Are Lazio’s proposed tax cuts good for New York?

October 29, 2000. Point-counterpoint opinion from FPI’s Frank Mauro and Stephen Kagann, New York State Chief Economist, in the New York Daily News.

It’s a Boon to the Rich
By Frank Mauro, Executive Director, Fiscal Policy Institute

Rick Lazio likes to refer to his proposed tax cuts as balanced and fiscally responsible, and says they will “extend economic expansion across New York.” In reality, he fails on all three grounds.

The Lazio tax cuts are not fiscally responsible. Together with the spending increases he has proposed, Lazio’s cuts would reduce the federal government’s projected budget surplus by more than $2 trillion over the next 10 years. That’s too much, and would return the country to an era of chronic budget deficits or further threaten the solvency of Social Security and Medicare.

Lazio’s tax plan does virtually nothing to bring economic prosperity to parts of New York State that have been left behind. Only a minuscule two-point plank in his plan is devoted to this purpose.

Interestingly, these proposals are both direct ripoffs from the comprehensive Economic Agenda released by Hillary Rodham Clinton in February. Clinton calls for a $3,000-per-job tax credit and Lazio for a $1,000-per-job credit for those who create jobs in what he calls “areas of our state where the wave of prosperity has not yet reached.” Both candidates also support federal incentives to make high-speed Internet access available in such areas. These two proposals are small parts of Clinton’s comprehensive economic agenda, but the entirety of Lazio’s.

The Lazio tax plan is not balanced. Overall, 30% of Lazio’s cuts would go to the wealthiest 1% of taxpayers and 74% to the top 20%. This doesn’t leave much for the other 80% of taxpayers with incomes below $65,000 — an average saving of about $340 a year when the plan is fully phased in, 10 years from now.

This absence of balance is a result of the taxes that Lazio would cut and how he would cut them. In regard to the “marriage penalty,” Lazio backs the Republican congressional leaders’ bill even though it would cut taxes for the wealthiest Americans much more than is necessary to eliminate this problem. When it comes to reducing the unfairness of the payroll tax — the one element of Lazio’s plan that is targeted to the middle class — he leaves out lower-income working families even though he knows the tax hits them the hardest.

Many of Clinton’s tax proposals, like her College Tuition Tax Credit and her tax credit for contributions to Retirement Savings Accounts, are referred to as targeted because their value is reduced and/or phased out as a family’s income exceeds $100,000. Most of Lazio’s proposals are also targeted, but more indirectly.

For example, he proposes eliminating the estate tax for everyone. But, 98% of people who die each year leave no estates or leave estates that are valued at less than the level (now $675,000 and soon to be $1 million) on which there is no tax, and most of this tax is paid by a very small number of very large estates.

Thus, the benefits of this and other Lazio proposals, like his plan to reduce the capital-gains taxes, are concentrated on much smaller, wealthier portions of the population than Clinton’s proposals, which target those who need economic relief the most.

Cuts Are Best for N.Y.
By Stephen Kagann, Chief Economist, New York State

Which tax plan, Rick Lazio’s or Hillary Rodham Clinton’s, is better for New York’s workers, families, seniors, jobs and future? The Lazio plan wins by a mile.

A analysis by the Manhattan Institute shows the Lazio plan would leave $4.2 billion in the hands of working New Yorkers, while the Clinton plan would provide at most $1.2 billion for relatively few.

The Lazio plan would eliminate the marriage penalty. Lazio would make Social Security taxes deductible, by up to $4,724 off each worker’s taxable income. Lazio would repeal the Clinton-added tax on Social Security for seniors who choose to work and earn more than $34,000.

Lazio would increase deductible IRA contributions for working people to $5,000. His capital gains tax cut would enhance the regional economy, increase state and local tax revenues and leave more in the accounts of New Yorkers who save and invest.

Clinton’s plan relies on targeted tax credits, copying Mario Cuomo’s strategy that failed our economy so miserably. Tax credits are camouflaged spending, in which tax dollars we all pay are used to benefit those few who meet the Clinton requirements. Her claim that her plan would create 200,000 upstate jobs with targeted tax cuts is based on preposterous numbers and would never work.

These election-year plans raise a broader issue: how to help create more jobs in New York. In 1993, New York was in deep recession. The 1993 Clinton tax increase soaked up state income needed to create jobs, delaying our recovery for years. Only Gov. Pataki’s massive, multi-year, across-the-board state tax cuts catapulted New York from last to 11th in job growth.

New Yorkers pay more federal taxes because our pre-tax incomes are higher and therefore taxed at higher rates. Our higher pre-tax incomes are not adjusted for our high cost of living, so more of our real (inflation-adjusted) income is taxed away.

Excessive federal taxes on New York are not only unfair, they damage our economy. As more of our dollars are used for spending in other states, we have less to spend in our stores, and less to invest in our homes and our businesses.

During the last 20 years, New York has grown jobs at 33% of the national average. The 10 states with the lowest federal tax burden grew jobs 48% above average. The outflow of New York dollars was followed by jobs. Families were separated; congressional representation declined.

New York now sends $54 billion more each year to Washington than in 1992. But while New York has been a federal cash cow, the Clinton administration cut real federal spending in New York by 1% while increasing it 7.4% in other states.

Yet Hillary Clinton has said she views the 1993 tax increase as a sound economic plan, while criticizing tax cuts as risky spending. She could not be more wrong, and in fact is forced to rely on statistics dating to the Cuomo years to badmouth the New York economy. She should tell the truth: Upstate does not “still rank 45th in the nation in job growth”; it ranks in the top 20, largely because of our across-the-board tax cuts.

The bottom line: The straightforward Lazio plan would leave New Yorkers with more dollars in their pockets, and it would help to create jobs so young New Yorkers could build careers close to home, like other Americans. The Clinton plan would do neither.

Impossible Choices: Food and Housing or Prescription Drugs?

October 11, 2000. This report was prepared by the Fiscal Policy Institute for USAction, the nation’s largest consumer organization. It examines how rising prescription drug prices are affecting the household budgets and living standards of older Americans. The report was released today in Washington by USAction and at numerous locations around the country by USAction’s state and regional affiliates. FPI Senior Economist Trudi Renwick presented the reports results at USAction’s press conference in Washington, DC, while FPI Executive Director Frank Mauro did the same at an event in Albany, NY, with Richard Kirsch, Executive Director of Citizen Action of New York.

Below, the text of the report. Impossible Choices with tables and graphs>>


Several recent studies have documented the phenomenal increases in prescription drug prices that have occurred in recent years. This report builds upon these previous analyses by examining how rising drug prices have affected the household budgets and living standards of older Americans.

During the 1990s, the price of most prescription drugs commonly used by seniors increased much more than the increase in the overall cost of living as measured by the Consumer Price Index (CPI). Moreover, the prices of prescription drugs increased faster than any other basic necessity – food, housing and even medical services. The average cost per prescription also increased faster than the overall price index and the indices for other basic necessities.

Over this same period, older Americans, on average, saw some growth in their incomes, but not enough to keep pace with skyrocketing drug prices. The squeeze on household budgets was even greater for those seniors whose incomes were stagnant or grew more slowly than the average. Those whose incomes did not grow with the average and who also happened to be in need of prescription drugs whose prices had increased at two or three or even more times the rate of inflation were particularly hard pressed. Many older Americans with incomes well above the poverty level are forced to make difficult choices between the prescription drugs they need and other necessities of life, from food, clothing and shelter to other medical services and transportation.

The Basics: What happened to prescription drug prices during the 1990’s? Section I of this report reviews the findings of two reports from Families USA and one from the Kaiser Family Foundation that document the changes that have occurred during various portions of the 1990’s in average retail prices per prescription, average manufacturer prices for all prescription drugs and for brand name drugs, the average price for seniors’ prescriptions, and the price of the 50 prescription drugs most commonly used by older Americans.

The Cost Factors: How have the increases in prescription drug prices compared to increases in the overall cost of living and the cost of other necessities? Section II presents data from the U. S. Bureau of Labor Statistics on changes in the Consumer Price Index and in key components of that index (for necessities like food and housing). It then compares the changes in these components of living costs with the increases in prescription drug prices over the same period.

The Impact on Household Incomes. Section III uses data from the Social Security Administration and the Census Bureau to compare prescription drug price increases with the increases that have occurred in Social Security benefits and incomes for elderly women living alone and for elderly couples. Average prescription prices and the prices of the majority of the prescription drugs commonly used by seniors have grown faster than the Social Security benefits and the total incomes of both income for elderly married couples and elderly women living alone.

That prescription drug prices have increased faster than incomes has meant that the burden of paying for prescription drugs has worsened for the elderly across the United States. Section IV: The Impossible Choices shows that seniors today are paying a greater percent of their income for prescription drugs. This section of the report also includes a number of case studies of elderly couples and individuals whose prescription drug costs consume an inordinate percentage of their incomes.

This report shows that the increasing prices of prescription drugs represent a burden not just for low-income seniors but for middle-income seniors as well. Any solution to the problem of prescription drug coverage must address both the needs of this broader spectrum of the elderly population and the soaring prices of prescription drugs.


Section I. The Basics: What has happened to prescription drug prices during the 1990s?

Over the last 8 years, the average cost per prescription for senior citizens increased steadily.

  • From 1992 through 2000, according to a recent report by Families USA, the average cost per prescription for senior citizens grew from $28.50 to $42.30, an increase of over 48%.
  • In 5 of these 8 years, the average price per prescription increased by more than 5%.
  • In only one of the 8 years, did the average price increase by less than 3%.
  • For a senior citizen whose usage remained constant during this period, at 23.5 prescriptions per year – the average number of prescriptions per senior for the 8 year period – the increase in price alone would have increased the average senior’s prescription drug costs from $669.75 per year to $994.05 per year.
  • For seniors with greater health problems and a greater need for prescription drugs, the increase over the period would have been even more substantial as will be demonstrated later in this report.
  • A couple, such as the Bergeons of South Milwaukee, who now spend about $6,500 annually for their prescription drugs, would be devoting $2,120 (or more than 10%) less of their annual $21,000 income to prescription drugs if it were not for these price increases.

