2014: Year in Review!

Best Political Moments of 2014


1. IMMIGRATION ACTIVISTS successfully persuade President Obama to provide deportation relief to five million undocumented immigrants.

For years, a lack of legislative action on immigration, combined with a record number of deportations of undocumented immigrants, deeply disappointed immigrants' rights organizations. That all changed after advocates successfully compelled President Obama to provide mass deportation relief. Thanks to this action, millions of immigrants can now live without fear of the separation of families or being sent into political and economic turmoil. Obama's actions reaffirmed the American spirit of welcoming, with open arms, people who come to our shores in expectation of a better life.

2. ENROLLMENT in the Affordable Care Act beats expectations.

When the ACA website tumbled in October 2013, few political observers anticipated that the enrollment in the health care law would ultimately match, let alone beat, the initial administration expectations. Nevertheless, a tireless political effort from health care reform advocacy organizations and the White House helped make that possible. Today, as a consequence of this law and its expansion of insurance, millions of Americans are enjoying the kind of economic security for their families that long eluded them. That is no small feat.

3. CLIMATE ACTIVISTS march in New York City. 

Environmentalists put climate change at the forefront of the national political agenda this year. Consequently, President Obama's administration took decisive action on emissions regulations through the EPA's authority. No greater display of activism in favor of action was seen than in the streets of New York City earlier this year. The march that took place was reflective of a yearning among young Americans to our political leaders that we will not stand for policies of fossil fuel burning that would only worsen the planet for us.

4. FEMINIST ACTIVISTS ignite national dialogue, discussion, and changes in school and legal policies on sexual assault. 

More than ever before, feminists succeeded in spotlighting issues related to violence against women in a serious and significant way. The civil rights division of the Department of Justice is now investigating over 70 colleges and universities for how they handle sexual assault. Further, the "It's on Us" campaign, as well as the focus on cases of domestic violence in the NFL and other private sector organizations, forced many Americans to come to terms with the fact that there is a rape epidemic that has plagued our culture.

5. LABOR UNIONS win key NLRB rulings and state wage battles.

For the first time in a long time, labor activists could confidently claim that they had a fine year in terms of important policy wins. National Labor Relations Board rulings going after McDonald's and Wal-Mart, as well as minimum wage increases in various states across the U.S. and President Obama's executive actions on labor rights for workers under federal contractors, were hard-earned accomplishments for workers. These are gains that will only amplify economic growth as workers take home more money for their families and enjoy the blessings of a more economically stable and secure life.

Honorable Mention: LGBT activists win key policy victories on marriage equality and employment discrimination.

Best Policy Ideas of 2014

1.  REFINANCING STUDENT LOANS (Elizabeth Warren)

Student debt is exploding and there is no better spokesperson for students' rights amid this development than Senator Warren. She has stood strong for refinancing of student loans, among other progressive policy ideas that benefit students, and college-aged activists across the U.S. have noticed. Lifting unnecessary economic burdens from students would liberate them in a way that would allow them to have the kind of financial stability that encourages the growth of families and the broader economy.

2. VETERANS' AFFAIRS REFORM (Bernie Sanders)

For far too long, policymakers urged key changes in how the VA does business but these policies never saw the light of day. The VA scandal brought to light the need for some of these significant reforms. Thanks to Senator Sanders' legislation, these reforms are now law. Firing of senior executives who have not performed adequately and more funding for fixing backlogs in care are coming to fruition. This care for those who served us in war is badly needed and long overdue.


3. MAKE UNIONIZATION A CIVIL RIGHT (Keith Ellison)

Labor unions built the middle class and helped grow the economy over the last several decades. The benefits they bring home for millions of workers are ones that have made our country better and our families more prosperous. More broadly though, these benefits are ones that reflect the dignity that represents work and ought to be recognized as basic human rights and reasonable worker protections. Rep. Ellison understands this well and his proposal should be given more attention in the national political debate.


4. MAKE VOTING A CONSTITUTIONAL RIGHT (Mark Pocan)

Although the 15th Amendment technically makes clear that voting is a constitutional right, it needs to be further codified into law. Making it a clear-cut constitutional right, through the Amendment process, would do that. It would also help squash voter ID laws which are clearly partisan, discriminatory, and not founded in any real, substantive evidence with regards to alleged voter fraud. They seek to fix a problem that does not exist, to paraphrase my former state representative (Phyllis Mundy), and they're aimed at dissuading minority voters. Voting rights advocates would be on stronger legal footing if voting rights were reaffirmed in the Constitution though. Voting is a most sacred American right - it defines us a self-governing republic - so it should be recognized as such.


5. BAN FRACKING (Andrew Cuomo)

Governor Cuomo took a bold, yet overdue, step in banning hydraulic fracturing in New York. His assessment that the environmental costs of fracking outweigh the economic benefits is the kind of evidence-based, nuanced, and pragmatic approach that defines good governing. Ultimately, the people of New York will be better off - in their health, safety and welfare - because of this decision.

Honorable Mention: President Obama's initiation of the restoration of U.S. diplomatic relations with Cuba.


Best Movies I Saw in 2014

1. Boyhood

The film strongly resonated with me, given that I grew up in largely the same generational time-frame as the main character. The acting was quite superb, particularly on the part of Ethan Hawke, and the construction of the movie's narrative was extremely impressive.

2. Birdman

Though relatively slow-paced, the movie was excellent in that it brilliantly poked fun at the self-obsessed nature of many actors, producers, and directors.

3. Gone Girl

The acting in this film made it particularly good. Ben Affleck performed exceptionally well while Tyler Perry proved his chops as a serious actor. Meanwhile, Neil Patrick Harris was impeccable in his depiction of a rather bizarre character but, more than anyone else, Rosamund Pike shined as Amy.


4. Interstellar 

The special effects and emotional pull of the movie made it a must-see. Beyond that, Matthew McConaughey, Michael Caine, and Jessica Chastain were especially strong in their performances.


5. The Skeleton Twins 

The movie was far more serious in nature and tone than I anticipated. Nonetheless, the interesting mixture of dark humor with heart-wrenching matters like suicide and depression provided for a well-constructed story.


Honorable Mention: Rosewater


Best TV I Watched in 2014

1. The Affair

Fascinating storyline, with various subplots and different perspectives clearly at play on display, makes it a compelling series.

