Wage disparities in the District are at their widest point in 35 years, and the city’s flourishing economy has masked a grim reality for residents who lack a college degree: Many are worse off now than before or during the recession, according a new report from a liberal policy group.
Hourly incomes for low-wage workers have fallen to an average of $12.62 over the past seven years, and in the event that those workers lose their jobs, they are more than twice as likely to spend more than six months looking for replacement work, according to a study by the D.C. Fiscal Policy Institute. At the same time, rental costs have skyrocketed and the hourly incomes of high-wage workers in the city have risen to an average of $45.30.
“What appears to be a strong economic recovery in the District is really just a recovery for a small number of residents,” reads the report, an advance copy of which was obtained by The Washington Post. “Only those residents with the most advanced education are making economic progress.”
The study, which relies on census data, puts numbers to a political debate over haves and have-nots that raged through anecdotes during last year’s mayoral contest. It also raises new questions about whether city policies may be exacerbating inequality amid a crush of development gentrifying large swaths of the nation’s capital.
To help cover a shortfall, new D.C. Mayor Muriel E. Bowser (D) on Tuesday acknowledged that she has frozen $16 million in spending, including additional counseling services for the homeless and a Healthy Tots nutrition program that benefits the working poor. Bowser said her administration has begun crafting a budget plan that may have to include cuts to every department, including job training and other social services. The city is also poised to end long-term welfare payments to more than 6,000 families this year — the very residents the report says have the worst prospects for obtaining employment.
“The study highlights that a lot of the things the mayor discussed last year during the campaign are real problems,” said Michael Czin, her director of communications. He pointed to an early line in Bowser’s inaugural address in which she called Washington “both rich with prosperity and rife with inequality” as evidence that the issues weigh on the mayor.
Czin said Bowser’s first budget, due this spring, will be heavy on funding for affordable housing and improving the effectiveness of job-training programs.
“We’re going to be discussing, in the immediate term, putting together a budget that looks and works to address some of these issues,” he said.
Bowser this month named Jenny Reed, deputy director of the policy institute, as her deputy budget director.
The report also lays bare that it is the city’s minorities, especially African Americans, who continue to struggle disproportionately.
Even as the District’s overall unemployment has fallen to 7.3 percent from a high of 10.4 percent during the height of the recession, unemployment among blacks remains at 16 percent. That’s higher than the 10 percent rate among blacks at the start of the recession.
African Americans in 2013 earned an hourly average of $17.14, just 30 cents more than six years earlier. In the meantime, average hourly wages among Hispanics rose nearly a dollar, to $15. Whites made an average hourly wage of $33, up $3 from 2007.
Disappointingly for advocates who work with truant youths, the report also found little difference in the hourly wages and unemployment rates among those with and without a high school diploma, 18 percent and 19 percent, respectively.
The typical hourly wage for a resident with a high school diploma fell $1.50 during the study period, to about $13, compared with almost $33 on average for those with a college degree.
Ed Lazere, executive director of the D.C. Fiscal Policy Institute, said the report illustrated why D.C. residents who obtain high school equivalency degrees often express frustration that there are few, if any, jobs available to them.
The report comes before the District realizes the effect of a minimum wage hike, to $11.50 an hour, next year. The increase, economists predicted, would put upward pressure on all low-income wages. It also comes as the District has mandated better sick leave for hourly workers and has prohibited employers from asking applicants about criminal records until they make a job offer.
But Lazere put the onus on Bowser and the D.C. Council to take further steps to improve the lives of low-income residents, including raising the minimum wage for tipped workers, now $2.77 before gratuities. The report also called for legislation to expand child-care subsidies, access to food stamps and family leave for workers.
“The D.C. economy is failing to create widespread prosperity and, in fact, is leaving many residents behind,” Lazere said. “D.C. leaders can make a difference by making sure the jobs we have here are good jobs.”