Can we all benefit from the economy?

January 15, 2014 | John Burbank

john-featured-croppedThe slow recovery from the great recession has heightened stark inequality in Puget Sound. Corporate profits and the stock market are soaring (think Boeing) but wages are stagnant, workers have lost their company pensions (think Boeing) and job growth is still lagging. Even with the 777X, think of Boeing again — they pushed 1,500 engineering jobs out of our state last year. The middle class is besieged.

Wages for the top fifth of workers have grown, but everyone in the middle or below has actually lost ground. The bottom 10 percent of workers, compared to the bottom 10 percent 35 years ago, actually make 25 cents less per hour. The worker in the middle makes about $18 an hour, a 15 cent per hour decline. Meanwhile, worker productivity has almost doubled. So where did this money go? Corporate profits and CEO salaries, for starters.

These inequalities did not happen by accident or because of some immutable laws of economics. Since the 1980s, national policy changes have undermined the middle class. Congress cut taxes for the wealthy and corporations, resulting in less public money to invest in education, college, Head Start, basic research and public infrastructure. Corporations strategize how to grab tax credit windfalls and government contracts simultaneously (think Boeing) and face less oversight (think Boeing and self-certification of a certain battery on the 787) and move around the globe searching to exploit the cheapest labor and avoid any consequences for environmental destruction.

Boeing’s demand that the Machinists give up their pensions and the state hand out further tax breaks was successful because the middle class across our country is so beaten down. If we want to realize a better and shared quality of life, we must reverse the growing inequality of income, opportunity, health and wellbeing. Instead of just being on your own, facing the unpredictabilities of health, work, education and life, we could all be part of a community of responsibility. Sort of like Social Security, through which everyone pays in, everyone gets benefits from, and everyone has skin in the game. With a platform of shared economic security, our private economy will thrive, with more customers for businesses, which means more profits AND more hiring, and that means more competition that increases bargaining power of workers.

Think about that, and run it backwards. High unemployment drives down workers’ wages and benefits and autonomy. High unemployment, especially in a state dependent on sales taxes, drives down public revenues, which means the state can’t fund the public services — like education and higher education — that workers and citizens need. Public workers — teachers, public health workers, snowplow drivers — are all threatened with diminished salaries and benefits because there is not much money, and, after all, that’s what’s happening in the private sector. And so the story goes, shifting money and power and hopes and dreams from ordinary workers and citizens and public services to corporate coffers and power brokers. Hurray for the recession.

This is the context our state legislators face as they start the 2014 legislative session. There are plenty of things they could do to re-channel the benefits of economic growth to working people rather than to corporate profits. Here is a short list:

  • Increase our state minimum wage to $12. Our lowest wage workers earn less than the inflation-adjusted level of the 1960s.
  • Pass paid sick days. No one should be forced to go to work sick, or leave their sick child miserably suffering at school.
  • Give child care teachers a raise. They deserve worthy wages. Investing in them is an investment in high quality early learning.
  • Expand access to higher education. Pass the Dreamer Act for immigrant kids and implement the Pay-It-Forward model of debt-free college financing for middle class students.
  • Close tax loopholes — and don’t create any new ones. Corporations that whine about wanting more public investment in education and infrastructure need to start paying up.

Is this a pipedream? Maybe. But if voters demand action from the people who represent them, then maybe we’ll start getting our economy working for the benefit of all of us … some day.

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Posted in Minimum Wage, Paid Sick Days, State Economy, Tax Reform

Comments

  1. Jeanne Large says:

    Good list. I’m ready to pay some state and local taxes to support education, transportation and infrastructure. How about you?

  2. bill wald says:

    Will raising the minimum wage decrease the gini index or simply increase the numbers for the bottom 50% so there appears to be an improvement for the bottom 25%? I suspect that very few people understand the vast difference between median wage and mean wage. If the minimum wage in WA is raised to $15 and nothing else was changed then families in WA making twice the minimum wage would still qualify for reduced school lunches.

    The education problem is that a majority of high school graduates need a year of junior college to get a proper high school education. Employers demand a college degree in hopes that they will get applicants who can read and write plain English and do simple arithmetic. The solution is teaching general work skills to the bottom 80% who should not be in college and union apprentice programs for those who need higher blue collar skills.

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