Hillary Clinton has kicked off her presidential campaign making all the right noises. Trouping around Iowa with a handful of aides (and a media scrum that could fill Yankee Stadium), she has focused, however hazily, on the scourge of economic inequality and the concomitant plutocratization of American democracy. The “deck is stacked,” she has said, in favor of the rich; CEO pay, she’s lamented, has soared from 20 times that of their employees to 300 times, while hedge fund managers pay lower taxes than nurses or truckers; we need, she’s said, a constitutional amendment to diminish the role of money in politics.
As if to confirm her judgment that these themes resonate with voters, her first-week campaigning has coincided with nationwide demonstrations calling for the minimum wage to be raised to $15, even as the customary “Tax Day” demonstrations protesting high marginal tax rates have faded to near invisibility since hardly anyone believes marginal rates are high. Clinton’s rollout has also coincided with the release of a study documenting just how pervasive low-wage work has become in the United States. This week, the National Employment Law Project reported that fully 42 percent of U.S. workers make less than $15 an hour — a sea of workers that extends beyond such usual suspects as janitors and food servers; even once decently paid employees such as auto assembly-line workers now work for a median hourly wage that has descended to $15.30.
Past a certain point, the accumulation of coincidences becomes a zeitgeist, a societal spirit that Clinton is seeking to identify with and advance. The policies she’s hinting at almost certainly will include support for a higher minimum wage and paid sick days, a more progressive tax code, requiring employers to give workers an advance schedule of their hours and diminishing the risks to workers seeking to form unions. But dealing with the pressures that globalization, technology and the rise of shareholder capitalism have placed on all but the wealthiest Americans will require more far-reaching and innovative initiatives.
Trade is likely to be the issue on which Clinton will have the most trouble squaring the circle. Globalization has lowered the incomes of millions of U.S. workers and impelled the Democratic base to oppose free-trade deals, even as financial elites within and without the party, not to mention the Obama administration, continue to promote them. Clinton, accordingly, might want to suggest that the proposed trade deal with European nations — all of which have higher labor standards and better worker protections than the United States — raise those standards here rather than lowering them there, adopting European policies that require employers to meet regularly with their workers and Germany’s requirement that corporate boards be divided equally between worker and management representatives.
In seeking to end the stagnation of middle-class incomes, Clinton also needs to look at where that money has been redirected. Even as wages have risen by no more than 2 percent over the past few years, dividends have increased by an average of 14 percent yearly since 2011. In 2014, the corporations that constitute the S&P 500 lavished $904 billion on shareholders through dividends and stock buybacks — a figure that Goldman Sachs predicts will rise to more than $1 trillion this year, the highest in U.S. history. Under relentless pressure from “activist investors,” corporations are underinvesting in research, production and their employees — so much so that Laurence Fink, the chief executive of BlackRock, the world’s largest asset manager, which handles $4 trillion in investments, recently told the New York Times’ Andrew Ross Sorkin that corporations are weakening their long-term value by funneling so much money to short-term investors.
Clinton should respond to this appropriation of the nation’s seed corn by mega-rich investors by raising the tax on capital income to that imposed on income derived from work, and the tax on short-term investments to levels well above that. She needs to propose linking CEOs’ pay not to their companies’ stock prices but rather to the median income of their employees, and making sure that, when annual bonuses are in order, they go not just to top executives but to all workers. She should promote legislation mandating corporate restructuring policies that would make employees a more powerful influence on a company’s conduct than wealthy in-and-out shareholders seeking to shake down the company for some quick bucks.
Clinton’s noises about policies to rebuild a middle class are a good start. Really rebuilding it, however, requires some radical change.
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