“What We Need Now”: A National Economic Strategy For Better Jobs
Jobs are returning with depressing slowness, and most of the new jobs pay less than the jobs that were lost in the Great Recession.
Economic determinists — fatalists, really — assume that globalization and technological change must now condemn a large portion of the American workforce to under-unemployment and stagnant wages, while rewarding those with the best eductions and connections with ever higher wages and wealth. And therefore that the only way to get good jobs back and avoid widening inequality is to withdraw from the global economy and become neo-Luddites, destroying the new labor-saving technologies.
That’s dead wrong. Economic isolationism and neo-Ludditism would reduce everyone’s living standards. Most importantly, there are many ways to create good jobs and reduce inequality.
Other nations are doing it. Germany was generating higher real median wages until recently, before it was dragged down by austerity it imposed the European Union. Singapore and South Korea continue to do so. Chinese workers have been on a rapidly-rising tide of higher real wages for several decades. These nations are implementing national economic strategies to build good jobs and widespread prosperity. The United States is not.
Any why not? Both because we don’t have the political will to implement them, and we’re trapped in an ideological straightjacket that refuses to acknowledge the importance of such a strategy. The irony is we already have a national economic strategy but it’s been dictated largely by powerful global corporations and Wall Street. And, not surprisingly, rather than increase the jobs and wages of most Americans, that strategy has been increasing the global profits and stock prices of these giant corporations and Wall Street banks.
If we had a strategy designed to increase jobs and wages, what would it look like? For starters, it would focus on raising the productivity of all Americans through better education — including early-childhood education and near-free higher education. That would require a revolution in how we finance public education. It’s insane that half of K-12 budgets still come from local property taxes, for example, especially given that we’re segregating geographically by income. And it makes no sense to pay for the higher education of young people from middle and lower-income families through student debt; that’s resulted in a mountain of debt that can’t or won’t be paid off, and it assumes that higher education is a private investment rather than a public good.
It would also require greater accountability by all schools and universities for better outcomes — but not just better test results. The only sure thing standardized tests measure is the ability to take standardized tests. Yet the new economy demands problem-solving and original thinking, not standardized answers.
Better education would just be a start. We would also unionize low-wage service workers in order to give them bargaining power to get better wages. Such workers — mostly in big-box retailers, fast-food chains, hospitals, and hotel chains — aren’t exposed to global competition or endangered by labor-substituting technologies, yet their wages and working conditions are among the worst in the nation. And they represent among the fastest-growing of all job categories.
We would raise the minimum wage to half the median wage and expand the Earned Income Tax Credit. We’d also eliminate payroll taxes on the first $15,000 of income, making up the shortfall in Social Security by raising the cap on income subject to the payroll tax.
We’d also restructure the relationships between management and labor. We would require, for example, that companies give their workers shares of stock, and more voice in corporate decision making. And that companies spend at least 2% of their earnings upgrading the skills of their lower-wage workers.
We’d also condition government largesse to corporations on their agreement to help create more and better jobs. For example, we’d require that companies receiving government R&D funding do their R&D in the U.S.
We would prohibit companies from deducting the cost of executive compensation in excess of more than 100 times the median compensation of their employees or the employees of their contractors. And bar them from providing tax-free benefits to executives without providing such benefits to all their employees.
And we would turn the financial system back into a means for investing the nation’s savings rather than a casino for placing huge and risky bets that, when they go wrong, impose huge costs on everyone else.
There’s no magic bullet for regaining good jobs and no precise contours to what such a national economic strategy might be, but at the very least we should be having a robust discussion about it. Instead, economic determinists seem to have joined up with the free-market ideologues in preventing such a conversation from even beginning.
By: Robert Reich, The Robert Reich Blog, June 11, 2013
“Blocked By The GOP”: One Way To Help Close The Gender Wage Gap Is To Raise The Minimum Wage
This week, ThinkProgress’s excellent Bryce Covert wrote about a new report by the National Women’s Law Project about the relationship between the minimum wage and the gender pay gap. As the NWLP demonstrates, raising the minimum wage would help close the gender pay gap, because women are disproportionately concentrated in low-wage sectors such as food service, retail, housekeeping, and home health aides,
Raising the minimum wage is an important step in bringing economic justice to women workers. Consider the following:
— Contrary to what you might assume based on the recent mass freak-out by male Fox News anchors, we ladies are hardly the dominant sex in the workplace. In fact, we’re losing ground economically, and the gender wage gap is getting worse rather than better. Increasing the minimum wage would significantly remedy the situation.
— The NWLP points out that women of color, who suffer from racial discrimination as well as gender discrimination, make up a disproportionate number of minimum wage workers. So they, too, stand to strongly benefit from a minimum wage increase, in ways that would partially offset the effects of discrimination.
— Earlier research has shown that the declining real value of the minimum wage has substantially accelerated the trend in growing wage inequality in the U.S. generally, particularly among women. Increasing the minimum wage would help slow this trend.