Families USA, “Cost Overdose: Growth in Spending for the Elderly, 1992-2010, ” July 2000.

More than half of the increase in prescription drug expenditures has been driven by the growth in the average price per prescription.

  • In its July 2000 report, Cost Overdose: Growth in Drug Spending for the Elderly, 1992-2010, Families USA, in conjunction with PRIME Institute of the University of Minnesota, used data from the Medicare Current Beneficiary Survey to calculate both total and average prescription drug expenditures per senior for the period 1992 to 1996. Data from the Health Care Financing Administration (HCFA), Office of the Actuary, was then used to estimate total and average prescription drug expenditures per senior for the years 1997 to 2000.
  • Annual spending per elderly person for prescription drugs grew from $559 in 1992 to $1,205 in 2000, an increase of 115.6 percent.
  • Some of this growth in spending is the result of increasing usage. The number of prescriptions per elderly person grew from 19.6 in 1992 to 28.5 in 2000, an increase of 45.4 percent.
  • A more significant factor, however, in driving up spending on prescription drugs was the increase in the average cost per prescription. The average cost per prescription for the elderly increased from $28.50 in 1992 to $42.30 in 2000, an increase of $13.80 per prescription or 48.4 percent.

During the 1990’s, the price of brand name drugs grew even faster.

In a July 2000 report, the Kaiser Family Foundation reported that the average retail price of all prescriptions grew from $23.68 in 1991 to $37.38 in 1998.

  • This represented a 59% increase over the course of the seven year period, and an average annual increase of over 6.7% per year.
  • Over this same seven year period, the retail price of brand name drugs grew even more rapidly – 8.8% per year.

While some of the increase in the average retail price of a prescription can be explained by shifts to the use of new, more expensive drugs, the prices for existing drugs have gone up year after year.

  • According to a July 2000 Kaiser Family Foundation report, manufacturers prices for existing drugs have increased every year during the 10-year period studied.
  • On average, drugs that were marketed for the entire period studied, cost 52% more in 1998 than in 1989.

The Kaiser Family Foundation, “Prescription Drug Trends: A Chartbook,” July 2000.

A study of the 50 prescription drugs most commonly used by older Americans found that prices increased by over 30%, from January 1994 to January 2000, for the existing drugs that were marketed throughout this period.

  • The prices of the 39 such drugs that were marketed during all of this six year period, when weighted on the basis of sales, increased by 30.5%.
  • Of these 39 drugs,
    • 4 saw their prices more than double
    • 10 had price increases of 50% or more
    • 27 have had price increases of more than 25%
    • all except 2 had increases of more than 15%.

Families USA, Hard to Swallow: Rising Drug Prices for America’s Seniors,” April 2000.

Section II. The Cost Factors: How have the increases in prescription drug prices compared to increases in the overall cost of living and the cost of other necessities?

37 of the 39 prescription drugs most commonly used by seniors (which were marketed throughout the January 1994 to January 2000 period) experienced price increases greater than the increase in overall prices.

  • Between January 1994 and January 2000, the overall Consumer Price Index (CPI) increased by 15.5%.
  • During this same period, the prices of all but two of these 39 prescriptions drugs increased faster than the CPI.
  • 19 of these prescription drugs experienced price increases which were greater than twice the overall increase in the Consumer Price Index during this period.
  • 8 of these prescription drugs increased in price more than triple the overall change in the Consumer Price Index.

Fiscal Policy Institute analysis of drug price data reported by Families USA in “Still Rising: Drug Price Increases for Seniors: 1999-2000,” April 2000.

Other basic necessities are increasing at about the same rate as the overall CPI, but prescription drugs are putting much greater pressure on the budgets of older Americans.

  • Senior citizens whose income increased at the rate of inflation, would be able to keep up with the cost of most necessities.
  • But seniors who are in ill health or otherwise in need of prescription drugs face a much more difficult situation, even if their incomes are growing as fast as the CPI.
  • For seniors with fixed incomes and substantial drug costs, something has to give.

The average cost per prescription for seniors has also increased much faster than the prices of other necessities.

  • Between 1992 and 2000, the overall Consumer Price Index increased by 23.0%.
  • During this same period, the average cost per prescription increased by 48.4% – more than double the increase in overall prices.
  • No other basic necessity (food, housing, apparel, transportation) increased as much as the increase in the average cost of prescriptions for seniors.

Section III. The Impact on Household Incomes: How do the increases in prescription drug prices compare to the increases in Social Security benefits and the overall incomes of the elderly?

Prescription drug costs represent an increasing share of older American’s incomes.

  • Social Security has an annual Cost of Living Adjustment (COLA) but average prescription drug costs represent an increasing portion of seniors’ Social Security benefits.
  • Average prescription drug spending for elderly couples as a percent of average Social Security benefits for elderly couples increased from 8.4% in 1992 to 13.5% in 1999.
  • This is significant since for most retired Americans, Social Security is the only part of their incomes that is automatically adjusted for inflation.
  • From 1991 to 1998, the average Social Security benefit of elderly couples increased by 22.9%. Over the same period, the average retail prescription drug price increased by 57.9%.
  • For elderly widows, the situation was very similar with Social Security benefits increasing by 28.3 % in the face of that same 57.9% increase in prescription drug prices.

Section IV. The Impossible Choices: What do the combinations of increasing drug prices and relatively stagnant incomes mean for some typical elderly households and for some real ones?

Elderly women, even those who are not considered poor, are particularly burdened by high prescription drug costs.

  • Elderly women tend to have very low incomes.
  • In 1999, 20 percent of elderly women living alone had incomes below the federal poverty threshold of $7,991.
  • Almost two-thirds – 62.2% – had incomes below 200% of the federal poverty threshold or $15,982.
  • Even with an income at 200% of the poverty threshold, an elderly woman with just three prescriptions can have prescription drug costs consume up to 14% of income.

The high cost of prescription drugs also puts increasing pressure on the budgets of many elderly couples.

  • Although elderly couples have a relatively low official poverty rate, many have incomes just above the poverty threshold of $10,070. In 1999, almost one fourth of the elderly individuals living in married couple families had family incomes less than $20,140 or 200% of the federal poverty threshold and more than 40% had incomes less than 300% of the threshold.
  • An elderly couple using five prescription drugs (Iorazepam, Klor-Con 10, Imdur, Premarin and Atrovent) with an income at 200% of the poverty threshold in 1994 spent about 5.5% of its income on prescription drugs in 1994.
  • An elderly couple with an income at 200% of the poverty line today would need to spend over 10% of its income to purchase the same bundle of prescription drugs.

USAction is the nation’s largest consumer organization with 37 affiliates and over 4 million members. USAction advocates for quality, affordable health care for all Americans. Through working with key lawmakers and organizing at the grass-roots to raise awareness, USAction has led the fight on prescription drugs at both state and national levels.

USAction is truly unique among national progressive organizations in its ability to mobilize coordinated efforts in 25 states. USAction reaches a broad constituency including communities of color, people with disabilities, and senior citizens. USAction also advocates for quality public schools for all students, a safe and clean environment, and consumer rights. USAction affiliates are: Arizona Citizen Action, Connecticut Citizen Action Group, Colorado Progressive Coalition, Florida Consumer Action Network, Georgia Rural Urban Summit, Iowa Citizen Action Network, United Vision for Idaho, Idaho Community Action Network, Citizen Action/Illinois, Maine People’s Alliance, Dirigo Alliance (ME), Michigan Citizen Action, Missouri Progressive Vote Coalition, Montana People’s Action, North Dakota Progressive Coalition, New Hampshire Citizen Action, New Mexico Progressive Alliance for Community Empowerment, Citizen Action of New York, Oregon Action, Citizens for Consumer Justice (PA), Ocean State Action (RI), South Carolina Progressive Network, Tennessee Citizen Action, Texas Citizen Action, Washington Citizen Action, Wisconsin Citizen Action, Democracy South, Midwest States Center, Midwest Academy, Northeast Action, Northwest Federation of Community Organizations, Progressive Action Network, American Federation of State County and Municipal Employees, Communication Workers of America, Service Employees International Union, and US Student Association.

The Fiscal Policy Institute is a nonpartisan research and education organization that focuses on tax, budget and related public policy issues that affect the quality of life and economic well-being of New York State residents. Founded in 1991 by a broad range of labor, religious, human services and community organizations, FPI’s work is intended to further the development and implementation of public policies that create a strong economy in which prosperity is broadly shared by all New Yorkers.


Thanks to the Nathan Cummings Foundation and The Midwest Academy for their support for this report, and to Wendy Chamberlain for graphic assistance. Thanks also to Amanda McCloskey, Director of Health Policy Analysis, Families USA for her research assistance and to The Civil Service Employees Association, Inc, Local 1000, AFSCME, AFL-CIO for printing the report.

Building a Ladder to Jobs and Higher Wages

October 1, 2000. New York’s public and private leaders can create more jobs, expand training and educational opportunities, and ensure that work is a path out of poverty. This report from the Working Group on New York City’s Low-Wage Labor Market examines the current nature of the city’s low-wage labor market and includes a comprehensive set of policy recommendations to address the labor market problems of New York City’s growing low-wage labor force. FPI was a member of the working group, which consisted of policy analysts from government, non-profit organizations and academia, specialists in worker training and representatives of business and labor, and was chaired by Mark Levitan of the Community Service Society of New York. Full report >> Summary of recommendations >>

Social Security Protects 253,000 New Yorkers Under Age 40

September 27, 2000. Despite widespread public perception that Social Security is only for seniors, 253,000 young people in New York receive monthly benefits through the Social Security disability and survivors insurance programs. A new report, Young Social Security Beneficiaries in New York, discusses the impact that Social Security privatization would have on this vulnerable population. Press release below.

