Raising the median wage: Policies that target the middle class
...here are some ideas designed to meet that goal [boosting the median]:
* Full employment: Tight labor markets provide middle-wage workers with the bargaining power they lack when job markets are slack, as they have been, remarkably, 70 percent of the time since 1980. Employment is growing at a decent clip and we're headed in the right direction, but we're not there yet. That means there's still a role for accommodative monetary policy (keeping interest rates low at the Federal Reserve) and growth-oriented fiscal policy (e.g., an infrastructure investment program).
* Trade deficits/manufacturing jobs: We've run large trade deficits for decades in this country and that's cost us millions of better-than-average factory jobs and made it harder to get to full employment (without offsetting bubbles in other sectors). Achieving a better balance between our exports and imports would thus help middle-class workers through both of those channels (more jobs in the tradable-goods sector and tighter job markets). That means taking actions against competitors who manage their currencies to subsidize their exports to us and tax our exports to them.
* Strengthen collective bargaining: While traditional unions in the private sector are down to only about 7 percent of the workforce, the power of collective action was most recently demonstrated by the low-wage workers and their advocates noted above. Moreover, there's a strikingly negative correlation over time between the decline in union density and the share of income going to the top 10 percent (see Figure 32 here). The decline of unions and the ensuing loss of bargaining power is thus a clear factor in middle-class economic insecurity. That means going after state "right-to-work" laws (which undermine bargaining units by allowing for free-riders) and the sharply uneven playing field for those who want to form a union.
* Mid-market employment: There's an incorrect notion that all the middle-class jobs have dried up — we're now a nation of derivative traders and low-end service workers who serve them their food and dry-clean their suits. Wrong, says economist Harry Holzer, who has dived deeply into these waters and found growing demand for mid-level jobs in certain occupations. What's missing is a) enough labor demand to boost the wage offers in these jobs (see "full employment" above) and b) the necessary skill sets. That means developing "a new set of education and training policies and practices" that specifically targets mid-level growth occupations.
* Work/family balance: In our workforce, those who most need flexibility at work are often the least likely to get it. A single-parent in a low-paying, hourly job with shaky child care has the least ability to deal with a scheduling hiccup, while a denizen of the top 1 percent with Cadillac child care can typically take off whenever he or she needs to. I'd also put gender pay equity under this rubric (note median wage gender gap of 17 percent in the figure above). That means paid sick leave, robust maternal and paternal leave policies, worker-centered scheduling, rid the tax code of any discrimination against caregivers, and equal-pay-for-equal-work legislation.
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