Press of Atlantic City
By: Wallace Mckelvey
December 2, 2013
Volunteers fill bags with canned corn and box stuffing under the florescent lights of a church basement.
The scene is so familiar it has become cliché: a sign of the times and a season of giving.
But these groceries aren't going to stereotypical "needy" families. Most of the recipients of bags assembled at Linwood's Central United Methodist Church are the working poor, a growing segment of the population gainfully employed but feeling the crunch of inflation and slashed wages.
"This holiday, a lot of people are requesting help for the first time," said Andy Cowgill, operations manager for the Eastern Service Workers Association, an all-volunteer organization that provides assistance to low-wage workers. In return for the help, members are asked to chip in 62 cents a month to augment private donations.
One of the people Cowgill has assisted had her wages frozen at $10.50 per hour for the past four years. Then, after 10 years working for the same company, her hours were cut.
"A lot of our members were more stable at one point," Cowgill says. "Now, they're really going day to day."
The increasing demand felt by organizations such as the ESWA is one symptom of a growing income gap locally and nationwide. U.S. Census Bureau data released last month show that middle-class families are being displaced onto either end of the spectrum. More households have joined the ranks of either the wealthy or the working poor.
In Atlantic County, the number of households making between $35,000 and $100,000 fell nearly 11 percent since the last American Community Survey three-year average was released in 2010. Meanwhile, the number earning less than $35,000 and more than $100,000 increased 5.7 and 7 percent, respectively.
That trend repeats across nearly every part of The Press of Atlantic City coverage area, the state and the nation.
Atlantic City bucks the trend: the number of high-income households decreased 23.4 percent, while low- and middle-income households fell 3.4 and 5.3 percent. That exodus of the wealthy could reflect a 6 percent decrease in total households and a nearly 11 percent drop in the city's average household income.
Cape May County, meanwhile, saw decreases in every income category except households earning more than $200,000, with a 37.5 percent increase. Despite the influx of wealthy households, the county has seen a 56 percent rise in unemployment. Per capita income, a reflection of how much the average worker earns, has actually decreased nearly 3 percent -- to $32,727 -- since the first years of the recession.
Ellen Mutari, an economics professor at The Richard Stockton College of New Jersey, said the recession has only accelerated a trend that's been in the works for three decades.
"At the heart of it is the loss of middle-class jobs, particularly stable jobs with good wages and good benefits," she said.
Employers have been slow to hire back employees they laid off during the recession with full-time hours and benefits, Mutari said. So, while overall unemployment may be decreasing, families are still struggling to make ends meet.
Casino dealers, for example, have told Mutari that's it's virtually impossible to find a full-time position. That's a major change from the boom years of the 1970s and '80s.
"People who have longevity in the industry still have good jobs with good wages, but it's becoming harder to secure a middle-class income," she said.
According to the living wage calculator developed by the Massachusetts Institute of Technology, two adults with two children must earn a combined $19.99 per hour -- or $41,574 per year -- in order to support their family in Atlantic County. The median earnings for individual workers in the county is $30,075, according to Census data, and the number of families below poverty level has increased from 9.9 percent to 11.6 percent since the 2010 figures were released.
Mutari said part of the problem is financialization, the phenomena of a larger percentage of corporate profits coming from the "buying and selling of pieces of paper" than from production of goods and services.
"In that financial sector, a lot of income goes toward people who are relatively prosperous," she said.
In essence, she said, it's easier to make money off investments than from wages. And the majority of those who can afford to invest are those who are already wealthy.
A recent study by two professors at the University of California Berkeley found that the top 1 percent accounted for more than 20 percent of the income earned by all Americans in 2012, one of the highest amounts since figures were regularly kept a century ago.
The diminishing middle class could mean a lingering recession, Mutari said, because it's the middle class that has historically accounted for much of consumer demand. Without that demand, she said, there's no incentive for businesses to begin hiring, which in turn feeds back into the disappearing middle class.
"Consumer demand is critical for getting the economy back on its feet and creating jobs," she said. "When income is primarily concentrated in the hands of people who save and invest, I don't believe that's good for the economy."
Locally, Cowgill said, low-wage workers face obstacles from everywhere because their pay has not kept pace with inflation. In addition to providing services such as emergency food assistance, the ESWA also lobbied for causes that affect both the poor and the average citizen, such as preventing utility rate hikes.
The organization has emphasized the need for more community involvement beyond low-wage workers, he said, because today's comfortable middle class could be tomorrow's working poor.
"I think the power really lies in the hands of community members," he said. "Low-income workers and members of the community need to join together to change conditions."