2. Homeland

The show is finally returning to the thrilling, complex, and smart nature of its first two seasons.

3. House of Cards

Although notably not as good as the first season, the second season of HOC was still satisfyingly action-packed and marked by great acting from Kevin Spacey and Robin Wright.

4. The Colbert Report final episodes

Stephen Colbert's star-studded, emotionally resonant series finale and his GW sit-down interview with President Obama made for an appropriately exciting and enthusiastic conclusion to the show.

5. The Tonight Show Starring Jimmy Fallon 

When Jimmy Fallon took over the reins of this show early in 2014, he proved he could make it an energetic, fun-loving program again. Thanks to his impersonations, skits, and social media-friendly bits, the show is deservedly enjoying its highest ratings since the days of Johnny Carson.

Honorable Mention: Last Week Tonight with John Oliver


Best Essays and Articles I Read in 2014


1. The Great Wage Slowdown

A comprehensive piece on wage and income inequalities puts into perspective the financial stagnation that besets too many Americans.


2. Going the Distance with Barack Obama

David Remnick's profile of President Obama, which includes an extensive and in-depth interview, is an amazing read as it gives us a rare glimpse of Obama's intellectual curiosity and complex understanding of politics and policy.


3. Buy Experiences, Not Things

The article wisely advises us to shun materialism in favor of rolling with the punches and enjoying the beauties of what life brings our way.


4. How David Gregory Lost His Job

This lengthy read is a very interesting, inside look at how exactly David Gregory fell from grace at NBC.


5. How Immigrant Rights Movement Got Obama to Change His Mind

The BuzzFeed exclusive gives credence to its editors' desires for the site to be taken seriously in its reporting as the article closely looks at how immigrants' rights' organizations helped bring about real changes in public policy.


Honorable Mention: In Defense of Obama


Best Books I Read in 2014

1. Capital in the Twenty-First Century

Thomas Piketty's comprehensive studies and analyses of inequality in the world force us to grapple with the dangerous effect that wealth disparity is having on economic growth and how government policies have only made it worse since the 1980's.

2. The Director 

David Ignatius has done an impressive job at weaving together a deeply interesting story about a Snowden-type leak at the CIA that forges unusual relationships in a dysfunctional world.


3. A Fighting Chance 

Elizabeth Warren's memoir reads less like a politically carefully constructed biography and more like a bold political manifesto. She draws a clear link between how her experiences growing up in a middle-class family helped shape her political and policy views that she espouses today. The background she provides gives readers a good glimpse into the story of one of our boldest modern politicians.

A Ranking of Christmas Music

1. THE CARPENTERS

The soothing voice of Karen Carpenter is heartwarming, clear, and beautiful all at once. Karen and her brother, Richard Carpenter, mastered the art of performing Christmas songs, albeit largely classic ones, that have broad generational appeal. Their music is easily recognizable to the ear as the duo's subdued enthusiasm - evident in their songs - has strong resonance with many Americans who celebrate Christmas. Their songs have earned permanent stay status on radio Christmas playlists precisely because they are so freaking good: pure and simple. "Christmas was meant for Karen Carpenter to sing about," Rolling Stone aptly wrote in a ranking of best Christmas albums. The Carpenters offer the best renditions of "Sleigh Ride" and "Do You Hear What I Hear?" I've ever heard. These two songs in particular are reflective of the smoothness and crispness with which the Carpenters deliver their Christmas music. Their collection of Christmas songs are, by far and away, the best - ever.

2. BING CROSBY 

Authoritative, classy, and majestic, Bing Crosby's voice lent itself to a Christmas collection that is worthy of its status as a cultural mainstay. Is there anyone else who could pull off such a wonderful rendition of "White Christmas"? The magic is in Crosby's deep voice which sounds like it could belong to the quintessential family patriarch at the head of a Christmas Eve dinner table anywhere in the United States. Importantly too, Crosby gave us this gem with David Bowie and for this masterpiece alone, he deserves a high ranking on lists such as this one.


3. FRANK SINATRA

Frank gives us a wealth of Christmas songs in which he delivers with signature snappiness and a mellow but pensive, reflective voice that pleases many listeners' sensibilities. Sinatra has especially strong performances of "The Christmas Waltz" and "Santa Claus is Coming to Town." In these songs in particular, Sinatra shines as a contemplative yet joyous style is purely on full display. He's the life of the party but, at the same time, incredibly low-key. That's what makes his Christmas music special.

4. MICHAEL BUBLE

Michael Buble's calm, brisk, and suave voice makes for an impeccable album, released in my freshman year of college at the perfect time: when I was somewhat homesick but reinvigorated at GW by the then-upcoming Christmas holiday. Buble's rendition of "Christmas (Baby Please Come Home)" is especially exciting, energetic, and enthusiastic. His Christmas music perfectly reflects the coexistence in his life of a fun-loving spirit with ostensible classiness. Though released relatively recently in 2011, Buble's Christmas album has merited its rightful place in radio holiday playlists for decades to come.


5. A CHARLIE BROWN CHRISTMAS

The Charlie Brown collection just really makes you feel at home. The tranquil, delightful melodies are brilliantly composed and pristinely peaceful and polished. This is the kind of stuff that kids waking up to Christmas morning ought to be listening to as they race down the stairs to open presents under the tree. Is there anything bad to say about this? I think not. So, I am sure my readers will complain about why it is last place here.


HONORABLE MENTION: Harry Connick, Jr.'s "When My Heart Finds Christmas"

I included this song maybe only because I love the line, "in my eyes are Valentines and Easter eggs and New Year's wine, but when my heart finds Christmas, my eyes will shine like new." Harry Connick, Jr. managed to do a really bang up job of magically incorporating various holidays into a (seemingly increasingly popular) soothing Christmas song. The song is wonderful because it resonates well a sort of childish innocence from an authoritative-looking fella like Harry Connick, Jr.

UPDATE ON 12/23/16: Shame on me for not including Andy Williams with his beaming, magnificent voice that literally lifts your spirits, especially in his thunderous hit, "It's the Most Wonderful Time of the Year."

The Problem of Stagnant Income Growth in the United States

NOTE: Graph on the left originally appeared in a Center for American Progress publication.

