Tag Archives: Minimum Wage

If everyone voted, progressives would win

In preparation for the 2016 presidential election, Democrats appear united around one candidate, while the Republican contest remains far from secured. Many on the left, who view Hillary Clinton’s stances as a tame brand of liberalism, have attempted to draft Sen. Elizabeth Warren, D-Mass., to run. But the progressives do not need a charismatic leader. Instead, they need to invest in unleashing the disgruntled progressive majority. A longer-term strategy for progressives should be to strengthen unions and boost turnout among politically marginalized populations.

“If everybody in this country voted,” the economist John Kenneth Galbraith said, “the Democrats would be in for the next 100 years.” There is strong evidence to support his claim. A 2007 study by Jan Leighley and Jonathan Nagler found that nonvoters are more economically liberal than voters, preferring government health insurance, easier union organizing and more federal spending on schools. Nonvoters preferred Barack Obama to Mitt Romney by 59 percent to 24 percent, while likely voters were split 47 percent for each, according to a 2012 Pew Research Center poll. Nonvoters are far less likely to identify as Republican, and voters tend to be more opposed to redistribution than nonvoters.

In a recent nationwide study, Stockton College professor James Avery found a strong correlation between the electorate’s class bias and the Gini coefficient, a commonly used measure of inequality. In short, the lower the turnout, the higher the class bias and the greater the support for policies that lead to inequality. His study builds on previous research by political scientists Christopher Witko, Nathan Kelly and William Franko showing how class bias in voting reinforces economic inequalities. Their findings are not confined to the U.S. Around the world, voter turnout is correlated with redistributive policies. For example, the turnout of low-income voters has been linked toregressive state tax systems and higher social spending.

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In “Regular Voters, Marginal Voters and the Electoral Effects of Turnout” University of Chicago professor Anthony Fowler found that marginal voters — those whose willingness to cast a ballot is affected by factors such as weather and the timing of elections — support liberal candidates. He estimates that 72.8 percent of those who do not vote because of weather support the Democratic Party. In fact, weather may have contributed to Electoral College victories for the Democrats in 1960 and the Republicans in 2000. He examined gubernatorial elections, which can coincide with a presidential election or a midterm year, and found that 68.2 percent of those who don’t turn out for midterm elections support Democrats. Among the 34 million people who were registered with a party but did not vote in the 2010 midterms, 63.1 percent supported Democrats, according to Fowler. And gubernatorial elections that coincide with the presidential race “increase turnout by 17.4 percentage points and the Democratic candidate’s vote share by 6.4 percentage points,” he said.

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High voter turnout benefits Democrats, but studies also show that it increases volatility and harms incumbents. The anti-incumbent effect is particularly important, because it means that all incumbent politicians, including Democrats, may be partly disinclined to support policies that will boost turnout. Democrats might also have to worry about a more progressive challenger swinging potential votes away from the party.

But can turnout be swayed? Evidence suggests so. A study of 170 countries by the International Institute for Democracy and Electoral Assistance found that electoral structures dramatically affect turnout. (See figure 19.) Measures such as no-excuse absentee voting, expansive early voting and Election Day registration have increasedturnout. But in the United States, research suggests that the more black people in a county — a group that tends to vote for Democrats — the fewer early voting sites there are.

Regardless, a simple get-out-the-vote strategy is not enough. In a 2005 seminal study, political scientist Adam Berinsky found that reforms that make it easier for registered voters to cast ballots increase the socioeconomic bias of the electorate. Get-out-the-vote campaigns increase turnout only among individuals with already high propensity to vote. While these voters may still be liberal, electoral reform is needed to increase registration among nonvoters, particularly the poor. In 2012 only 52.7 percent of those with income below $10,000 were registered to vote, compared with 83.5 percent of those earning more than $150,000, according to U.S. census data. In order to address the gap in voting between those in the top and bottom income brackets, electoral reforms must affect registration.

This is why Election Day registration (EDR) and “motor voter” laws are critical to improving electoral participation. For example, in a report released last month, Demos found that if all states used a “motor voter” system, which allows voters to register at local DMVs, it would increase registration by 18 million. These measures have reduced political inequality, particularly in states with registration bias. EDR consistently leads to higher turnout.

Changing the composition of the electorate is the easiest way to shift policy to the left.

Progressives can also improve their electoral prospects with better information. First, there is the evidence from the Kaiser Family Foundation that Americans are least likely to know that reforms they support are included in the Affordable Care Act and most likely to know that reforms they oppose are included. “If the public had perfect understanding of the elements that we examined,” a group of researchers wrote in 2012, “the proportion of Americans who favor the bill might increase from the current level of 32 percent to 70 percent.” In another recent study, Fowler and Michele Margolis exposed participants (through fake op-eds) to simple facts about Republican and Democratic policy platforms on social and economic issues such as the earned income tax credit, minimum wage, abortion and same-sex marriage. “When uninformed citizens receive political information, they systematically shift their political preferences away from the Republican Party and toward the Democrats,” the researchers said.

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Changing the composition of the electorate is the easiest way to shift policy to the left. As John B. Judis and Ruy Teixeira point out, what they call the “emerging democratic majority” has always existed but just hasn’t voted. Instead, Democrats should mobilize the marginalized progressive majority. There was a time when progressives saw voting rights as essential to their strategy. In 1992, California Gov. Jerry Brown told Bill Clinton that his campaign would have Brown’s “full endorsement” if Clinton supported a $100 cap on political contributions, a ban on PACs, universal registration, same-day registration and an Election Day holiday. As Joan Didion points out in “Political Fictions,” Clinton did not receive Brown’s endorsement because at the time the more centrist Democratic Leadership Council’s strategy was to “jettison those voters who no longer turned out and target those who did.”

