On this Bring It In podcast episode, 1Huddle’s CEO and Founder Sam Caucci sat down with Luke Shaefer, author of $2.00 a Day: Living on Almost Nothing in America, which was named one of the 100 Notable Books of 2015 by the New York Times Book Review and won the Hillman Prize for Book Journalism. Shaefer is also the Professor of Social Work and director of Poverty Solutions at the University of Michigan. His research on poverty and social welfare policy in the United States has been published in top peer-reviewed academic journals.
On this episode of Bring It In season two, Luke sat down with Sam and discussed discrimination in the labor market, providing working families with stability, and how companies can provide support to their employees in case of a crisis.
Audio available on Apple Podcasts, Spotify, and Google Podcasts.
Below are some of the insights Shaefer shared during our chat, edited for length and clarity. You can find more Bring It In podcast episodes here.
Sam: What kind of got you into this line of work?
Luke: So I’m a professor of public policy as we’ve talked about, and I have always been interested in poverty in the United States and what we can do to address it. Growing up, I grew up in a sort of a lower middle-class family, my dad went through a career crisis when I was in about seventh grade and we had a period where we had really not a lot of money at all.
And I lived in a town that was mostly upper-middle-class, so I could really feel the differences, but I also had a sense that we had an extended family to fall back on and that we didn’t have to go to the welfare office. We called grandma and grandpa instead. And so I remember at the time, just sort of thinking, I wasn’t really poor, but I also wasn’t really middle-class and maybe I could be a part of helping different parts of our society understand each other a little bit better.
So from there, I decided to do casework. I wanted to work in nonprofit organizations, social work, and early on I came to the conclusion that for everyone that I was helping him was coming into my office, it was facing eviction or seeing their utility shut off, I just sort of thought maybe there were bigger structural issues at play. And so since then, I’ve really tried to have my work-life be about trying to dismantle what I like to call structural cycles of poverty. Often we talk about cycles of poverty. And I think the image that generally generates is somebody who doesn’t have the skills to be successful and needs to be sort of given those skills or society needs to help their child get those skills.
And I tend to think that that’s really not a great model, at least for understanding the families who I’ve come into contact with, but rather more often not to say that people don’t make mistakes, but more often it’s the bigger structures are embedded in that sometimes sort of lead them to make decisions or just don’t leave them with enough.
And so that has propelled me through my work, trying to think about how we make public programs work better, but also all the things that impact families who don’t have a lot of money that you might never sort of think of, like the cost of auto insurance. In the city of Detroit, that’s a huge barrier to economic mobility and finding and keeping a job as if they have the very highest auto insurance rates in the country, or housing, or public transportation.
The last thing I’ll just say in this perhaps too long introduction is I have taken the approach of trying to both do quantitative research in my career looking at large-scale data to see how programs are working and see these sort of large-scale phenomena. I’m also always trying to have qualitative work where I’m actually spending time getting to know families who are experiencing the very things I’m trying to study because I’ve often found that from my vantage point and my office and Ann Arbor sometimes I don’t even know the right questions to ask, and it’s only through getting to know folks and really trying to listen that I’ve been able to identify some of the issues that I think are most important for getting a handle on the challenges that we face.
Sam: Your book $2.00 A Day was written in 2015, 2016. The world has changed a lot since then, but I’d be interested to hear what’s changed. Are we doing better? Are we doing worse? What has changed since the original publication?
Luke: I’m going to sort of talk about two things in there. The first is that book was really about following families who were not just poor, but really, really, really poor. And in the United States, families often have access to food assistance. Many low-wage workers combine work with food assistance, their wages don’t make enough to keep food on the table so they’re forced to combine those things. And we have programs for people who are earning low wage workers through the tax code, but really in 1996, we went on a path that has eviscerated the cash safety net, a modest amount of money that families can fall back on to pay the rent, buy toilet paper, buy school supplies. A program is a tiny fraction of what it was. We go so far in the book to say it’s dead because many families don’t even know to look for it. And so they’re stuck trying to figure out, when I go through these spells of unemployment and between jobs, and I’ll come back to the jobs in a minute, how do I pay the rent? How do I pay the utility bills? All these things that food assistance won’t get me. And so the book really follows families and looks at the larger scale data of this phenomenon.