MY FOLLOWING ESSAY BELOW WAS ORIGINALLY SUBMITTED FOR MY COURSE, POLITICS OF INEQUALITY IN THE U.S., TAUGHT BY PROF. ROBERT STOKER:

      The United States is currently experiencing what The New York Times recently dubbed “the great wage slowdown of the 21^st century.” [1] It is critical to recount how the country got here and what policies can be pursued to reverse this trend. In December 2007, the United States economy officially entered a recession – one so severe that it would ultimately be dubbed the Great Recession. On September 15, 2008, the recession was significantly worsened by the collapse of Lehman Brothers. A historic financial crisis was upon the country as markets tumbled, large financial institutions like the American Insurance Group and auto companies like General Motors sought government bailouts, and credit dried up, all in a period of just a few months. In late 2008 and early 2009, the financial crisis had a massive impact that was immediately felt across the country: large-scale job loss. In those months, the U.S. lost several million jobs – at an average rate of 700,000 job losses per month; the national unemployment rate ultimately peaked at 10 percent in October 2009 before job losses finally were reversed in February 2010. [2]

           Though the recession officially ended shortly before the resumption of job growth – in June 2009 – the recovery has been slow and not broadly shared. On the one hand, over 10 million new jobs have been created and there has been the longest stretch of uninterrupted job growth in history. The unemployment rate has declined to 5.8 percent, there are more job openings than at any time since 2001, and the economic recovery has outpaced the typical historical standard for recoveries from financial crises. [3] On the other hand, income inequality has continued to rise and wages and family income have been remarkably stagnant during the recovery. Consequently, despite seemingly strong economic indicators such as sizable GDP growth and over 200,000 jobs being created for several consecutive months in 2014, millions of Americans continue to believe the country’s economy is still feeble. [4] This view is shared on the part of the Economic Policy Institute (EPI). “An economy that does not provide shared prosperity,” the EPI wrote in August 2013, “is, by definition, a poorly performing one.” [5] According to Census data, median household income in 2013 – $51,939 – was eight percent lower than the median in 2007. This level was nearly nine percent lower than the median household income in 1999.[6] The lack of sizable income growth stands in stark contrast to the increasing productivity of American workers.

           The slow income growth in the recovery from the Great Recession is also particularly notable because in previous post-World War II recoveries from recessions, the job growth the U.S. is currently seeing was often accompanied by larger income and wage growth than the country is currently seeing. “Historically…low unemployment led to faster wage growth,” The New York Times asserted, “but that relationship appears to have broken down since the Great Recession.” [7] One especially noteworthy aspect of this development has been that, for the wealthy, incomes have risen dramatically in the recovery but that has not been the case for other income groups. Per Census data, income inequality dramatically increased between 1999 and 2013. However, in the recovery from the recession alone (2010-2013), households in the top five percent saw their average income rise five percent while average income for the middle 60 percent decreased.[8] Further, the monthly BLS Current Population Survey has found that household income has actually declined by 5.1 percent since the recession began.[9] More broadly, median inflation-adjusted income is $3,600 lower today than it was in January 2001, causing some economists to label the 2000s a “lost decade.” [10]

           As such, this income stagnation has coincided with slow wage growth as low-wage jobs comprise the bulk of the jobs regained since the recession. According to the Bureau of Labor Statistics (BLS), wages increased for private-sector workers by just 0.5 percent in the late 2012-early 2013 period in which the unemployment rate finally fell below 8 percent after 40 months above that level. In the last year, in which the unemployment rate fell below 6 percent, workers’ hourly earnings have increased by a mere 2 percent. [11] Economists David Blanchflower and Adam Posen have documented the problem of low wage growth and have concluded that it is a consequence, partly, of a large number of “part-time workers…want[ing] full time jobs.”[12] Indeed, though job growth has been unusually robust in recent months, the fact of the matter is that there is what FiveThirtyEight described last May as a “long-running shift toward temporary employment during the recovery.”[13] Bureau of Labor Statistics data reveal that more than seven million Americans are still working in part-time jobs despite actively looking for full-time jobs.[14] A deeper analysis done by the American Enterprise Institute found that the jobs created post-recession pay 23 percent less than the jobs that dominated the economy pre-recession.[15]

           As such, this quandary has meant that while the unemployment rate has technically decreased, there remains a stubbornly large number of Americans who are underemployed. There are 7.2 million workers, for instance, who are identified by the Bureau of Labor Statistics as “those working part-time who would prefer full-time work.” These workers are part of a subset of “marginally attached workers” and are thus not counted as part of the official U-3 unemployment rate.[16] Therefore, their plight is sometimes overlooked in the national press reports on strong economic growth. This development of low wage growth is vital for a key reason and that is that millions of Americans rely upon these jobs to provide them with financial support to build a family. The pay that is offered, especially in part-time work but also in full-time work, is rather paltry based on findings that the pay is not sufficient to support a family struggling to stay out of poverty, as will be demonstrated later.

           When Labor Secretary Thomas Perez candidly declared, “we suck” on the minimum wage, he was correct when considering the value of the minimum wage and our performance when compared to other industrialized advanced democracies. Perez’ Labor Department has published research that shows that a change in government policy could improve the wage outlook for millions of workers.[17] His assertion that government policy has an impact on improving the economic conditions of Americans is one that is borne out in other realms as well. In fact, as the Center on Budget and Policy Priorities noted, fiscal stimulus policies undertaken during the recession, such as President Barack Obama’s $826 billion American Recovery and Reinvestment Act (ARRA), prevented the economy from worsening, particularly with regards to unemployment and income thanks partly to infrastructure spending.[18]

           However, the Recovery Act included not just infrastructure spending, which helped in creating full-time jobs in the aftermath of the recession, but it also included cash assistance and tax-and-transfer policies. Such policies are federal tools intended to strengthen workers’ after-tax income – the actual money households keep after paying taxes – as a means of mitigating income inequality. According to the Congressional Budget Office, tax credits like these meant that the “after-tax income distribution is a little more equal than the market income distribution.” In fact, in 2010, for households in the lowest income quintile, the effect of taxes and transfers like those in the stimulus package was a massive difference of seven percent between their 2.3 percent share of market income and their 9.3 percent share of after-tax income.[19] Such ARRA tax credits included the Making Work Pay Credit, an expansion of the Earned Income Tax Credit, and other tax credits for individuals and small businesses that boosted Americans’ take-home pay.[20] As the CBO documented, “the sum of market income and government transfers, minus federal tax liabilities”—how they defined ‘after-tax income’—was one percentage point larger, for the bottom four quintiles of income distribution in 2010, than their pre-tax income. Therefore, the results of these tax credits indicate that they can be effective at reducing income inequality.[21] The results of these policies make clear that government policies aimed at boosting income through minimum wage increases, stimulus jobs spending, and tax credits are worth strongly considering if the United States seeks to resolve the problem of slow income growth.