That strategy limits the liberalism of the Democratic Party because those who less consistently turn out tend to be more liberal than those who do. In addition, it alienates low-income people, further depressing turnout and creating a self-reinforcing cycle of people becoming increasingly alienated from established politicians and increasingly unlikely to vote. Democratic politicians are wary of policies to boost turnout because of its anti-incumbent effect and the possibility of progressive challengers.

Now with Democrats on the defensive across the country, conservatives fighting full franchise and progressives realizing the limits of hero leftism, there may be an effort to mobilize the marginalized progressive majority. If they are persuaded to weigh in at the ballot box, they can sway the agenda that Democratic leaders support. As a truly great progressive, Franklin Delano Roosevelt, once said to his progressive base, “I agree with you. Now make me do it.”

This piece originally appeared on Al Jazeera.

Russell Brand is wrong: Voting really can change America for the better

Last year, Russell Brand declared in a New Statesman article that he had never voted because he “regard[s] politicians as frauds and liars and the current political system as nothing more than a bureaucratic means for furthering the augmentation and advantages of economic elites.” And Brand, in many ways, is right — just not about voting. A growing body of political science literature actually finds that voting is an incredibly important lever of policy change. To understand why, though, we need to start with the matter of class.

The class bias in voter turnout in America is strong. A recent study estimates that in 2008, voter turnout among the wealthiest 1 percent of the population was an astronomical 99 percent. It’s not surprising that this level of participation doesn’t hold for all tax brackets; yet the chart below still shows a startling trend. There is only a single instance over the past three election cycles of a lower income bracket having higher turnout than a higher bracket.

For a long time, political scientists weren’t worried about turnout disparities. In their seminal 1980 study on the question (using data from 1972), Raymond Wolfinger and Steven Rosenstone argued that, “voters are virtually a carbon copy of the citizen population.” Later, in a 1999 study, Wolfinger and Benjamin Highton find a slightly larger gap between voters and non-voters, but still conclude that “non-voters appear well represented by those who vote.”

However, in a more recent review of the data, Jan Leighley and Jonathan Nagler find “enduring and increasing” differences between voters and non-voters on issues relating to class-based issues.  They find that non-voters are far more likely to support union organizing, a job guarantee and universal health insurance.

Why the differences in the studies? It turns out, the reason is historical. Difference between voters and non-voters with regards to the size of government and redistributionweren’t as strong in the 1970s and 1980s, when the earlier studies were conducted; since then, according to Larry Bartels, the U.S. has become a world leader in class conflict over government spending. These biases began accelerating at the end of the 1980s.

Since then, the Leighley and Nagler thesis has enjoyed increasing support. A 2012 Pewsurvey revealed similar differences, with non-voters far more supportive of government intervention in the economy and far more supportive of the Affordable Care Act. A Public Policy Institute of California (PPIC) study of Californians from 2006 finds that non-voters are also more likely to support higher taxes and more services. They were more likely to oppose Proposition 13 — a constitutional amendment that limits property taxes — and to support affordable housing.

Given all of this, it’s unsurprising that the current Republican electoral strategy is based around disenfranchisement through means like voter ID laws. Consider a Pew poll taken from before the 2012 election: Among “likely voters,” Obama and Romney were split, with 47 percent of voters each. Among non-voters, however, Obama had 59 percent support, compared with Romney’s 24 percent support.

 

One problem with this is that turnout inequality affects both parties — pulling the Democrats and Republicans to the right. The corollary is that voter suppression efforts pursued by Republican partisans also affect the behavior of Democrats. And there is strong evidence that voter suppression efforts increase turnout inequality.

For instance, one study finds that “state voter registration laws pose a substantial barrier” to the mobilization of low-income voters.  While 63.2 percent of citizens in the lowest income bracket (less than $10,000) are registered, a full 87.1 percent of those in the top bracket ($150,000 or more) are. Research shows that same-day registration decreases the class bias of the electorate, so rollbacks of same day registration will also harm low-income voters.

It’s important to note that the gap between registration and turnout is higher for low-income citizens. A bit more than 16 percent of registered low-income citizens don’t vote, while only 6.9 percent of registered citizens in the top income bracket don’t vote. (See chart) Much of the problem, then, is getting low-income voters  – who are hampered by voter ID laws and reduction in early voting — the the ballot box. It’s unsurprising that an investigation of Republican voter suppression efforts finds that “larger increases in class-biased turnout, indicating higher turnout among lower income voters relative to wealthy voters, is significantly associated with a larger volume of proposed legislative changes.” This finding was confirmed by a study of Indiana’s voting law by Matt A. Barreto, Stephen A. Nuño and Gabriel R. Sanchez.

Where class bias is lower, the poor benefit. Christopher Witko, Nathan Kelly and William Franko studied 30 years of data on turnout inequality and find, “where the poor exercise their voice more in the voting booth relative to higher income groups, inequality is lower.” Their results show that lower turnout inequality leads to significantly more leftist governments and significantly more liberal economic policies. In currently unpublished research, James Avery studied the period between 1980 and 2010 and finds  “unambiguous” evidence that increased turnout bias leads to “greater income inequality several years later.”

This means that the impact of voting goes beyond simply elections.