— Finally, one of the chief benefits of the the minimum wage is as economic stimulus. In fact, it was originally instituted during the Great Depression not so much as a worker protection policy but as macroeconomic policy, to encourage economic growth. Low-wage workers tend to spend close to every penny they make, rather than save. The money they inject back into the economy then has a multiplier effect which revives the economy as a whole — meaning that the minimum wage benefits not just minimum wage workers, but everyone else.
So far, President Obama’s proposal to raise the minimum wage, which he made in the State of the Union address earlier this year, doesn’t seem to have gotten out of committee. It’s one of the endless list of things in this country that is excellent policy and excellent politics, but is being blocked by the G.O.P. Lather, rinse, repeat. Will this story ever end?
By: Kathleen Geier, Washington Monthly Political Animal, June 8, 2013
“A Nonpartisan No-Brainer”: Raising The Minimum Wage Is Beneficial For Individuals And Businesses
In Tuesday’s State of the Union speech, President Obama called on members of Congress to raise the federal minimum wage from $7.25 to $9.00 an hour, something Governor Mitt Romney (R-MA) supported during the 2012 election. The president said, “This single step would raise the incomes of millions of working families. It could mean the difference between groceries or the food bank; rent or eviction; scraping by or finally getting ahead.”
Who could argue with that?
Two Republican leaders have voiced their opposition to the president’s proposal. House Speaker John Boehner (R-OH) and Senator Marco Rubio (R-FL) agree that raising the minimum wage hurts businesses, claiming that increasing the cost of employment makes it difficult for businesses to sustain themselves and deters them from hiring employees.
A study released yesterday by the Center for Economic and Policy Research suggests otherwise. John Schmitt, who authored Why Does The Minimum Wage Have No Discernible Effect on Employment?, argues that raising wages actually has little to no effect on employment. Schmitt offers 11 “channels of adjustment,” ways in which businesses could respond to a raise in minimum wage. These include raising prices on goods and services (offset by higher demand), increase in worker efficiency and effort, and less difficulty in recruiting and retaining employees which “may compensate some or all of the increased wage costs, allowing employers to maintain employment levels.”
Based on the results of this study, small businesses have everything to gain in paying their employees a wage they can live on. Economist and New York Times columnist Paul Krugman addressed the myth behind cutting minimum wage during a time of recession back in 2009. “In reality, reducing wages would at best do nothing for employment; more likely it would actually be contractionary,” Krugman said. “Proposing wage cuts as a solution to unemployment is a totally counterproductive idea.”
Larger corporations such as Walmart and McDonald’s that employ 66% of low-wage workers are rewarding their top executives in profitable years with raises, while their low-wage employees are still making minimum wage — a pay level that is not sustainable for many American families. In fact, if minimum wage matched inflation, it would be $10.58 per hour.
As stated in a Huffington Post article, “This would guarantee that workers on the lowest rung of the economic ladder don’t lose purchasing power, but it would also mean fast-food companies and other low-wage employers would have to pay higher wages just about every year, except in rare cases of deflation.”
This type of proposal was already favored in 2010, when the Public Religion Research Institute conducted a poll and found that 67 percent of respondents were in favor of increasing the minimum wage to $10.00 an hour—that includes a majority of respondents who identified as Republicans.
In 2007, President Bush signed the Fair Minimum Wage Act, which easily passed in the House 315-116, including bipartisan support from 82 Republicans. It passed the Senate — with the help of Mitch McConnell (R-KY) — by a 94-3 vote before making it to the president’s desk.
Studies clearly point to the profitable effects on individuals and businesses if earnings per hour are raised to a level where low-wage workers are actually able to support themselves and their families. If Republicans like Boehner and Rubio are truly advocating for their middle-class constituents, then supporting the president in ensuring that workers earn what they deserve — and can live on — ought to be a nonpartisan no-brainer.
By: Allison Brito, The National Memo, February 14, 2013
“The Audacity Of Freedom”: President Obama Decisively Changes The Direction Of Our Politics
President Obama is a freer man than he has been at any point in his presidency. He is free from the need to save an economy close to collapse, from illusions that Republicans in Congress would work with him readily, from the threat of a rising tea party movement and from the need to win reelection.
This sense of freedom gave his State of the Union address an energy, an ease and a specificity that were lacking in earlier speeches written with an eye toward immediate political needs. It was his most Democratic State of the Union, unapologetic in channeling the love Bill Clinton and Lyndon Johnson had for placing long lists of initiatives on the nation’s agenda. Obama sees his second term not as a time of consolidation but as an occasion for decisively changing the direction of our politics.
Here was an Obama unafraid to lay out a compelling argument for the urgency of acting on global warming. He was undaunted in challenging the obsession with the federal budget — and in scolding Congress for going from “one manufactured crisis to the next.” By insisting that “we can’t just cut our way to prosperity” and that “deficit reduction alone is not an economic plan,” he brought to mind the great liberal economist John Maynard Keynes. He sought to add another big achievement to near universal health-care coverage, announcing a new goal of making “high-quality preschool available to every single child in America.”
And Obama made clear his determination to shift the center of gravity in the nation’s political conversation away from anti-government conservatism, offering a vision that is the antithesis of the supply-side economics that has dominated conservative thought since the Reagan era.
