Economic Security

Now that President Biden has been sworn in, it’s time to get down to business. I posted a week or so ago a list of five areas where I believe America needs to make some serious progress if we are to defuse some of the anger that pervades parts of our society and make economic and social progress toward an America that works for all of us and is sustainable.

The first of these areas is the need to provide economic security for working men and women. Over the past few decades, the share of income going to what we might call the ‘working class’ has declined significantly even while the cost of housing, education, child care and so forth have all increased. This issue has contributed directly to increased number of young people living with their parents, decline in the marriage rate and rapidly increasing levels of household debt. We urgently need to deal with this problem; here’s how.

Increase The Minimum Wage. The current minimum wage in the US is $7.25 per hour. In 1968, the minimum wage was $1.60. If the minimum wage had kept up with the increase in worker productivity, it would be over $19 today. We need to increase the minimum wage to at least $15/hour ($31,200/year). Further, we need to do this quickly and not put it off until 2025 or even later as some politicians seem to want. The minimum wage needs to be at $15/hour not later than January 1, 2022 and needs to be indexed to inflation from that point. This increase will affect between 20 and 30 million working Americans and help them feel they are being compensated fairly for their labor. They will be able to afford a life with dignity.

You will hear a lot of people say that increasing the minimum wage will cost jobs and, to be sure, some jobs will be lost. But the increase in purchasing power of the millions of Americans who receive pay increases will help offset that and create new jobs. A lot of business owners will say that they cannot afford to pay that much and will go out of business. To them I say that if your business plan depends on paying starvation wages to your employees, you need to make some changes. Some will say that the minimum wage in their state/county/city/region should be lower because wages there are lower than the rest of the country. But we don’t want to perpetuate pockets of poverty in our country. All Americans deserve a decent wage.

I should point out that by increasing the minimum wage, the government will save significant amounts of money in the cost of food stamps, rent subsidies, certain tax credits and so forth. We need to do this.

Limit Child-Care Costs for Families. Childcare costs have skyrocketed in the past decade. The average cost for a year of full-time care averaged about $9600 in 2019. The median wage in 2019 was about $35,000 and the median household income was about $68,000. You can see what a bite childcare can take out of a family’s budget, particularly if there is more than one child. The result is either poverty or one parent dropping out of the workforce (usually a woman) to care for children which further reduces the household income.

The Child Care for Working Families Act, introduced by Patty Murray in the previous congress would limit the amount that families pay for child care to 7% of their household income. It would also strengthen existing child care and fund training for childcare workers. It would also support universal access to quality pre-school programs. We need to enact this legislation for the sake of our children.

Housing Costs. Fewer and fewer American families can afford decent housing. There are a variety of reasons for this including the depressed wages of working class families. The increase in the minimum wage should help deal with that a bit. One of the largest contributors to the high cost of housing, though, is restrictive zoning and regulations. The most affordable housing to build are apartments but zoning in many places strictly limits the amount of land available for housing. Other local restrictions like parking requirements, height limits, minimum lot sizes and so on limit the amount of affordable housing that can be built. While zoning is a local issue, the Federal government can set certain standards and withhold funding from localities that have unreasonable restrictions.

Strengthen Unions. One of the reasons the country was more equal in the 1950s and 1960s was that unions were stronger. They were able to negotiate a fair share of the economy’s gains for workers. Unions helped improve working conditions and wages for everyone. But unions have weakened and the decline of the middle class almost exactly tracks the decline of unions.

Unions raise wages for all types of workers and improve benefits for workers including health insurance, retirement, paid sick leave and family leave. Unions are an important check on the power of corporations and the wealthy in our democracy. Unions support policies that help low and moderate-income voters. Corporate interest groups such as the National Restaurant Association, National Chamber of Commerce and oil companies almost always lobby against the interests of low and moderate-income voters.

Here’s what needs to be done to strengthen unions and help restore the middle class: