EPI President Lawrence Mishel testified in front of the United States House Committee on Education and the Workforce today, on the state of the U.S. economy, prospects for America’s workers, and policy solutions to address our economic challenges.
In his testimony, Mishel noted that, despite a year of relatively robust job growth, we still need to add 5.6 million jobs to return to pre-recession health in the labor market. At the current rate of job creation, we will reach this milestone in August 2016. To spur job creation and achieve full employment, Mishel encouraged Congress to enact a program of public investment and infrastructure spending, as well as targeted employment programs in communities where unemployment remains high. At the same time, he said, the Federal Reserve should target full employment, and not seek to slow the economy until wage growth has picked up.
“The most important economic policy decisions being made about job growth in the next few years are those of the Federal Reserve Board as it determines the scale and pace at which it raises interest rates. Let’s be clear that the decision to raise interest rates is a decision to slow the economy and weaken job and wage growth,” said Mishel. “The key danger is slowing the economy too soon rather than too late.”
Mishel also discussed factors contributing to wage stagnation, as well as policies to generate broad-based wage growth, including raising the minimum wage, updating overtime rules, strengthening the right to collective bargaining, and regularizing undocumented workers.
“It is a welcome development that policymakers and presidential candidates in both parties have now acknowledged that stagnant wages are a critical economic challenge. This will create a very useful debate on the best way to lift wages for the vast majority,” said Mishel. “The goals that economic policy must focus on are creating jobs and reaching robust full employment, generating broad-based wage growth, and improving the quality of jobs.”
For more resources on the issue of wage growth, EPI’s Raising America’s Pay initiative is a multiyear research and public education initiative to make wage growth an urgent national policy priority. By explaining wage and benefit patterns—and the role of labor market policies and practices in suppressing pay—the initiative is identifying policies that will generate broad-based wage growth.