It’s not particularly hard to pinpoint an underlying issue that is an undertow on Memphis’s economy: Too few people aren’t making a living wage.
Just think: the median household income in Memphis is $36,817. That amounts to $17.70 an hour.
The living wage for one parent with one child in Memphis is $18.18, according to the highly respected M.I.T. Living Wage Calculator. The living wage for one adult and two children is $21.89 an hour. For two adults with one child, it is $17.87 and with two children, it’s $19.33.
As the city with a high (if not the highest) percentage of single head of households, it’s the living wage for a household headed by one adult that captures our attention. That’s because here, 47% of children under 18 years of age are living in single-parent households (most of them are headed by women).
But here’s the most disturbing statistic of all. Twenty percent of Memphis households have average incomes that are the equivalent of $6.37 an hour.
Chasing The Wrong Rainbow
In retrospect, the Memphis Jobs Conference of the 1980s – which is lionized as the seminal moment in turning Memphis around at a point when its economy was headed in the wrong direction – didn’t aim high enough when it concentrated on hospitality and distribution.
One of the big ideas was for Memphis to become “America’s Distribution Center,” and in achieving that goal, we have created an economy that pays too many people too little money.
Today, Memphis is overrepresented with freight and distribution jobs when compared to the rest of the U.S. We have four times more of these jobs as are found in a typical metro area, and they pay $12-14 an hour, which leaves an adult with one child significantly short of the living wage of $18.18.
Too Many Jobs Paying Too Little
According to M.I.T., Memphis has a number of professions that fail to reach the living wage for an adult and child:
$16.66 – Community and Social Services
$16.92 – Arts, Design, Entertainment, Sports and Media
$11.08 – Health Care Support
$14.61 – Protective Service
$8.63 – Food Preparation and Serving
$9.61 – Building and Grounds Cleaning and Maintenance
$8.93 – Personal Care and Services
$10.89 – Sales and Related
$13.61 – Office and Administrative Support
$11.92 – Farming, Fishing and Forestry
$15.59 – Construction and Extraction
$17.89 – Installation, Maintenance, and Repair
$13.87 – Production
$12.81 – Transportation and Material Moving
Too Little To Spend
It’s no wonder that the poverty rate in Memphis soared 26% between 2000-2010, and that the poverty rate for the core city is now 36%.
The ramifications of these modest paychecks ripple throughout the Memphis economy. There’s less money for the consumer spending that produces important revenues to pay for vital city services, there’s less money for the kind of enriched opportunities that are keys to children’s social and emotional development, there’s less money for the extras that make life more enjoyable, but most of all, there’s less money to pay for food, child care, medical expenses, housing, and transportation.
The hard realities of the lives of people who don’t earn a living wage are difficult for the rest of us to even imagine.
There’s the constant scuffle to keep life from crashing around you, the constant stress of worrying about what tomorrow will bring, and the constant guilt that you are not doing all that you should for your children’s future. Add to that an economy where many jobs are not connected with public transit in a region with the most economic segregation of any region in the U.S. region, and life is a challenge, day in and day out.
The Myth Of Opportunity
We are told that it’s time for all of us to talk about opportunity more than we talk about inequality, but the idea of equal opportunity is about as real as the tooth fairy. Research after research shows that people born into the bottom quintile of income rarely make it to the upper quintile, and that 70% remain below the middle, and if we are waiting for the private sector to solve this problem, we are merely delusional.
It would make sense if city government would pass a minimum wage like many other cities have done instead of waiting for the federal government to act, but then, there’s the reality of our anti-urban, anti-worker philosophy of our Tea Party Legislature. Instead of helping Memphis push a huge boulder up a hill, there are state legislators like Sen. Brian Kelsey and Rep. Glen Casada pouring oil on the slopes. Not only have they sponsored laws to prohibit living wage laws in Tennessee, but they even go so far as to sponsor laws to protect the “wage theft” industry.
Here’s the thing: We have done things to be more competitive, but they tend to be more about tweaking existing programs or creating new programs that by and large continue to do what we have been doing rather than about creating better systems that identify structural weaknesses, adopt new approaches, and set out on a different path to the future.
The global economy has turned many products into cheap commodities, and our tendency to try to compete with third world nations on the basis of cheapness is a race to the bottom. For too long, our economic development strategies have been caught in the commodity trap, stemming from our background as an agricultural center and continuing with our emphasis low-wage, low-skill jobs.
Adding Value
Commodity economic development is premised on appealing to companies which make their decisions based on the lowest prices. Because our commodities tradition is in businesses with thin profit margins, our economic development culture is one with an aversion to risk-taking, which in turn undercuts innovation and entrepreneurship.
The commodity mentality thinks they can grow their economies with low wages, low land costs, low utility costs, and low taxes. In a commodities world, these are seen as the factors that must be controlled to keep prices down.
The problem is that this approach has human consequences, and we see it every day in the large percentage of Memphians struggling with their lives. It’s why it’s past time for all of our economic development strategies, programs, and plans to having increased per capita income and more Memphians being paid living wages as our leading indicator of success.
The Shift From Shipping To Innovating
In a post here September 25, 2013, John Lawrence of EDGE wrote: “We should shift our focus from being the middleman, shipping other people’s things to innovation of high-value goods or production of time-to-market-critical goods that benefit from the shipping expertise we have built. We should shift from describing air, water and rail in isolation to promoting the overall capacity of the world’s most diverse logistics infrastructure.
“We should understand changing global needs and define the future of logistics in emerging industries like personalized medicine and diagnostic laboratories. Logistics does not have to mean low-skill, low-wage labor. Specific initiatives in Biologists, Export Planning and Ag-Biosciences could position the region to both grow and use our logistics infrastructure more purposefully.
“This could then lead to much greater and beneficial expansion of our economy.”
That sounds like a damn good start.