In the wake of the 1965 Voting Rights Act, long-term Democratic incumbents shifted their voting behavior to respond to the newly mobilized Southern black electorate.Thomas Hansford and Brad Gomez studied more than 50 years of data and find that the “effect of variation in turnout on electoral outcomes appears quite meaningful.” One recent studyfinds that where there is less class bias in turnout, party policy platforms are more favorable to the poor. James Avery and Mark Peffley find that states with low-income voters turned out to vote, politicians were less inclined to pass restrictive eligibility rules for welfare.  Political scientists Kim Hill and Jan Leighley find in two studies that states with a more pronounced class bias, social welfare spending is lower. David Broockman and Christopher Skovron find that legislators tend to overstate the conservative attitudes of their constituents. This could be because their constituents tend to be wealthier. One study of wealthy citizens finds that, “on economic issues wealthy Democratic respondents tended to be more conservative than Democrats in the general population.”

Voting should only be the beginning of political change; it should not be the end. It is, however, necessary. In their study, Hill and Leighley find, “it is the underrepresentation of the poor, rather than the overrepresentation of the wealthy” that explains why states with high turnout inequality have low social welfare spending. The fight to reduce the influence of the wealthy will be a long one, but it begins at the ballot box.

So don’t listen to Russell Brand. Vote.

This article originally appeared on Salon

The 1% are more likely to vote than the poor or the middle class, and it matters — a lot

Does it matter that the wealthy turnout to vote at a rate of almost 99% while those making below $10,000 vote at a rate of 49%? It sure seems like it would, but for a long time many political scientists and journalists believed it didn’t. In their seminal 1980 study on the question (using data from 1972) Raymond Wolfinger and Steven Rosenstone argued that, “voters are virtually a carbon copy of the citizen population.” In a 1999 study, Wolfinger and Benjamin  Highton find a slightly larger gap between voters and nonvoters, but stillconclude, “non-voters appear well represented by those who vote.”

This argument has been largely assimilated by pundits and also non-voters, 59% of whom believe “nothing ever gets done,” and 41% of whom say “my vote doesn’t make a difference anyway.”

But more recent research suggests that the logic of wealth voters is sound — and that if the poor and middle class turned out at a higher rate, policy would shift leftward on economic policy. The most importantstudy on the question is by Jan Leighley and Jonathan Nagler. They revisit the Wolfinger/Rosenstone thesis and find that, in fact, non-voters are not, “a carbon copy” of the voting electorate as previously assumed. They find that, “notable demographic, economic, and political changes that have occurred in the U.S. since Wolfinger and Rosenstone’s classic statement [their 1980 book, “Who Votes”].” The most important difference that Leighley and Nagler find is that:

After 1972, voters and non-voters differ significantly on most issues relating to the role of government in redistributive policies. In addition to these differences being evident in nearly every election since 1972, we also note that the nature of the electoral bias is clear as well: voters are substantially more conservative than non-voters on class-based issues.

 

That is, after the New Deal consensus eroded, policy views became more polarized along class lines and the class-skewed nature of the electorate began to matter considerably. Non-voters skew left on a variety of issues:

A Public Policy Institute of California (PPIC) study of Californians from 2006 finds that non-voters are more likely to support higher taxes and more services. They are also more likely to oppose Proposition 13 (a constitutional amendment which limits property taxes) and to support affordable housing (a more recent study finds similarly). More recently, a 2012 Pew study that examined likely voters and non-voters finds a strong partisan difference. While likely voters in the 2012 presidential election split 47% in favor of Obama and 47% in favor of Romney, 59% of non-voters supported Obama and only 24% supported Romney. The study also found divergence on other key policy issues, including healthcare, progressive taxation and the role of government in society.

The ideological turnout gap seems strongly related to the economic divide in voting behavior. A recent study by William Franko, Christopher Witko and Nathan Kelly examined 30 years of data for all 50 states. They find no instances in which low-income voter turnout was higher than high-income voter turnout. Across midterm and presidential elections, Census data show strong gaps between turnout rates between those earning above $150k and those earning less than $10k (a 32.6 point gap in 2008, a 34.9 point gap in 2010).

There is evidence that this affects the political system. Consider a recent study by David Broockman and Christopher Skovron finds that politicians believe that their constituencies are significantly more conservative than they are. Such a bias should be impossible to sustain – politicians have strong electoral incentives to gauge their constitutents’ views correctly. Once we understand that voters are more conservative than non-voters, the puzzle disappears. Politicians’s real constituents are the people who vote — a disproportionately affluent and conservative slice of the population.

Conversely, where the electorate is less skewed policy outcomes shift left. In a recent study William Franko, Nathan J. Kelly and Christopher Witko find that “where the poor exercise their voice more in the voting booth relative to higher income groups, inequality is lower.” In another study, Franko examined voting gaps and policy outcomes in three areas–minimum wages, anti-predatory lending laws and SCHIP (State Children’s Health Insurance Program). He finds that states with smaller voting gaps across incomes had policies more favorable to the poor. States with low turnout inequality have a higher minimum wage, stricter lending laws and more generous health benefits than those with high turnout inequality.

The design and benefit levels of  many social safety net programs such as Temporary Assistance for Needy Families (TANF), are decided at the state level, which provides a natural experiment to test how turnout inequality  affects policy. James Avery and Mark Peffley find that, in states with higher rates of low-income voting, politicians were less inclined to pass restrictive eligibility rules for social benefits. Political scientists Kim Hill and Jan Leighley find in two studies that states with a more pronounced turnout bias, social welfare spending is lower. Thus, the evidence confirms what theory would predict: closing low-income voting gaps is consequential for public policy, in favor of lower-income households.

This piece originally appeared on Vox.

