Always fun when they don’t explain

It’s not the wages, it’s the hours:

Ashley Sierra has worked at Dollar General for two years and makes just $11 an hour, while only receiving part-time hours. A mother of three, she relies on family members to barely make ends meet. “My weekly paycheck is no more than $200, $260 at the max. I have three children, I cannot survive on $260 a week, it’s just not working. It needs to get upped to at least $15 an hour, the bottom is $15, because we work so hard for so little,” said Sierra.

She’s working 25 to 30 hours a week there. Yes, there are taxes – FICA – on such low wages.

OK, so, what’s actually the problem here? That no one at this level of the economy can actually gain full time work. If she was doing 40 hours at $11 then sure, she’s still low paid but her income would undoubtedly be higher.

So, why can’t she get 40 hours?

Obamacare. If someone does over 30 hours (about) then the company has to buy them health care insurance. Which is expensive. From the point of view of the employer it’s also not worth it. Schedule 3 part timers instead of 2 full timers – -ish, -ish.

The fuck up is the uptick in compensation costs at approaching full time hours. Which is why near none of the low paid these days gain full time hours.

23 thoughts on “Always fun when they don’t explain”

  1. Same thing in France and no doubt other countries. Aggravated by a changing and unpredictable shift pattern so you can’t get that second job.

  2. Hmm, I don’t see anything about how much support the 1-3 baby daddies provide. Any chance one of the family members she relies on is a husband?

  3. Is there a UK equivalent of this threshold problem? @philip is correct about why it’s hard to combine multiple part-time contracts (some people take one day job and one night job, so they’ll never clash but you might end up working until you drop). And presumably a lot of low pay work is demand dependent so employers like to keep a pool of workers they only call on – and pay – when they need to, which is a tough deal for most employees but may be the best they can get in their part of the food chain. But is there legislation that makes this problem worse at particular hours thresholds?

  4. Anon.
    I think there is something in the UK. I believe the threshold for some employer payments is 16 hours? I certainly know of a number of convenience stores that have staff on 16 hr contracts, but who actually work more hours.

  5. @Estiban
    How child support works for baby daddies in the US is like this: The baby daddie gets a minimum wage job. After a few months, the wage garnishment order shows up at the employer. Baby daddie quits and finds another minimum wage job (easily done with the current labor shortage). Rinse and repeat.

    How do I know this? I owned a few fast food franchises. This is quite common.

  6. @Jimmers That was very much the case when I was a youngster.
    I was perm’ (39 hours a week excluding lunch) at a supermarket and worked with former classmates who were part-timers (13 hours) while attending 6th form. One dropped out and ended up working 39 hours a week but the extra 26 hours were O/T.
    Sounds reasonable until your bonus and holiday allowances etc are calculated on your standard hours. The poor bugger was still there when I realised that I had made the opposite mistake to him and went back into full time education.

  7. Not to be mean – I wouldn’t want to swap places, but:
    1. She’s receiving the Earned Income Tax Credit (inverse income tax).
    2. Free healthcare – either Medicaid or $0 premium Obamacare.
    3. $3k cash per child (CTC).
    4. Section 8 housing voucher of ~$1k/month.
    5. Food stamps (EBIT) of ~$230 per child per month.
    6. Free breakfast and lunch at school, plus a take home weekend food bag.

    The $260 is rubbish. As TM stated, the only tax paid is 7.65% FICA, and at that earning level, she’ll receive 90% of her gross earnings in Social Security benefits when she retires.

    Tell me again that the US has no welfare system.

  8. Not to be snippy or anything, but FICA is not a tax, or not in the conventional sense. It’s an insurance premium, or, more-correctly, a partial insurance premium – her employer pays the other part, so it should be figured as part of her compensation, albeit deferred. The clue’s in the name – Federal Insurance Contribution Act.

    Her contributions, together with those of her employer, will fund her Social Security benefits (old age pension) as well as disability-pension benefits if she becomes unable to work. The value of these benefits, at that earning level, will likely vastly-exceed the premiums paid, so it’s a Ponzi scheme of sorts – but that’s for another day :-).

    As others note, she will also receive the Earned Income Tax Credit, a reverse tax which is fully-refundable, so she’ll likely get a check for several thousand dollars from Uncle Sam each year. This should also be figured into her compensation.

    llater,

    llamas

  9. ” I believe the threshold for some employer payments is 16 hours? ”

    Thats a benefits system thing, and its the employees who demand to only work 16 hours a week, because thats what they need to work to qualify for Tax Credits (or Universal Credit as its morphed into now).