Social Security, America’s Most Important Safety Net Program, Protects 253,000 New Yorkers Under Age 40

These and other recipients of Disability and Survivors Insurance would be particularly jeopardized by privatization.

Most people think of Social Security as our nation’s foremost income security program for the elderly. And it is, keeping hundreds of thousands of elderly New Yorkers out of poverty. But it is also the most important safety net for workers under 40 who become disabled and for people under 18 whose parents die or become disabled.

In reality, about 253,000 New Yorkers under the age of 40 collect Social Security benefits each month, according to Young Social Security Beneficiaries in New York, a new report by 2030 Action, a non-profit, non-partisan advocacy group for young adults, based in Washington, DC.

This first-ever report on the impact of Social Security privatization on young New Yorkers was released today in Albany by the Fiscal Policy Institute (FPI), the Capital District Center for Independence, the NYS AFL-CIO, the Statewide Senior Action Council, the Gay Men’s Health Crisis (GMHC), the Student Association of the State University (SASU), NYSUT, CSEA, the NY Aids Coalition and Citizen Action of NY.

The report also explains how Social Security privatization would impact on the recipients of Social Security Survivors and Disability Insurance benefits. According to FPI’s Executive Director Frank Mauro, “Some supposed experts are offering privatization as the remedy for all that ails the Social Security system. In reality, however, as this new report from 2030 does an excellent job of explaining, allocating a portion of Social Security contributions to private accounts will make it harder rather than easier to solve the Social Security problem that most Americans care about: ensuring the long term solvency and stability of the system without cutting benefits.”

Sue Meineker, Benefits Advisor for the Capitol District Center for Independence and a Social Security disability recipient, underscored the human implications of the 2030 report. “Where is the money going to come from to pay for these vital benefits that so many New York families depend on each month to meet their expenses?” she asked . “How are cuts in these benefits avoided if a trillion dollars is drained from the system? When we see workers who have become disabled through job related injuries, we know they get a sizable Social Security disability benefit that is able to help them support themselves and their families. They have contributed to the Social Security system and are able to reap the benefits provided by this vital trust fund now that they need it. Our concern is with taking money from the fund and putting it into private accounts. How are you going to be able to support yourself and your family? As a Social Security disability recipient, I see first hand the difference that monthly benefits make. We cannot cut into the guaranteed portion of Social Security, and that’s just what privatization does. The consequences for vulnerable families, particularly those where a parent has become disabled or died or a wage earner in their prime has become disabled, as well as retirees, would be severe.”

Focusing on the segment of disability insurance beneficiaries who live with HIV and AIDs, Ronald Johnson, Director of Public Policy and Communications for the Gay Men’s Health Crisis concluded that “Privatization is a high risk gamble for fragile people living with HIV and AIDS. As the AIDS epidemic grows and as people live longer with this disease, reliance on Social Security disability benefits can only increase.”

Among those joining in the release of the 2030 report were labor organizations that represent a large portion of the New York workers who pay the FICA taxes that fund the Social Security Trust Funds. Thomas Y. Hobart, Jr., President of New York State United Teachers said that “Hundreds of thousands of NYSUT members fund Social Security through their payroll taxes. It is fitting and proper that NYSUT take the leak in educating its members and other New Yorkers about privatization and other threats to the Social Security system.”

“Social Security is a vitally important program that touches the lives of virtually all Americans and is a lifeline that delivers monthly benefits to close to 3 million New Yorkers,” said Denis Hughes, President of the NYS AFL-CIO. “One-third of these benefits provide income support to workers who become disabled and to survivors of deceased workers. We need to keep Social security working for families. Privatization would replace guaranteed benefits with benefits dependent on workers’ luck or skill as investors and the ups and downs of the stock market. For families that had a parent die or become disabled and now depend on Social Security to make ends meet each month, this is too much of a risk.”

The value of Social Security survivors and disability insurance policies to the average young family might catch many people, of any age, by surprise. The report describes a worker who is age 25 or 35 this year, and has a spouse and child. If her earnings were $20,000 in 1999, according to the Social Security Administration, and she were to become disabled, her family’s monthly disability benefit would be $1,261; at $30,000 it would be $1,661 and at $40,000 it would be $2,028. Were she to die, her family’s monthly survivors benefits would be $300-400 higher at each income level.

“Seniors cannot sit by while young people are placed in harms way as a result of Social Security privatization,” said Mike Burgess, Executive Director of the Statewide Senior Action Council. “Social Security is an intergenerational compact that is also the most effective safety net for those in need. We are not going to ‘trade a safety net’ to ‘modernize Social Security’. It’s our duty to protect this important legacy for future generations, to make sure that the politicians make the right decisions for Social Security. Privatization will put Social Security’s guaranteed benefits below the poverty line, and that’s just wrong.”

“It is important to point out that Social Security is a program that benefits many New Yorkers under the age of 40 who have lost a spouse or a parent or who are disabled,” said Kathy McCormack, FPI Director of External Relations. “The needs of these young New Yorkers should be a crucial part of the current debate over the future of the Social Security system. Young families in New York have an incredible stake in the debate over Social Security. The downsides of privatizing Social Security have not been discussed at all, but they are serious. We need a full accounting of how privatizers could avoid cutting disability and survivors benefits in New York. With the whole surplus going to a tax cut under Bush’s plan, the numbers point in one direction – cuts.”

The 2030 report shows that, in total, 2.9 million people collect Social Security in New York. This total includes 2.1 million retirees, over 431,000 disabled workers and family members, and close to 430,000 survivors and family members. There are about 67,000 New Yorkers age 18-39 who are collecting Social Security, and an additional 186,000 beneficiaries age 17 and under. The numbers come from Social Security Administration tables.

The Self Sufficiency Standard for New York: How Much Do New Yorkers Really Need to Make Ends Meet?

September 13, 2000. Today, the members of the New York State Self-Sufficiency Standard Steering Committee released the Self Sufficiency Standard for New York report in Albany. The report is authored by Dr. Diana Pearce who currently teaches at the School of Social Work at the University of Washington, Seattle. Dr. Pearce has developed these Standards for 12 other states.

Full report here, county-by county standards here. Executive summary, press release and committee members below. Also see the article in the New York Times, Family Needs Far Exceed the Official Poverty Line.

Executive summary

How much income do families need to cover their costs? How do we know if public policies help or hurt families chances of meeting their basic needs? Which jobs pay high enough wages to cover work-related expenses such as child care, transportation and taxes along with other basic necessities?

These critical questions can be answered using an innovative tool called the Self-Sufficiency Standard. The Standard measures how much income is needed, for a family of a given composition in a given place, to adequately meet its basic needs – without public or private assistance.

The Self-Sufficiency Standard for New York contains estimates of the monthly and hourly “self-sufficiency” wage for 8 family types in 64 separate jurisdictions. The complete report, calculates “self-sufficiency” wages for 70 family types for each county in the state. Separate estimates are included for upper and lower Manhattan and Yonkers.

The Self-Sufficiency Standard for New York is calculated using a methodology that has been utilized by Dr. Pearce and Wider Opportunity for Women to calculate self-sufficiency standards for 12 other jurisdictions, including Connecticut, New Jersey, Massachusetts, California, Illinois, Indiana, Iowa, North Carolina, Pennsylvania, Texas, Wisconsin and Washington, D.C. metropolitan area.

The Standard uses the best available estimates of the specific costs of providing food, housing, child care, transportation and health care. For costs such as housing, health care and child care, for which there is significant geographical variation, county-specific cost estimates are used. For example, housing costs outside New York City are based on the United States Department of Housing and Urban Development Fair Market Rents while the cost of child care is estimated using the rates set by the Market Rate Survey conducted last year by the New York State Office of Children and Family. Outside New York City, for a single parent family with two preschool children, monthly self-sufficiency wage requirements range from $5,044 per month in Nassau and Suffolk Counties to $2,501 per month in Otsego County. If we assume full-time work, these translate into hourly wage requirements of $28.66 and $14.21 respectively.

For all jurisdictions in New York State, the self-sufficiency standard documents that families require incomes significantly higher than the federal poverty thresholds to meet basic needs. The federal poverty threshold for a family of three anywhere in the state (anywhere in the country for that matter) is $14,150. In Albany County, the annual income requirements for three-person single parent families calculated using the self-sufficiency standard range from $21,900 for a parent with two older children to $34,848 for a parent with two children using child care.

While both the Self-Sufficiency Standard and the official poverty measure assess income adequacy, the Standard differs from the official poverty measure in several important ways:

  • the Standard explicitly incorporates the costs of working: transportation and child care;
  • the Standard takes into account that many costs differ not only by family size and composition, but also by the age of the children;
  • the Standard incorporates regional and local variations in costs;
  • the Standard includes the net effect of taxes and tax credits;
  • the Standard is based on the costs of each basic need considered separately.

The report also includes an analysis of the ways in which low-income families may be able to close the gap between basic needs and income, including child support, subsidized health care coverage and various other public subsidies. The report shows that the receipt of child care assistance, food stamps, and Medicaid can reduce the hourly self-sufficiency wage requirement for a single parent family with two pre-school children living in Albany County from $16.38 an hour to $5.18. The report illustrates the dramatic impact that these and other public supports can have on the ability of families to meet basic needs.

