The Recession

Growing Income Gap Could Keep Economy from Full Recovery

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The federal stimulus package is a good way to jump-start our
economy, but it is not enough to solve the deep crisis of inequality
that has been building in this country for decades. A recent article
says the government needs to act quickly to start addressing the
growing income gap.

In an article in The Nation online, Christine Owens and Annette Bernhardt, executive director and policy co-director, respectively, of the National Employment Law Project
(NELP), say working families were struggling to survive even before the
current recession.

Although U.S. workers are more productive than ever,
they are faced with stagnant wages, disappearing benefits and little
job security. The Bureau of Labor Statistics reports that eight of the
top 10 occupations projected to generate the most jobs by 2016 are
low-wage jobs in the service sector.

Owens and Bernhardt write:

Policies focused only on job growth will simply put us
back on the path toward greater inequality. If we truly want to rebuild
a good jobs economy to “create jobs that sustain families and sustain
dreams,” as President Obama recently put it—we have to act now to lay
down the institutional and regulatory framework.

According to Owens and Bernhardt, there are four low-cost things the
government can do right now to put more money into the pockets of
low-income families:


Fully enforce minimum wage
and overtime laws. Growing numbers of employers are ignoring even these
most basic laws and retaliate against workers for reporting violations.
The reports cites the example of Wal-Mart, the nation’s largest
employer, which announced in December 2008 that it would settle 63
cases in 42 states charging unpaid wages, totaling at least $352
million and involving hundreds of thousands of current and former
workers.

Kim Bobo agrees. In her book, Wage Theft in America: Why Millions of Working Americans Are Not Getting PaidAnd What We Can Do About It, Bobo, executive director of Interfaith Worker Justice says wage theft is “an epidemic” in the nation, especially in the low-wage labor market.

“Wage theft is a national crisis,” she writes. “As many as 2 or 3
million workers are not being paid minimum wage; millions are denied
overtime pay.”

Owens, Bernhardt and Bobo all say the Department of Labor must
return to its core mission of safeguarding workplace standards by
increasing the number of inspectors, targeting industries with high
rates of violations, protecting workers who file complaints and
cracking down on employers that misclassify their employees as
independent contractors.

Recommendations in the NELP article include:

  • Raising the federal minimum wage. A recent study by the Federal
    Reserve Bank of Chicago found that an increase in the minimum wage
    boosts consumer spending more than tax cuts, as families spend their
    paychecks at local businesses. The NELP article calls for an increase
    in the federal minimum wage, starting next year and phasing in over
    multiple years to make up lost ground.
  • Using federal contracts to create living-wage jobs. Every year, our
    government spends $400 billion on contracts with a wide range of
    companies for goods and services, financing more than 2 million jobs.
    But significant numbers of these jobs pay low wages and provide no
    benefits, in industries such as utilities and housekeeping, property
    maintenance and repair, clothing and apparel and food preparation. NELP
    says federal contracts should favor employers that pay living wages,
    provide health benefits, offer quality training and obey labor laws.
  • Enacting the Employee Free Choice Act to guarantee that workers can form unions and bargain free of
    intimidation and abuse. They say the unions transformed manufacturing
    into a middle-class industry after World War II; today, it is doing the
    same for low-wage workers such as janitors, child care workers, home
    care workers and hotel room cleaners.

Owens and Bernhardt conclude that continuing on the path of rising
inequality is not inevitable. Saying our country responded to the Great
Depression by putting into place the policies that formed the basis for
several decades of strong economic growth and shared prosperity, we can
do the same today.

We now face another deep economic crisis, and another
opportunity to set the bar higher. Let’s not just stimulate the
economy; let’s rebuild it with good jobs.

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