We’ve had a pretty amazing breakthrough in the American Rescue Plan. So since the book was published, Kathy and I (my coauthor Kathy Edin) and many other scholars have been vocal proponents for something that most other Western countries do, called a child allowance. So that’s a program that says simply, Hey, raising kids is expensive and society has a reason to support parents in that work. And one way they can support them is through a small amount of money that could be used to pay the utility bill or pay the rent, but that also be used to save for college or pay for childcare can be incredibly expensive. The United Kingdom implemented one of these and saw child poverty fall by 50%. Canada implemented one of these. They increased it in recent years and it’s a huge poverty reduction.
So a lot of momentum has been gained to do this, and the cool thing about this program is rather than doing something just for poor families, which is what we typically do in the United States, it says, you know, we’re going to provide the exact same benefit to poor and middle-income families because they’re struggling too.
And when we started talking about it, I remember quite clearly, some of my colleagues said, oh, this is a pipe dream. It’s never going to happen in the United States. We’re talking about a $250 monthly stipend, basically, per kid that just helps your children as much as and in the best way you can. And everybody thought it was crazy, but it has attracted a lot of tension, and the one year of funding for this provision was actually included in the American Rescue Plan that passed a few months ago. So as your listeners may know that starting July 15th, all low and middle-income families are going to start to receive this $250 stipend per child, $300 for young children for the rest of the year.
And that provision holds the promise to completely eliminate the kind of poverty that motivated our book. Families surviving on no money. It’s not like they’re going to be living large, but providing that sort of stable source of cash that families can use to the betterment of their children is something that will be in place starting in July and goes through the rest of the year. And then Congress has a big decision to make about whether or not they’re going to make that permanent or not.
So that’s a huge change. It’s an incredibly important moment in American history. I’m incredibly grateful that Congress and President Biden put this provision in and we’re going to see if it was just an anomaly, a blip, and to go back to doing things the way we used to do it, or if we’re really charting towards a very different kind of future in the fight against child poverty.
So folks aren’t aware of it. I really suggest that they get some information and learn a bit more about it, because whether or not people think it’s a good idea or not, it’s a big idea. It’s a transformative idea. But we don’t know if it’s going to be something that sticks around over the long term or not.
The second thing I just mentioned, Sam, is the question about low-wage jobs. And I do think that a lot of companies have really started to rethink some of the ways they go about staffing low-earning jobs, frontline jobs, entry-level jobs. It was, from the outside, it really looked like a lot of the big box stores, thinking of fast food, it really looked like their business models would often depend on quite a bit of turnover and that the companies, you know, many of which are in pretty thin profit margins, they knew that the only thing that they could control was their labor costs.
So we would see a lot of our workers who would have schedules that would really change from week to week. The number of hours that you would get might really change, you might be getting 30 hours. A lot of people are stuck at 30 hours because 31 hours might trigger health insurance benefits within the company. And the next week they go down to 10 hours. That’s really hard to manage for families. Or shifts that change from during the day to the night, and that’s really hard, especially for families with kids to be always changing. And there’s been some policy changes on that, but more broadly, I think companies are really starting to rethink that. Companies and a lot of places are putting in two-week scheduling buffers, that help families have a bit more stability.
And then I think in the last couple of years, I think some of it was driven by the heat of the economy. When we wrote our book, we were still in a really bad economy and the last couple of years have been a lot better, and it’s shifted towards employers needing to do things, to make jobs more attractive. I’m really interested to see some traces around qualifications and what type of job candidates are employers willing to take a chance on? So I’m hopeful that in general, a lot of companies are thinking more towards investing in workers than over the long term, trying to maintain their contract over the long term. And you know, I hope we continue to go in that direction.