The Self-Sufficiency Standard for New York State is being distributed by the New York State Self-Sufficiency Steering Committee. A companion report, The Self-Sufficiency Standard for the City of New York, is being released by the The Women’s Center for Education and Career Advancement and Wider Opportunities for Women.

Press release

The NYS Self-Sufficiency Standard, unlike the federal poverty standard, charts the actual cost of living and working in each county of New York State. It measures how much a family must earn in order to pay for housing, food, childcare, taxes, health care and other basic necessities. It is based on the ages and number of children in each household, and the county in which the person resides.

“The report is the first of its kind in New York State to provide a realistic assessment of what families actually need to earn to be self-sufficient,” stated Ron Deutsch, Executive Director of SENSES. “We need to use this report as a springboard for realistic public policy measures that have positive impacts on our states’ families.”

“The Self-Sufficiency Standard provides us with a wonderful new tool. Since it takes into account the differences in the cost of living across the state and considers both the costs of living and working, it is a much better gauge of income adequacy for New York’s working families than the current federal poverty thresholds,” stated Dr. Trudi Renwick of the Fiscal Policy Institute.

In the 12 states where standards have been developed it has been used to evaluate economic development proposals, evaluate the impact of proposed policy changes, target education and job training investments, as a counseling tool and as a benchmark for evaluation. For example, The Self-Sufficiency Standard has recently been adopted by the Philadelphia and Chicago Workforce Investment Boards to define “self-sufficiency.”

Russell Simon, Senior Policy Associate of the New York Association of Training and Employment Professionals said “This Self-Sufficiency Standard will provide a valuable tool to the 33 local workforce investment areas across New York State for assisting individuals and  families in working toward their economic goals. With the implementation of the federal Workforce Investment Act, local Workforce Investment Boards should consider using the data in this report to establish self-sufficiency goals that reflect local conditions and target resources to help underemployed and unemployed workers meet the financial needs of their families.”

“In this, the best of economic times, 25% of New York’s children are growing up in poverty. The heartbreaking truth is that the majority of these children live in families where their parents work very hard,” said Elie Ward, Executive Director of Statewide Youth Advocacy. “We hope that the release of the Self-Sufficiency Standard for New York State will help our state leaders, in both the public and private sectors, better understand what it takes to raise a family. And that this information will encourage them to design policies and programs that support the hard working families across our state.”

“In a society that emphasizes the value of work and on the heels of sweeping work-based welfare reform, the self-sufficiency standard is a critical tool for demonstrating that far too many families, who are holding up their end of the social contract by working, still have earnings that leave them well below what is essential to meet their basic needs,” stated Rus Sykes of the State Communities Aid Association. “In that context, the self-sufficiency standard can guide policymakers in establishing fair wage policies and designing educational and employment and training programs aimed at building suitable skills for higher wage employment. But for the many families, who because of entry level wages, lower skills and other obstacles, will not attain economic independence quickly, this study clearly demonstrates the critical need for government support services for child care and health coverage, adequate child support and tax credits such as the Earned Income Tax Credit (EITC) that can help in the interim to ‘fill the gap’ between earnings and the self-sufficiency standard.”

“The road to self-sufficiency is not an easy one. The cost of health insurance, child care, and housing can make it seem impossible to obtain. It has taken me a while to reach the level of independence that I am now at, and I never would gotten there if it weren’t for the assistance of programs such as the Women’s Employment and Resource Center, Career Central, Section 8, Child Care through the Department of Social Services, and also my current employer,” stated Pam Hallenbeck a housing counselor in Albany.

According to Sandra McGarraugh of Thalia Training and Consulting, “The importance of providing access to education and training, particularly to technical programs offered through community colleges, is underscored by the self sufficiency standard data. Technical training can mean the difference between making a self-sufficiency wage and just getting by with continuing subsidized support. For low-income women, many of whom are single parents, the associate degree programs offered at the community college level are critical ladders to self-sufficiency. The difference between the earnings of an entry level unskilled worker (average $6 hour) and that of a skilled technician ($15 -$20 hour) is the key to maintaining a livable family wage at a self sufficiency level. Further, the high/skill and high/wage potential jobs available with the postsecondary training provide opportunities for continuing skill development and career advancement, which support families in achieving a economically secure lifestyle over time.”

The report’s author, Dr. Diana Pearce, will be in Albany on Thursday, September 14th and will be available for one-on-one interviews. Dr. Pearce will also be giving an informational forum on September 14th at Emmanuel Baptist Church, 275 State Street, Albany from 1:00 P.M. to 3:00 P.M. Dr. Pearce teaches at the School of Social Work, University of Washington in Seattle. She is recognized for coining the phrase “the feminization of poverty.” Dr. Pearce founded and directed the Women and Poverty Project at Wider Opportunities for Women in Washington D.C. If you would like to schedule a time to meet with Dr. Pearce, please contact either Ron Deutsch or Christine McKenna at SENSES.

Representatives of SENSES, FPI and Thalia Training and Consulting will be conducting informational forums across the state: September 25th in Buffalo and Rochester, September 26th in Ithaca and Syracuse, September 27th in Utica, and October 12th in New York City.

Members of the NYS Self-Sufficiency Standard Steering Committee:

  • Susan Antos, Greater Upstate Law Project
  • Ron Deutsch, Statewide Emergency Network for Social and Economic Security, Co-chair
  • Mark Dunlea, Hunger Action Network of NYS
  • Suzanne Garhart, Workforce Development Institute, Hudson Valley Community College
  • David Hamilton, NYS Catholic Conference
  • Lois Johnson, Women’s Employment and Resource Center
  • Dan Maskin, NYS Community Action Association
  • Ann Mattei, Adult Literacy and Workforce Preparation Team, NYS Education Department
  • Sandra McGarraugh, NYS Career Options Institute, Co-chair
  • Christine McKenna, Statewide Emergency Network for Social and Economic Security
  • Merble Reagon, Women’s Center for Education and Career Advancement
  • Trudi Renwick, Fiscal Policy Institute
  • Russ Simon, NY Association of Training and Employment Professionals
  • Rus Sykes, State Communities Aid Association
  • Scott Trees, Siena College
  • Elie Ward, Statewide Youth Advocacy
  • Agnes Zellin, NYS Child Care Coordinating Council

Family Needs Far Exceed the Official Poverty Line

September 13, 2000. An article in the New York Times by Nina Bernstein, focusing on a new report on what families really face in terms of basic expenses – The Self Sufficiency Standard for New York.

Carol Williams did not need an economic study to prove that her $24,000-a-year job as an administrative assistant could not support three children in New York, even when squeezed into a one-bedroom, $600-a-month apartment in the Bronx.

“By the time I paid my car payments and my car insurance and some bills, I was broke,” said Ms. Williams, a widow. “Most of the time we were scrambling to buy food.”

There was nothing wrong with her budgeting skills. Though the federal government says poverty in New York City officially ends at $14,150 for a household of three – just as it does in Brooklyn, Miss., or Manhattan, Kan. – Ms. Williams and many residents like her have found that getting by takes tens of thousands of dollars more.

In fact, according to a study that scrutinized basic family expenses in the five boroughs, meeting bare-bones needs in the city costs two to five times more than the national poverty levels for families with children.

As a working parent in the Bronx with three children, for example, Ms. Williams would need $38,088 to cover a no-frills budget for housing, child care, food, taxes, health care, transportation and other basic out-of-pocket costs, even after tax credits, according to the study. The study is to be released today by its local sponsors, the Women’s Center for Education and Career Advancement, the New York Community Trust and the United Way of New York City.

In Queens, Robbin Davis often helps feed her family by bringing in leftovers from the lunches she prepares for the elderly for $7 an hour at a settlement house. In that borough, an adult with a preschooler and a school-age child needs a full- time job paying $22.18 an hour, or $46,836 a year, to be self-sufficient. And in the southern half of Manhattan, the same family would need $74,232, without budgeting a dime for a movie or a restaurant meal. Given that the city’s median income is $50,600 for a household of three people, a substantial proportion of families here clearly have to scramble to make ends meet.

At a time when work is expected to serve as New York’s main antipoverty program, the study highlights the gap between wages that disqualify working parents from public subsidies and the income they need to be independent, termed the “self-sufficiency standard.” The study is part of a nationwide project to assess how much income is enough for families to meet their needs on their own.

The same methodology has found similar gaps in 13 other states and major metropolitan areas, but only San Francisco is more expensive than New York City for families across the board, said Diana Pearce, the University of Washington sociologist who supervises the national project.

An examination of costs in counties across New York State, also being released today, found that even in the lowest-cost jurisdiction – Clinton County, whose major town is Plattsburgh – income just above the poverty threshold is still less than half of what it takes to work and adequately support a typical family. And when adjusted for inflation, wages for middle-level and low-end jobs in New York actually declined during the 1990’s, by 7.6 percent and 9.5 percent respectively, even as they rose modestly in the nation as a whole, according to a recent study by the Economic Policy Institute, a Washington-based research organization.

Yet the national poverty threshold remains the basis for calculating most aid here. And the minimum wage – $5.15 an hour, or $16,148 a year, including tax credits – is the same as in the rest of the nation, though much more than that salary left Ms. Williams short of money to feed her Bronx household. A closer look at some of the families struggling to bridge the gap reveals that low-income New Yorkers use many strategies to get by.

Ms. Davis, the woman in Queens, is still trying to work her way off welfare with her part-time job at the center in Queensbridge and hopes that training and a high school equivalency diploma will enable her to get a full-time job there. But each time her earnings increase, so does her rent on the public housing apartment in Astoria where she lives with her mother and her three children, sharing a bedroom with her daughter.

When the father of her 10-year-old son began paying $300 a month in child support, all but $50 went to the welfare department, which recently cut her remaining grant from $71.50 to $6.50. And because of the extra $50, her food stamp allotment was cut to $134 a month, from $163, she said.

