How to Raise Middle Class Wages

Lawrence MishelIt is a positive thing that the beltway crowd is starting to talk about wages. After all, the paper we released at the launch of our Raising America’s Pay initiative was titled “Raising America’s Pay: Why It’s Our Central Economic Policy Challenge.” Wages are central for the simple reason that the vast middle class, as well as low-income households, rely primarily on their wage income to support their spending. And policies can restore wage growth. Let us start with Federal Reserve policy assuring a strong jobs recovery that gets unemployment down to where real wages grow at least as fast as productivity growth (which means nominal wage growth at least 3.5 to 4.0 percent). Large scale infrastructure spending would be wise as well. Yes, President Obama should allow millions of undocumented workers to work legally, thereby eliminating their vulnerability to exploitation and consequently raising their wages, which would then lift up other workers’ wages as well. Low wage workers (the bottom fifth) earn less than they did in 1968 despite a doubling of productivity and far more education simply because we have failed to adequately increase the minimum wage. We can end wage theft, raise overtime eligibility for six million workers, and end the misclassification of employees into independent contractors. We can use federal legislation to restore collective bargaining for those who want it and we can oppose the actions in the states that have weakened collective bargaining, initiatives that are expected to continue this year. And why do we need new global trade agreements that will serve to put more downward pressure on wages? (I don’t see any effort of the “winners compensating the losers” from trade.) Most of all, economic policy should take creating good jobs and lifting wages as its central concern. This is not what happened in the four decades of “flexible, innovative, American-style capitalism” that the Washington Post looks so kindly toward.

—Lawrence Mishel
Washington Post “Wage Freeze” Brain Freeze
[See article for lots of links. -FM]

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