Sam: Yeah. One of the best, one of my top highlights in the book that just jumped off the page for me, says about one in four jobs pay too little to lift a family of four out of poverty. Low-wage workers are concentrated in the service sector, which, of course, the typical American experience is a direct benefit from their labor. And the thing I’ve struggled with, and I don’t know how you feel, is over the last few weeks, especially this sort of movement away from frontline workers being looked at as heroes to now being cast as lazy or not willing to work hard enough, especially given the moment with unemployment benefits and yet I’ve even seen in certain states, which is just absolutely shocking to me, this push for the department of labor within a state to even post a job port or a portal for employers and employees to report workers who they feel are not willing to come to work.
Now, of course, bad actors aside, this concept of criminalizing not showing up to work is really scary to me at a time when you hear about companies, again, equally hopeful companies are trying to do the right thing when it comes to engaging workers, but pre pandemic workforce engagement was a challenge, and I just don’t know what that’s doing at the tail end of a really tough year from the pandemic and on top of all of the existing challenges that you write about.
Luke: Yeah. Yeah. I’ve really been disappointed in the turn in the conversation in recent weeks. It just doesn’t seem to reflect any deep thinking whatsoever in my view to sort of take the position that at this moment in time, after a pandemic that killed half a million Americans, way more than previous wars, where all of social life has been thrown in flux that the only possible reason why it might be taking a little bit of time to sort of make this labor mark transition back to a full economy would be that people are lazy.
Now there’s a lot we can talk about the evidence on unemployment insurance benefits and what that does to the typical unemployment spell, but it just seems like you can think of many reasons in the current circumstances why this might be taking a little bit of time. And then the other piece that has really bothered me is his not acknowledging that it is the precise spending on unemployment insurance benefits, as well as the economic stimulus payments that have completely propped up the economy in the first place so that we wouldn’t even be in this place where we were looking to hire, we were going off an economic cliff, and I can tell you at the beginning I was, I underestimated the severity of the public health crisis and I overestimated the toll of the economic crisis, and in part that’s because the federal government actually acted in a pretty effective way last March/April, last December, and then an ARPA in a way that really protected the economy and protected families from going off the cliff.
So it turns out the industries that weren’t directly affected by COVID are not having the same problems of labor market attachment. And so to not basically blame this all on a set of policies that I think basically saved us during this time really seems to me to be short-sighted and not very thoughtful at all. I think we can talk about what we want to do going forward, but what happened to sort of being together as a nation and being in each other’s corners? I guess we would be done with that if we can’t find workers immediately.
So as you say, the issues are sort of deep and complicated. One is the low wages. Lay wages are extremely low in a lot of industries and they’re increasing because they have to, but that’s really lagged behind our productivity and overall gains in the economy for a very long time. And it turns out, going to work is really expensive.
There are transportation costs, there are lots of work-related costs, there are childcare costs. And then, we have sort of set up our public benefits often in ways that mean as you go to work, you lose some of those benefits. And that’s part of what I like about this new child tax credit. I think it’s pro work because you keep the same benefits as your earnings grow up until the very top.
But there are lots of other structural challenges. So we’ve done some work in the city of Detroit, and you can see that there’s what we call the human capital channel challenges, a lot of the folks who are not in the labor market, the ones who are wandering about. They have low levels of education and they often have a reported disability of some kind. Many of them have a criminal record because we’ve incarcerated more people than anywhere in the entire world, ever, in history. And many people come out with a criminal record. Many employers won’t look at people if they have a criminal record. So they basically cut out millions of people from the job market right then and there.
So there are some things that we can do to really support the human capital. We can do education, we can do training. Well, there’s some stuff on the employer side too. So I mentioned auto-insurance in the city of Detroit, the same policy that costs $1,300 nationally is costing $5,400 in the city of Detroit. That’s about 20% of the median income for a Detroit household. Now, what does that have to do with the labor market?