Monique Wallace, a Brooklyn woman, feels that after a rocky start, she is close to making it. When pregnancy and illness forced her to leave an out-of-state college halfway through her sophomore year, she turned to the City Human Resources Administration’s job center, but was turned away without a referral. She went to her local unemployment office in search of work after the birth of her daughter, Cheyenne, in September 1998, but was offered only minimum-wage jobs at fast-food restaurants, she said.

“They’re sending me to Wendy’s, and I have a daughter I’ve got to take care of,” Ms. Wallace said. “And you know $5 an hour is not going to cut it.” Instead, she followed a sign in the public library to the Women’s Center.

“When she came to us, she was in tears,” Merble Reagon, the executive director, recalled. “We told her, ‘You can do this, Monique – you’re bright, you’re motivated, and you want to be self-sufficient.’ ”

After an unpaid internship at PaineWebber and help with an intensive job search, Ms. Wallace landed a position at a financial services company as a receptionist. By January she had been promoted to sales representative, making $25,000 in base pay for selling life insurance. She expects to add $7,000 to $10,000 more in bonuses and commissions.

But she is still shy of the study’s $35,940 self-sufficiency standard for an adult with one preschool child in Brooklyn. That figure is based in part on allotting $801 for renting a one-bedroom apartment, a modest fair-market rent according to housing surveys by the Census Bureau. It is also based on child care costs analyzed by the state for subsidies; on average health maintenance organization costs; and on $63 for a monthly Metro pass, among other expenses.

For now, Ms. Wallace shares a bedroom with her 2-year-old daughter in her mother’s publicly subsidized apartment in East New York, and counts on her mother for what the study characterizes as a “private subsidy”: child care at $80 a month, far below market rates.

Even so, Ms. Wallace was caught short this pay period when she resumed her college education with part-time classes. The $250 for her books fell due at the same time that cold weather demanded that her daughter’s summer sandals be replaced with sneakers. Ms. Wallace said Cheyenne’s father is a student and cannot pay child support for now.

“Everything is going to feel it,” Ms. Wallace said, mentally dividing up her $735 check, received every two weeks. “I’ll send less money to the phone bill. I guess it’s going to affect the food. And I didn’t even get her coat yet – I’ll get that maybe next week.”

The compromises families make have hidden costs, Dr. Pearce said, and children often pay them. The self-sufficiency benchmark, she said, underlines the distortions of the poverty line, which was devised 40 years ago, when low-income families paid little in taxes and nothing for child care, because women were not expected to work.

“Unless these families get help with those major costs, such as child care, health care and shelter, they’re not able to stabilize and become self- sufficient,” she said.

For Ms. Williams of the Bronx, that struggle continues. She started her climb to higher wages with a church maintenance job at $15,000 a year and baby-sitting at $7 an hour for a Manhattan family – a couple who could hardly afford more, she said, since they were living in a Manhattan studio apartment with two toddlers. She sent her own children to her mother’s home in Virginia, she said, and child-welfare authorities there took them into custody, saying they were being abused.

Striving to win back her children from foster care, she discovered that she earned too little to rent an acceptable apartment, but too much to qualify for a state job training grant that could prepare her to earn more. Meanwhile, Virginia child-welfare authorities were claiming in a court petition that since she was working, she could pay them $12,000 in child support to cover foster-care costs.

Ms. Williams persevered with the help of the Women’s Center, a 30- year-old nonprofit organization in Lower Manhattan that helps displaced homemakers prepare for employment. She completed a free computer bookkeeping course and an unpaid PaineWebber internship, passed her high school equivalency test, regained her children and landed a $24,000 office position at a children’s residential treatment center in Westchester County. A tax refund covered the down payment on the car she needed to get there.

When her salary fell far short of family needs, she said, her reluctant solution was to add a second job — moonlighting four nights a week as a youth counselor in one of the center cottages for $10 an hour. “I just got accustomed to not sleeping,” she said.

The grueling schedule backfired badly this summer. She said her teenage son, already feeling abandoned after his stint in foster care, became involved with a gang after his older sister graduated from high school and joined the Navy. The private school where her younger daughter has a full scholarship warned that her grades were slipping. And Ms. Williams had to take off so much time to deal with these family problems that she lost her office job.

“They thought I was more effective working with the residents,” said Ms. Williams, whose night shift and weekend work as a counselor pays about $22,000 a year now with overtime, some of it mandatory and unpredictable. She has sent her 17- year-old son to join his 19-year-old sister on the naval base in Norfolk, Va., hoping he will complete high school.

“I worked two jobs so long I’m going to rest for awhile,” she said, “but I’ll be out for a second job soon, because $22,000 is just not enough.”

Strengthening Social Security and Medicare – Rhetoric and Reality in the 2000 Election

September 13, 2000. Remarks of Frank J. Mauro, Executive Director, Fiscal Policy Institute, at the retiree luncheon hosted today in New Paltz by the United University Professions, Capital District Region.

Many issues of importance to retired and soon-to-be -retired Americans are being fought out in this year’s election campaigns. Of these issues, the most important relate to the strengthening of Social Security and Medicare. I use the term “strengthening” to encompass both the protection of the benefits available under the current Social Security and Medicare systems, as well as the need to expand Medicare coverage in several ways. The expansion issue that is being addressed most seriously in this year’s campaigns involves the provision of assistance to seniors in meeting the high and increasing cost of prescription drugs.

Sometimes it appears that there is more heat than light being shed on these and other campaign issues. But, for better or worse, that is the nature of modern campaigns – particularly high-budget, media-dominated campaigns for national, statewide and congressional offices. Our job, as citizens, is to wade through the rhetoric as carefully as we can to identify, understand and examine the factual underpinnings of the candidates’ statements.

The context within which this year’s candidates for federal office are grappling with proposals for the strengthening of Social Security and Medicare, and with addressing other issues with fiscal implications, is an unusual one. In 1998, for the first time in 30 years, the federal government had an overall budget surplus (i.e., total receipts exceeded total outlays.). And in 1999, for the first time in 39 years, it ran a surplus in its so-called “on-budget” accounts. (NOTE: The on-budget accounts have only operated in the black during seven of the last 60 federal fiscal years: 1947, 1948, 1949, 1951, 1956, 1957, and 1960. It should be mentioned, however, that following the end of World War II the annual on-budget deficits were relatively small until the 1970s and that they did not really grow to substantial proportions until the 1980s.)

The federal government’s “off-budget” accounts, which are comprised overwhelmingly of the Social Security Trust Fund, have been running increasingly large budget surpluses since the early 1980s. This is the conscious result of the changes made in the Social Security system in the early 1980s to begin building up substantial reserves in preparation for the time when the Baby Boom Generation begins retiring.

As of December 31, 1999, the balances in the Social Security Trust Funds were $896.1 billion, up $133.7 billion from a year earlier. The latest projections by the Trustees of the Social Security and Medicare Trust Funds are that Social Security contributions (i.e., the payroll taxes paid by employees and employers, including self-employed individuals) will exceed benefits each year through 2015 and that contributions, income from the taxation of benefits and interest income will exceed benefits each year through 2024. This means that the balances in the Social Security Trust Funds are projected to continue growing until the end of 2024, when they will peak at a projected $6.047 trillion.  (Note: this is $6 trillion of 2024 dollars, not adjusted for inflation to be comparable to current 2000 dollars.)

Beginning in 2025, under these projections, the Trust Fund will begin using portions of the accumulated $6 trillion surplus to pay benefits. It is then projected that the accumulated surplus will be used up by the end of 2037, at which time annual payroll taxes and the taxes on benefits are projected to equal about 71% of annual benefit payments, with this percentage declining to about 66% in 2075.

Warning #1: The Social Security System is not in crisis. Improvements are necessary, but radical changes are not.

These projections underscore the underlying strength of the Social Security system, but they also point out the long term problem that needs to be addressed. In doing so, it is important that voters not be taken in by exaggerations of the magnitude of the problem. In fact, the long-term solvency of the Social Security trust funds can be ensured by dedicating a modest percentage of the on-budget surplus to this cause and speeding up the rate at which we raise the cap on the amount of earnings subject to Social Security contributions. This would allow us to “save” Social Security without any increases in the retirement age over and above the increases that are already scheduled to take effect and without any benefit reductions. The people who advocate increasing the retirement age as a way to close Social Security’s projected shortfalls are in white collar jobs that they could easily continue to do through their late 60s or even into their early 70s, but they have their blinders on when they imply that most waitresses, nurses aides and carpenters can continue to ply their physically demanding trades at those ages.

It is also important to note that, in the last several years, the projections as to the future health of the Social Security system have been improving steadily. Voters would clearly be able to make more informed decisions about alternative Social Security “reform” proposals if they knew that each of the last three annual reports by the Trustees of the Social Security and Medicare Trust Funds concluded that the system was in better shape than the prior year’s report had projected. Since their 1996 report, the Trustees have revised from 2020 to 2025 their projection of the year in which payments are first likely to exceed income. Their projection of the year in which the trust fund surplus is projected to be depleted has been extended from 2029 to 2037. And, the projected overall funding shortfall (over the course of the 75-year period for which the Trustees are required to make their projections) has been reduced from 2.23% to 1.89%.

According to the Economic Policy Institute, however, the latest projections are still based on pessimistic assumptions about the future economy. According to EPI’s analysis of the 2000 Annual Social Security and Medicare Trust Funds Reports, “Recent developments suggest higher real GDP and productivity growth than the trustees assume. Hence, real wage and payroll-tax revenue growth should be greater than predicted by the trustees’ report, increasing the size of the trust fund. Given the report’s improved forecast in spite of these pessimistic assumptions, there is even less need to cut benefits or to privatize the system.”

