Challenge

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Decent Work and Economic Growth in the US

In order to reach SDG 8, Decent Work and Economic Growth in the US, we must sustain inclusive and sustainable economic growth, full and productive employment, and decent work for all.
205M
People Impacted
$ 442B
Potential Funding
I have this challenge
the problem
Nature and Context

As of January 2021, there are over 205 million people of working age (ages Aged 15-64) in the US (Federal Reserve Economic Data).

By 2030, every Baby Boomer will be age 65 or older, which means that 1 out of every 5 U.S. citizens will be of retirement age ( US Business Insider).

Roughly 10.5% of the US population (34 million people) lives below the poverty line.

In 2020 the Coronavirus pandemic compounded existing challenges people living in poverty face and threatened to push many more below the national poverty line.

  • Between February 2020 and May 2020, an estimated 14% of working Americans lost their jobs because of the economic fallout from the COVID-19 pandemic (Urban Insititute)

  • The unemployment rate jumped from 3.5% in February to over 19% in April (Urban Insititute)

Symptoms and Causes

Minimum Wage

The Fair Labor Standards Act (FLSA), enacted in 1938, is the federal legislation that establishes the general minimum wage that must be paid to all covered workers (Congressional Research Service).

As of April 2021, the federal minimum wage is $7.25, which was last increased in 2009 (National Conference of State Legislatures).

The Brookings Institution found that in 2019, approximately 53 million workers between 18 and 64 (44% of all workers), were in low-wage jobs. Their median hourly wage was $10.22, and median annual earnings were about $18,000, which would put a family of three below the federal poverty line of $21,960 (Human Rights Watch).

  • 5 states do not have minimum wage laws

  • 29 states and the District of Columbia have minimum wage laws above

  • 16 states have minimum wage laws above the federal wage.

You can see more details about each state using this Decent Work and Economic Growth Interactive tool.

Workplace Safety and Workers' Rights

The International Labor Organization (ILO) identifies what it calls 'fundamental principles and rights at work' (US Department of Labor), which are:

  • freedom of association and the effective recognition of the right to collective bargaining;

  • elimination of all forms of forced or compulsory labor;

  • effective abolition of child labor; and

  • elimination of discrimination in respect of employment and occupation.

Retirement

In the US, Social Security provides a foundation to plan for retirement as well as social protection for workers who become disabled, or for their families if they die (Center on Budget and Policy Priorities).

Many employers have shifted from offering traditional defined-benefit pension plans, which guarantee a certain benefit level upon retirement, toward defined-contribution plans (such as 401(k)s). Social Security, therefore, will be most workers’ only source of guaranteed retirement income that is not subject to investment risk or financial market fluctuations.

  • Over 64 million people collected Social Security benefits in June 2020.

  • 97% of the elderly (aged 60 to 89) either receive Social Security or will receive it.

  • For 50% of people 65+, Social Security provides at least 50 percent of their income, and for about 1 in 4 seniors, it provides at least 90 percent of income.

  • Without Social Security benefits, about 4 in 10 Americans aged 65 and older would have incomes below the poverty line.

  • Nearly 6 million children under age 18 lived in families that received income from Social Security in 2019. That number included nearly 2.8 million children who received their own benefits as dependents of retired, disabled, or deceased workers.

The average Social Security retirement benefit in June 2020 was about $1,514 a month, or about $18,170 a year.

While women make up half of Social Security beneficiaries in their 60s, 70% of beneficiaries in their 90s, and 96% of survivor beneficiaries, they tend to receive lower benefits than men, as a result of occupation(s), amount of time working, and the gender pay gap.

There is also a significant racial retirement wealth gap, leading seniors of color to face more retirement insecurity than white seniors.

As of 2020, Social Security began paying out more than it takes in and will have insufficient funds to pay out promised benefits and expenditures by the mid-to-late 2030s. This is the result of:

  • The average life expectancy: was slightly less than 70 years old in 1968, but has been steadily rising to reach almost 79 years old in 2016.

  • The population in 1968 was slightly more than 200 million but reached 323 million by 2016.

  • By 2030 1 in 5 U.S. citizens will be of retirement age, with the younger generations not growing at the same rate.

Therefore, more people will be reaching retirement age and living longer on average, using social security benefits more than they contribute to them and for a longer period of time, while fewer people remain in the workforce to contribute to social security.

COVID-19

The COVID-19 pandemic resulted in the number of unemployed Americans increasing by more than 14 million, from 6.2 million in February to 20.5 million in May 2020 (AI for Good).

Since the start of the pandemic, 74.7 million people have lost work, with the majority of jobs lost in industries that pay below-average wages (Human Rights Watch).

Among households making less than $35,000 a year, over 57% experienced income or employment loss during the pandemic, compared with 34.6 percent of those making more than $150,000 a year (Human Rights Watch). Among the same households, 25% of adults (11 million people) were also facing challenges with food insecurity.

the impact
Negative Effects

Due to the close relationship of income and many other factors of life, tens of millions of households face multiple stress factors simultaneously, including

  • no work in the previous week

  • income loss,

  • food insecurity

  • housing insecurity, or

  • symptoms of depression.

According to Human Rights Watch, in households with an annual income below $35,000:

  • 1/9 adults living experienced at least 1 of these stress factors

  • 60% experienced at least two, and

  • 30% struggled to manage three at the same time.

Economic Impact

The current federal minimum wage of $7.25/hour has not been raised in over 10 years. After adjusting for inflation, in 1968 a minimum wage worker earned $10.59/hour, and the minimum wage today would be over $22 per hour had it tracked productivity increases over the last five decades (Economic Policy Institute).

According to the Economic Policy Institute, raising the federal minimum wage to $15 by 2025 would:

  • lift the pay of 32 million workers or 21% of the US workforce

  • provide over $108 billion in additional wages, roughly $3,300 per person annually

  • Raise earnings for 31% of Black workers and 26% Hispanic workers, and 59% of women

  • lift up to 3.7 million—including 1.3 million children—out of poverty

  •  and reduce government expenditures on public assistance programs between $13.4 and $31 billion.

Success Metrics

Potential measures of success outlined by the UN (SDG Tracker) include:

  • Ensuring the hourly earnings are equal for equal work, regardless of occupation, age, sex, race/ethnicity, or disability.

  • Reducing the unemployment rate, by sex, age, and persons with disabilities.

  • Reducing the number of youth (aged 15–24 years) not in education, employment, or training.

  • Lowering the frequency rates of fatal and non-fatal occupational injuries, by sex and migrant status

  • Increasing the proportion of jobs in sustainable tourism industries out of total tourism jobs

  • Access to financial services, banks, ATMs, etc.

who benefits from solving this problem
Organization Types
  • Government agencies running public assistance programs

  • Poverty, homelessness, food security, and employment-related organizations

  • Local, state, and federal governments

Stakeholders
  • Federal, state, and local government agencies and policy makers

  • Employers / HR Departments

  • Nonprofits focusing on hunger, poverty, homelessness, and employment

financial insights
Potential Solution Funding

Based on data from over 600,000 tax returns filed by nonprofits in the US (data via X4Impact), on an average year, over 34,000 nonprofit organizations deploy $200B in the US to address work and economic-related issues.

There is also over $370M in government and private grants.,

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