Economy Boosting Jobs

Last week, Dylan Matthews wrote that, “You can always rely on the Economic Policy Institute for really depressing charts about just how far behind the U.S. middle class is falling.” In an attempt to show our positive side, here’s a new video, from our friends at the Topos Partnership, that explains the economy in terms everyone can understand.

The video makes the case that helping low wage workers helps everyone, and it does it without depressing charts or regression analyses. Given that today’s weak labor market is due to a severe demand shortage, raising wages at the bottom and middle can indeed boost economy-wide demand. When the economy is closer to full-employment, raising wages at the bottom and middle may not necessarily lead to higher GDP, but increasing the minimum wage and strengthening labor standards creates a floor that raises living standards for everyone. That, to us, is the very definition of a better-working economy.

  • benleet

    It’s too simplistic, I think, it will not grab anyone’s attention. The message is “we need higher wage income for the 80% or so who work for wages, the vast majority of workers. The rich owners are taking too much of the surplus of production, or profits, keeping it for themselves, which in turn perverts the financial system with massive inflows with no productive outflows.” I’d prefer a more divisive message. Is that depressing? I think so. Today EconoMonitor has an article “Was the World Economic Crisis Avoidable?” raising similar questions about distribution, the failure of wage income to keep pace with productivity. Mass production requires an equitable distribution of income, this concept Marriner Eccles wrote about. He was the Chairman of the Fed from 1934 to 1948 or so. It’s basic to modern society and the benefits of mass production. The issue of distribution of surplus income will probably become the central issue discussed in democracies that wish to have a high quality of life. Mexico should talk about it, they are really failing in this regard. It affects employment levels, it makes the economies of mass production possible, and allows growth to be commensurate with technological advances. So make a longer version, 15 minutes, I suggest, and put it on YouTube. Report the strategy of pouring $2.1 trillion in direct government job creation, as EPI proposes. This makes for a tighter labor market and higher wages. Sustainability of government jobs is not the issue, as Paul Solman at PBS claimed recently in a debate with Dean Baker. Government jobs are needed to restore income balance and additional purchasing demand, and will disappear or diminish when those balances and demand are restored. Tall order, but I hope you do it.

  • StanO360

    Of course higher wages in a long term, healthy economy, sustainable way ONLY comes by a worker increasing the VALUE of what they do. Otherwise it just creates imbalances in the market. Inflation, irrational job choices, irrational investments. I.e. someone does not build a factory due to labor costs. Or, someone doesn’t start a new business because they make an artificially high wage.

    Investment slows as profits drop and flows into bonds or overseas investments. Less capital for research, building, etc.

    Speeds up automation and workforce reductions. Of course, concurrent inflation will match wages NOT tied to increased value/productivity.

    So the key is, increase worker value not artificially raise wages. Do things that help companies domestically be and stay competitive. Companies are leaving the US NOT because of wages, but because of taxes and regulations. Medical devices, high tech manufacturing, etc. are leaving because they lose 30% just for being here, plus onerous regulations.