Low-Pay Angelenos Struggle as Jobs and Workweeks Get Cut
L.A.’s Working Poor Surviving the Recession
Profile inside: Maria Emma Baeza and her two children see their near-poverty existence getting tougher.
By HOWARD FINE
Staff Reporter
After several years of gradually rising wages and opportunities, many of L.A. County’s 1 million-plus working poor have been hit hard by the recession and the fallout from the Sept. 11 terrorist attacks.
A combination of layoffs and cutbacks in hours has swelled the ranks of low-wage earners eligible for some form of public assistance and put many Angelenos who had been part of the working poor out of work.
Two years ago, the Business Journal published a series on poverty in Los Angeles that portrayed a huge underclass of working people barely able to make ends meet and a social service sector struggling to help, despite a thriving economy at the time.
Today, in the midst of a recession, job cuts have been especially felt in the low-wage service sector. Any gains workers made during the expansion have vanished, at least for the time being.
“These are the people who were the closest to the edge to begin with, so they have been and are likely to continue bearing the brunt of the pain of this recession,” said Alec Levenson, research scientist at the USC Marshall School of Business who tracks income levels and poverty in Los Angeles.
This deterioration has larger implications for all Angelenos, putting additional strain on local governments and non-profit social service providers. What’s more, it comes just as California and the nation are in the midst of an unprecedented experiment: phasing out welfare payments and forcing welfare recipients to find jobs.
To be sure, not everyone has been touched by the effects of the recession or the terrorist attacks. Most people are still working; the region’s unemployment rate is hovering at 6 percent, historically low for L.A. over the last decade. And some industries, like home or road construction, are still going strong, hiring workers.
(A significant jump in the unemployment rate is expected for the month of January, though, as tens of thousands of jobless Californians waited to file for unemployment benefits until after a 30 percent hike in those benefits kicked in last week.)
Nevertheless, as the recession has taken hold, it’s become harder for the ranks of the working poor to eke out a living. As the hours they work get cut back or disappear altogether, they face ever-increasing rents and utility bills.
Sudden job losses
“It is not pervasive yet through every industry, but we’re seeing many people losing jobs or hours without any notice,” said Madeline Janis-Aparicio, executive director of the Living Wage Coalition, an advocacy group for the working poor. “People who for years were making just enough to get by are now faced with choices like moving three families into one-bedroom apartments or going on food stamps or to soup kitchens.”
Consider the case of Maria Camarena, a 34-year-old mother of five who showed up last week at a local relief center to pick up food.
Last October, she was laid off from her $8.75 an hour job at a kitchen near Los Angeles International Airport that prepared airline meals. Her husband still works as a busboy at an airport-area restaurant, earning the minimum wage of $6.75 an hour for an average 35 hours a week. His $12,000 annual pre-tax salary is well under the poverty threshold for a family of four, let alone a family of seven. It’s hardly enough to support their five teenage children, pay the mortgage on the house they bought two years ago, and put food on the table.
“It’s really, really difficult for us,” Camarena said through a translator. “That’s why I come here to pick up food whenever they call and say there is some available.”
Camarena said she’s been looking for another job ever since she was laid off. “I’ve tried hard, but there’s no jobs now,” she said.
At this stage, there’s no telling just how many L.A.-area families like the Camarenas have recently slipped into poverty. The most recent income and poverty data available only goes through 1999 or 2000, the peak of the last business cycle. They show that the percentage of Angelenos with incomes under the federal poverty level ($17,400 for a family of four) fell to 17.4 percent in 2000 from 24 percent in 1995. The time lag for data of up to two years means that income figures from post-Sept. 11 won’t be available until next year at the earliest.
Poverty increase expected
But those who track such data say they are bracing for an increase in the poverty figures.
“Poverty levels tend to rise steeply during a recession,” said Deborah Reed, an economist at the Public Policy Institute of California in San Francisco. “So we can expect to see the poverty rate go up in the next year or two; the only question is how much. And that will largely depend on how long and how severe this recession is.”
That same recession has already reduced revenues to state and local governments that traditionally have had the role of providing for the poor. The state, faced with a budget deficit of $12 billion to $14 billion, is hardly in a financial condition to fill the hole left by the steep reduction of federal welfare benefits. And county government, traditionally the provider of last resort, faces a crisis of its own as it must cut $900 million from its health care budget in the next four years, just as demand for public health services is skyrocketing.
