Robert Reich Makes The Case For Trickle-Up And EFCA

3 comments January 27th, 2009at 07:17am Posted by Eli

Hey, instead of giving massive tax breaks to rich people and corporations, how about improving wages instead?

Why is this recession so deep, and what can be done to reverse it?

Hint: Go back about 50 years, when America’s middle class was expanding and the economy was soaring. Paychecks were big enough to allow us to buy all the goods and services we produced. It was a virtuous circle. Good pay meant more purchases, and more purchases meant more jobs.

At the center of this virtuous circle were unions. In 1955, more than a third of working Americans belonged to one. Unions gave them the bargaining leverage they needed to get the paychecks that kept the economy going. So many Americans were unionized that wage agreements spilled over to nonunionized workplaces as well. Employers knew they had to match union wages to compete for workers and to recruit the best ones.

Fast forward to a new century. Now, fewer than 8% of private-sector workers are unionized….

(…)

It’s no wonder middle-class incomes were dropping even before the recession. As our economy grew between 2001 and the start of 2007, most Americans didn’t share in the prosperity. By the time the recession began last year, according to an Economic Policy Institute study, the median income of households headed by those under age 65 was below what it was in 2000.

(…)

The way to get the economy back on track is to boost the purchasing power of the middle class. One major way to do this is to expand the percentage of working Americans in unions.

Tax rebates won’t work because they don’t permanently raise wages. Most families used the rebate last year to pay off debt — not a bad thing, but it doesn’t keep the virtuous circle running.

Bank bailouts won’t work either. Businesses won’t borrow to expand without consumers to buy their goods and services. And Americans themselves can’t borrow when they’re losing their jobs and their incomes are dropping.

Tax cuts for working families, as President Obama intends, can do more to help because they extend over time. But only higher wages and benefits for the middle class will have a lasting effect.

Unions matter in this equation. According to the Department of Labor, workers in unions earn 30% higher wages — taking home $863 a week, compared with $663 for the typical nonunion worker — and are 59% more likely to have employer-provided health insurance than their nonunion counterparts.

(…)

Most of the time, employees who want to form a union are threatened and intimidated by their employers. And all too often, if they don’t heed the warnings, they’re fired, even though that’s illegal…. We tried to penalize employers that broke the law, but the fines are minuscule. Too many employers consider them a cost of doing business.

This isn’t right. The most important feature of the Employee Free Choice Act, which will be considered by the just-seated 111th Congress, toughens penalties against companies that violate their workers’ rights. The sooner it’s enacted, the better — for U.S. workers and for the U.S. economy.

The American middle class isn’t looking for a bailout or a handout. Most people just want a chance to share in the success of the companies they help to prosper. Making it easier for all Americans to form unions would give the middle class the bargaining power it needs for better wages and benefits. And a strong and prosperous middle class is necessary if our economy is to succeed.

Trickle-down has been discredited every single time it’s been tried, while trickle-up actually worked.  And yet, the former is still considered some kind of Serious Economic Theory, and the latter is completely ignored, or treated as taboo, “class warfare.”

I would like to see the Obama administration and the overwhelmingly Democratic Congress start focusing on Stuff That Works rather than Stuff That Rich And Powerful Elites like, but I won’t believe it until I actually see it.

Entry Filed under: Democrats,Economy,Labor

3 Comments

  • 1. Ruth  |  January 27th, 2009 at 10:11 am

    Good catch. Reich isn’t the only voice of reason, but the few there are have been resoundingly proved right by eight years of Eat the Poor ideology. Seems to be too obtuse for the wingers, that a salary creates a consumer, and this is a consumer economy. Q.E.D.

  • 2. Cujo359  |  January 28th, 2009 at 4:33 am

    You’d think that after a quarter century of not-so-spectacular growth followed by a crumbling economy, the folks who keep telling us that all that helping the workers earn more money is for morons and sissies would shut up for a while.

    You’d think that, but it’s not happening, is it?

  • 3. Eli  |  January 28th, 2009 at 7:17 am

    Dude, why do you hate America?


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