The upcoming Labor Day holiday presents an opportunity to celebrate recent public policy advances that will improve conditions for California’s workers and their families as well as to highlight additional steps that would allow more people to share in our state’s prosperity. Here are five facts that show some of the challenges that California workers continue to face along with some actions policymakers could take to address them.
1. Women face a pay gap in nearly every California county, and women of color are more likely to have low-paying jobs, according to our Women’s Well-Being Index. California’s recently enacted Fair Pay Act should help to reduce the gender wage gap, and the state’s commitment to gradually raise the minimum wage will boost the earnings of the lowest-paid workers, including many workers of color. But there’s more work to do. California could further reduce the wage gap by making clear that prior compensation cannot be used to justify pay disparities, or by going a step further to outright prohibit employers from seeking job applicants’ salary history — a strategy recently adopted in Massachusetts. California also could expand the Fair Pay Act so that it prohibits pay disparities by race or ethnicity for people who perform similar work. In addition, California could help low-paid workers earn more by ensuring that domestic workers and farmworkers have the right to overtime pay and by expanding the state’s new Earned Income Tax Credit — the CalEITC — to more people.
2. Lack of affordable child care presents a significant challenge for parents who want to work. California recently adopted policies to help workers better balance work and family responsibilities, including giving more workers the right to paid sick leave and making paid family leave a more viable option for low-paid workers. But California falls far short of providing enough affordable child care slots for families that need them, and high-quality care is often out of reach even for families with moderate incomes. Our Women’s Well-Being Index shows that the typical single mother would have to spend at least half of her income to afford center-based child care for two children in nearly every county in the state. At a minimum, California could begin to address this problem by committing to a multiyear plan to fully restore the affordable child care slots eliminated by budget cuts beginning in 2007-08. However, “incremental improvements to the current system are insufficient,” as recently noted by the Right Start Commission. Fully addressing families’ need for affordable child care will require a significant and sustained investment in a much bolder approach that aims to provide all families with access to high-quality child care and preschool.
3. A large share of low-income workers’ earnings go to pay the rent, making it hard to save and get ahead. Although the new CalEITC and rising state minimum wage will boost the incomes of California’s lowest-paid workers, many will still likely struggle to make ends meet because of high and rising housing costs in many parts of the state. The majority of California’s low-income households spend at least half of their incomes on rent, and a minimum wage worker needs about three full-time jobs just to afford a two-bedroom apartment. Although California recently took some steps to begin addressing the state’s housing affordability crisis through this year’s budget, the most significant measures have either been postponed or are no longer moving forward. California needs to do much more, and one commonsense place to start is by redirecting state spending on housing assistance to people who struggle the most to keep a roof over their heads. Currently, California spends 45 times as much on a single tax break that primarily benefits homeowners with six-figure incomes as it does on a tax credit for low- to moderate-income renters.
4. Many people want to work, but face barriers that make it hard to find jobs. In recent decades, public investments to help families make ends meet have shifted away from the lowest-income families to working families somewhat higher up the income scale. This shift has contributed to a rise in the share of US children experiencing extreme hardship, living in families with incomes below half the federal poverty line, commonly called “deep poverty.” Although the majority of children in extreme poverty live in working households, the adults in their families often face significant challenges that make it hard to maintain jobs throughout the year, including disabilities, chronic illnesses, and bouts of homelessness. California recently took steps to better support parents working to overcome barriers to work through the state’s welfare-to-work program, CalWORKs, including ending the punitive and counterproductive “family cap” rule and increasing support for families without stable housing. State policymakers could build on these advances by further raising CalWORKs grants, which currently fail to lift children out of deep poverty and don’t even cover low-cost rent, and by eliminating the CalWORKs asset test, which discourages low-income families from saving. In addition, federal policymakers should hold states accountable for connecting parents participating in welfare-to-work programs to good jobs that provide opportunities for advancement.
5. Nearly half of California’s workforce is expected to struggle to make ends meet in retirement. Roughly 47 percent of workers ages 25 to 64 are projected to have inadequate incomes in retirement, and the youngest workers — those ages 25 to 44 — face nearly double the risk of retiring into poverty than workers currently near retirement age. In part, this problem reflects the fact that millions of California workers lack access to job-based retirement plans. A bill approved last week by the Assembly would help more workers prepare for a secure future by establishing a voluntary, portable retirement account for workers without access to workplace savings plans. As a next step, policymakers should do more to help seniors who are currently struggling to get by on inadequate incomes, for example by raising SSI/SSP grants through next year’s budget and reinstating the grants’ annual cost-of-living increase. SSI/SSP grants help over 1 million low-income seniors and people with disabilities pay for critical expenses, such as food, rent, and prescription medicine. State policymakers can also reduce the chances that today’s workers retire into poverty by making sure that people can work, earn, and save more by taking the steps to shore up workers’ earnings mentioned above.
Workers and their families have much to celebrate this Labor Day, thanks to recent decisions made by our state’s leaders. When the new legislative session begins in December, policymakers should continue to build on these advances in order to put economic security within even more people’s reach.
— Alissa Anderson