I also promised to come back later in the week with ideas as to what to do about this wage problem, so here I am to deliver the goods.
Interestingly and thankfully, I’m not alone. Some very heavy hitters have been weighing in on the same topic, including Sen. Elizabeth Warren (at the AFL-CIO’s National Summit on Raising Wages), Rep. Chris Van Hollen (in remarks about his Action Plan to Grow the Paychecks of All), and former Treasury Secretary Lawrence Summers (at a Center for American Progress Event introducing a new report from the Commission on Inclusive Prosperity).
Before getting into the details, there’s a compelling theme uniting this work: wage stagnation and inequality are not inevitable. They are not solely the outcome of benign-sounding forces like “globalization” and “technological change.” Instead, they are often the outcome of policy choices that we have the power to change.
In my forthcoming book—The Reconnection Agenda: Reuniting Growth and Prosperity—I focus on these solutions:
–First and foremost, full employment. But how do you get there?
–Through better fiscal (no austerity; investment in public goods) and monetary policies (no pre-emptive rate hikes).
–Through lowering the trade deficit, a major impediment to full employment and a drag on growth and jobs—and above-average manufacturing jobs, at that.
–Through labor market policies designed to reach the hard-to-reach: work-based, earn-while-you-learn policies for young people not in college, fair hiring practices for those with criminal records, subsidized employment for the marginally employed and long-term unemployed who want to get back into the job market.
But even full employment can’t be counted on to provide workers all the bargaining clout they need to generate persistent real wage gains throughout the pay scale. Here, let me borrow some good ideas from the AFL-CIOs wage summit (and these are just the subset that I thought were most related to generating wage growth):
RESTORE FREEDOM OF ASSOCIATION
- Restore workers’ freedom to form and join unions
- Restore and protect workers’ freedom to bargain collectively
- Support union organizing campaigns
RESTORE AND STRENGTHEN LABOR STANDARDS
- Increase and index the minimum wage (with parity for tipped workers, workers with disabilities, and young workers)
- Stop misclassification of employees as independent contractors
- Restore overtime protections
- Federal contractor accountability
- Stop wage theft
- Strengthen prevailing wage standards
- Equal pay for equal work
- Scheduling protections
- Paid sick days and expanded access to paid and unpaid family and medical leave
- Labor protections for domestic workers and farm workers
Now, imagine we get all of this right such that we’re at full employment, while the above policy set is helping to steer more of the growth to those who depend on their paychecks as opposed to their stock portfolios. We’re done, right?
Nope. To achieve persistent real wage growth, we don’t have to just get to full employment. We have to stay there. And that means financial market oversight designed to put a stop to the economic shampoo cycle (“bubble, bust, repeat”). A strong Volcker rule prohibiting federally insured banks from exposure to unsustainable losses, adequate capital buffers against over-leveraging, consumer protections against risky lending—such rules, and importantly, their enforcement, should be seen as part of the wage agenda.
Let’s review. Achieve truly full employment, lift worker power through collective bargaining, enforce labor standards, and provide rigorous financial oversight to avoid bubbles and busts.
Why isn’t education on the list? Not because I don’t think it’s important. It’s essential that children, most notably those facing access barriers to quality schooling, are able to realize their intellectual potential, especially given the historically high value of educational wage premiums. But it’s not here because a) it already has way more defenders than pretty much anything else above, and b) it’s long-term. Much of what I’ve scribbled down here is designed to help the current generation of wage earners.
What’s that? There’s no politics behind any of the above? I disagree. True, this Congress isn’t likely to undertake these measures. To the contrary, the House Republicans are busy trying to dial back financial reform.
But Warren, Van Hollen, and Summers ain’t exactly chopped liver, and not a day does go by in recent weeks wherein someone doesn’t ask me about the sort of material I’ve just gone through. We’ve got the makings of a solid, progressive agenda and a labor force, not to mention an electorate, anxious to hear about a very different set of policy choices, one that will reconnect their economic fortunes to the growing economy.
I say we give the people what they want.