Well, it turns out we scraped all the job postings we could find, tens of thousands of job postings in the city, and turned out close to, I think, 24% of them required you to have auto insurance. These are the low-wage jobs. So you’re required to have auto insurance or a driver’s license, and it also turns out we’ve suspended the driver’s licenses of hundreds of thousands of Michiganders in recent years. So I think there are things that we can do where we can make the jobs more stable. We can do training, and I think the employers also have to look and say, what do I need to require? Do people really need to have auto insurance in order to come work for me? And they have to say, I’m willing to have a smaller pool if I’m going to continue to make these requirements.
And then Sam, I also want to recognize that I think some of the challenges on this are in the social environment of workers. And when people are living on the edge and they’re not making enough, their benefits are going down, sometimes they’re embedded in sort of social networks that are not just not supportive, but can be part of the problem in terms of, I share a car with Uncle George, I’m thinking of the Walmart story with Ray McCormick and our book, and he’s supposed to leave gas in the car so I can get to Walmart, but he drove doing his own things cause he had his own stuff going on, and then when I got in it to go to work, my gas light was on. And I can’t blame that, that’s not a problem with Walmart. I would like Walmart in that story to be more supportive and figure out ways to help workers sort of work through those types of crises, and I actually think they have moved in that direction. There’s a lot of really interesting things going on at Walmart, but we have to figure out ways to do policies that can really help people stay attached to jobs when some sort of crisis happens in their lives.
So we’ve gotten really interested in success coaches and emergency cash grants and that sort of stuff, not just to help find the attachment to the job in the first place, but to keep someone in there that job, when they might otherwise sort of have a crisis that leads them to lose the work.
Sam: One of the points in the book that a few people that I’ve shared it with, I always love to ask what, what’s the one thing you remember, the one takeaway, and it was multiple times I had people make a comment about the fact that an average black applicant had to apply for, I think it was seven jobs to get a call back verse three for white applicant. And then the disparity even further, if you were black job seeker with a criminal record, it took 20 applications and that barrier to entry, you know, I think, is tough to wrap your head around.
I wonder, so many, even for me, as I’ve over the years thought about job training as being a solution to so many challenges, I just couldn’t help, but walk away from your book and it has since brought me down a path of discovering more when it comes to poverty and the impact on workers, but it’s almost changed my perspective on how much job training can really make an impact. There is an impact, but there’s so many other issues that as an employer, I have to be concerned about if I really care about my workforce and I want to lift up every worker and put my business in a position, I have to be concerned with what happens beyond clock in, clock out. And I want to know if there’s any other points or things you’ve seen that have been success stories for CEOs or HR leaders to takeaway to employees. Are there any tactics or resources or things you’re saying that are working?
Luke: Yeah. I just wanted to track back quickly on the question about racial discrimination in the labor market and discrimination against the folks with a criminal record. There’s this interesting study about the Ban The Box Initiatives, and this was an interesting one where there’s been a lot of effort to ban employers from asking about a criminal record at the start of an application, thinking that it immediately led people to sort of be taken out of the running. And there’s a couple of studies that interestingly find in places where the box has been banned, the racial discrimination in hiring actually increased. And the theory is that if there isn’t a box, because of our association’s prejudice stereotypes we have in our head, the typical employer presumes that a black applicant has a criminal record. That’s like the default in a lot of people’s minds. And that’s not to say it’s a default in everybody’s mind, it’s not to say that it’s something that they would expressly say, but it seems to be how it’s working out.
And so it sort of speaks to some of the complexity in dealing with racism, stereotypes, prejudice in the labor market. And that type of study has been replicated in many different ways. We have studies that they use comparable resumes that have different names. The one you referenced is a Devah Pager study that uses actual applicants. And then there’s recently been some studies around efforts around crowdfunding and we do find when the race of the applicant, like if pictures of her are cut off, you can’t tell the race of the business proposal, that black applicants do a lot better. So it’s like one of those key pieces and all this, and then you have these issues of compounding disadvantage between race and then criminal record, and those two things are interlinked too. So lots to sort out.