           However, current federal government policy currently is insufficient with regards to supporting income growth and that ought to motivate reform. There are a number of alternatives that can be pursued to potentially ameliorate this problem. These alternatives include raising the national minimum wage to $10.10 and indexing the minimum wage to inflation, passing federal legislation akin to the American Jobs Act in order to increase direct infrastructure spending, and expanding the Earned Income Tax Credit to provide stronger assistance to childless workers. In exploring these alternatives though, it is crucial to determine who the relevant stakeholders are with regards to the potential implementation of these alternatives. When assessing the impact of these alternatives on the relevant stakeholders, there ought to be consistently applied criteria for measuring the effect of the alternatives. In terms of these policy alternatives, it is vital to assess how these alternatives would affect the labor market and the broader economy, what the cost to business would be, and whether they are politically feasible.

           For one, it is critical to analyze the impact of these policy alternatives on employment and economic growth.  Notwithstanding the slow recovery from the Great Recession, economic studies consistently demonstrate that job growth and economic prosperity are strongly correlated with income growth. Further, the more robust economic growth is for the broad middle class of American families in terms of employment, the stronger their income growth is – and vice versa.[22] The cost to business is important as well because prosperous businesses that create family-sustaining jobs help grow the economy and workers with solid income, in turn, can support jobs at these businesses through their purchasing power. The political feasibility is crucial to measure too because these policies could not come to fruition without sufficient support from legislators, either at the state or federal level. As such, there are vital stakeholders invested in these alternatives. These stakeholders include workers and their families, the business community, and political actors such as interest groups, members of Congress, and state governments.

POLICY ALTERNATIVES

           The first policy alternative to examine in combating wage stagnation is a proposal to increase the national minimum wage to $10.10 per hour by the year 2016 and indexing the minimum wage to inflation. In terms of the stakeholders, Senator Tom Harkin (D-Iowa) and Congressman George Miller (D-California), both retiring members of Congress, have introduced federal legislation to do this. President Obama has publicly endorsed this initiative, utilizing several of his weekly addresses and his 2014 State of the Union address to call for the wage hike. Political interests like progressive advocacy groups across the country, including labor groups such as the Service Employees International Union (SEIU) and Jobs with Justice, are also stakeholders here; they have also backed this measure.[23] For the President, congressional Democrats, and these political interest groups, the effect of a minimum wage hike would be a significant political victory for them. The workers that these political actors claim to represent are individuals who may increase their loyalty and attachment to the Democratic Party and these labor groups if a wage increase passed. On the other hand, a wage increase is opposed in the ascendant GOP congressional majority, who are friendlier to the interests of businesses, a stakeholder with key concerns, as will be described later. The level of $10.10 is not incidental; according to the Economic Policy Institute, such a minimum wage level would result in “bring[ing] a minimum-wage income back above the poverty line for a family of three.”[24]

           Indeed, a December 2013 study conducted by University of Massachusetts-Amherst economist Arindrajit Dube found that such an increase in the minimum wage would cut poverty by 1.7 percent.[25] In fact, an Economic Policy Institute analysis, of data from the U.S. Census Bureau and the Congressional Budget Office (CBO), shows why a policy debate on reducing poverty ought to include a discussion on the minimum wage. The analysis found that “today, at the federal minimum wage of $7.25 per hour, working 40 hours per week, 52 weeks per year yields an annual income of only $15,080 – [which] is below the federal poverty line for families of two or more.”[26] Further, the facts that the minimum wage has not kept up with productivity and has not kept up with inflation are key reasons why income growth has been stagnant. This problem, with regards to the minimum wage, is inextricably linked to the rise of income inequality in the last three decades in the United States. Therefore, it is crucial to examine raising the minimum wage as a policy solution precisely because, as the Center on Budget and Policy Priorities notes, “the decline in the minimum wage’s relative value has contributed to the increased dispersion in wages over the past few decades.” As the CBPP argues, a wage hike would mean more “adequate earnings” for more than eight million families, particularly low-income adults who are most affected by income stagnation. These workers would have financial burdens lifted from them; they would have an easier time affording basic needs and supporting their families.[27]

           In fact, a 2010 Massachusetts Institute of Technology (MIT) study demonstrated that the lack of minimum wage growth was the primary cause of rising income inequality in the last three decades.[28] As the minimum wage declined in real value over time, it failed to be sufficient for workers seeking to make a living and it meant the value of income for millions who rely upon the minimum wage declined. Indeed, Bureau of Labor Statistics data shows why this is vital: the purchasing power of the minimum wage has declined by 23 percent in inflation-adjusted dollars in 1968. In very real terms, the decline in value of the minimum wage has dragged down income for low-income and middle-income Americans.[29] If the minimum wage were increased and indexed to inflation, for workers, its purchasing power would significantly increase and these workers could effectively utilize the pay to spend on goods and services thus supporting jobs at other businesses too. Therefore, businesses, a key stakeholder in this alternative, could potentially benefit from a minimum wage increase in this way.