The picture is similar in the private non-profit sector, according to a recent statewide survey conducted by the California Endowment, the United Way of Los Angeles and numerous other non-profit coalitions. The November survey found that 62 percent of non-profit organizations serving the poor had seen an increase in demand in the last few months; those same organizations reported drops of 30 percent to 40 percent in funding since Sept. 11.
“Since last April or so when the dot-com bubble burst, we’ve been seeing more and more people coming through our doors,” said Barbara Morck, project director at the Ocean Park Community Center in Santa Monica, which serves the homeless. “But now, it’s getting much more serious. People’s savings are running out and their safety nets are disappearing, so they’re coming to us.”
Welfare reductions
Of great concern is welfare reform and the pending reduction in welfare payments as time limits expire. Tens of thousands of Angelenos have come off the welfare rolls and entered the workforce during the recent boom, yet some 600,000 still receive benefits. Many of those people work and supplement their income with welfare checks; others face mental health or substance abuse problems that make it much more difficult to find jobs.
Starting next Jan. 1, thousands of Angelenos will see their welfare checks sharply reduced as they begin hitting the five-year cumulative time limits under the federal welfare reform law enacted under the Clinton administration.
The impact of these time limits on the working poor is hard to gauge and considered by many economists to be a wild card that could make this recession different from previous ones.
“History is no guide here, so no one can really say what will happen when these time limits come up,” Reed said.
California was the last major state to implement the program and thus the five-year time limit for ending welfare payments comes later here than elsewhere. It’s conceivable that by next Jan. 1, California could be coming out of recession and jobs might be easier to find.
What’s more, unlike other states that have implemented a complete cutoff in welfare payments, California will continue making payments to children of families that had been eligible for welfare. Thus a single mother with two children who had been receiving $650 a month will still receive $525 a month a reduction to be sure, but hardly a catastrophic cutoff.
However, state-funded programs to help train welfare recipients for jobs are at risk. That’s because Congress this summer must reauthorize the $3.7 billion in block grants that the state receives for welfare programs. If Congress reduces the authorization, some of those programs likely will be scaled back or eliminated, according to Bruce Wagstaff, deputy director for the welfare-to-work division of the California Department of Social Services.
In the meantime, many of those working poor who lost their jobs or saw their hours get cut back are hoping the economy stabilizes so that they can find more work and stop their slide down the economic ladder.
“I’m afraid if I don’t get another job in the next two or three months, I won’t have any place to live,” said Chawee Sukajatanee, a 55-year-old Thai immigrant who lost one of her two low-wage jobs last fall and had her hours cut back at the other. She’s now taking home about $17,000 a year, barely half of her pre-Sept. 11 income.
So what can be done help low-wage earners ride out the recession?
In the short run, some steps already have been taken. The Los Angeles City Council has allowed workers laid off as a result of Sept. 11 to postpone utility payments. The Los Angeles Alliance for a New Economy, the umbrella group for the Living Wage Coalition, has set up a relief center that opens once a week in different parts of the county so that hard-pressed or laid-off workers can pick up free food and other supplies. The alliance also got Kaiser Permanente to agree to contribute $1 million to extend Cobra health benefits.
In Sacramento, Gov. Gray Davis lent his support to making the 30 percent hike in unemployment benefits retroactive to Sept. 11. Such a move would put $100 more a month in the pockets of those laid off in the wake of the terrorist attacks.
Also at the state level, welfare-to-work administrators are working with county officials to steer job-training programs toward industries that have not been as impacted by the downturn.
“We want to be sure we’re not training people for hotel or airline work that’s not there, but rather for things like public safety, teaching and health care, where we know there is intense demand,” said Wagstaff.
But advocates for the working poor say more needs to be done.
“Tops on the list is building more affordable housing,” said the Living Wage Coalition’s Janis-Aparicio. “Rents are already out of reach for so many of the working poor and they keep going up. We’ve heard so many reports in the last couple of months of families having to move out of their own apartments and into already overcrowded apartments. Others have no other places to go and are ending up on the street.”
Ultimately, Janis-Aparicio said, wages have to rise significantly for the working poor, so they can lift themselves out of poverty.
