We’re apparently more ideologically divided than ever, politics remain horribly gridlocked, there’s deep confusion about where the economy’s headed…so what better time to trot out an ambitious policy agenda?!
Obviously, there’s a selection bias in play, but everywhere I turn these days, people are asking me (and, I presume, others like me): what should we be doing to help the middle class, push back on inequality, and improve the quantity and quality of jobs? In other words, interested parties are looking past the present (and the entrails of political shockers just down the road in VA’s seventh district) and thinking in terms of rolling good policy ideas out of the hangers, onto the tarmac, and lining them up before a very long runway.
I think that makes sense, and anyway, what’s the alternative? Sit on your hands for the next how-ever-many years?
Here are a few slides from a recent presentation on diagnosing the inequality problem and prescribing policy solutions, largely under the framework of full employment.
The first few slides list a number of the factors widely viewed as behind the increase in inequality with two totally subjective grades. The first number, e.g., 10 for globalization, is how heavily I weight the factor in explaining inequality’s growth on a scale of 1 to 10. The second—low, medium, high—is how amenable I think the factor is to policy intervention, assuming functioning politics and decent policymakers.
It’s typical to cite globalization and technology, as I do, but the others—labor standards, financialization, even full employment—often fail to get mentioned, a huge oversight. Given that technological change is an ongoing, secular force in the workplace and economy, I give it a lower weight, though who knows? The “medium” for the entry in terms of it policy elasticity is born of the fact that I don’t think there’s much we can do to change the pace of innovation, though divesting in R&D obviously doesn’t help. However, over the long-run a highly educated workforce is essential for developing and exploiting new technologies.
The last slide lists a set of ideas to promote full employment, ones familiar to OTEers as well as to those who’ve visited the website of CBPP’s full employment project. Regarding smart fiscal policy, a CDSH is a “cyclical dove, structural hawk,” a view that no less than Treasury Sec’y Lew endorses here. Budget deficits need to grow in bad times and fall only once a solid recovery is underway (austerions are cyclical hawks, prescribing deficit reduction in the face of weak demand).
OJT stands for “on-the-job training”—see the Holzer/Lerman paper on the full employment site. The other stuff should be familiar and each one corresponds to a paper on the site. The consideration of job quality as well as quantity is an important addition, and Ross Eisenbrey’s paper on the relevant policies in that space is very strong. I summarize some of his key suggestions below.
It’s still early and I’m highly caffeinated so perhaps this is all delusional, but I’m telling you: I strongly suspect that many more people than you might think actually would like to see a functional, effective government sector pursue these policies. They just don’t believe we’ve got such a sector, and, of course, they’re right. For now.
[Summarizing some of the ideas to improve job quality from the Eisenbrey paper cited above:
—Updating/increasing the salary threshold below which salaried workers are eligible for overtime pay. This threshold—the so-called “salary test”—is not indexed to inflation, meaning the unless policy makers act, nominal earnings growth will increasingly exempt salaried workers from time-and-a-half pay, even when their occupational duties mean they should be non-exempt (there is a “duties test” but it is less reliably applied in practice than the salary threshold). Simply adjusting the current threshold for inflation based on its nominal value back in the mid-1970s would more than double it from $455 to about $980 and likely provide OT eligibility to millions of workers.
—Improve the enforcement of “wage and hour” rules. Incidence of “wage theft” (not paying workers what they are contractually owed), misclassification (classifying regular employees as self-employed who are thus ineligible for minimum wages, overtime, and other established protections), non-payment of overtime, has led to significant wage losses for many lower-paid workers.
—Level the playing field for union organizing. Eisenbrey presents extensive evidence of both legal and structural changes that have tilted the balance against those interested in boosting the number and ability of workers to engage in collective bargaining, thus blocking an essential rebalancing of bargaining power. Reversing this tilt requires allowing unions to organize sub-contracted workers, crackdowns (versus “wrist slaps”) on employers who illegally block organizing drives, reducing waiting periods between drives and elections, and providing union advocates the same access to potential members that employers currently enjoy.]