The Rundown
10:42 pm
Mon March 31, 2014

Economy & Innovation Rundown: Cost Of Living And Public Assistance

Every week, I turn to my reporters and ask what they’ve been reading that’s related to their beats, but they just haven’t been able to get around on reporting themselves. I then turn around and share some of those articles with you and I usually attempt to find some thematic tie.

Metro is considering rate hikes for one-way MetroLink rides, as well as fare hikes on monthly passes.
Metro is considering rate hikes for one-way MetroLink rides, as well as fare hikes on monthly passes.
Credit (Flickr/The_Bjbuttons)

Usually, the thematic tie is arbitrary and, some would say, fanciful. Other times, the reporters hand me a bunch of articles and I think, “Did they talk with each other to plan this?” This week was one of those weeks.

The primary theme revolved around income and the public assistance. Sort of.

It started with an article in The Atlantic – theatlanticcities.com, to be precise – that reported the findings of a study from the National Low Income Housing Coalition. The upshot: In most cities, someone working at a minimum wage job cannot afford a market-rate, two-bedroom apartment. In some cities, it would take an average 2.6 full-time, minimum wage jobs to afford that two-bedroom apartment (assuming that a person devotes the recommended 30 percent of his or her income to rent).

It does vary, state to state, but even in Missouri, the minimum wage would have to be $14.31 an hour for one person to afford that two-bedroom apartment with just one job. The problem isn’t only that minimum wage jobs don’t pay enough. According to the article, there is also a dearth of affordable housing units.

“More than 40 million American households are renters (35 percent of all households), a figure that has been growing substantially since the economic crisis. Just 34 percent of the apartments built in 2011 were affordable for even the median-income renter. And 10 million of these renter households qualify as 'extremely low-income,' meaning they make 30 percent or less of the area’s median income. Today, there are just 31 affordable and available units for every 100 of these families.”

Speaking of minimum wage jobs, it turns out that Wal-Mart, is well aware of the difficulties of making ends meet on the federal minimum wage of  $7.25 an hour (or, in Missouri’s case $7.50 an hour).

How do we know this? A reporter at Business Insider took a look at the world’s largest retailer’s annual report and found an interesting comment.  According to the article, Wal-Mart provides a list of risks to the company’s financial well-being. One of those factors: “changes in the amount of payments made under the Supplement[al] Nutrition Assistance Plan and other public assistance plans, changes in the eligibility requirements of public assistance plans.”

In plain English, Wal-Mart recognizes that a large portion of its customers (and, in some cases, its employees) live on the minimum wage of $7.25 (or, in Missouri, $7.50) an hour or less, and that many of their customers rely on public assistance for things like food stamps and extended unemployment insurance. If the federal government changes how much individuals can get from public assistance programs, or who qualifies for those programs, then that could mean Wal-Mart’s customers have less money to buy stuff at Wal-Mart.

We don’t yet know for sure if cuts to the food stamp program that went into effect Nov. 1 will affect Wal-Mart’s bottom line. But, the article points to one indicator: For the fourth quarter ending Jan. 31, Wal-Mart reported earnings of $4.43 billion, a drop of 21 percent from a year earlier. Wal-Mart said it blamed the decline on the unusually harsh winter.

From income to public assistance

And, speaking of public funding… Missouri’s public defenders, it turns out, are having a particularly difficult time, according to the St. Louis Business Journal. Now, the article doesn’t deal specifically with how much public defenders earn. It’s more about the incredible weight of their case loads.  

“The new study, which was completed by the RubinBrown accounting firm, found that public defenders in Missouri spent an average of only nine hours preparing their cases for serious felonies, as compared to the 47 hours they needed. Public defenders spent only two hours preparing for misdemeanor cases, as compared to the 12 hours called for.”

Here’s how I’m linking this to this posting's theme -- income and public assistance.  The public defenders do their work thanks to tax dollars. And it's no secret that they do not earn the highest salaries. So, considering how much public defenders earn, it’s surprising to learn how much work they are expected to accomplish. Luckily, the cost of living in St. Louis is reasonable, so at least they are rewarded with affordably priced homes, clothing and beer into which they can cry.

Finally, this week, here’s a look at another aspect of something that is funded, in part, by public money.

As we’ve reported, Metro is looking at raising its fares with the hope of raising an additional $2.2 million. The increases would affect monthly passes and daily, one-way MetroLink fares, but they would leave student semester passes, weekly passes and one-way bus fares alone.

Metro, which has been holding public meeting on the increase, is expected to go before the full Board of Commissioners in May. The increases would take effect in July.

Rate hikes aren't the only way to pay for getting around.  This fall, Missourians could be voting on a 1 percent general sales tax to support transportation. If the measure does make it on the ballot, no one knows how much of that sales tax would go for roads and bridges and how much would go for public transit. In general, people are uncomfortable mingling public support of roads and bridges with public transit. Yet, there is widespread agreement that our roads needs help and, logically, it would be the gas tax that goes to pay for it.

And yet no one is talking about raising the gas tax. But maybe they should be.

An article in Nextstl.com looked at transportation funding and asked: Which does a better job of paying paying for itself, the gas tax or metro fares?

Its answer: The value of the gas tax has been eroded by inflation.

At 17 cents a gallon, the tax hasn't increased in years. And with cars being more fuel efficient and people driving fewer miles, that 17 cents doesn't go nearly as far as it once did.  Metro fares, which have steadily increased over the years, have outpaced inflation

The article has interesting charts and graphs to explain the point, but it does make you wonder if Missourians should reconsider the gas tax rather than a general sales tax to pay for roads and transportation infrastructure.

It's April 1

I would be remiss if I didn't take advantage of this, the first of April, at least to tip my hat to a kind of prank. Granted, it's not a very funny prank, considering how much time and money are involved, but it started as a prank.

Business Week reports on a Seattle-based techie and comedian (I guess they can be both) who played a trick to show the weakness in Google's reliance on its open-source map services. Essentially, Bryan Seely set up a fake listing for a Secret Service office and an FBI office. 

Here's how the article says he did it: 

Seely started with Map Maker, a crowdsourcing tool that allows regular users to add information on local places to Google Maps. He created entries for two ATMs, including a phone number for each. The ATMs were real; the phone numbers were ones he had set up. Then he went into a different service, Google Places, where businesses can create a place page for themselves, and he created a listing for the ATMs. An automated call to the phone number for each ATM gave him PIN numbers, which he could use to alter the place listings as he wished.

Seely quickly turned himself in for his prank and deleted the listings. Again, his point was to prove the downside to Google's reliance on crowdsourcing. Scammers have been using this loophole to create fake locksmiths in particular and, as the article points out, it ends up costing real local businesses money.

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