           Increasing the minimum wage to $10.10 per hour, and indexing the minimum wage to inflation as Harkin and Miller propose, could provide substantial benefits to millions thus strengthening wage growth. Economist David Card has found that the effect of minimum wage increases in the early 1990’s was that they ultimately “raised…average wages.”[30] According to the U.S. Department of Labor, if the Harkin-Miller bill were to pass Congress, as many as 28 million low-wage workers would see their income boosted.[31] Research from the Brookings Institution in January 2014 similarly found that “a minimum wage increase could provide a much-needed boost to the earnings of low-wage workers.” Brookings research explains that 24.9 percent of the workforce, a critical stakeholder here, would see their wages increase. Consequently, these workers would be more financially stable, as many of them are not teenagers but instead are grown adults with families. The workers’ families would thus also benefit as a higher wage would mean more room in families’ budgets for necessities like food, education, clothing, and other items.[32] Economist David Cooper concluded in research for the EPI that raising the minimum wage to $10.10 would, in fact, “lift wages for millions.”[33] Indeed, the reason why this proposal is so significant for alleviating poverty and increasing Americans’ income is because a sizable 52 percent of the workers who will benefit from the proposal live in a family making below $40,000 a year. That level is, according to the Washington Center for Equitable Growth, considered a “basic standard of living for a family of four.”[34] Therefore, the effect of a minimum wage increase would mean millions of workers, a key stakeholder here, and their families would have more money in their hands. They would thus be able to support the economy with their new consumer spending from their greater income. However, a February 2014 report of the Congressional Budget Office had mixed conclusions in its analysis of the effect of a minimum wage hike.

           On the one hand, the CBO determined that an increase to $10.10 per hour would increase earnings for 16.5 million Americans, that 900,000 workers would be lifted out of poverty, and that, “on net…national income would rise.” On the other hand, the CBO also concluded that such a wage hike could reduce employment by 500,000 workers as employers cope with the added costs of raising workers’ wages.[35] Further, analyses from the Cato Institute, the Office of Economic Analysis, and the Manhattan Institute all determine that job losses from minimum wage increases have the potential to be sizable.[36] Indeed, a 2005 Journal of Human Resources economic study found that the so-called “losers” of a minimum wage increase – those who would lose their jobs due to employers deciding to cut jobs to counter the effect of higher wages – outnumbered the number of so-called “winners.”[37] Economist Richard Burkhauser reaffirmed this finding in his research for the Southern Economic Association as he wrote that, because of this dynamic, “no net reduction in poverty” resulted from a minimum wage increase.[38]

           This problem, one of at least modest job losses that could be caused by a minimum wage hike, is important because a key stakeholder, businesses, is involved and it directly affects the growth of the labor market and the economy. The core issue at hand is that when the minimum wage is increased, the result is that businesses would have to undertake an added cost to support their employees. Consequently, as the CBO explained, businesses could pass on the costs to customers, in the form of higher prices, thus maxing out potential consumers. Another option for businesses is they would let some workers go to afford paying higher wages to those remaining. The accumulation of studies described above, most notably that of the CBO’s, find that the impact of this potential development, in the scenario of a wage hike, is uncertain. However, it could have a notable effect on “reducing income” for some, as the CBO described it.[39] Nevertheless, after state legislators, a key stakeholder, acted, the impact on business in some states has been positive with regards to jobs. States that increased their minimum wages in 2013 saw faster job and income growth than those that did not. [40] The higher minimum wages in these states meant that businesses’ workers could become part of the customer base to afford their goods and services, there was less worker turnover as these workers felt less of a need to seek other employment, and workers utilized their higher wages to support other businesses through their new pay. Thus, as these states showed, the impact to business and the broader economy could indeed be a strong, positive influence. However, though many states have increased their minimum wages recently, the likelihood of raising the wage nationally is low given the opposition in the incoming Republican-controlled Congress.

           A second policy alternative to examine in combating income stagnation is direct spending on infrastructure and job creation through federal economic fiscal stimulus. As aforementioned, the federal government already undertook such spending in a significant manner as a consequence of the American Recovery and Reinvestment Act. The results of the ARRA, with regards to improving economic growth and the labor market, are clear. According to the nonpartisan Congressional Budget Office, the Recovery Act resulted in 3.5 million jobs being either saved or created. The workers who benefited from this job creation took home money that they may not have had in absence of the stimulus. As a consequence of the stimulus package, the CBO concluded that there was a noticeable, sizable increase in national income as well because of these jobs programs. In deep analyses of the law, The New New Deal author Michael Grunwald and economist Jared Bernstein, the former chief economic adviser to Vice President Joe Biden, have also concluded that the stimulus’ impact in bolstering incomes is significant and indisputable.[41]

           A significant aspect of the job and wage improvements seen from the Recovery Act was due to the $105.3 billion in infrastructure spending in the stimulus law. Such spending included investments in rail improvement, strengthening roads and bridges, airport enhancements, and expansions of broadband. The Center on Budget and Policy Priorities made clear that such spending was crucial for income growth in that “without the Recovery Act, millions would be…struggling to get by on less income.”[42] That is because the stimulus package created jobs that provided robust wages in the infrastructure industry. Without this federal assistance, given the lack of much private capital or private sector job openings in the wake of the financial crisis, the workers who benefited would have likely not seen such opportunities.

           Therefore, infrastructure spending could have a positive impact on income growth, something further evidenced by the studies done by various think tanks and institutions. For instance, the American Jobs Act, legislation President Obama proposed in September 2011, would have created 1.9 million jobs, many of which would have been full-time infrastructure jobs with good pay, according to the CBO.[43] According to the Center for American Progress, spending on infrastructure has a strong impact on directly improving wages for working people by hiring Americans to work in strong-paying, high-skilled jobs related to roads, bridges, and other projects for which demand is high. Further, as CAP notes, “well-maintained roads allow goods and people to move quickly between locations, increasing productivity…[and] increased productivity results in…rising wages for workers.”[44] Therefore, such studies demonstrate that the impact of infrastructure spending for businesses, mainly the construction industry but also corporations that rely upon roads to ship and send goods, is significant. Businesses, a vital stakeholder, would benefit significantly from having the ability to more quickly move items from place to place. Political interest groups that represent these interests have rallied to support infrastructure spending as a result.[45]

           However, on another note, the impact that the American Jobs Act would have includes jobs programs targeted specifically for low-income individuals, who have suffered more than most Americans in income stagnation.[46] Some of these programs – which include subsidized employment measures in infrastructure as part of a public works-focused spending approach – offered in the legislation were akin to those included in the TANF Emergency Fund in the Recovery Act. According to the Center on Budget and Policy Priorities, the effect of those programs, as they were designed in the stimulus package, was that they created wage-paying jobs “quickly and efficiently.” The same analysis from the CBPP finds that if those programs are extended, as the American Jobs Act would do, there would be a suppression of income stagnation that was similar to what was seen in the stimulus’ TANF spending.[47]