If supply-siders claim that prosperity depends upon showering financial benefits on wealthy “job creators” at the economy’s commanding heights, Obama argued that economic well-being emanates from the middle and bottom, with help from a government that “works on behalf of the many, and not just the few.”
The “true engine of America’s economic growth,” he said, is a “rising, thriving middle class.” He continued: “It is our unfinished task to restore the basic bargain that built this country, the idea that if you work hard and meet your responsibilities, you can get ahead, no matter where you come from, no matter what you look like or who you love.” With that last phrase, he linked gay rights to an older liberalism’s devotion to class solidarity and racial equality.
An Obama no longer worried about reelection was the worst nightmare of conservatives who feared he would veer far to the left if given the chance. In the GOP’s response, Sen. Marco Rubio (Fla.) conjured that liberal bogeyman, declaring that the president’s “solution to virtually every problem we face is for Washington to tax more, borrow more and spend more.”
But Rubio’s rhetoric felt stale, disconnected from the Obama who spoke before him. Obama did speak for liberalism, yes, but it is a tempered liberalism. His preschool proposal, after all, is modeled in part on the success of a program in Oklahoma, one of the nation’s reddest states. Most of the president’s initiatives involve modest new spending and many, including his infrastructure and manufacturing plans, are built on partnerships with private industry.
Even the president’s welcomed call to raise the minimum wage to $9 an hour and to index it to inflation was cautious by his own standards. In 2008, Obama had urged a $9.50 minimum wage, and it rightly ought to be set at $10 or above.
Moreover, the president’s words were carefully calibrated to the issue in question. On immigration reform — in deference to cross-party work in which Rubio himself is engaged — Obama kept the rhetorical temperature low, praising “bipartisan groups in both chambers.” But he invoked all of his rhetorical skills on the matter of gun safety, a more complex legislative sell. His gospel-preacher’s variations on the phrase “they deserve a vote” will long echo in the House chamber.
No, the liberated Obama is not some new, leftist tribune. He’s the moderately progressive Obama who started running for president before there was a financial crisis or a tea party. In his 2006 book “The Audacity of Hope,” he proposed to end polarization by organizing a “broad majority of Americans” who would be “re-engaged in the project of national renewal” and would “see their own self-interest as inextricably linked to the interests of others.” On Tuesday night, creating this majority was what he still had in mind.
By: E. J. Dionne, Jr., Opinion Writer, The Washington Post, February 13, 2013
GOP Congressman Equates Purchasing Health Insurance With Buying An Expensive Vacation Home
Just when you thought it could not get more ridiculous, GOP Congressman and Chairman of the House Appropriations Labor-Health and Human Services subcommittee, Denny Rehberg, has come up with a novel idea. He wants the Congressional super committee to solve $1.2 trillion in deficit reduction by simply killing off the expansion of Medicaid and the subsidies that will open the door to health care for millions of Americans.
In making his argument, Rehberg noted that expanding the Medicaid safety net program, and providing subsidies to low and middle class workers, is akin to the “expensive vacation home” that the average American would choose not to buy if that American was facing a deficit as serious as the nation’s.
Before getting to the heart of Rehberg’s suggestion, one can’t help but wonder what makes the Congressman think that the “average” American can afford an expensive vacation home (or any vacation home for that matter) on what the average American earns, even if that American is not in debt?
But should we be surprised by the Congressman’s view of the world? This is the same Denny Rehberg who is not only listed as number 23 on the list of the wealthiest members of Congress, but is the same Congressman Rehberg who had no idea what the minimum wage was in his own state (check out this video as it is priceless.)
Of course, far more important is Rehberg’s inability to grasp that getting treatment for cancer or unblocking that clogged artery that is going to make someone a widow or widower is not quite the same as purchasing a vacation home—expensive or otherwise.
And while life might not be worth living for Rep. Rehberg and friends without that idyllic home on the lake, the average American would still prefer to remain alive, thank you very much, which is precisely why Medicaid coverage was extended to more people and subsidies are to be made available to the working poor and middle-class so that medical care will become an option in their lives.
When asked how low and middle class Americans will manage to purchase health care, should the mandate requiring them to do so be found to be Constitutional by SCOTUS, Rehberg answered that Health and Human Services would be able to grant waivers to those who cannot afford coverage without Medicaid or subsidies.
Thus, Rehberg’s solution is to simply leave millions of Americans without coverage by way of a waiver. Nice.
Health Care For America Now’s Executive Director, Ethan Rome, put it this way:
Rep. Rehberg’s proposal is yet another part of the Republican assault on the middle class. Denny Rehberg says that basic health care is a luxury item, as if a mother in Montana taking her children to the doctor or a cancer patient getting treatment is the same as buying ‘an expensive vacation home.’
Considering that estimates place the uninsured under age 65 in Montana at somewhere between 16 percent and 20 percent of the population, a number well in excess of the national average, I suspect that Rehberg’s fellow Montanan’s might disagree with his approach.
Let’s hope they voice that disagreement at the ballot box next November.
By: Rick Ungar, Mother Jones, October 6, 2011
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