Cover Story from Winter 2007 EPI Journal
The Agenda for Shared Prosperity
A new policy to address the middle-class squeeze
by Ross Eisenbrey, Mark Levinson, and Lawrence Mishel
In May 2006 EPI began developing an Agenda for Shared Prosperity that will provide America with a comprehensive, accessible, and inspiring economic agenda that will reduce economic insecurity and provide broadly shared prosperity.
The Agenda for Shared Prosperity will address the growing gap between America’s promise and its problems. The United States is rich in resources, with an energetic and entrepreneurial population, a $13 trillion economy, the world’s most advanced technologies, and a democratic system that is an inspiration for the world. But for most of the past quarter century, conservative economic policies have left the nation with stagnant living standards for the overwhelming majority, increased inequality that is polarizing our society and distorting our democracy, and growing insecurity for most families.
Thanks to economic policies that have shifted bargaining power away from the vast majority and toward employers and the most well off, rising productivity no longer raises pay and living standards for most working families. The steep drop in unionization rates (from 25% in the late 1970s to under 13% today); the failure to raise the real value of the minimum wage, let alone raise it in accordance with productivity (its value has declined by over 25% since the late 1960s); macroeconomic policy that has kept the unemployment rate too high for most of the last 30 years; unfettered globalization and offshoring that increasingly puts U.S. workers in competition with workers around the world; economic deregulation and the privatization of government services; and escalating pay for CEOs have all contributed to stagnant wages and growing inequality.An agenda of accelerated globalization and greater national saving, as some urge, will neither create needed growth nor reconnect pay and productivity.
Since 1980 the U.S. economy has grown at an annual average rate of slightly over 3% a year. But the benefits of this growth have gone overwhelmingly to the richest 10% of families and primarily to the upper 1%. The typical family’s income has risen modestly in this time period, with nearly all of the growth occurring in the late 1990s. Incomes for working families, however, are now lower than they were in 2000. Millions of Americans feel that their jobs, incomes, homes, access to education, health insurance, and retirement funds are ever more at risk. Inequality has risen to heights not seen since before the Great Depression—an America that once grew together is now growing apart.
Sadly, nearly half of all parents believe their children will not have a higher standard of living than they currently enjoy. America can do much better.
Alternatives to failed economic policies
Responding to this quiet crisis, the Agenda for Shared Prosperity is based on a simple idea: the success or failure of our economy is measured, not by the value of the stock market or the size of the gross domestic product, but by the extent to which the living standards of the vast majority of Americans are rising. The Agenda will offer alternatives to the failed conservative economic policies, whose implicit assumption is, in Jared Bernstein’s phrase, “YOYO” (You’re On Your Own). YOYO economics holds that the way to solve the economic challenges we face—from Social Security to health care to globalization to inequality—is a tax cut, a private health savings or retirement account, or further government cutbacks.
The Agenda will challenge the superficial assertion that global forces, technology, and competition have rendered the people of the United States helpless to do anything but adjust individually to the outcomes of an unregulated market. We will propose and promote ideas that are honest enough to gain public credibility, inspiring enough to give hope, and ambitious enough to match the scale of our problems.
The Agenda for Shared Prosperity will produce a monograph providing a narrative about the economy— how we got where we are and what economic challenges we face—and an agenda to restore broadly shared prosperity and lessen economic anxieties. It will explain the policies—government retrenchment, deregulation, privatization, deunionization, globalization—behind this failure, and it will outline a bold policy agenda to address the serious problems the nation faces.
Starting in January 2007, policy “white papers” addressing health care, retirement security, work and family, globalization, and other critical issues will be released on a regular basis. These white papers will survey key economic challenges and offer policies that address them. There will also be numerous, shorter “topic papers” on more specialized issues, intended to supplement and provide knowledge that the longer white papers draw upon. For instance, the policy white paper on globalization will address the skewed exchange rates that fuel our current trade deficits, but a more detailed analysis of the problems caused by the misalignment of exchange rates and policy options and consequences will be covered in a special topic paper.
A Web site will provide access to all papers and offer links to other relevant material. In addition, there will be briefings that inform policy makers and public forums that provide opportunities for general discussion and debate on these issues.
We are inheritors of a tradition that believes government has an important role to play in stimulating economic growth, lessening inequalities and economic insecurities, providing affordable and accessible health care, ensuring retirement income security, respecting the rights of working people to organize to improve their condition, and helping families balance work and family life. In the tradition of the nation’s founders, the abolitionists, the progressives and populists, the New Deal, Fair Deal, New Frontier, and Great Society, the labor, civil rights, and women’s movements, and the economic and social progress of the late 1990s, we foresee a new generation of social and economic reform in America.
The Agenda will make its debut on January 11. Senator James Webb (Dem., Va.) will be the keynote speaker, Jacob Hacker (Yale University) will present a health care proposal to provide affordable and universal coverage, and Jeff Faux (EPI Distinguished Fellow) will present ways to manage globalization so that it benefits working people here and abroad. Video, audio, and other information will be available at www.SharedProsperity.org.