So, in deciphering this year’s election campaign rhetoric, Warning #1 is to be wary of claims that Social Security is in crisis. It is not. Warning #2 which is a direct corollary of this first warning is to be wary of claims that radical “solutions” that would dismantle this most effective of all safety net programs are necessary in order to save it. As we will see, such “solutions” are not only unnecessary, they serve to make the situation worse.

Warning #2: Diverting a portion of Social Security revenues to private accounts makes it harder rather than easier to eliminate the budget shortfalls projected for 2038 and thereafter.

Some supposed “experts” are offering “privatization” as the remedy for all that ails the Social Security system. In reality, however, allocating a portion of Social Security contributions to private accounts would make it harder rather than easier to solve the Social Security problem that most Americans care about: ensuring the long term solvency and stability of the system without cutting benefits or increasing the retirement age.

Proposals to allow workers to divert a portion of their Social Security contributions to individual accounts would greatly increase the difficulty involved in balancing the system’s revenues and expenditures over time. If, under the current rules, revenue increases and/or expenditure decreases of a given amount are necessary to ensure the system’s solvency over time, then even greater revenue increases and/or expenditure decreases would be necessary if a portion of the current revenue stream were diverted to private accounts.

Under Governor Bush’s proposal, for example, workers would be allowed to divert a portion of their Social Security contributions to private accounts, with that portion being 2% in the examples that his campaign has provided. This would mean that for those workers, a little more than 16% of their contributions would go to individual accounts rather than to the overall Social Security Trust Fund. This would create a particular challenge for the system’s solvency since Social Security is a pay-as-you-go system in which current revenues are used to pay current benefits.

If half of all workers (or some smaller portion of workers with higher than average earnings and half of all taxable earnings) took this option, then about 8% of Social Security contributions would be diverted from the Trust Fund, with virtually no material reduction for many years in the amount of benefits to be paid. The result would be a reduction of about $40 billion in revenues in each of the next several years, growing to about $50 billion per year in current 2000 dollars over the course of the ensuing decade. By reducing the system’s annual revenue, such a change would also be reducing the system’s accumulated surpluses at the end of each year, by ever increasing amounts, given the power of interest compounding. This would put the system into the red sooner than under current law and increase the percentage by which revenues fall short over time of expenditures. (A more sophisticated analysis by Princeton University Economics Professor Alan Blinder, a former member of both the Council of Economic Advisors and the Board of Governors of the Federal Reserve Bank, and several other highly respected economists, concluded that if everyone who is younger than 55 in 2002 opted to have 2% of their earnings go into a private account, that the amount available to be spent on basic benefits over the ensuing 75 years would have to be reduced by 41%, over and above any benefit reductions necessary to cover the 1.89% revenue shortfall, that is currently projected by the Trustees for this period. This analysis also concluded that the benefits from the private accounts, thus established, would only cover about half of the reduction in basic benefits.)

Many investment firms that want a “piece” of the individual or private accounts business have been obscuring these realities – either directly and/or through the funding of one of several advocacy organizations that have been established to advance this concept. A refreshing exception has been John Bogle, the founder of the Vanguard Group of mutual funds, who has emphasized the clear reality that, “Diverting part of the existing tax flow earmarked for Social Security, as Bush recommends, will only deplete the programs’s reserves faster than the experts are predicting.” (Prial, Dustin, “Vanguard founder offers another view on Social Security,” Associated Press, August 29, 2000.)

Warning #3: Be wary of plans that promise to use the surplus to strengthen Social Security and Medicare but also promise to use over $1.5 billion to cut taxes and/or increase spending for other desirable purposes.

It seems that every candidate for federal office from George Bush and Al Gore on down says that he or she wants to use the federal government’s projected budget surplus to protect Social Security and pay down the national debt, and virtually every candidate says that they also want to use some of the surplus to provide a tax cut to the American people who, after all, created the surplus. Voters, however, must carefully examine candidates proposals for reducing taxes and increasing spending to determine if they can really be implemented without jeopardizing Social Security and Medicare and without driving up (rather than paying down) some of the national debt.

As an example, I have taken a careful look at the proposals by U. S. Representative and current U. S. Senate candidate Rick Lazio, since he recently did a pretty good job, in an August 24, 2000 speech, of laying out an overall framework for evaluating plans for using the federal budget surplus. In this speech, Rep. Lazio argued that “our most important economic duty is to take a balanced, financially responsible approach to managing the budget surplus.” He then went on to define such an approach as “one that protects Social Security, and Medicare, reduces the national debt and provides pro-growth tax relief.”

In this same speech, Representative Lazio announced what he called a “Balanced, Fiscally Responsible Plan to Extend Economic Expansion Across NY.” In the various documents that he released announcing and explaining his plan, however, Rep. Lazio never explains how his plan meets this test of balance and fiscal responsibility. He simply calls his plan balanced and fiscally responsible thus implying that it meets this definitional test.

In attempting to sell his plan as fiscally responsible, Rep. Lazio used two techniques.

  • First, he went to great lengths to picture his plan as using only a modest portion ($776 billion over ten years) of the projected surplus (which he characterized as having been conservatively estimated at more than $4.4 trillion over that same period).
  • Second, he explicitly compared his estimate of his own plan’s size (the $776 billion figure) to the size of the tax reduction plans being advanced by presidential candidates George Bush and Al Gore. His purpose was to have listeners and readers see his plan as being a lot smaller than the plan proposed by George W. Bush ($1.3 trillion over ten years), and only a little bit bigger than the plan proposed by Al Gore ($500 trillion over ten years).

Without the time for any analyses, the initial media coverage of Lazio’s speech and his plan bought the line that he was selling. The New York Times, for example, headlined it’s August 25th story on Lazio’s speech, “With His Tax Cut Plan, Lazio Distances Himself From Bush.” As Rep. Lazio’s plan was analyzed, however, it became clear that it would cost much more than the initial $776 billion estimate. In response to questions about this seeming inconsistency, Rep. Lazio’s campaign staff indicated that some of provisions of his plan would be less generously framed than his speech and supporting documents had indicated, and that some would be phased in more gradually than might normally be the case. This led to a number of follow-up stories in various newspapers, including one in The New York Times, on September 7th, entitled, “In Two Weeks, Lazio’s Tax Plan Undergoes Deductions of Its Own.”

In his August 24, 2000, economic policy speech, Rep. Lazio said that “over the next decade, the federal government is expected to run a budget surplus of more than $4.4 trillion” and that his tax reduction plan would only cost $776 billion over that same period. The clear implication of this juxtaposition was to emphasize that Rep. Lazio was suggested than only a very small portion of a very big surplus be returned to the people in the form of tax cuts. So, how could anyone conclude that this was not fiscally responsible. After all, Rep. Lazio is only suggesting that 17.5% of this dividend be returned to the people in the form of tax cuts. That would leave fully 82.5% of the surplus, or $3.785 of the surplus to protect Social Security and Medicare, reduce the national debt, and maybe even meet some other needs, wouldn’t it? Unfortunately, the answer to that question is “no” for the following reasons:

a. The surplus available for tax cuts and deficit reduction isn’t really $4.4 trillion since more than 50% of the total projected surplus is in the off-budget Social Security Trust Fund. “Only” $2.2 trillion, not $4.4 trillion, is available for protecting Medicare, reducing the national debt and addressing some of American society’s other unmet infrastructure and human needs.

To begin with, the Congressional Budget Office’s latest projection of the federal budget surplus for the next ten years is actually a little higher – $4.561 trillion. But, of that amount, $2.388 trillion is in actually in the Social Security trust fund. The remaining $2.173 trillion is the projected on-budget surplus that is available for protecting Medicare, reducing the national debt and addressing some of American society’s other unmet infrastructure and human needs. So, even if Rep. Lazio’s $776 billion estimate of the cost of his tax cut proposals were correct (which it is not), it would represent 36% of the surplus available for tax cuts and other purposes other than protecting Social Security. In reality, as is outlined below, the true impact of Rep. Lazio’s plan on the surplus is much greater, reducing it by $1.399 billion, and thus using over 64% of the non-Social Security surplus for this one purpose. This moves his plan from the realm of fiscal responsibility to that of fiscal irresponsibility, especially when we remember that the surplus is a “projected” surplus based on assumptions about the economy that allow CBO to project that federal revenues will grow between 4% and 5% during each of the next ten years. While this might not actually happen, a 10-year phased-in tax cut would establish a legal commitment to forego an increasing amount of revenue each year and that commitment could only be changed by Congressional action. This is not to say that the Congress might not be justified in enacted some tax cuts in the face of the projected surplus, but that it should do so judiciously, without extremely long phase-in periods which are, in effect saying, that we absolutely know that we will be able to afford something in 2003 or 2005 or some other future year that we cannot afford now.

b. The on-budget surplus includes $360 billion attributable to Medicare, further reducing the amounts available for other purposes.

Despite Representative Lazio’s recognition of the importance of protecting Medicare as well as Social Security, he never acknowledges that, according to the Congressional Budget Office projections on which he relies, some $360 billion of the on-budget surplus is really attributable to the Health Insurance (Medicare) Trust Fund. Setting aside this portion of the on-budget surplus for the protection and strengthening of Medicare, reduces the portion of the surplus available for uses other than Social Security and Medicare to $1.813 billion. If Rep. Lazio’s $776 billion estimate of the cost of his tax cut proposals were correct (which it is not), it would represent 43% of the surplus available for tax cuts and other purposes other than protecting Social Security and Medicare. In reality, as is outlined below, the true impact of Rep. Lazio’s plan on the surplus is much greater, reducing it by $1.399 billion rather than $776 billion, and thus using over 77% of the non-Social Security, non-Medicare surplus for this one purpose.