           In fact, investments in infrastructure, such as those featured in the 2009 stimulus package and in Obama’s 2011 proposal, are particularly effective at tackling lagging income. “Infrastructure occupations,” the Brookings Institution’s Joseph Kane and Robert Puentes analyzed in May 2014, “tend to offer more equitable wages.” This reality is crucial and it exists because the infrastructure industry is more unionized than other industries, its jobs are in high demand, and it is considered a “growing” field.[48]

           Jobs with such wages were a core part of the American Jobs Act and the evidence of that is further reflected in the professional economic analyses of the legislation. Among other aspects of the proposal, the legislation sought to create a multi-billion dollar National Infrastructure Bank, put thousands to work modernizing schools, and improve railroads, waterways, and broadband access. The accumulative effect of such policies would be the creation of at least two million jobs, according to Moody’s Analytics and the Economic Policy Institute, which found that “workers in nearly every state would benefit” from such jobs programs. As such, the broader economy, the labor market, and workers’ income would stand to benefit. Consequently, the success of such programs would represent a sizable dent in income stagnation given the amount of good-paying jobs that would be generated for millions of workers, important stakeholders.[49] Ultimately though, further stimulus spending, which can be done most effectively at the federal level, is also likely doomed in Congress. Despite significant public support for infrastructure spending, President Obama’s high-profile campaign-style push for the American Jobs Act was ultimately unsuccessful. At the state level, legislators are required legally to balance their budgets thus making the task of stimulus-type spending even more difficult in the states.[50]

           A third policy alternative to examine is a proposal to expand the Earned Income Tax Credit (EITC) to be more generous to childless workers. As currently designed, the EITC is both extremely politically popular and incredibly effective in alleviating poverty. President Ronald Reagan’s 1986 tax reform law, President Bill Clinton’s 1993 budget law, President George W. Bush’s 2001 tax cut, and President Barack Obama’s 2009 stimulus package all expanded the tax credit.[51] For nearly 30 million working families, the EITC, which helps relieve the burdensome payroll tax, has had a significant impact on wage growth. According to the Center on Budget and Policy Priorities, families with children have seen their income increased by “about $240 a month.”[52] A refundable tax credit, the EITC is a powerful work incentive for low-income and middle-income workers as the credit increases as a worker’s income increases – until it is phased out when a maximum level is reached. Therefore, the influence the credit could have on job growth is significant; in fact, in the 1990s, the EITC was credited with supporting strong job growth. It also works to refund workers if the credit exceeds a worker’s tax liability. The effect the tax credit has on after-tax income, as aforementioned in this paper, is significant in alleviating inequality.[53]  

           Consequently, the effect of the tax credit has been to cut poverty, encourage work and thus dramatically increase employment, especially after its broad 1993 expansion, which covered an additional 15 million Americans.[54] The results of the continual expansions of the EITC have included lifting millions out of poverty – 6.5 million in 2012 – and “a significant investment in low-wage workers,” according to the Brookings Institution.[55] Nevertheless, the benefits for childless workers are meager compared to the benefits that are provided to families with children. “Low-income childless workers,” anti-poverty policy experts Chuck Marr and Chye-Ching Huang note, “receive little to nothing from the EITC.”[56] In fact, the Tax Policy Center found that while “families with three or more children may receive…up to $6,143,” childless workers can only receive $496.[57]  Beyond that, the childless worker benefit only even exists for those between the ages of 25 and 64. The consequence of this bias against childless workers is such that, as the CBPP assessed, “low-wage workers not raising…children are the only Americans whom the federal income tax taxes into poverty.”[58]

           However, given the policy success of the EITC in improving Americans’ income, economists and policy experts have concluded that expanding the EITC to assist childless workers would further strengthen income. Indeed, the Georgetown Center on Poverty, Inequality, and Public Policy asserted in 2009, based on a wealth of research, that “expanding the EITC for workers without…children…[would] address the problem of low wages.”[59] The precise benefit an Obama-proposed expansion for childless workers would have on wages includes a substantial hike for currently impoverished individuals – such as raising the credit for a childless worker “with wages at the poverty line” from $171 to $841.[60] The result would be several million more lifted out of poverty. State governments, a stakeholder here, that acted on EITC expansions saw economic success in their states. Research conducted by economist Joseph Sabia at San Diego State University in 2007 concluded that state increases of EITC programs were strongly correlated with state reductions in poverty and increases in family incomes. Sabia wrote that a national EITC expansion would “boost the wages” of millions of Americans.[61]  

           The broader impact though is that, as affirmed by economist Arindrajit Dube, such an expansion would represent the most effective anti-poverty tool of the federal government. In fact, part of why Dube is able to make such an assertion is because of the EITC’s ability to specifically boost the income of Americans most affected by income stagnation: low-income and middle-income Americans.[62] “The benefits of the EITC,” the Employment Policies Institute’s research director Michael Saltsman explains, “generally accrue to those in poverty,” thus leading to a direct boost in their incomes.[63] Considering that extensive research of the Economic Policy Institute concluded that the EITC “is extraordinary valuable to the living standards of the bottom half of the income distribution,” and given that it is this group of Americans who have suffered tremendously from income stagnation, an expansion of this program would clearly be enormously beneficial for income growth.[64]

           Expanding the EITC to be more generous for childless workers is not only a strong policy for income growth but it is also enormously popular politically. In fact, it is a proposal backed by a wide array of political actors across party lines, including President Obama, leading House Republican Paul Ryan, GOP Senator Marco Rubio, and leading Senate Democrat Richard Durbin. Both conservative and liberal think tanks, like the American Enterprise Institute and the Center for American Progress, favor an expansion. The fact that the credit rewards and encourages work makes it particularly politically appealing. In fact, expansions of the EITC, when incorporated into broader bills, have usually passed with broad, bipartisan support, as evidenced in the overwhelming congressional support for the American Taxpayer Relief Act of 2013 – which extended Recovery Act expansions of EITC.[65] Policymakers would likely battle to take credit if an EITC expansion passed, given how popular it is, so it is in their own political interests to see it happen. Further, it should be noted there is virtually no cost to businesses considering that the tax credit has literally no impact on employers, in their capacity as businesspeople, and is only aimed at workers. On the other hand, as demonstrated above, the influences on the labor market and employment – given that the credit encourages work – and on workers, who would benefit significantly, are positive and strong.