So let me get to the second part of your question. And I really I’m very interested in a couple of different models. There is a success coach model where, in fact, a couple of employers might band together to pay for a success coach, or maybe it’s the success coach that’s embedded at your company that could be a resource to workers when they have that crisis. Let’s say Ray McCormick gets into her truck and the gas lights on, she would have somebody to call and say, I can’t get to work, I really wanted to get to work. And, in that case, she actually loved her job, she’d been named cashier of the month twice in the six months that she had been there, and the success coach would not be a social worker, would not be a caseworker, would not be somebody who’s basically there to fix the worker, but somebody who is there to problem solve. They’d say, okay, you can’t get to work. I’ve got resources, X, Y, and Z, that help you, and really just problem solve.
So think of it as sort of somebody who’s in their corner. It’s not someone that the workers can go and complain about their boss. It’s really somebody who’s just all about practical problem solving to keep people in their jobs, to retain them.
And there’s a really neat group, they have a model called the Employer Resource Network. These are called the ERN’s, employer resource network. And their model is that, a set of employer and a community might actually sort of band together and together they would pay for the success coach or a set of success coaches if they’re very big companies so that the person has sort of a little bit of independence from the company and they might co-fund some of the resources, maybe it’s an emergency cash grant program where if somebody is behind on their rent, they could come and get some help and they would set very clear parameters around that, but they can share the costs.
And then that model comes with a sort of a collaborative approach to where the employers, I think, sometimes get together quarterly, maybe more, maybe less, but they get together as a group and say, what are you struggling with? This is an example of an employer resource network in Pontiac, Michigan. They’d say, we can’t fill our graveyard shifts. So they would do that work that I mentioned before in my own work of actually going out and asking, talking to workers. What would make the late-night shift attractive to you? In that case, they found out there was no childcare at all during those hours. And so the employers banded together to actually seed one of the nearby childcare centers to start childcare provision during the hours of those shifts. And they found that to be really successful. And after it was seeded, that program ended up being self-sufficient, but it wouldn’t have happened without the employers sort of coming together, realizing it was a problem that they all were experiencing, and trying to address it.
And another example was the fact that there was no public transportation at all during a key shift, there’s just no way to get to a set of employers. This is in a different community. And so this employer resource network got together and they worked with the local transportation authority to pilot a bus route. And then when it turned out it was successful, then the transportation authority could take it over. And so it ultimately ended up being a benefit to the employers.
So on a fundamental level, right at the very basic level, I think doing more to really listen to your workers and try to figure out what their needs are. We can think about all the great ideas we have for why workers can’t get the work, why they may sort of leave jobs, why we’d not be able to attract our own workers, but really trying to do the work by getting beyond your own biases and doing some listening. I’ve heard of CEOs, in this one practice that I really like, spending a day doing every entry-level job in the company so you can actually see what it’s like, and you can feel the pressure points yourself.
And then some of these ideas of like flexible resources that meet family needs and sort of that crisis moment so that they can stay attached, whether it’s a success coach, someone to call or a set of modest, but very flexible resources that families can use because the crisis is a thing that is often shared, right? Most workers will have something that happens that makes it hard for them to get to work, or at this critical juncture, whether or not they can stay or not. And they usually sort of look similar, but they’re just not the same. And I think a mistake that a lot of employers make is to over-specify, you can get help for this one sort of specific situation. And so it means a lot of families who are experiencing a crisis, they don’t quite fall within those guidelines. So it’s not any help to them.
Sam: What’s the next book going to be?
Luke: We’re doing a book on America’s poorest places. So if you think of $2 A Day, it’s about following very poor families who really want to work, who have a history of work, but have a hard time because of instability in the jobs, and then the family sort of maintaining that work.
We’ve really been thinking a lot more about how places play a big role in this. And you can see these amazing disparities across American communities where things like life expectancy, depending on where you’re born, can range wildly, like more than a decade difference in fairly small geographic areas.
