The President Drills Down to the Core Challenge: Creating Good Jobs and Raising Wages

In his State of the Union address last night, President Obama articulated some core truths that ought to guide economic policy, with lines like “the best measure of opportunity is access to a good job,” and “Say yes.  Give America a raise.”

We need policies to create more jobs, but we must insure that they’re good jobs, with benefits and decent pay that can support a family and fuel economic growth based on what people earn on the job, as opposed to what households borrow or “gain” in asset bubbles.

The president highlighted the problem of stagnant wages, noting that “women hold a majority of lower-wage jobs—but they’re not the only ones stifled by stagnant wages.” This is absolutely true. I illustrated this point recently by pointing out that the share of young (ages 25-34) men earning poverty-level wages ($11.29 in 2012) had doubled from 1979 to 2012, jumping from 10.8 to 25.5 percent. Young women were even more likely to earn poverty-level wages, with 31.1 percent doing so in 2012. There’s been some, but not much, progress for women on this front, since a third earned poverty-level wages in 1979.

This is not news to us at EPI—we’ve focused on job quality and wage stagnation since our founding in 1986, and pounded on these themes in the twelve editions of the State of Working America and numerous other works. Generating better jobs and better pay is the key to addressing inequality and strengthening and expanding the middle class. Unfortunately, we have only seen broad-based wage growth for a few years (the late 1990s) over the last four decades. Over the last ten years there has been no wage growth for the vast majority of workers, white collar or blue collar, among college and high school graduates. We cannot get where we want to go unless different wage dynamics are generated and that has to be a central focus of economic policy. The president’s call for Congress to pass the Harkin-Miller minimum wage bill was absolutely right, as is his executive order requiring federal contractors to pay $10.10. Providing income to working families through a robust social insurance system, and work supports such as an improved EITC, are also pillars of economic growth and living standards.

The president also said that “we have to make sure that every American has the skills to fill those jobs.” This is also true, and relates, in my view, to facilitating upward mobility—providing education and skills to disadvantaged and working class children so they can obtain access to the good jobs we need to generate. But we know from the president that high school graduation has hit “its highest level in more than three decades” and that “more young people are earning college degrees than ever before.” The problem workers today face is not a skills deficit but a wage deficit, a lack of good jobs. This is clearly evident to anyone open to seeing the accumulating evidence of stagnant wages and underemployment of college graduates.