminists, and a member of that generation of feminists would be less likely to "work" her erotic capital in the experiment, which puts her at another disadvantage to Shepard, who is able to "work" his more masculine assets straight-forwardly. However, I know that you support sex work and/or lucrative marriage/similar as valid options in ERE, so not quibbling with you about the matter, just pointing out another limitation from Ehrenreich's perspective vs. Shepard's perspective from the get-go.

Another example would be that individuals attempting modern practice towards success are less likely to prosper if those who are attempting more primitive practices towards success are not jailed or otherwise eliminated from the field.

End Post 2

[Henry]

Broke is a personal situation. Poor is an industry. And as James Baldwin stated "It's expensive to be poor." The best book I've read on the topic is Matthew Desmond's "Evicted."

[ffj]

On your wider point of being able to escape powerty on US minimum wage, let's not forget that there are a couple million of illegal immigrants in the US, many of them making minimum wage or less, who nevertheless are able to save up some money and send it back to their home country (or take it with them upon return). They can do it in spite of being at tremendous disadvantage, often not speaking the language very well, not having access to public services and literally being hunted by the US government.

You may want to revisit some of these assumptions. There are at least 11 million illegal immigrants here in the U.S. and this country spends a lot of money on them in various ways. https://judiciary.house.gov/sites/evo-s ... timony.pdf

If you don't like that source you can pick another. Point taken on them having grit which is admirable.

[7Wannabe5]

@Henry:

"Poverty by America" also does a good job of describing poverty as an industry. I almost flamed out (okay, I did but then deleted) on a forum member who was describing his monetary success as a slum lord after reading it.

INTERLUDE

Another book I am currently reading is "Grandma Gatewood's Walk: The Inspiring Story of the Woman Who Saved the Appalachian Trail." In 1955, at the age of 67, 5'2" 150 lbs, barely working poor background, she was the first woman to thru walk 2190 miles of the trail. She had 11 children with a husband who frequently raped her and beat her to the point of lost teeth and broken bones. She was living in a room with one of her children helping out with the grandkids when she read a magazine article that inspired her. She didn't tell anybody of her plans until she was already underway. She didn't even have a tent or a backpack: just a shower curtain and a corded sack she had sewn herself out of denim.

So, I asked myself whether she could have taken that same level of determination and resourcefulness and directed it towards becoming wealthy, and my answer was "Why would she have wanted to? She was already doing what wealthy men dream of doing."

END INTERLUDE

And to your point that "broke" is a personal situation, I agree. I've been broke myself, and it can actually be kind of fun if you have other forms of capital in your knap-sack. Carrying debt/revolving-obligations is kind of like carrying the bad kind of fat (as opposed to the good kind of hiking fat Grandma Gatewood was carrying), but being broke, as opposed to poor, can be more like being naked. Your vulnerability provides a certain kind of heightened challenge and reveals options.

[OutOfTheBlue]

The thread reminds me of a book:

Down and Out in Paris and London by George Orwell

And a quote (not from that book): "We're too poor to buy cheap".

[mountainFrugal]

I will have to read Scratch Beginnings and Poverty by America. Thank you for the recommendations. I read Nickle and Dimed a long time ago so might have to reread to have anything interesting to say on the book comparisons.

The topic of homelessness was brought up a few times in this thread (+1 for Evicted). If you are interested in more in this topic with extremely nuanced views and hard questions asked to researchers studying this I recommend: https://www.lewis.ucla.edu/programs/hou ... e-podcast/ . Each episode is more or less an in depth journal club about a paper or book on the topic from the researchers in the field. If you want an up-to-date view of the field and what experimental policy actions have helped certain sub-populations of people experiencing homelessness then the most recent pathways home series (6 episodes). I cycle commuted every day by one of the largest homeless encampments in the California when I was living and working in Oakland. This podcast answered many of the questions I had regarding this issue and shed light on to how difficult it is to bring yourself out of that situation, especially with physical illness, mental illness, or drug addiction. However, a majority of the people experiencing homelessness are not that as is explained throughout the recent podcast series. The series also showed me many of the mental stereotypes that I had were actually untrue about this population as a whole. https://en.wikipedia.org/wiki/Anecdotal_evidence . Some promising research is focusing on keeping people from becoming homeless in the first place is actually one of the most cost effective ways to deal with this problem.

[Chris]

I sought out Scratch Beginnings after reading Nickel and Dimed. Definitely good to read back-to-back.