Six studies that show everything Republicans believe is wrong

The great 20th-century economist John Maynard Keynes has been widely quoted as saying, “When the facts change, I change my mind. What do you do, sir?” Sadly, in their quest to concentrate economic and political power in the hands of the wealthiest members of society, today’s Republicans have held the opposite position – as the evidence has piled up against them, they continue spreading the same myths. Here are six simple facts about the economy that Republicans just can’t seem to accept:​

1. The Minimum Wage Doesn’t Kill Jobs.

The Republican story on the minimum wage takes the inordinately complex interactions of the market and makes them absurdly simple. Raise the price of labor through a minimum wage, they claim, and employers will hire fewer workers. But that’s not how it works. In the early Nineties, David Card and Alan Krueger found “no evidence that the rise in New Jersey’s minimum wage reduced employment at fast-food restaurants in the state.” Since then, international, national and state-level studies have replicated these findings – most recently in a study by three Berkeley economists. Catherine Ruetschlin, a policy analyst at Demos, has argued that a higher minimum wage would actually “boost the national economy” by giving workers more money to spend on goods and services. The most comprehensive meta-study of the minimum wage examined 64 studies and found “little or no evidence” that a higher minimum wage reduces employment. There is however, evidence that a higher minimum wage lifts people out of poverty. Raise away!

2. The Stimulus Created Millions of Jobs.

In the aftermath of the 2007 recession, President Obama invested in a massive stimulus. The Republican belief that markets are always good and government is always bad led them to argue that diverting resources to the public sector this way would have disastrous results. They were wrong: The stimulus worked, with the most reliable studies finding that it created millions of jobs. The fact that government stimulus works – long denied by Republicans (at least, when Democrats are in office) – is a consensus among economists, with only 4 percent arguing that unemployment would have been lower without the stimulus and only 12 percent arguing that the costs outweigh the benefits.

3. Taxing The Rich Doesn’t Hurt Economic Growth.

Republicans believe that the wealthy are the vehicles of economic growth. Starting with Ronald Reagan in the 1980s, they tried cutting taxes on the rich in order to unleash latent economic potential. But even the relatively conservative Martin Feldstein has acknowledged that investment is driven by demand, not supply; if there are viable investments to be made, they will be made regardless of tax rates, and if there are no investments to be made, cutting taxes is merely pushing on a string. Thomas Piketty and Emmanuel Saez, two of the eminent economists of inequality, find no correlation between marginal tax rates and economic growth.

In fact, what hurts economic growth most isn’t high taxes – it’s inequality. Two recent IMF papers confirm what Keynesian economists like Joseph Stiglitz have long argued: Inequality reduces the incomes of the middle class, and therefore demand, which in turn stunts growth. To understand why, imagine running a car dealership. Would you prefer if 1 person in your time owned 99% of the wealth and the rest of the population had nothing, or if wealth was distributed more equally, so that more people could purchase your cars?

Every other country in the Organization for Economic Cooperation and Development has far lower levels of inequality than the United States. Since there are no economic benefits of inequality, why hasn’t the right conceded the argument? Because it’s based on class interest, not empirical evidence.

4. Global Warming is Caused by Humans.

Even as global warming is linked to more and more extreme weather events, more than 56 percent of Republicans in the current congress deny man-made global warming. In fact, the infamous Luntz memo shows that Republicans have actually created a concerted campaign to undermine the science of global warming. In the leaked memo, Frank Luntz, a Republican consultant, argues that, “The scientific debate is closing [against us] but not yet closed. There is still a window of opportunity to challenge the science.”

In truth, the science of global warming is not up for debate. James Powell finds that over a one year period, 2,258 articles on global warming were published by 9,136 authors. Of those, only one, from the Herald of the Russian Academy of Sciences, rejected man-made global warming. That one article was likely motivated by the Russian government’s interest in exploiting arctic shale. Another, even more comprehensive study, examining 11,944 studies over a 10-year period, finds that 97 percent of scientists accepted the scientific consensus that man-made global warming is occurring.

This is not an abstract academic debate. The effects of climate change will be devastating, and poor countries will be hurt the worst. We’ve already seen the results. Studies have linked global warming to Hurricane Sandydroughts and other extreme weather events. More importantly, doing nothing will end up being far more expensive than acting now. One study suggests it could wipe out 3.2% of global GDP annually.

5. The Affordable Care Act is Working

President Obama’s centrist healthcare bill was informed by federalism (delegating power to the states) and proven technocratic reforms (like a board to help doctors discern which treatments would be most cost-effective). Republicans, undeterred, decried it as Soviet-style communism based on “death panels” – never mind the fact that the old system, which rationed care based on income, is the one that left tens of thousands of uninsured people to die.

From the beginning, Republicans have predicted disastrous consequences or Obamacare, none of which came true. They predicted that the ACA would add to the deficit; in fact, it will reduce the deficit. They claimed the exchanges would fail to attract the uninsured; they met their targets. They said only old people would sign up; the young came out in the same rates as in Massachusetts. They predicted the ACA would drive up healthcare costs; in fact it is likely holding cost inflation down, although it’s still hard to discern how much of the slowdown was due to the recession. In total, the ACA will ensure that 26 million people have insurance in 2024 who would have been uninsured otherwise.

It’s worth noting that every time the CBO estimates how much Obamacare will cost, the number gets lower. Odd how we’ve never heard Republicans say that.

6. Rich people are no better than the rest of us.

Politicians on the right like to pretend that having money is a sign of hard work and morality – and that not having money is a sign of laziness. This story is contradicted by human experience and many religious traditions (Jesus tells a graphic story about a rich man who refused to help the poor burning in hell). But it’s also contradicted by the facts – more and more rich people are getting their money through inheritances, and science shows that they are no more benevolent than others.

More and more, the wealthy in America are second or third generation. For instance, the Walton family, heirs to the Walmart fortune, own more wealth than the poorest 40 million Americans. Thomas Philippon and Ariell Reshef have found that 30 to 50 percent of the wage difference between the financial sector and the rest of the private sector was due to unearned “rent,” or money they gained through manipulating markets. Josh Bivens and Larry Mishel found the same thing for CEOs – their increased pay hasn’t been correlated to performance.