And then rates of social mobility. So some colleagues of ours, Raj Chetty and Nathaniel Hendren have led up some work to really use tax data, to find out in every place, every county in America, if you grew up low income, what are your chances of reaching the middle class? And you see huge differences depending on what community you’re in, where in some places, the American dream is alive as well. Some places if you grow up, low-income, you’re just as likely to reach the middle class as anybody else. But in a lot of places you grew up poor, you’re likely to be low income as an adult.
So we had been doing some quantitative work to really try to hone in some of the places that don’t just have the highest poverty rates, but the worse health outcomes and lowest rates of mobility, and then really try to live into this tough notion I’m trying to sell, of listening.
So we’ve had students who’ve gone to live and the communities we’re in. So we’re in the Mississippi Delta, actually, I’m getting ready for my first post COVID trip to South Texas in a few weeks, we’ve been in Appalachia and really just try to understand what’s going on in these places at the community level and what we can do to to help support those communities so that families outcomes improved.
Sam: Well, it’ll have to be the next purchase. What is that? 2022, 2023?
Luke: We’ll see. Yeah. Everything’s slowed down with COVID, but I hope we’re going to finish up this year. We’re probably about a year, two years out.
Sam: Can’t rush the process.
Luke: I’d like it to be going a lot faster. Lots of different things have been going on, so.
Sam: Sure. Well, I think it’s really important work. And like I said, the book has made an impact on how I’ve thought about the things that impact a worker, a person, the family every day, and sitting on the other side of conversations with leaders that talk about, we wanna fix employee engagement challenges, and it just, it all connected for me, it doesn’t just happen when you’re clocked in. There’s so much more that goes into it.
I want to ask you in closing about, given the theme of future of work, what’s your hope for the future of work?
Luke: So I guess I’m less worried that the robots are coming to take care of jobs, I do think we’re going to lose some jobs to automation. Clearly, we already have, although I recently went into a fast food place and they had to put in my own order and boy, was that a terrible experience. But I do think more and more of the jobs, even the lowest entry-level jobs, they’re just going to take more and more skills with digital resources, digital literacy, I think more often it’s called that, and problem-solving skills.
It can’t be about learning this new system or this new program. And it has to be really about training people to know how to deal with systems. And so I think really that points to moving in the direction of companies really investing in workers, investing in some serious training, and trying to say, even the folks at the entry-level go back, I like to reverse this course of like trying to actually, I feel like for a long time we’ve been moving in a direction of trying to reduce the sort of connection and the ties between worker and firm. And I just don’t think that’s going to work in the new world that we’re going to have to have more investment, more training that the companies do, more on the skills of digital literacy and problem-solving skills and less on a particular program or a particular thing.
And then as a society and as employers, I think we need to stabilize families. So I’m really excited about the child tax credit and stabilizing families to have this source of support that they can count on rather than huge swings and they’re safety net programs, as well as the huge swings in the workforce. So thinking about how we stabilize that, I’d like to do more on things like stabilizing health insurance, right? So we sort of take one sort of source of instability out of the equation with a more stable safety net.
And then I think this like revisioning, like who gets to do what work, this is actually a very libertarian idea that I really think is an important one. So the huge pile up of things like occupational, licensure and licensing and like exams and you have to do this training and it costs this, and then you take this exam and that costs that, and then you can do this work. I think often we don’t even know if those types of trainings, those types of licenses really improve the quality, but they certainly reduce the number of people who can do the work. So I think really opening up at a company level and saying, you know what? Maybe we figure out different ways to take a chance on people then sort of expect them to have had the money to do these things and maybe sort of reduce some of that red tape. I think that’s a really interesting direction. So that’s my vision in a nutshell.
Sam: I think it’s great. I think there’s a ton there and I appreciate you taking some time and talking with us.
Luke: Yeah, my pleasure.
Topics Discussed: Poverty, Low Wage, Child Allowance, Unemployment, Discrimination, Crisis, Training, Future of Work, Leadership
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