           Given the fact that expanding the Earned Income Tax Credit is proven to be politically popular, it is apparent that this policy alternative is the most likely to become law. More importantly, given that the EITC is economically effective in boosting income for financially struggling individuals, it is apparent that expanding the credit is also the most likely policy alternative to be effective in addressing income stagnation. As noted in researched done by the American Enterprise Institute (AEI), the EITC, in fact, “does a better job of lifting workers from poverty” than the minimum wage does as a consequence of how the tax credit is specifically targeted at low-income and middle-income households.[66] This fact is critically important because, after all, it is these households that have suffered the most from income stagnation. Therefore, a policy that is most directly aimed at assisting them is one that ought to merit attention. Harvard economics professor N. Gregory Mankiw further argued in January 2014 that evidence demonstrates that expanding the EITC would “do more to supplement the incomes of low-wage workers” than any other short-term policy. Mankiw argued such because of the same reasons AEI described in terms of how the credit targets low-income Americans.[67]

           On the whole, expanding the EITC is also the best policy because of the fact that it would provide more net benefit to a greater number of American workers than policies like raising the minimum wage, which could cost jobs, and increasing infrastructure spending. Given that workers are important stakeholders here, it is vital to pursue a policy that is best suited for their needs. Professor David Newmark, of the Center for Economics and Public Policy at the University of California, Irvine agrees with the above conclusion. “Research supports the notion,” Newmark contends, “that the EITC provides greater support to low-income families than does the minimum wage.” Newmark makes this point precisely because of both the risk of a minimum wage hike resulting in corporations cutting jobs and the fact that the EITC is solely aimed at helping the needy.[68]

           These realities compel us to recommend to federal policymakers that Congress and the President should cooperate to pass an expansion of the Earned Income Tax Credit to be more generous to childless workers, akin to existing proposals from President Obama and Congressman Ryan. If such an expansion were passed, it would be enormously beneficial for lifting income in the United States and, more broadly, for strengthening the U.S. economy. At a time when the economic recovery is sorely in need of such rejuvenation, it is appropriate and vital that policymakers act swiftly to expand the Earned Income Tax Credit.

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[1] Leonhardt, David. "The Great Wage Slowdown of the 21st Century." The New York Times. October 7, 2014. Accessed November 15, 2014. http://www.nytimes.com/2014/10/07/upshot/the-great-wage-slowdown-of-the-21st-century.html?_r=0.

[2] Ibid.

[3] Ibid.

[4] Ibid.

[5] "A Decade of Flat Wages: The Key Barrier to Shared Prosperity and a Rising Middle Class." Economic Policy Institute. August 21, 2013. Accessed November 14, 2014. http://www.epi.org/publication/a-decade-of-flat-wages-the-key-barrier-to-shared-prosperity-and-a-rising-middle-class/.

[6] United States Census Bureau, Income and Poverty in the United States: Current Population Reports, September 2014; http://www.census.gov/content/dam/Census/library/publications/2014/demo/p60-249.pdf.

[7] "Wage Growth Is No Longer as Sensitive to Labor Market Conditions." The New York Times. October 4, 2014. Accessed November 15, 2014. http://www.nytimes.com/interactive/2014/10/04/upshot/100000003156300.embedded.html.

[8] U.S. Census Bureau.; Center for American Progress, ‘What the New Census Data Show About the Continuing Struggles of the Middle Class.’ September 16, 2014. https://www.americanprogress.org/issues/economy/news/2014/09/16/97203/what-the-new-census-data-show-about-the-continuing-struggles-of-the-middle-class/.

[9] Ibid.

[10] Ibid.

[11] Economic Policy Institute; Bureau of Labor Statistics: Employment Cost Index, www.bls.gov.

[12] “Unemployment Is Finally Under 6 Percent, But Don’t Expect a Raise Anytime Soon.” The Washington Post. October 3, 2014. Accessed November 15, 2014. http://www.washingtonpost.com/blogs/wonkblog/wp/2014/10/03/unemployment-is-finally-under-6-percent-but-dont-expect-a-raise-anytime-soon/.

[13] Casselman, Ben. “We’ve Regained the Jobs Lost in the Recession But the Recovery Isn’t Complete.” FiveThirtyEight. June 4, 2014. Accessed November 15, 2014. http://fivethirtyeight.com/datalab/weve-regained-the-jobs-lost-in-the-recession-but-the-recovery-isnt-complete/.

[14] Ibid.

[15] “New jobs pay 23% less than those lost during the Great Recession,” American Enterprise Institute. August 11, 2014. http://www.aei.org/publication/study-new-jobs-pay-23-less-than-those-lost-during-the-great-recession/.

[16] Bureau of Labor Statistics; www.bls.gov.

[17] Reilly, Mollie. “Labor Secretary: We suck on the minimum wage,” The Huffington Post. October 23, 2014. http://www.huffingtonpost.com/2014/10/23/tom-perez-minimum-wage_n_6036238.html.

[18] “Stimulus keeping 6 million out of poverty in 2009, estimates show,” Center on Budget and Policy Priorities, November 24, 2014. http://www.cbpp.org/cms/index.cfm?fa=view&id=2910.

[19] Congressional Budget Office, ‘The Distribution of Household Income and Federal Taxes, 2010: Share of Before-Tax Income and Federal Taxes, by Income Group, 2010,’. December 2013. http://www.cbo.gov/sites/default/files/44604-AverageTaxRates.pdf.

[20] Ibid.

[21] Ibid.

[22] Center for American Progress, “Middle Class Series: The American Middle Class, Income Inequality, and the Strength of Our Economy: New Evidence in Economics,” May 17, 2012. https://www.americanprogress.org/issues/economy/report/2012/05/17/11628/the-american-middle-class-income-inequality-and-the-strength-of-our-economy/.

[23] Fair Minimum Wage Act of 2013. Congress.Gov, Proposed March 5, 2013. https://www.congress.gov/bill/113th-congress/senate-bill/460.

[24] Cooper, David. “Raising the Federal Minimum Wage to $10.10 Would Lift Wages for Millions and Provide a Modest Economic Boost.” Economic Policy Institute. December 19, 2013. http://www.epi.org/publication/raising-federal-minimum-wage-to-1010/.

