Home Ken Plum: Closing the income gap

Ken Plum: Closing the income gap


money-newlinksBetween 2007 and 2012, the median wages of Virginia’s highest income earners rose by 8 percent while the lowest income families’ wages shrank by 10 percent, according to an analysis by the Commonwealth Institute for Fiscal Analysis.

The gap between the haves and the have-nots continues to widen in Virginia as it has throughout the nation. A growing underclass of unemployed, under-employed and under-paid creates a challenge for the state and the nation. Too many people are faced with the monthly decision of paying for the rent, utilities, food, prescriptions and school supplies without enough money to cover them all. Public and private relief organizations are strained to keep their food pantries and clothing closets stocked to meet the increased demand.

A sluggish recovery from the Great Recession has contributed to the problem. Many jobs that were lost have not come back. For those in the lowest wage jobs, income has been stagnant. Since 1982 to the present, those in the lowest income brackets have seen wage growth of three percent on average although the growth in the last few years has been less. By contrast those in the upper ten percent of wage earners have seen wage growth of 51 percent. There are actions that the state government can take to enable low income workers to become more active contributors to the state’s economy.

I have introduced a bill to raise the state’s current minimum wage of $7.25 to $8.25 this year and to $9.25 the next. Such an increase would help over 123,000 working Virginians buy their groceries, pay for their car’s gas, and meet basic necessities. I am disappointed but not surprised that it is opposed by the state Chamber of Commerce and by the fast food industries. While a raise of the minimum wage will add to the cost of business, it will at the same time produce consumers who will spend that money back into the economy. If the federal Congress follows the President’s proposal to raise the minimum wage, Virginia under my bill could go to the federal level.

I have also introduced a bill to make a portion of the federal earned income tax credit refundable as it is in about 20 states. Currently the lowest paid of workers can receive a credit on their income tax based on the limits of their income. By refunding a part of the credit that cannot be applied because of their limited tax liability there is additional money for working people to spend to support themselves with less reliance on social service programs. If refundable tax credits are available to those in the film, coal and agricultural industries, such a program should be available to help as many as 343,000 working Virginians. Unfortunately a subcommittee of the House Finance committee defeated my bill.

No one gains with the sharp division between the have and the have-nots in our society. Paradoxically, efforts to help those most in need will help all other parts of the economy as well.



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