If rich people haven’t really earned their money, are they at least doing any good with it? Studies find that the wealthy actually give less to charity as a proportion of their income than middle-class Americans, even though they can afford more. Worse, they use their supposed philanthropy to avoid taxes and finance pet projects. Research by Paul Piff finds that the wealthy are far more likely to exhibit narcissistic tendencies. “The rich are way more likely to prioritize their own self-interests above the interests of other people,” Piff recently told New York magazine. “It makes them more likely to exhibit characteristics that we would stereotypically associate with, say, assholes.”

Originally published on The Rolling Stone.

Life, liberty and the pursuit of property

It is a general rule, if not a law, of the modern business cycle that the working class is the last to gain from the boom and the first to lose from the bust. A recent report by Demos, a progressive think tank, finds that most of the job gains are not only in low-wage industries but in highly unequal ones. The report found that in 2012 fast-food CEOs were earning more than 1,200 times what the average fast-food worker made, and that over the next eight years, some 421,900 jobs will be created in the highly unequal food preparation and serving industry, which includes the fast-food industry.  

Bosses in these industries often victimize employees, stealing their wages, firing them without cause and subjecting them to brutal and unpredictable schedules. Workers are often misclassified and thereby denied legal benefits, and they make too little to pay their bills and therefore rely on credit card debt and payday lenders. Turnover rates are high, and workers are frequently subject to the vicissitudes of an unforgiving labor market.

Worker militancy, long ago banished by anti-unionization efforts and terror over the possibility of unemployment, has already shown nascent signs of return. The fast-food strikes in 150 U.S. cities and 30 other countries on Thursday, following those across more than 100 cities last December, highlight the increasing plight of workers and their desire for change. And companies are taking notice. In its most recent SEC filing, McDonald’s worried about risks including “campaigns by labor organizations and activists” and “reputational harm as a result of perceptions about our workplace practices.” In his recent book “Capital in the 21st Century,” French economist Thomas Piketty shows that these high levels of inequality are unlikely to abate in the near future.

American worries about inequality between capital and labor have a long and proud history. The founders, fearful of centralized economic power, believed that property should be owned widely. John Adams said, “The only possible way then of preserving the balance of power on the side of equal liberty … is to make the acquisition of land easy to every member of society.” In a remark that would surely have him branded as a Marxist today, Lincoln proclaimed in 1861, “Labor is the superior of capital, and deserves much the higher consideration.” The key to solving this problem structurally is not merely redistribution through taxation and social programs. Although these ameliorate the worst degradations of our current society, they treat the symptoms of inequality rather than curing the cause. The key to reducing inequality is predistribution — the distribution of income and wealth prior to government redistributive efforts — through higher wages and employee capital ownership.

Profit-sharing

A higher minimum wage is part of the solution. Catherine Ruetschlin, a policy analyst at Demos, argues that a higher minimum wage would actually “boost the national economy” by giving workers more money to spend on goods and services. Critics allege that a higher minimum wage would kill jobs. However, the most comprehensive meta-study of the minimum wage examined 64 studies and found “little or no evidence” that a higher minimum wage reduces employment. The preponderance of evidence suggests that a higher minimum wage lifts people out of poverty. It alsoshifts income toward the bottom of the income distribution.

The second part of the solution is to increase stock ownership. Many companies spend billions each year on share buybacks, which help only those who own stocks. Walmart, for instance, spent $7.6 billion on share buybacks in 2012. The benefits of such actions should be spread more widely. In fact, employee capital ownership has a long history in the United States. In 1792, when the U.S. government first subsidized the cod industry, it mandated that three-eighths of the subsidy go to the crew. Any company that refused to sign an agreement promising its workers a share in the profits would not receive government aid. Today, about 47 percent of American workers participate in a profit-sharing agreement. Sadly, however, arrangements are far less common among workers at the lowest end of the spectrum.

Profit sharing and other forms of employee ownership benefit employees. A study of 40,000 employees at 14 firmsfound that workers in profit sharing arrangements have higher pay and benefits, greater job security and higher job satisfaction. Profit sharing also helps employers by boosting productivity. A meta-study by Chris Doucouliagos examined 43 published studies and found that profit sharing, worker ownership and worker participation in decision making are correlated with higher productivity. A U.K. study that found employee ownership increased productivity by 2.5 percent confirms this finding.

There are numerous ways to incentivize an ownership society. More progressive capital gains taxation would discourage accumulation at the top. Firms with broad ownership could be favored in federal contracts or economic development projects. Currently, corporations can include “incentive pay” (read: bonuses) as a cost of business (and therefore subject to a lower tax rate). This break should be allowed only to firms that establish incentive pay for all their employees. Ownership policies can be bipartisan. Two of the most vigorous defenders of employee profit sharing are conservative Rep. Dana Rohrabacher and the socialist Sen. Bernie Sanders. Turning workers into capitalists through ownership has been proposed by the more liberal Robert Solow and also the conservative James Pethokoukis.

Another promising idea is “baby bonds.” A “baby bond” grants citizens a small capital stake that becomes available to them when they reach adulthood, which can be used to pay for education or finance a mortgage. Hillary Clinton floated such a scheme — $5,000 for each child — during her 2008 presidential campaign. In Britain, the Child Trust Fund established by the Labor Party in 2005 granted every child born after Sept. 1, 2002, 250 pounds. In the name of “fiscal austerity,” Prime Minister David Cameron eliminated the program and replaced it with tax-exempt junior individual savings accounts, which only exacerbate inequality, because poor and middle-class families often cannot afford to fund such accounts.