[25] “Minimum Wage and Poverty,” Center for Economic and Policy Research. January 13, 2014. http://www.cepr.net/index.php/blogs/cepr-blog/minimum-wage-and-poverty.

[26] Cooper, David. “The minimum wage used to be enough to keep workers out of poverty – it’s not anymore,” Economic Policy Institute, December 4, 2013. http://www.epi.org/publication/minimum-wage-workers-poverty-anymore-raising/.

[27]Bernstein, Jared. “Proposal to Strengthen Minimum Wage Would Help Low-Wage Workers, With Little Impact on Employment,” Center on Budget and Policy Priorities. January 7, 2014. http://www.cbpp.org/cms/?fa=view&id=4075.

[28]National Bureau of Economic Research. Massachusetts Institute of Technology: Study on Minimum Wage and Income Inequality. 2010. http://www.nber.org/papers/w16533.

[29]Washington Center for Equitable Growth. “Understanding the Minimum Wage and Income Inequality and Economic Growth.” March 2014. http://equitablegrowth.org/research/understanding-the-minimum-wage-and-income-inequality-and-economic-growth/.

[30] Card, David & Krueger, Alan. “Myth and Measurement: The New Economics of the Minimum Wage,” 1997.

[31] U.S. Department of Labor, “Busting Myths About the Minimum Wage,” www.dol.gov.

[32] “The Ripple Effect of the Minimum Wage on American Worker,” The Hamilton Project of the Brookings Institution. January 30, 2014. http://www.hamiltonproject.org/papers/the_ripple_effect_of_the_minimum_wage_on_american_workers/.

[33] Cooper, David, EPI.

[34] Washington Center for Equitable Growth.

[35] Congressional Budget Office, “The Effects of a Minimum-Wage Increase on Employment and Family Income.” February 2014. http://www.cbo.gov/sites/default/files/44995-MinimumWage.pdf.

[36] “The Minimum Wage Debate,” The Cato Institute. January 2014. http://www.cato.org/joining-the-minimum-wage-debate.

[37] Saltsman, Michael. “The $9 Minimum Wage That Already Exists.” The Wall Street Journal. February 13, 2013. http://online.wsj.com/articles/SB10001424127887324616604578302153328738108.

[38] Sabia, J.J. “Minimum Wages: A Poor Way to Reduce Poverty,” The Cato Institute. March 2014. http://object.cato.org/sites/cato.org/files/pubs/pdf/tbb_70.pdf.

[39] Congressional Budget Office.

[40] Ibid.

[41] “5 Years After Stimulus, Obama Says It Worked,” Time Magazine. February 17, 2014. http://time.com/8362/economic-stimulus-recovery-act-anniversary-obama/.

[42] “Despite Deep Recession, Recovery Act Prevented Poverty,” CBPP. January 5, 2011. http://www.cbpp.org/cms/?fa=view&id=3361.

[43] Congressional Budget Office, “Estimate: American Jobs Act of 2011,” October 7, 2011. http://www.cbo.gov/publication/42609.

[44] “Rebuilding America’s crumbling infrastructure,” Center for American Progress. March 3, 2013. http://cdn.americanprogress.org/wp-content/uploads/2013/03/StateMiddleClassPolicies-Ch7.pdf.

[45] Ibid.

[46] Ibid.

[47] Schott, Liz. “Extending the TANF Emergency Fund Would Create and Preserve Jobs Quickly and Efficiently.” Center on Budget and Policy Priorities. April 6, 2010. http://www.cbpp.org/cms/?fa=view&id=3061.

[48] “The Extent and Impact of US Infrastructure Jobs,” The Brookings Institution. May 9, 2014. http://www.brookings.edu/research/interactives/2014/infrastructure-jobs.

[49] Zandi, Mark, “An Analysis of the Obama Jobs Plan.” Moody’s Analytics. September 9, 2011. https://www.economy.com/dismal/article_free.asp?cid=224641.

[50] “Obama’s jobs plan blocked in Senate.” The Hill. October 11, 2011. http://thehill.com/homenews/senate/186877-senate-blocks-obamas-447-billion-jobs-plan.

[51] “Policy Basics: The EITC,” www.cbpp.org.

[52] Ibid.

[53] Ibid.

[54] Ibid.

[55] Kneebone and Williams, “EITC Expansion Would Strengthen Credit for Childless Workers.” The Brookings Institution. March 18, 2014. http://www.brookings.edu/research/papers/2014/03/eitc-expansion-workers-kneebone-williams.

[56] Marr, Huang, and Ruffini, “How Expanding the EITC Could Improve Labor and Cut Poverty,” RealClearPolicy. July 16, 2013. http://www.realclearpolicy.com/2013/07/16/how_expanding_the_eitc_could_improve_labor_and_cut_poverty_13059.html.

[57]Maag and Carasso, “What is the Earned Income Tax Credit?” The Tax Policy Center. February 12, 2014. http://www.taxpolicycenter.org/briefing-book/key-elements/family/eitc.cfm.

[58] CBPP.

[59] Edelman, Greenberg, Holt, and Holzer. “Expanding the EITC to Help More Low-Wage Workers.” Georgetown Center on Poverty, Inequality, and Public Policy. September 2009. www.georgetown.edu. Accessed on November 21, 2014.

[60] CBPP; Ibid.

[61] Saltsman, Michael, The Wall Street Journal. http://online.wsj.com/articles/SB10001424127887324616604578302153328738108.

[62] http://www.cepr.net/index.php/blogs/cepr-blog/minimum-wage-and-poverty.

[63] Saltsman.

[64] EPI.

[65] The New Republic.

[66] Strain, Michael. “EITC does a better job of lifting workers out of poverty than the minimum wage.” American Enterprise Institute. May 5, 2014. http://www.aei.org/publication/earned-income-tax-credit-does-better-job-of-lifting-workers-from-poverty/.

[67] Mankiw, N. Gregory. “Help the Working Poor But Share the Burden.” The New York Times. January 4, 2014. http://www.nytimes.com/2014/01/05/business/help-the-working-poor-but-share-the-burden.html.

[68] Newmark, David. “The Minimum Wage Ain’t What It Used to Be.” The New York Times: Economix Debate. December 9, 2013. http://economix.blogs.nytimes.com/2013/12/09/the-minimum-wage-aint-what-it-used-to-be/.