As inflation bites across the US, low-paid workers feel the squeeze

These are days in America when even dollar store goods cost €1.25.

As inflation in the United States tops seven per cent, a rate not seen in four decades, low-paid workers in Louisiana have begun to feel the squeeze.

At his store in New Orleans, Chris Burton is replenishing stock and points to cocoa butter body moisturiser which he is putting on shelves. He says this is now retailing at $3.75 (€3.30) compared with $2.50 a little while ago. Body wash now costs $5.50 compared to $4.50.

Food prices have increased at a slower rate but are still rising, he suggests.

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Burton works part time by choice – he is also a musician in New Orleans’s jazz club sector – but says some of his colleagues out of necessity are having to take on two or three jobs to make ends meet. He makes most of his money playing music.

Richard Joseph, a stocker at another store, earns about $10 per hour. He says inflation has made life more difficult. His company offers a 15 cent raise every year "but prices are going up on everything in the store".

“There are a lot of items I cannot afford to buy now, because of the inflation. I used to fill up my tank for gas but I can’t do that now and the price of meat is skyrocketing.”

Joseph has a wife and son and is the only person working in the house but he is being offered only 24 hours of work every week. “So really I am not making any money.”

The squeeze on living standards is being felt not only in New Orleans.

Kenya Slaughter works in a shop in the city of Alexandria, about three hours from New Orleans in central Louisiana, and is also concerned about rising prices. She says the price of soft drinks has risen from about $2 to about $2.11. Her colleagues were talking about the price of a laundry basket on sale in their store. She says the cost increased from about $13 to about $20 within a week.

If the government can say $600 is a fair amount and you know you are only making $230 or $300 per week, something is not right. We are not getting a fair amount

Slaughter says it is not just low pay in the retail sector that is causing difficulties, but also the number of hours offered to staff each week, which can fluctuate widely. “Our pay rate does not change but the hours can change at a moment’s notice,” she says.

“You could be relying on particular hours to pay your bills and now all of a sudden you don’t get the hours you were expecting.” She says it is not up to the local manager but rather the corporate management setting out how many hours to offer workers.

Short-term trend

Jobs at present are plentiful in New Orleans. On almost every street in the city there are signs saying: “We are hiring.” Wages are rising in some areas as employers compete for workers.

However, campaigners fear this is a short-term trend. They worry that as soon as the economy, fuelled by pent-up savings and billions of dollars in federal Covid-19 stimulus programmes, begins to turn, pay rates will drop once again. Some say this was what happened following the devastating hurricane Katrina 16 years ago when the boom generated by the massive rescue and rebuilding funding provided to the city eased off.

Louisiana is the second poorest state in America and it has no local minimum wage rate. This means that the minimum payment rate in place is the $7.25 an hour as mandated by the federal government in Washington, although business owners who spoke to The Irish Times said in general the actual payments are higher.

Workers have been campaigning for more, and with some success at least in the public sector.

From last month those employed by the city of New Orleans and its contractors, including road maintenance and waste and rubbish collection, now earn at least $15 per hour. This followed a series of rallies, marches and strikes.

The campaign group Step Up Louisiana, which was at the forefront in pushing for the minimum wage rise in the public sector, is now urging that this be expanded to cover all workers.

It says residents of New Orleans voted to raise the minimum wage by a dollar more than the federal rate as far back as the late 1990s but state law blocked the measure going into effect. Step Up believes current public safety concerns in New Orleans, including car jacking and other crimes, are linked to people not having sufficient money to make ends meet.

Federal financial support

Ironically a catalyst for the growing demands for wage increases may have been the level of income provided to workers under the federal financial support programmes introduced by the government in Washington to help those affected by the pandemic.

Burton says the federal government provided $600 a week under this programme. He says for most musicians this $600 was more than they earned in a week while working. “Most jobs do not pay $600 per week. It was quite something.”

The $600 figure from the government “got people up in arms about this pay business”, he says. “If the government can say $600 is a fair amount and you know you are only making $230 or $300 per week, something is not right. We are not getting a fair amount.”

At the organisation Housing Nola (New Orleans, Louisiana), executive director Andreaneca Morris is working late on a Friday evening and shares king cake – a traditional New Orleans delicacy for Mardi Gras season.

She says Louisiana opted out early from the federal $15-an-hour programme for those whose jobs had been affected by Covid. Business groups had been pushing the State authorities to get people back to work.

She wipes away tears as she tells a story about a court challenge last year brought by three workers, including an emergency department doctor who had experienced long Covid, over the ending of the programme.

There were people who wanted to be part of the jobs market but just could not, she says. However, authorities wanted to turn off the money so as to force what they saw as the “welfare queen to get off her duff and go back to work”.

The term "welfare queen" was popularised by Ronald Reagan in the 1970s and '80s as part of his criticism of some social programmes.

System was broken

Morris says authorities failed to recognise that the system was broken and there was a need to help everyone that could be helped. She says the judge in the case found the plaintiffs had no standing. Although he recognised they had been hurt by the authorities, he could do nothing for them. The doctor in the case died shortly afterwards, she says.

If you are on $7.25 per hour couple or a couple of hundred bucks per week and your average rent is $900, that math does not work at all

The governor of the state subsequently announced that in the future the basic (non-Covid) unemployment payment would be raised from about $210 to $230 per week, she says. “They will be increasing the basic payment down the line in return for hurting people now who immediately needed help.”

New Orleans is a city trying to get back on its feet following the double impact of both Covid and Hurricane Ida last year.

However, while workers and campaigners point to inflationary pressures, they suggest the issue of rent costs is one of the main issues affecting those on low pay.

Burton says that after Hurricane Katrina 16 years ago devastated New Orleans, leaving 80 per cent of it flooded, rent prices soared. “We used to be one of the cheapest rent cities before Katrina hit. But after Katrina, with new development and gentrification, prices skyrocketed for rents.”

Morris estimates that an individual needs to be making about $22 an hour or between $45,000 to $48,000 a year to afford to rent in the city.

Even before the pandemic New Orleans had a serious housing crisis, she says, and about half the people who lived in the city could not really afford to do so. “If you are on $7.25 per hour couple or a couple of hundred bucks per week and your average rent is $900, that math does not work at all.”

Prohibits rent controls

Morris says Louisiana’s constitution prohibits rent controls. Outside of properties that are receiving a form of state rental subsidy, she says there is no regulation of the standard of accommodation provided. Landlords can also charge what they think the market will bear.

About 18,000 people are receiving rental subsidies, she says, and state laws allow property owners to file for the right of return of houses or apartments from tenants if they want them back. Her organisation has seen people evicted in as little as five days.

Morris says there are about 1,050 people homeless in New Orleans – a figure that does not include people without homes who have moved in with parents or friends. Some live in official shelters, in tents or beneath the highways that spread out, effectively raised on concrete stilts, from the city.

On Canal Street, the main thoroughfare in New Orleans, at nighttime people can be seen huddled in doorways or asleep on the pavement.

While wages are growing in the US, the squeeze on the cost of living is not just affecting New Orleans, but the whole country.

The Biden administration blames supply chain problems and profiteering in some sectors. However, it also at the start tried to play down the issue. The federal reserve is expected shortly to move to raise interest rates to try tackle inflation although this poses its own risks to the economy. But without action to deal with prices, Biden and his Democratic Party are likely to face severe pressure in the mid-term elections next November, notwithstanding the soaring economic growth and good employment numbers.