Complementary goals

A higher minimum wage and broader ownership of assets are complementary goals. The first strikes at income inequality — it raises wages for workers enough to live, which should be the standard. It should be axiomatic that an able-bodied worker produces enough to provide for his or her basic needs. The second tackles the issue of wealth inequality; wealth provides a buffer for workers in hard times, a nest egg for retirement and money to fund education. Our economy has been working very well for some people but leaving the vast majority of Americans with little or no wealth. More and more Americans own no stock, have little saved away for retirement and rent, rather than own, their home. They increasingly have negative wealth in the form of credit card, student and home debt. New research finds that rather than being the result of lavish spending, these debts are an economic inevitability in an increasingly unequal society. Unlike large corporations and wealthy bankers, they are unlikely to be bailed out.

The current system is unsustainable. Inequality is straining our democracy and our shared sense that we’re all in this together. The goal should be to harmonize the interests of capital and labor by granting some control of the former to the latter. James Madison wanted America to be a country with “universal hope of acquiring property.” Today, most Americans can only hope to acquire debt.

Originally published on Al Jazeera.

The “donor class” and the minimum wage

When the Congressional Budget Office (CBO) recently released a new report estimating the effects of a higher minimum wage, conservatives pounced on the possibility that a minimum wage hike to $10.10 would cost about 500,000 jobs. But much like their reaction to the recent report about the Affordable Care Act, they are jumping to conclusions far too quickly.

First, there are reasons to be skeptical about the negative employment effect. Many studies find no negative employment effects. A recent report by Demos finds that by stimulating economic growth, a minimum wage could in fact create jobs. After all, a worker for one company is a customer for another. Minimum wage workers struggling to make ends meet are more likely to spend, reviving local economies. This is the argument forwarded by billionaire investment banker Nick Hanauer and economists like Joseph Stiglitz. It has strong theoretical support, as well as empirical support; studies show that poor workers are more likely to spend marginal income than wealthy workers.

Part of the problem is that the CBO relies heavily on simulations, rather than the empirical (observed) effects of the minimum wage. Textbook economics would predict job losses; if you make a good (labor) more costly, you reduce demand for it. But the world doesn’t work like a textbook. Workers being paid more may work harder (economists call this an “efficiency wage”). Workers struggling to make ends meet may not be paid in accordance with their ability, because they can’t credibly threaten to leave their job or unionize (they will simply be fired and replaced). The most famous study on the issue, by David Card and Alan Krueger finds that, “Contrary to the central prediction of the textbook model of the minimum wage … we find no evidence that the rise in New Jersey’s minimum wage reduced employment at fast-food restaurants in the state.” More recently, these findings were replicated empirically by Arindrajit Dube, T. William Lester and Michael Reich.

Looking internationally will not help Republicans. Even the right-leaning Economist magazine has argued that a minimum wage hike in Britain, “has done little or no harm” and instead, “Not only has it pushed up pay for the bottom 5% of workers, but it also seems to have boosted earnings further up the income scale—and thus reduced wage inequality.” The U.S. minimum wage pales in comparison to other developed countries; Australia’s is more than double our own. Historically, too, the current minimum wage is anomalous. Adjusted for inflation, it is far lower than the $10.77 a worker would be making in 1968.

But even if some minor job losses materialize, raising the minimum wage is still good policy. The data show that 55% of the people making a minimum wage work full-time and their the average age is 35. Many of these workers are struggling under student debt, or the costs of raising children. These are not simply college students working on the side; for many people these jobs are the only source of vital income. For these poor workers, a $3 raise may be the difference between a Thanksgiving Turkey and empty stomachs.

The minimum wage has potent implications for our national discussion of inequality and upward mobility. Republicans have been paying lip service to the idea of reducing inequality and increasing upward mobility, but so far policy proposals have been sparse. The minimum wage is a perfect solution. It requires little government spending and is unlikely to have any significant effect on the deficit. It certainly doesn’t violate the “no new taxes” pledge. So a minimum wage hike would be the perfect conservative solution to inequality: targeted at working people (rather than the unemployed), minimal bureaucracy and no new revenue for the government. And studies show it would work. Larry Mishel of the Economic Policy Institute finds that the declining value of the minimum wage has been a major driver of increased inequality. Citing the work of David Autor, he finds that more than half of the growing divide between workers at the median and workers at the lowest 10% of the income distribution can be explained by a declining minimum wage.

The CBO isn’t interested in adjudicating studies, but rather creating a consensus, and it generally errs on the side of conservatism. While the effects of the minimum wage on the job market is mixed and uncertain, the effect on upward mobility is not. The CBO estimates that in total, “overall real income would rise by $1 billion” and that a $10.10 minimum wage could lift 900,000 people out of poverty. The report estimates that those making less than $26,300 a year will their real family income increase by $300 dollars, and those making less than $51,400 would see it rise by $200. All told, more than 16 million workers will be positively affected. For many, that might enough to fix a broken dishwasher or afford Christmas presents. However, one group would be negatively affected: those earning more than $182,200, who would see their real family income drop by $700. Given that this classis the most likely to vote and donate money to Republicans, it’s unsurprising that the part will be slow to embrace raising the minimum wage. Business groups like the Chamber of Commerce have spent millions aiming to keep the minimum wage low.

Republican opposition indicates just how much the party has been co-opted by the interests of the donor class. While a large plurality of economists and more than 73% of citizens support raising the minimum wage, research by Larry Bartels finds that only 40% of the wealthiest Americans do. When combined with research by Martin Gilens and Kay Lehman Schlozman showing how the wealthiest Americans have a disparate voice in public policy affairs we begin to see why the minimum wage has yet to gain traction: class interests, not economics are driving the debate.

