Outten & Golden: Empowering Employees in the Workplace

Lifelong Wage Warrior Larry Mishel Takes On Trump’s Tax Scam

December 19th, 2017 | Isaiah J. Poole

Lawrence Mishel, the outgoing President of the Economic Policy Institute, is finally – after 30 years at the progressive economic research organization – seeing one of his wishes come true. Leaders in both major political parties are talking about wage stagnation, and how to address it.

“I’ve always wanted to elevate the concerns about people’s paychecks as the salient economic issue,” he said in an interview in his downtown Washington office.

The bad news is that the stagnant wages conversation is being co-opted by the Trump administration and congressional Republicans to sell a tax cut bill that will primarily benefit corporations and the wealthy.

Even so, Mishel counts that as progress. When Mishel joined the then-embryonic EPI as its first research director in 1987, all of the major right-wing think tanks denied that wage stagnation among the working class was a problem, even though EPI was among the first to show the trend unfolding, using the federal government’s deep trove of economic data. Few Democrats recognized the issue, either, Mishel said.

Today, “what’s interesting is there is so much of a dedication on the Trump team to link everything they are going to do to good jobs and wages, something that Democrats have not always done, for mysterious reasons,” Mishel said, pointing as an example the administration promoting its tax bill as “a $4,000 pay raise to workers.”

“The polls show that not many people buy it, even among Republicans, but it’s interesting that this transformation has happened,” Mishel said.

A Lifelong Passion

Mishel has had a lifelong passion for the plight of workers, going at least as far back as his Philadelphia boyhood and days at Penn State University. At Penn State, he combined that passion with a passion for economics, and after receiving advanced economics degrees from American University and the University of Wisconsin at Madison, he went to work as an economist for several unions, including the United Auto Workers; United Steelworkers; the American Federation of State, County and Municipal Employees; and the Industrial Union Department of the AFL-CIO.

When Mishel became president of EPI in 2002, the think tank was beginning to gain a reputation as being more than an advocate of pro-worker policies; it has a reputation for rigorous, fact-based scholarship and economic analysis that is relied on by a broad range of scholars, journalists and lawmakers. Its “State of Working America” reports have become a bible for people seeking to understand the economy from a Main Street point of view.

This month, Mishel hands over the reins of the EPI presidency to Thea Lee, who was previously deputy chief of staff for the AFL-CIO and a leading spokesperson for the union on issues like the impact of trade policy on workers.

But Mishel says he’s not going to disappear; he plans to continue to do research for EPI. “I want to tell the narrative about how wages were suppressed,” he said, particularly to make the point that four decades of stagnant wages for the working class is the result of, to borrow from the title of an EPI publication, “failure by design.”

An Economic Conundrum

The current state of the economy presents a classic economic conundrum. Economic textbooks say that with today’s national unemployment rate, 4.1 percent, we should see wage inflation caused by a tight labor market.

The last time the national unemployment rate averaged 4 percent, in 2000, wages rose on average about 5 percent a year, as shown in this wage tracker by the Federal Reserve Bank of Atlanta. In 2017, the wage tracker shows wage growth in 2017 hovering around 3.4 percent. EPI research further finds that this substandard wage growth has been even worse for people at the lower end of the income scale, whose wages in 2016 grew only about half as much as those of the top 20 percent.

“A true sign of a robust economy is rapid wage growth, and we don’t see wages growing that much faster than inflation, even with roughly 4 percent unemployment,” Mishel said.

Barring a last-minute surprise, passage of the Trump administration/Republican tax bill this week appears inevitable. Asked to what the American economy might look like a year after the tax bill is passed, Mishel predicted a continued stock market rise because companies, already flush with cash and finding themselves flooded with more, will continue to choose to use that cash to buy back their shares rather than invest in creating new jobs.

The big winners will be stockholders and corporate executives. Workers? Not so much. A boost in stock prices at best only benefits the third of American workers who have meaningful stock holdings, primarily retirement accounts. And even among that group of workers, the average retirement account stock portfolio is less than $100,000.

“The rising stock market is not a sign that the economy is doing well,” Mishel said. In fact, an overheated stock market, disconnected from the pulse of the Main Street economy, is prone to the kind of explosive bubble-burst that the nation saw in 2008.

What We Need Instead

What we need instead, Mishel said, is structural changes that will lead to real wage growth and improved working-class living standards. Those policies include:

• Raising the minimum wage, which Mishel said would have ripple effects beyond low-wage workers to boost the take-home pay of about 30 percent of the workforce.

• Targeting job creation in areas of high unemployment, which are disproportionately communities of color. Ultimately, government policy should be to ensure that every person who wants a job has access to a job, publicly funded if necessary. “You want a situation where employers are chasing after workers, and not workers chasing after employers. When employers are chasing after workers, wages go up,” Mishel said.

• Rebuilding the collective bargaining system. In 2016, only about one in 10 workers belonged to a labor union, a close to 50 percent decline from 1983. Nearly half of those work in the public sector. In private companies, fewer than one in 16 workers – less than 7 percent – belong to a union. If unions are stronger, Mishel said, “workers in non-union employers benefit as well, because their employers will follow the lead of the employers where collective bargaining is setting the standard. …I don’t think we will ever get robust middle-class wage growth or have the vibrant democracy that we need without reestablishing collective bargaining.”

• Assuring what Mishel calls “day-one fairness,” which would include eliminating such practices as misclassifying full-time workers so they are not eligible for health benefits or overtime, or forced arbitration and noncompete clauses that prevent workers from challenging bad worker policies or even leaving a bad employer to work for a competitor.

Having Their Moment

When Mishel is presented with the view that Donald Trump’s presidency and right-wing control of Congress has placed many of these policy goals further out of reach, he offers a contrarian view.

“The right is having its moment now,” he said, “but what has happened, though, is that the traditional stranglehold on the Democratic Party policy agenda by what you could call the corporate Democrats and their friends has been broken… The center-left policymakers have moved much closer to where the Economic Policy Institute has always been. So [with] the next wave of candidates and the next wave of legislation that comes if and when Democrats have electoral victories, we will do a lot better than we did during the Clinton era or the Obama era.”

Examples include the increased willingness of the Democratic Party mainstream to embrace universal health care, a $15 minimum wage by 2023, and support for collective bargaining for all public employees, Mishel said.

With this change, “you will see the Economic Policy Institute emerge as a much more important source of policy proposals,” Mishel predicted. “Our time will come again; there may be a Democratic House in 2019, and who knows about the Senate? Nothing is for sure, but it is not as grim as ‘the Democrats will never get back.’”

The People Can Win

In the meantime, Mishel advises people concerned about the state of the American worker to not think of the economy as “broken.”

“People walk around as if we have a bad economy,” Mishel said. “We don’t have a bad economy. It’s been built to do what it is doing, which is skimming the most for those at the top.”

That should be heartening, he went on to say, because changing the economy is “a matter of organizing and policy and mobilization.” That work won’t be easy, he said, but “the people can win.”

This blog was originally published at OurFuture.org on December 19, 2017. Reprinted with permission.

About the Author: Isaiah J. Poole is communications director of People’s Action, and has been the editor of OurFuture.org since 2007. Previously he worked for 25 years in mainstream media, most recently at Congressional Quarterly, where he covered congressional leadership and tracked major bills through Congress. Most of his journalism experience has been in Washington as both a reporter and an editor on topics ranging from presidential politics to pop culture. His work has put him at the front lines of ideological battles between progressives and conservatives. He also served as a founding member of the Washington Association of Black Journalists and the National Lesbian and Gay Journalists Association.

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