Clinton Speech Confirms That Presidential Campaigns Will Focus on Wage Stagnation
Hillary Clinton appropriately defines her economic policy goal as raising “incomes for hardworking Americans so they can afford a middle-class life” rather than “hitting some arbitrary growth target untethered to people’s lives and livelihoods.” The object of economic policy, in other words, is not growth or redistribution but higher living standards for the vast majority! Bravo. Equally important is that one of her three pillars of growth—fair growth—focuses on ending the wage stagnation that has limited median incomes for the past generation. America “needs a raise” and we need to reward “actually building and selling things.” As Clinton said, “If you work hard, you ought to be paid fairly.” So, if there was any doubt that addressing wage stagnation would be the central economic policy issue debated in the upcoming Presidential election then Hillary Clinton’s economic vision speech ended it.
Clinton’s speech sets the foundation for the emerging debate on wages by asserting that: (1) wage stagnation is the result of policy choices (it should be added, “on behalf of those with the most income, wealth and power”); and (2) ending wage stagnation is the “core economic challenge” to boosting middle class incomes and lifting more households into the middle class. Let the debate begin. We look forward to hearing from other candidates not only how they plan to obtain growth, but also how such growth will translate to higher pay for the vast majority. That generally hasn’t happened since 1979.
This is, of course, exactly the debate we hoped for when the Economic Policy Institute launched its Raising America’s Pay initiative in June 2014, and it is also how we framed the debate in our initial paper (“Raising America’s Pay: Why It’s Our Central Economic Policy Challenge”) and in our Raising America’s Pay policy agenda. In fact, making wage growth the central economic issue has been a key conclusion of every State of Working America published since its inception in 1988. Thanks are due to the fast-food and Walmart workers and their allies for establishing that wage growth for the vast majority is the immediate and central economic policy issue. Let the debate begin among the Democrats, among the Republicans, and then between the parties in the general election.
The Clinton speech is noteworthy for what is included as well as what is excluded. It was a positive sign that there was no focus on skill and education upgrading to solve our wage problems (on the other hand, education and skill upgrading was discussed as providing upward mobility of today’s youth). Similarly, it was good to see that a dead-end policy solution such as middle-class tax cuts were not offered to offset wage stagnation, though Clinton did suggest middle class families “deserve tax relief.” Rather, the focus was on improving labor standards by setting a higher minimum wage (a $12 wage in 2020 would lift wages for the bottom fourth), ending wage theft, stopping misclassification, and widening overtime eligibility for salaried workers that the president has proposed (that would aid roughly 13.5 million workers). It was critically important that Clinton stressed the importance of rebuilding collective bargaining given that the erosion of such bargaining has been the single largest factor eroding pay for union and nonunion workers in the middle class. And we know that Clinton proposes to be aggressive in providing undocumented workers a path to citizenship, something that will also raise wages for those workers but also for those in similar fields of work.
It is terrific that Clinton specifically talked about more growth to get to full employment to “give people choices about where to work” and so “employers have to offer higher wages and better benefits in order to compete with each other to hire new workers and keep productive ones.” This is an important topic too frequently left aside in current economic policy discussions. I can’t say I’m persuaded that some of the things Clinton mentions are the important drivers of getting us to full employment in a year or two: for example, business tax reform, eliminating red tape, or immigration reform are items which, at best, could be on a long-term growth agenda. A burst of public investment, which she mentions, is the more likely tool to get us to full employment.
Finally, it’s noteworthy that Clinton is proposing to steer Wall Street activity toward more productive purposes and to have financial actors punished for their crimes. That’s certainly warranted and long past due. I would have liked to see policies which shrunk the financial sector and restrained their pay, along with efforts to restrain executive pay. We won’t be able to raise the middle if the bulk of the income is grabbed by the top.