If Republicans are serious about reducing inequality and increasing upward mobility without increasing deficits and killing jobs, the minimum wage is the way to go. Sadly, they have been co-opted by a donor class less interested in good policy than their own economic interests.

Originally published on Salon.

Stop blaming single mothers for inequality

Republicans have been having an intense debate about how to solve inequality. On one side, there is conservative pundit Charles Murray, who thinks the solution is for the rich to tell the poor how gross they are and how moral rich people are. On the other side are those like conservative columnist and author Ross Douthat, whobelieves it would be better to be really mean to poor people because there’s just no stigma to poverty anymore. Because solving inequality will inevitably entail redistribution, the Right so far is content with throwing out some vague talking points, rather than a real agenda.

Now they have one: make life really hard for single mothers.

Earlier this year, Utah Republican Senator Mike Lee proposed a tax credit for families with young children and tax preferences for married couples. Now, Fla. Republican Senator Marco Rubio has proposed not only making life easier for married couples,but making life harder for single mothers. In the Wall Street Journal, Ari Fleischer, former press secretary for George W. Bush, argues that, “Marriage inequality is a substantial reason why income inequality exists. For children, the problem begins the day they are born, and no government can redistribute enough money to fix it.”

Even ignoring the fact that one really easy way to encourage marriage would be to open it to millions of LGBT Americans currently denied it, the focus on marriage is a charade.

Conservatives who want to argue that a decline in marriage is causing inequality argue that poor people tend to be unmarried and that areas with more two-parent households tend to have more economic opportunity. Both of these statements are true. But it’s important to tease out the causal link. Does not getting married harm your economic prospects or do bad economic times put an undue strain on relationships? Is there another factor driving both developments?

Two researchers from the National Bureau of Economic Research — Melissa Schettini Kearney and Phillip B. Levine — findthat single motherhood is largely driven by poverty and inequality, not the other way around. They state in a report: “The combination of being poor and living in a more unequal (and less mobile) location, like the United States, leads young women to choose early, non-marital childbearing at elevated rates, potentially because of their lower expectations of future economic success.”

A report by the British Rowntree Foundation had a similar finding: “Young people born into families in the higher socio-economic classes spend a long time in education and career training, putting off marriage and childbearing until they are established as successful adults.” Women in the slow track, in contrast, face “a disjointed pattern of unemployment, low-paid work and training schemes, rather than an ordered, upward career trajectory.” This is largely due to “truncated education.”

Fleischer and Rubio also argue that marriage is harming upward mobility. In theAtlantic, W. Bradford Wilcox has adopted this meme, citing the work of Raj Chetty, Nathaniel Hendren, Patrick Kline and Emmanuel Saez. But his case leaves out something important. Hendren tells Salon that, “areas that had more two-parent households had higher rates of mobility, people born to married parents have lower rates of upward mobility in a place with fewer two-parent households. It’s something about the place that is driving the mobility in these places.”

So all Fleisher’s pontificating about how all the “have-nots” need to do is, “marry and give birth, in that order” comes to naught. A two-parent family living in a community full of single-parent households will still end up poor. The case is far from closed, but there is strong evidence that economic hardship is causing poor and working-class Americans to abandon marriage, rather than the other way around.

Even given this, while it’s worth helping families, we should also help single mothers and fathers, since they are in need of even more help. Instead, Rubio’s plan will actually exacerbate inequality by hurting single parents. If economic hardship is driving high divorce rates and teenage pregnancy, then creating more economic hardship is only going to make the problems worse.

Take my friend Sally (not her real name). She had a child with a man she thought was a stable partner. But Sally broke up with him when he became physically and emotionally abusive. She has a good job, but it’s still hard to make ends meet with kids: she has to pay for childcare, she’s limited in the jobs she can pursue because of her mortgage, and she isn’t getting much help.

Lee and Rubio will do nothing to help her. In fact, Rubio’s plan will make her life even worse, because the Earned Income Tax Credit will be even more skewed against her. Rubio’s plan actually gives Sally, and other women like her two options: court poverty or marry the man who is abusing you.

The plans fail even if you accept the premises of the Right. According to the conservative narrative,inequality has grown worse because America has increasingly divided into two groups. One group, the hard-working Americans, get a college education, get married and then have kids who go to college, get married and have kids. The other group is the lazy, feckless poor, who don’t go to college, have children out of wedlock and don’t get married. The data don’t support this narrative, but even if you accept it, the Republican proposals will only increase inequality. If the rich are married and the poor aren’t, then policies that help married couples and hurt unmarried workers will only worsen inequality.

A better way to fight inequality would be to support policies that help married and unmarried Americans. NY Democratic Senator Kirsten Gillibrand’s “opportunity agenda” would do exactly that. She advocates a broad swath of proposals including raising the minimum wage, creating a family leave system, funding universal pre-K, establishing a tax credit for childcare expenses and passing an equal pay law. These proposals will ameliorate inequality and will do far more to strengthen the family than a modest tax credit. Other liberal proposals include instituting a universal basic income, expanding the Earned Income Tax Credit and higher taxes on the wealthy.

“Encouraging marriage” is a disingenuous dodge. A small tax credit isn’t going to fix the fact that if middle-class incomes had risen equitably over the past three decades we’d all be making $19,000 more each year.

Here’s the dirty little secret. The Republican Party isn’t seriously worried about inequality or poverty or mobility or wage stagnation because addressing any of these issues will lead to the government intervening in markets. That’s okay if it’s to help rich people, but not to help poor people. As Gore Vidal noted, they want “socialism for the rich, capitalism for the poor.”