N&D was a college reading assignment, well before I learned about ERE, and even then I felt that the author wasn't really trying to live cheap. It was like she had an imagined what "poor" would be like, implemented that lifestyle, couldn't balance the numbers, then declared it to be impossible. In SB, I liked how he started from zero (more or less; IIRC, he lost most of his $25 right away) and bad reasonable goals (job, car, housing). And while he had a more realistic plan than Ehrenreich, he also came from the middle class, though maybe he was better suited to cheap living having just graduated college.

At the end of the book, I liked that he listed reasons why the findings of his experiment aren't applicable to everyone: he's young, white, male, able-bodied, and -- maybe most importantly -- his mental stress was reduced by the fact that the entire time he knew that he could go home to his parents.

[Henry]

It was like she had an imagined what "poor" would be like,

This is a constant source of tension in sociological circles. It was why Alice Goffman (daughter of Erwin Goffman) took heat when she wrote On The Run. When an "outsider" partakes in ethnography studies, especially embedded ethnographic studies, it reeks of an academically subsidized slum vacation. I think the operative word is fragility. As you said, a person who has no money and home but can go home to momny and daddy is broke. A person who has no money or home and faces living in their car or the street is poor. Unless they are ERE which I imagine to be the very small minority.

The other barometer is bail money. If there is no bail money, the greater the chance that false charges or real charges that could be pled out or reduced will lead to prolonged imprisonment. Broke people can find family, friends or even a credit card to bail them out. Poor people stay in the system or go to Chico's Bail Bonds which is the equivalent of payday loans and leaves return to prison a possibility.

A very interesting footnote in Evicted was when a subject in the study was gifted a refrigerator from an unknown source. It was later disclosed that it was the author who gifted the refrigerator. I think it happened in On The Run as well. I think she supplied bail money and/or withheld information from the police. These studies are fraught with hermeneutical issues. It's why someone like James Baldwin who lived it and can write about serve as primary source material.

[jacob]

This is a constant source of tension in sociological circles. It was why Alice Goffman (daughter of Erwin Goffman) took heat when she wrote On The Run. When an "outsider" partakes in ethnography studies, especially embedded ethnographic studies, it reeks of an academically subsidized slum vacation. I think the operative word is fragility. As you said, a person who has no money and home but can go home to momny and daddy is broke. A person who has no money or home and faces living in their car or the street is poor. Unless they are ERE which I imagine to be the very small minority.

This tension also exists between ERE and poverty due to the overlap in [quantitative] spending (typical ERE spending ~ half the poverty line). The flipside of the middle-class confusing ERE with living in poverty is the under-class accusing ERE of poverty tourism. On top of that, well-meaning albeit naive souls might volunteer ERE as a solution to poverty (thanks a lot )---a strategy that rarely goes over well. Here's some resulting fireworks from 2011: https://earlyretirementextreme.com/angr ... poor.html/

A Venn diagram could explain it better because it would add +1 dimensions to an issue that's simplistically measured only by how much people are spending or what their political beliefs are. It might also resolve the modernist-vs-postmodernist debate that has a strong tendency towards explaining everything in terms of either privilege (societal) or agency (individual). Indeed, I think this particular contrast&compare falls under that dichotomy.

[Henry]

On top of that, well-meaning albeit naive souls might volunteer ERE as a solution to poverty (thanks a lot )---a strategy that rarely goes over well.

There was a much discussed chapter in Evicted where a woman spent all her food stamps on lobster tails because it was her anniversary. Ironically, she ate the seafood alone. Everyone around her expressed frustration at her "poverty mentality" (there is a really derogatory expression for this behavior that I will forego using). However, her feeling was that her life was so miserable with no chance of improvement, that she deserves at least one meal where she could eat like she had money. A few days later her power is cut off. In contrast, I remember reading a post on this forum that turned my light bulb on. A poster spoke about he and his spouse stood outside a car dealership promoting financing and he smiled at the thought that he could buy 10 vehicles with cash. So there is an argument that poverty is the source of bad decisions where broke is the result of bad decisions.

Within the poor community, there are actually two types of poverty: grinding and stable where the distinction is most often found in who has subsidized housing. The goal is to elevate from grinding to stable. So if one wanted to Venn diagram ERE and poverty, maybe one could say that ERE is a voluntary decision to live in stable poverty despite income/net worth?