In the budget proposals that it currently has pending before the Congress, the Clinton Administration has proposed to change the categorization of the Health Insurance Trust Fund so that it would be considered off-budget, like the Social Security Trust Funds. According to the President’s Mid-Session Review of the budget for FY2001, this change is intended to ensure that Health Insurance surpluses over the next ten years “are not used for other purposes .”

NOTE: According to the Congressional Budget Office’s An Analysis of the President’s Mid-Session Review of the Budget for Fiscal Year 2001, “That proposed accounting change would have no effect on the economy. It would reduce on-budget surpluses while correspondingly increasing off-budget surpluses, but it would not, by itself, reduce the debt or change the government’s financial position. However, if the Congress and the President agreed to avoid on-budget deficits in future years, that accounting change might make the surpluses generated by the HI program (and any additional transfers from the general fund) less vulnerable to proposals to increase spending or reduce taxes. If taking the HI trust fund off-budget thereby increased the likelihood of maintaining projected budget surpluses and paying down debt held by the public, it would enhance long-term economic growth.” (Emphasis added, not in original.)

The reference, in the above excerpt from the CBO’s analysis of the Mid-Session Review, to “any additional transfers from the general fund” refers to the Administration’s proposal to transfer an extra $115 billion to the Health Insurance Trust Fund from the federal government’s on-budget accounts over the next ten years. The CBO concludes that such transfers would add to the Health Insurance Trust Fund’s balances and make the Medicare program appear more “solvent” but that balancing the revenues and expenditures of this program in the long run is a more substantial challenge.

If Rep. Lazio supported this idea of assigning additional on-budget surpluses to the Health Insurance Trust Fund, that would further decrease the amount of surplus funds available for purposes other than protecting Social Security and Medicare. If the President’s proposal as it currently stands were adopted, it further reduce the portion of the projected surplus that is available for uses other than Social Security and Medicare from $1.813 trillion to $1.698 trillion.

c. The tax cuts proposed by Rep. Lazio will cost $1.121 trillion over ten years, not $776 billion.

The $776 billion figure turns out to be a significant underestimate of the ten-year cost of the tax cuts proposed by Rep. Lazio. A conservative estimate of the cost of these tax proposals over the next ten years, even with some of the after-the-fact “amendments” by the Lazio campaign staff to reduce their cost, is $1.121 trillion over the next ten years. Rep. Lazio’s campaign has acknowledged that it used outdated estimates for its proposal to reduce the portion of Social Security benefits subject to taxation (a difference of $60 billion) and that its 10-year cost figures for some of the other proposals assumed either that they would sunset after four or five years (a difference of $204 billion for the proposal to eliminate the marriage penalty) or that they would be phased in so gradually that the promised benefits would not be available until 2010 (a difference of at least $200 billion for the proposal to make employees’ Social Security contributions deductible of their personal income tax returns).

The campaign has also said that, while it wasn’t specified in Rep Lazio’s speech or in any of the briefing documents released by the campaign, that the Social Security payroll tax deductibility provision would not be available to taxpayers in tax brackets higher than 28%.

NOTE: The federal personal income tax has five brackets: 15%, 28%, 31%, 36% and 39.6%. The income thresholds for each bracket are changed annually based on an inflation index. For married couples filing joint returns in 2000, those five brackets will apply, respectively, to the portions of taxable income [income after deductions and exemptions] above $0, $43,820, $105,950, $161,450, and $288,350.  Thus, in 2000, not making the Social Security payroll tax deduction available to taxpayers with any income in the 28% bracket  would mean that this deduction would not be available to married couples with taxable incomes above $105,950 or single taxpayers with taxable incomes above $63,600.

While this “clarification” helps to trim the costs of his proposed tax cuts, it also renders incorrect the line used in both Rep. Lazio’s speech and some campaign commercials that this proposal “will reduce the average two-income family’s tax bill by about $1,200 per year.” This line is really a misleading characterization of the fact that the average savings to be realized by all 2-earner families under an across-the-board payroll tax deductibility provision would be about $1,200. So even for an across-the-board payroll tax deductibility plan this is a misleading statement. For such a plan there is a big difference between the savings to an average two-income family (about $530, see next paragraph) and the average savings to all two-income families (the $1,200 figure) since the latter average is heavily weighted by the savings that would go to many two high-earner families ($3741 in 2000). With the campaign’s after-the-fact revision of the plan (limiting it to those in the 28% or 15% brackets), this statement is now both misleading (which it was originally) and incorrect.

The median income for a 4-person family (two parents, two children) in the United States is about $56 thousand per year and for such families in New York State it is about $57 thousand. If all of the income of such a New York family was from wages and salaries subject to the Social Security payroll tax, the benefit of Rep. Lazio’s proposal, when fully phased in ten years from now, would be about $531 in current dollars, assuming that median family incomes keep up with the cost of living in New York State over the next ten years, something that they have not done over the last ten years. Under the slow phase-in that Rep. Lazio has not enunciated to try to make his plan fit into his cost estimate of $776 billion over ten years, such a family would probably see benefits of $50 to $100 for the next several years.

d. The impact of the tax cuts on the surplus is greater than the savings to taxpayers because of the increased interest costs that would result from a slower reduction in the amount of debt outstanding.

Both Rep. Lazio’s estimate ($776 billion) and the more accurate estimate ($1.121 trillion) are estimates of the amount by which the proposed tax cuts would reduce federal revenues over the next ten years. They are not estimates of the effect that this plan would have on the projected surplus. The difference is that the CBO’s projection of the surplus assumes that the surplus simply accumulates, earning interest. This is, in effect, the same as saying that, if the annual surpluses are not used for tax cuts or spending increases, they will go to reducing the national debt and that this, in turn, will reduce the amount of the federal budget that will go to interest payments in the following year thus making that subsequent year’s surplus greater than it otherwise would have been. When the impact that the annual phase-in of Rep. Lazio’s tax cut plan on the national debt and, therefore, on annual interest payments is taken into consideration (using CBO’s interest calculation methodology and assumptions), the projected surplus over the next ten years is reduced by an additional $278 billion. Thus, while Rep. Lazio’s tax cuts are estimated to cost $1.121 trillion over the next ten years, their impact on the surplus is to reduce it by a total of $1.399 trillion (the $1.121 trillion direct cost of the tax cuts plus the $278 billion in interest) or 77% of the projected non-Social Security, non-Medicare surplus of $1.813 trillion. (If any of the $1.813 trillion were to be used to further protect Medicare, such as with the Clinton Administration’s proposal to use $115 billion of the non-Social Security, non-Medicare surplus for this purpose, the potion of the surplus “used up” by Rep. Lazio’s tax cuts would be even greater. That percentage would be over 82% if the Administration’s proposal were adopted.)

e. If all of Rep. Lazio’s other proposals for tax reductions and spending increases were implemented, there would be no surplus moneys available to reduce the national debt or to strengthen Social Security and/or Medicare. In fact, we would have to choose between using some of the Social Security and Medicare Trust Fund’s own surpluses to balance the regular budget OR actually increase the national debt.

While an argument could be made for increasing the national debt in certain situations, to plan to do so would certainly be inconsistent with the principles for using the surplus that Rep. Lazio set forth in his economic policy speech and with the approaches being set forth by most other candidates for federal office, including Al Gore and George Bush. So it is quite surprising that Rep. Lazio’s other proposals for tax reductions and spending increases more than use up more than the $414 billion that is left after setting aside the projected surpluses in the Social Security Trust Fund ($2.388 trillion) and the Medicare Trust Fund ($360 billion), and after taking into account the impact ($1.399 trillion) of his August 24th tax reduction plan on the projected surplus. (This $414 billion would be reduced to $299 billion, if the Administration’s proposal for using $115 billion to protect Medicare’s future is accepted.)

Education. While the details of Rep. Lazio’s education plan may or may not stand up to careful scrutiny, it will, by his accounting, cost $97 billion over ten years, thus reducing the amount of the projected non-Social Security, non-Medicare surplus available for debt reduction and other purposes to $317 billion (or $202 billion if the Administration’s proposal for using $115 billion to protect Medicare’s future is accepted.)

Gasoline Taxes. Rep. Lazio’s proposal to suspend the federal gasoline tax for six months and then to reduce it by 4.3 cents per gallon would cost at least $50 billion over ten years, thus reducing the amount of the projected non-Social Security, non-Medicare surplus available for debt reduction and other purposes to $267 billion (or $152 billion if the Administration’s proposal for using $115 billion to protect Medicare’s future is accepted.).

Telephone Taxes. The repeal of the 3% federal tax on local and long distance telephone calls, that Rep. Lazio and most other members of Congress support, is estimated to reduce federal revenues by about $55 billion over the next ten years, thus reducing the amount of the projected non-Social Security, non-Medicare surplus available for debt reduction and other purposes to $212 billion (or $97 billion if the Administration’s proposal for using $115 billion to protect Medicare’s future is accepted.).

Prescription Drug Program. The Congressional Republicans’ prescription drug plan which Rep. Lazio has supported would reduce Federal revenues by an estimated $159 billion over ten years, thus reducing the amount of the projected non-Social Security, non-Medicare surplus available for debt reduction and other purposes to $53 billion (or a negative $62 billion, i.e., an increase rather than a decrease in the national debt of this amount, or a use of the Social Security and/or Medicare surpluses of this amount or some combination of the two, if the Administration’s proposal for using $115 billion to protect Medicare’s future is accepted.).