The Right would also like to stay away from inequality because the main genesis of the cavernous gap between the rich and poor is policies that they championed (deregulation, free trade, union-busting, halting the rise of the minimum wage). They want to destroy the few remaining New Deal programs that are hindering inequality from becoming worse. Talking about marriage keeps the institutions that are driving inequality intact and serves as a red herring that obfuscates the causes of inequality.

The Minimum Wage is Not an Economic Question

Today 75 economists, including 7 Nobel Laureates signed a letter advocating for a higher minimum wage. They sum up what is now the consensus among economists: a modest boost to the minimum wage won’t have a significant effect on unemployment and may boost the local economy. But it strikes me that focuses on the “economics” of the minimum wage is relatively unimportant; it’s the moral question that matters.

If I go to the bank and ask for a loan to finance a the development of technology to turn kittens into car sealant, they won’t ask about the return on investment, they’ll call the police. Similarly, when we banned child labor we didn’t ask if that would reduce GDP. We banned child labor because we aren’t a society that lets children work in dangerous factories. We passed OSHA because we aren’t a society where workers have to worry about dying on the job.

We should raise the minimum wage because we aren’t a society where a full-time worker can’t feed her family. Even if raising the minimum wage caused unemployment (it doesn’t) it would still be the right thing to do. Work should have dignity, and dignity means being paid enough to live.

The minimum wage debate is a microcosm of this problem. Conservatives constantly lament the fact that our society is too materialistic and atomized but when it comes time to give up material pleasure for social gain they run. Is it not a tad materialistic to eschew regulation to save jobs? Isn’t it materialistic to pollute the environment for economic growth? Too often the left falls into the trap of allowing our moral case to be diluted with the economics argument.

We should certainly point out that the minimum wage won’t kill jobs and neither will regulation, but it’s important to remind people that simply increasing GDP isn’t actually a good goal. Robert F. Kennedy put it best when he said of efforts to increase GNP (an economic indicator similar to GDP that measures production based on ownership):

Yet the gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages; the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage; neither our wisdom nor our learning; neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile. And it tells us everything about America except why we are proud that we are Americans.

Are we proud to live in a country where full-time workers still struggle to eat? Then let’s raise the minimum wage.

What the empathy gap means for college students

Okay, so now that this is a blog, because of a decree I made yesterday, I need to start engaging with some writers. First up, is Matt Bruenig. We both blog at Policyshop and are pretty liberal cats. So I like his newest piece in Salon (where I intern) with Elizabeth Stoker, who studies Christian ethics (I hope she doesn’t hate my latest), about the distorted way elites view teenagers. I’m not writing to respond, only to add. I think my post on the “empathy gap,” really gets to the heart of why this is happening:

Discussion is growing of an “empathy gap” rooted in our society’s dramatic increase in inequality. As David Madland argues in Democracy, “Studies across U.S. states, of the United States over time, and across countries all find that societies with a strong middle class and low levels of inequality have greater levels of trust of strangers.” This trust brings about economic advantages. Madland cites one study which found, “a 10 percentage-point increase in trust increases the growth rate of GDP by 0.5 percentage points” over five years.” International studies have confirmed this effect.

This decline in social trust begins a downward spiral. Bo Rothstein and Eric Uslaner note in a fabulous paper for World Politics, “The best policy response to growing inequality is to enact universalistic social welfare programs. However, the social strains stemming from increased inequality make it almost impossible to enact such policies.”

The lack of social trust caused by inequality makes increasing opportunity harder (as I’ve noted above) which further erodes social trust and increases inequality. Wealthy citizens see themselves as “makers” and the poor as “takers,” while the poor see the rich as selfish. Rothstein and Uslaner continue later, “Unequal societies find themselves trapped in a continuous cycle of inequality, with low trust in others and in government and policies that do little to reduce the gap between the rich and the poor and to create a sense of equal opportunity.”

Because elites are so detached from the average working person, they say dumb things about the minimum wage, poverty and the safety net.

When Matt and I see the world, we don’t see universal opportunity, because it’s not there. Without that opportunity (and, I would argue with it) there’s a real need to redistribute. The problem is that while my circle of friends includes a lot of fuck-ups, elites generally hang with people who are “poor” if they make $250,000 a year. Cynthia Freeland writes in Plutocrats of millionaires whining about how victimized they are:

The clincher, Peterson said, came from one of her dinner companions.

“She turns to me and she goes, ‘You know, the thing about twenty is’ ”—by this she means $20 million per year—“ ‘twenty is only ten [after taxes].’ And everyone at the table is nodding.”

When you have the “skyboxification,” (Michael Sandel’s word) it changes who you interact with and it eliminates the social bonds necessary to underlie the welfare state. Worse, it means rich people stop seeing struggling poor people. As I write in an upcoming article,

the War on Poverty never aimed to rid the country of poverty. It was just to get the poor out of our sight. And by that measure it has worked. It’s much easier to hate the poor when you can’t see them. Make no mistake, we could have ended poverty in America. If affordable housing could be dropped on Arabs or food stamps shot at Communists, I’m sure there would be more than enough to go around. America is a Potemkin village, the poor hidden behind the facade of EBT and SNAP instead of stuck in bread lines. By creating an atomistic society, the elite have perpetrated the ultimate deception – the poor, ever with us are now invisible.

So, while I see lots of kids struggling to pay for college (or even get in), elites see a bunch of kids graduating Harvard ready to grab the world by the balls.

Anyways, long story short, Matt’s got good ideas. I’m hoping to use this blog to start engaging them more. I can see some points of tension between us, and I hope he’ll humor me with a debate in the future.