    Basically if you are a single mother with kids, the most sensible course of action is to work 16 hours a week, the State will then pay you what it considers you ‘need’ given your personal circumstances, which may be more than what you’d earn if you worked 40 hours at your usual pay rate. If you do work extra hours over the 16 then you lose your benefits at an effective tax rate of 55%. So lets say you do an extra day and earn £76 (8 hours at £9-50/hr, current minimum wage). You immediately lose £42 of benefits at the end of the month, so you are only £34 better off for an entire days work. Why would anyone do that? Most people prefer to sit on their arses and do nothing and get largely the same amount of money at the end of the month.

    If you are an employer in the UK nowadays finding people who want to work full time is a nightmare. All workers want is the 16 hours a week that qualifies them for their free benefits cash.

  10. Dennis, CPA to the Gods

    Not to be snippy or anything, but FICA is not a tax, or not in the conventional sense. It’s an insurance premium, or, more-correctly, a partial insurance premium – her employer pays the other part, so it should be figured as part of her compensation, albeit deferred. The clue’s in the name – Federal Insurance Contribution Act.

    Not to be snippy of anything, but given that ‘Merica’s ruling class has raided the Social Security Fund for cash on a regular basis – with no prospect that the money will be repaid out of the General Fund (or anything else) – I’d say it’s a fucking tax.

  11. “So, why can’t she get 40 hours?

    Obamacare. If someone does over 30 hours (about) then the company has to buy them health care insurance. Which is expensive. From the point of view of the employer it’s also not worth it. Schedule 3 part timers instead of 2 full timers – -ish, -ish.”

    It’s really because she’s lazy and only want to work the 30 hours at one job rather than go throught the effort to look for a second job and deal with organizing shifts.

    Obamacare’s *a* cause – but it’s not the real thing holding her back.

  12. And she won’t get that second job because she has family members paying her way.

    Also, at that level tax rate is less than 15 percent – all in, $11/hr for 30 hours is $363 which should leave about $320 in the check plus.

  13. “philip
    May 17, 2022 at 7:57 am
    Same thing in France and no doubt other countries. Aggravated by a changing and unpredictable shift pattern so you can’t get that second job.”

    That is an excuse that may affect some people – but not the majority. It is not the norm for shifts to change that often.

  14. “llamas
    May 17, 2022 at 12:33 pm

    Her contributions, together with those of her employer, will fund her Social Security benefits (old age pension) as well as disability-pension benefits if she becomes unable to work. The value of these benefits, at that earning level, will likely vastly-exceed the premiums paid, so it’s a Ponzi scheme of sorts – but that’s for another day :-).”

    That is not how social security works here.

    Social security ‘premiums’ go straight into the general fund. *Current* SS benefits are paid for by *current* SS premiums – and a lot of deficit spending.

    They are not going into a fund which will you back out later in life – you’re paying for current recipients and when you retire those still working will pay for your payouts.

    It absolutely is a Ponzi scheme – except in this case the scheme runners can borrow indefinitely inflating the value away.

  15. Dennis, Pointing Out The Obvious

    Let’s see… three kids and no mention of a husband or child support payments. Can we guess how some of the choices Our Suffering Girl has made worked out for her?

  16. @ Denis, Agammamon et al – I understand only-too-well how US Social Security works in reality, and that the Social Security ‘Trust Fund’ consists of nothing more than a thick pile of IOUs that will never be paid. But – as I said – that’s a discussion for another day. The point was that FICA contributions are not a tax in the conventional sense – they are for a specific purpose only, they do go to that purpose (paying SS benefits, although we can debate whose, and when, and how much) and they cannot be directly appropriated by the Congress, as other tax revenue can. You are right to point out that the Congress found a way round that, as legislators will when they see actual money going unspent, and that SS financing is now a complete fiasco of unfunded liabilities and accounting shenanigans that would put you or me in the black-bar motel if we were to try it. But that doesn’t alter the point I was making.

    llater,

    llamas

  17. @dearieme
    The Obamacare bill is infamous for Congress having to vote YES before they were allowed to read it. Biden uses a different tactic: Bills are thousands of pages and only realsed hours or a few days before vote

    @Jimmers
    Yes, 16 hour rule has been tied to various benefits since 1980s, maybe before

    @Bill G
    Yes, 16 hour education rule was one I was aware of. College signed off a fake timetable for a mate on FT course

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