Other Proposals. Without even adding up all of the other uses of the surplus that Rep. Lazio has endorsed, proposed or voted for, the surplus will be more that “used up” by these three: The so-called New Markets Initiative bill that Rep. Lazio voted for in late July would cost an estimated $16 million over ten years, while the Congressional Republicans’ Health Insurance Access bill would add another $69 billion, and the tax proposals (other than the marriage penalty provisions and the repeal of the estate tax) that were included in his minimum wage increase bill would cost at least $35 billion over the ten year period. Combined, these proposals would require $120 billion over ten years. This is $67 billion more than the $53 billion that was left after accounting for the prescription drug program. (The result is over-promising of $182 more if the Administration’s proposal for using $115 billion to protect Medicare’s future is accepted.).

While some of these provisions may be meritorious, they add up to a more than complete use of a “projected” budget surplus thus jeopardizing the other articulated goals of protecting Social Security and Medicare and reducing the national debt.

* * * * * *

All voters who are concerned with the well-being of retired Americans, should carefully review the proposals that are being put forward during this election season. It is essential that we consider those proposals with an understanding of the true financial situation of the Social Security Trust Fund, an understanding of the fact that resources used to fund private accounts reduce the overall solvency of the Social Security system, and an understanding of the fact that implementing proposals to “use up” the projected non-Social Security, non-Medicare surplus for other purposes (whether they be judged worthy or not worthy on other criteria) makes it impossible to protect Social Security and Medicare, let alone to reduce the national debt.

County-by-County Self-Sufficiency Standards

September 13, 2000. Click on the county or metropolitan area you are interested in to download an Excel file with the estimates of the Self-Sufficiency Standard for 70 specific family types.

Metropolitan Areas
Albany-Schenectady-Troy, NY MSA
Albany County
Montgomery County
Renesselaer County
Schenectady County
Schoharie County 

Binghamton, NY MSA
Broome County
Tioga County

Buffalo-Niagara Falls, NY PMSA
Erie County

Dutchess County, NY PMSA
Dutchess County

Elmira, NY MSA
Chemung County

Glens Falls, NY MSA
Warren County
Washington County

Jamestown, NY MSA
Chautauqua County

Nassau-Suffolk, NY PMSA
Nassau County
Suffolk County

New York, NY PMSA
Bronx County
Kings County
New York County
(Lower Manhatten)
New York County
(Upper Manhatten)
Putnam County
Queens County
Richmond County
Rockland County
Newburg, NY-PA PMSA
Orange County 

Rochester, NY MSA
Genesee County
Livingston County
Monroe County
Ontario County
Orleans County
Wayne County


Syracuse, NY MSA
Cayuga County
Madison County
Onondaga County
Oswego County

Utica-Rome, NY MSA
Herkimer County
Oneida County

Westchester, NY MSA
Westchester County
City of Yonkers



Non-Metropolitan Counties
Allegany County
Cattaraugus County
Chenango County
Clinton County
Columbia County
Cortland County
Delaware County
Essex County
Franklin County
Fulton County
Greene County
Hamilton County
Jefferson County
Lewis County
Otsego County
Schuyler County
Seneca County
St. Lawrence County
Steuben County
Sullivan County
Tompkins County
Ulster County
Wyoming County
Yates County

Testimony before the Rockland County Legislature’s Public Hearing on Proposed Living Wage Law

September 5, 2000. FPI’s Zofia Nowakowski testified:

Good evening.

My name is Zofia Nowakowski and I am a research analyst from the Fiscal Policy Institute. We are a nonpartisan, non-profit organization that undertakes research and education on tax, budget, and economic issues affecting low and middle-income New Yorkers. We have two offices, one in Albany under the direction of our Executive Director Frank Mauro, who was previously secretary of the Ways and Means Committee of the New York State Assembly. Our other office is in New York City, and run by our Chief Economist Dr. James A. Parrott, who was the former chief economist for State Comptroller Carl McCall.

At the Fiscal Policy Institute we regularly conduct analyses of the New York State and New York City economies and how developments in those economies are affecting workers and residents. Last year we published an extensive analysis of the New York State economy entitled The State of Working New York, The Illusion of Prosperity: New York in the New Economy. This report details the character of economic growth and compensation trends for the state as a whole as well its regions over the last decade. For Labor Day of this year we followed up with an update on the major economic trends in New York, on which I will comment here. When discussing the impact of any legislation designed to influence compensation such as the living wage proposal for Rockland County, it is critical to know the context in which it is being proposed. In particular, we must be aware of what the economic and labor market trends are within the region. Trends we can measure include wage and compensation levels, employment indicators, and income statistics.

When we looked at the economy of the state over the most recent full economic cycle, that is, from 1989 to 1999, we found somewhat disturbing labor market trends. First of all, we found that the inflation-adjusted median wage, or the wage of the middle-earning New Yorker in New York State, declined by 4.2% over this period, although nationally, the US economy helped workers increase their wages by 2.4%. We might be surprised to hear this, since the average wage of New Yorkers shot up over the same period by 10.9%. But the reality is that the wage gains indicated by this jump in average wages have been highly concentrated at the top of the earnings scale, and most New Yorkers have not shared in that wage increase.

It is trends in wages for the low wage workers in the state that are most pertinent to this discussion, since it is workers earning near the bottom of the scale that the proposed bill will cover. Wages for the low-wage worker, or the worker earning wages at the 20th percentile, also declined over this period, by 5.4%. This again stands in stark contrast with trends nationwide, where low-wage workers gained 5.6% in their wages. Overall, New York State ranked in the last 4 to 6 states in terms of how wages changed for its middle and low-earning workers across the decade. Among the 10 northern industrial states that are comparable to New York in their economic history and structure, median and low wage changes in our state ranked last or second to last.

We also found that in 1999, the percentage of workers in New York State who are earning poverty-level wages was 25.6%. Therefore, one-quarter of our workers are earning wages that would not bring them out of poverty while working full-time. This is a conservative estimate, since the federal poverty standard does not adjust for regional cost of living differences, which are significantly higher in downstate New York than elsewhere in the country.

Trends in health insurance are no more optimistic. The proportion of uninsured individuals in New York State climbed over the decade, from 15.3% 1989 to 19.7% in 1998. This can be linked to declines in employer-based health insurance in New York State. While 67.1% of New Yorkers were covered by employer-provided insurance in 1989, just 61.7% had coverage from their employer in 1998.

Given these trends, perhaps then we would not be surprised to hear that the middle-earning 4-person family in New York did not see any gains in their income over the decade, even as such families did gain income nationally. The poverty rate is now 16.6%, more than 3 points higher than the nation’s rate. Poverty also grew faster in New York than almost other state since the late 1980s, at 3.3%. These trends rank New York nearly last in the nation and among comparable states. As a result of the earnings boost for a very small group of New Yorkers and losses for the large majority of others, the ratio of income inequality between the top-earning and bottom-earning New Yorkers was 14, the highest in the nation.

Why these negative trends? We can identify some concrete and illustrative changes in the industry and job mix of the state and county over the decade. In our 1998 report, we determined that the 15 industries with the largest employment increases in the 1990s had an average wage of $34,000, $3,000 less than state’s $37,000. Meanwhile, those jobs that were declining, primarily in depository institutions and insurance, manufacturing, and utilities, had an average wage of $57,000, or $20,000 more than the state’s average wage.

Can we be certain that Rockland County is experiencing more of the same trends? Much of this data is not accessible at the county level, but a look at the change in job mix does indicate more of the same. Those two industries that lost the most jobs over the decade in Rockland County, manufacturing and construction, had an annual average wage of $50,000 and $40,000 respectively, significantly higher than the average wage in the county of $35,000. On the other hand, the industries that were responsible for by far the largest share of job growth in the county, services and retail, had average wages lower than the county average.

These trends point to the need for measures that will shore up the quality of compensation for workers in the economy of the new millennium, from smart economic development policies that bring the most “buck” to workers for the subsidy “bang”, to labor market policies that encourage wage and insurance compensation that permit a self-sufficient living standard.

For families to attain self-sufficiency, or the income needed for a family of a given composition in a given location to adequately meet its basic needs without public or private assistance, much still remains to be done even with the passage of the proposed bill. A living wage pegged at $8.25 an hour without health insurance would still place a family of four below the federal poverty level in the year 2000, if the worker was employed for 37.5 hours a week, 52 weeks a year. One week from now, the New York State Self-Sufficiency Standard Steering Committee will release a report that details county-by-county and family-by-family what a basic needs budget would be, and will show that while the $8.25 hourly wage is an important step, it is only the first in a series that would be needed to be made for families to attain self-sufficiency in Rockland County.

We also should remember that the living wage has a successful history in this state. Section 220 and 230 of the New York State Labor Law establish strong prevailing wage and supplemental benefits standards in the construction and building service industries. New York City also has a rich history in this area, beginning with Mayor Robert Wagner’s 1961 legislation, which required contract workers to be compensated at a value equal to city workers. Under this legislation, in 1970, City contract workers were paid a wage of $2.50, which would be equivalent to $11 today, higher than $10.50, the wage level the Rockland County living wage bill targets for 2002. New York City also became one of the pioneers of the recent wave of living wage laws that are being enacted across the country, when its prevailing wage bill was passed in 1996. Recently, other parts of the state, including Tompkins County and Buffalo City have followed by passing their own living wage ordinances. For the reasons identified above, Rockland County has good reason to follow in this tradition today.

Thank you.

State of Working New York 2000: Still Waiting for Prosperity

September 2, 2000. FPI’s Labor Day 2000 report: New York’s working families are still waiting for prosperity. Wage and income gains lag for most New Yorkers.

“While workers in most of the nation are experiencing strong wage and income growth, the situation facing New York’s working men and women is improving at a snail’s pace,” said Frank Mauro, executive director of the Fiscal Policy Institute.  Mauro’s comments were based on the new edition of The State of Working America, advance copies of which are being released today by the Washington-based Economic Policy Institute.

%d bloggers like this: