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News from EPI EPI Lays Out Agenda to Raise America’s Pay

There is now widespread agreement across the political spectrum that wage stagnation is the country’s key economic challenge. Wages for the vast majority of American workers have stagnated or declined since 1979, and wage stagnation has broadened over the last dozen years to include college graduates as well as those without a college degree. Importantly, wages stagnated despite ample productivity gains over the last three-and-a-half decades that provided the potential for widespread wage growth.

As EPI has demonstrated throughout its Raising America’s Pay project, wage stagnation is not inevitable. It is the direct result of public policy choices on behalf of those with the most power and wealth that have suppressed wage growth. Because wage stagnation was caused by policy, it can be alleviated by policy.

In How to Raise Wages: Policies That Work and Policies That Don’t, EPI President Lawrence Mishel and Vice President Ross Eisenbrey lay out a series of concrete, achievable policies that can raise wages, and explain why some of the most frequently cited policies will not help. The paper provides the underpinning of EPI’s Agenda to Raise America’s Pay—an 11-point set of policy solutions that policymakers can and should adopt to combat and reverse the past three-and-a-half decades of wage stagnation.

“Leaders across the political spectrum have finally acknowledged that wage stagnation must be addressed in order to fuel middle class income growth and reduce income inequalities,” said EPI President Lawrence Mishel. “Unfortunately too many people believe nothing can be done to lift wages. They are wrong. Policies can be adopted which strengthen workers’ ability to obtain higher wages.”

Because a tight labor market will drive up wages, Mishel and Eisenbrey argue that policymakers should make full employment a top priority. Notably, the Federal Reserve should keep interest rates low until nominal wage growth reaches 3.5 to 4 percent, and Congress should enact employment programs targeted to hard-hit communities.

Mishel and Eisenbrey also lay out a set of policy changes that will directly support workers’ individual and collective power to bargain for higher wages. These include raising the minimum wage, updating overtime rules, strengthening the right to collective bargaining, regularizing undocumented workers, ending wage theft, prohibiting forced arbitration schemes that limit access to courts, and eliminating wage fraud which treats employees as independent contractors.

Lastly, Mishel and Eisenbrey note that restraining the growth of top one percent incomes will not adversely affect the size of our economy but will instead allow the vast majority to claim a larger share of economic growth through wage gains. Doing so requires curtailing excessive growth of executive and financial sector pay.

“We are releasing the Agenda to Raise America’s Pay to show that there are steps we can and should take to lift wages for the vast majority,” said Eisenbrey. “We know how to generate robust wage growth and now it is time for policymakers to make this happen.”

Along with the briefing paper, the 11-point Agenda to Raise America’s Pay will be a crucial guide for anyone concerned with Americans’ stagnant wages—including policymakers at the Federal, state and local levels and presidential candidates.

The 11 points of the Agenda to Raise America’s Pay are:

  • Raise the minimum wage to $12.00 an hour by 2020
  • Update overtime rules
  • Strengthen collective bargaining rights
  • Regularize undocumented workers
  • Provide earned sick leave and paid family leave
  • Close race and gender inequalities
  • Support strong enforcement of labor standards
  • Use monetary policy to encourage economic growth
  • Enact targeted employment programs and undertaking public investments in infrastructure to create jobs
  • Reduce our trade deficit
  • Use the tax code to restrain the incomes of the top 1 percent

The Agenda to Raise America’s Pay serves as a counterpoint to commentators who bemoan the lack of solutions to wage stagnation, and will be an essential document for policymakers, members of Congress, and other leaders looking for ways to raise wages.