More than seven years after the recession ended, employers are compelled to reach deeper into the pools of untapped labor, creating more jobs, especially among retailers, restaurants and hotels, and paying higher wages to attract workers and meet new minimum-wage requirements.
Not that long ago, Alex Caicedo was stuck working a series of odd jobs and watching his 1984 Chevy Nova cough its last breaths. He could make $21 an hour at the Johnny Rockets food stand at FedEx Field when the Washington Redskins were playing, but the work was spotty.
Today, Caicedo is an assistant manager at a pizzeria in Gaithersburg, Md., with an annual salary of $40,000 and health benefits. And he is getting ready to move his wife and children out of his mother-in-law’s house and into their own place. Doubling up has been a lifesaver, Caicedo said, “but nobody just wants to move in with their in-laws.”
The Caicedos are among the 3.5 million Americans who were able to raise their chins above the poverty line last year, according to census data released this month.
More than seven years after the recession ended, employers are finally compelled to reach deeper into the pools of untapped labor, creating more jobs, especially among retailers, restaurants and hotels, and paying higher wages to attract workers and meet new minimum-wage requirements.
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“It all came together at the same time,” said Diane Swonk, an independent business economist in Chicago. “Lots of employment and wages gains, particularly in the lowest-paying end of the jobs spectrum, combined with minimum-wage increases that started to hit some very large population areas.”
Poverty declined among every group. But African Americans and Hispanics — who account for more than 45 percent of those below the poverty line of $24,300 for a family of four in most states — experienced the largest improvement.
Government programs — like Social Security, the earned-income tax credit and food stamps — have kept tens of millions from sinking into poverty year after year. But a main driver behind the impressive 1.2 percentage point percent decline in the poverty rate, the largest annual drop since 1999, was that the economy finally hit a tipping point after years of steady, if lukewarm, improvement.
Overall, 2.9 million more jobs were created from 2014 to 2015, helping millions of unemployed people cross over into the ranks of regular wage earners. Many part-time workers increased the number of hours on the job. Wages, adjusted for inflation, climbed.
“Another hidden benefit was lower prices at the pump,” Swonk said. “People who couldn’t afford the commute before could now afford to accept a minimum-wage job.”
There are different roads out of poverty, said Sheldon Danziger, president of the Russell Sage Foundation, a social-science-research institution, but today, one of the most promising is to “go somewhere where they raised the minimum wage.”
About 43 million Americans, more than 14 million of them children, are still officially classified as poor, and countless others up and down the income ladder remain worried about their families’ financial security. But the Census Bureau’s report found that 2015 was the first year since 2008, when the economic downturn began, that the poverty rate fell significantly and incomes for most American households rose.
“If you look under the hood of the census report,” Michael Strain, director of economic policy studies at the conservative research organization American Enterprise Institute, said, “you see more people are working, so fewer people are going to be in poverty.”
The poverty rate fell in 23 states, with Vermont leading the way. The rest stayed flat; none got worse. And other evidence suggests the improvement has continued, if not as strongly, this year.
Caicedo, 32, initially found his job on Craigslist last summer, starting at $12 an hour. Recently, he was promoted to his salaried position and now drives a 2015 Nissan Pathfinder. His wife was able to leave her job at a clothing store and take care of their four children.
Michael Lastoria, who started the chain called &Pizza where Caicedo works, said: “We try to pay as close to a fair or living wage as possible,” roughly $2 an hour above the minimum, with a steady full-time schedule and benefits. “We want people to have careers, not just jobs,” he said.
The availability of full-time jobs at a livable wage may be essential to move out of poverty but is not necessarily enough. Many poor people, saddled with a deficient education, inadequate health care and few marketable skills, find small setbacks can quickly set off a downward spiral.
The lack of resources can prevent them from even getting to the starting gate: no computer to search job sites, no way to soften the bad impression a missing tooth can leave.
Many of those who made it had outsize determination, but also benefited from a government or nonprofit program that provided training, financial counseling, job hunting skills, havens and other services.
Cheyvonné Grayson, 29, grew up in South-Central Los Angeles, where, at 14, he saw a friend gunned down. Since graduating from high school, Grayson has worked mostly as a day laborer.
In 2014, he was paying $300 a month to sleep on someone’s couch and showing up at 6 a.m., morning after morning, at nonunion construction sites in the hopes of getting work.
Often the supervisors and workers spoke only Spanish, and it was hard to understand the orders and measurements. He remembered one foreman looking him up and down, skeptical that he could do the job.
“I had to prove this man wrong,” Grayson said.
At every site, he said he tried to pick up skills, carefully observing other workers, asking questions and later reinforcing the lessons by watching YouTube videos. Even so, the work was inconsistent and paid poorly, he said.
What made the difference, he said, was getting into the carpenters union — a feat he could not have achieved without the help of the Los Angeles Black Worker Center. “That was the door opener,” Grayson said.
He had to borrow a few hundred dollars for fees and tools, but his first apprenticeship as a carpenter started at $16.16 an hour. He quickly moved up to $20.20 an hour and is paid for his further training. He is now hanging doors for new dormitories at the University of Southern California.
For the first time in his life, he opened a bank account.