When it comes to affordability, common efforts go to driving down prices alone, according to Josh Bivens, chief economist at the Economy Policy Institute. But “affordability is the outcome of the race between incomes and prices. You want to make sure incomes are always ahead in that race and growing faster over time,” Bivens explained.
But over the past 30 or 40 years, wages for the majority of Americans have lagged behind what the economy could’ve paid out, said Bivens, explaining that labor markets under capitalism are tilted toward employers. Policy must rebalance that. To start, Bivens said minimum wage has to rise consistently. The federal minimum wage is now effectively a joke, Bivens said, and though some states and cities have moved theirs ahead, it’s uneven.
Next is ensuring unemployment remains low for long periods of time. While this might sound like stating the obvious, the benefits stretch beyond just making an income: Low unemployment rates increase worker negotiating power and maintain their value. Threatening to quit is one way workers have leverage, Bivens explained, but that disappears if the labor market isn’t really strong. A report from the Economic Policy Institute showed that in low-unemployment labor markets, workers who are historically marginalized or work low-wage jobs have faster wage growth; one example, the report notes, is that during the initial years of the pandemic, employers of low-wage workers had to work harder—and pay more—to retain them. At the same time, the report explained, expanded child tax credits, direct payments, and food assistance happening at that time also strengthened the labor market.