Even with a strong economy, most American workers are struggling, writes economics columnist Jon Talton. Here are some modest proposals to address the headwinds.
Wall Street is celebrating the longest bull market in history. Not everyone agrees with that assessment, but the critiques are highly technical and nobody would question that stocks have done very well since March 2009.
Still, as we approach Labor Day, this milestone that most benefits the 1 percent diverges from the well-being of most people who work for wages.
How could the lot of working people in America be improved? Let me count the ways:
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Raise the national minimum wage. A total of 21 states are either governed by the federal minimum of $7.25 an hour or set their state law to that level. This pay reached its maximum purchasing power 50 years ago and now badly lags.
With no connection between a higher minimum wage and state economic performance (e.g. $11.50 an hour in booming Washington vs. $7.25 in Mississippi), the only thing holding back an increase is right-wing ideology.
Not every locality has the prosperity to sustain Seattle’s $15 an hour, but some raise is sustainable everywhere. It puts more money in the hands of workers and back into the economy.
These are not the teenage jobs of the 1970s. In 2016, nearly 43 percent of workers at the federal minimum were 25 or older. About 8.6 million Americans comprised the working poor in 2015, earning at or below the federal poverty line. The actual numbers may be much higher.
Make unionization easier. The high-water mark of the middle class coincided with strong union workforces in the private sector. Their gains helped all workers. Now labor barely has a beachhead outside of government, and even that is imperiled.
Majority sign-up, or “card check,” is one proposal to reverse this problem. It would allow workers to fill out an authorization form asking for union representation, instead of holding a costly election, controlled by management where employees can face company pressure or threats.
A good-faith debate can be held on the need for a secret-ballot election along with card check. But hostile federal actions since the Reagan administration have steadily eroded workers’ power. The result is a system badly out of balance, tilted against employees. Card check without the requirement for an election would restore more fairness for labor.
Roll back the “shareholders rights” movement. Since the 1980s, the ruling theory in business has been to add short-term value to a company’s stock price, no matter the cost. First up on that butcher’s bill has been employees. Job security, pay raises, benefits, even being employed at all — anything can go to goose the stock.
This change in corporate values has also profoundly affected communities, raised inequality and hurt investment in the long-term health of corporations.
Sen. Elizabeth Warren proposes a remedy in her Accountable Capitalism Act. Among other things, it would require large companies to obtain a federal charter that “obligates company directors to consider the interests of all corporate stakeholders.” As in Germany, these companies would also have to provide for worker participation. No less than 40 percent of directors would be nominated by employees.
Transaction and capital-gains taxes could also be introduced and targeted to incentivize holding stocks for the long term and to restrain abuses by private equity.
Rein in mergers by aggressively applying antitrust laws. The brilliance of today’s cartels and quasi-monopolists has been to keep prices low in most cases. This allowed for the triumph of consumer-based antitrust law, where regulators assess the merits of deals or bigness based largely on how they affect customers’ pocketbooks. The result has been unprecedented industry consolidation and the loss of economic crown jewels by countless communities.
With this has come the loss of millions of good jobs over the past 40 years. Many of these losses happened in the angry Heartland that voted for Donald Trump. As a working paper last year by economists José Azar, Ioana Marinescu and Marshall I. Steinbaum pointed out, opportunities and wages are lower in areas most affected by this phenomenon.
It’s time to weigh antitrust on anti-competitive market power and anti-democratic political power, no matter how cheap a product the giant offers.
Expand protections for workers in a changing labor force. In no small measure driven by the “shareholder value” theory, companies have raced in recent decades to add temps and contractors.
These insecure and temporary “gigs” are part of the falling fortunes of the middle class. They are a big part of why many experienced, older workers are struggling, despite the relatively strong recovery.
Louis Hyman, a labor historian at Cornell, wrote in The New York Times that this arrangement may be beneficial to some workers.
“But for the vast majority of workers, the ‘freedom’ of the gig economy is just the freedom to be afraid. It is the severing of obligations between businesses and employees. It is the collapse of the protections that the people of the United States, in our laws and our customs, once fought hard to enshrine.”
We need to find ways to strengthen, not further erode, the safety net. This includes affordable health insurance under nonsabotaged Obamacare or Medicare for all; decent retirement savings; and wealthy big corporations bringing more work in-house again and providing skill ladders up.
Prepare for the AI/robotics disruption. A recent study by the Organization for Economic Co-operation and Development (OECD) found that nearly half of the jobs in 32 nations were vulnerable to automation. Advances in machine learning have the capability to take over white-collar work from humans, too.
Yet at a time when headlines go to stories of employers unable to find qualified workers, it’s easy to forget the potential dislocation ahead. I’m not sure a universal basic income will solve all ills. It might bring ill unintended consequences. But we need to be discussing constructive responses to major job losses and millions of workers being made obsolete.
This isn’t a complete list. Some will say we need to emphasize the impact of globalization and offshoring of jobs. This is a discussion worth having, although many scholars say the big employment disruptions are over. No one who understands trade believes a tariff war would return good jobs. Good policy such as the measures above, however, would.
Happy Labor Day.