In Seattle, Calls for a Higher Minimum Wage are Calls for Democracy

Mar 28, 2014Felicia Wong

Roosevelt Institute President and CEO Felicia Wong spoke yesterday at the Income Inequality Symposium in Seattle, where she gave the closing remarks, calling on our memories of President Franklin D. Roosevelt and the New Deal to urge Seattle into action on raising the minimum wage. Her prepared remarks are below.

Thank you so much, Mayor Murray, David Rolf from SEIU 775NW, Howard Wright, and all of you who have served on the Mayor’s Task Force or spent so much of your time fighting for economic growth and economic justice.

Today – we feel like a nation at the crossroads, on the brink.  But let’s remember: we’ve been here before. The story is familiar. Poverty and income inequality are on the rise throughout the United States. Even if you’re fortunate enough to have a job, you’re struggling to make ends meet. Meanwhile, a select few do very, very well for themselves. The President, facing a critical midterm election, addresses the nation. Raise standards for workers, he says, and he calls for laws to raise the national minimum wage, too.

I’m talking about 1938, when the President was Franklin Delano Roosevelt. When FDR took office, there was no federal law guaranteeing a minimum wage for American workers – and in fact throughout the 1930s the President battled a recalcitrant and conservative Supreme Court, and conservative business establishment, on behalf of workers. In his 1938 address to Congress, FDR said such a law was long overdue. He said it was morally unacceptable and economically unsustainable for so many people in the United States to earn poverty wages. To quote Roosevelt: “Aside from the undoubted fact that the people thereby suffer great human hardship, they are unable to buy adequate food and shelter, to maintain health, or to buy their share of manufactured goods.”

That’s the key. FDR understood that the minimum wage was an issue for our hearts and for our wallets. Again and again, he returned to the point that businesses could not thrive unless workers did. Without workers, an economy cannot grow.

It was a tough fight, and FDR didn’t go it alone. He had what he called his Brains Trust -- lawmakers, academics, activists, and business leaders. Their job was to figure out economic policies under which everyone could prosper. FDR went to Congress with their proposals. The result: the Fair Labor Standards Act, a keystone of the New Deal, along with the Social Security Act. With the FLSA we got a federal minimum wage as well as the 40-hour workweek and standards for overtime pay. These underlie modern labor policy.  These are issues that are hotly debated even today.

As we’ve seen over the course of this day’s symposium, fixing our country’s inequality and wage problems will – once again – need the good ideas and expertise of a brain trust. We have been fortunate to hear from important partners such as Maud Daudon from the Chamber of Commerce, Saru Jayaraman from Restaurant Opportunities Center - United, and leaders from other cities such as Supervisor John Avalos from my hometown of San Francisco and Wilson Goode from Philadelphia.  Innovation is a team sport. FDR understood this, and so does Mayor Murray.

I work at the Roosevelt Institute in New York City.  And I am here today because Seattle is at the center of the nation’s most important fight.  

At Roosevelt, we think of ourselves as an ideas and leadership shop. I won’t claim that we ask ourselves “What Would FDR Do?” in every situation. But we certainly try to capture his spirit of innovation and collaboration in our work. We support public intellectuals like Dorian Warren, whom you’ve heard from today, and Mike Konczal, Joe Stiglitz, Annette Bernhardt, Richard Kirsch, and others. They plunge into all facets of the inequality problem – which President Obama has rightly called the defining problem of our time.  They envision solutions, including a new labor agenda for the 21st century.  This includes raising the minimum wage and providing paid sick leave, and also includes new standards for the right to organize, the enforcement of labor laws, and strategies to combat labor market segregation by race and gender.  At Roosevelt we also support some 10,000 undergraduates across the U.S. who dig in deep in their local communities – designing and fighting for policy solutions at the city level.

We at the Roosevelt Institute believe – as does everyone here – that we all do better when we all do better. But: wages have been backsliding for decades now. The typical American family makes less today than it did 25 years ago. I know we have heard a lot of statistics today, and they can seem overwhelming, but consider this for just a moment: 16 million children live in homes where their families are not sure where the next meal is coming from. Five years after the Great Recession officially ended, there are still three times as many Americans looking for work as there are job openings. And, as we’ve discussed today, new jobs aren’t good jobs.  The most recent BLS statistics forecast a low-wage trajectory through at least 2020.  Only one of the 20 occupations expected to add new jobs requires a college degree, and most of the kinds of jobs we will be creating offer low or moderate pay.

From FDR to President Obama to each and every one of us here today, whether right or left or center: we can all agree that no one should work a full-time job and worry about putting food on the table for their family.  

But this is not just about morality, not just about the “we should” and the “we shouldn’t.”  This is about economic fundamentals. When people can’t even buy groceries at the end of the month, they can’t do all of the things – go to a baseball game, go to dinner at a restaurant – that drive economic growth and make our towns and cities strong.

Now, consider the other half of the coin: times are not tough for everyone. In 2012 alone, the richest 1 percent of Americans took home more than 20 percent of all income – one of their biggest hauls since the Gilded Age. Corporate profits are at record levels, and corporations are sitting on huge cash reserves. Many will tell us that corporations and wealthy owners are the job creators, the engines of the economy.  Now, none of us begrudge real success. But the question is, if they’re doing so well, why isn’t the rest of the economy doing better?

And the answer is clear: As FDR once argued, the people – middle class, working families – are the real job creators. These aren’t just strangers, or statistics. I’m talking about our friends and family and co-workers. I’m talking about us. As more and more Americans struggle to keep up - businesses can’t function.  Companies need customers, people to spend money on those products and services. That’s why holding down wages is more than just unfair. It’s also bad economics.

Let me take a minute to tackle the arguments on the other side: that raising the minimum wage will cause unemployment, business flight, or higher prices.  But empirical research looking at decades of data – much of which we have heard today – shows that on balance raising wages has little or no negative employment effects, and in fact there is significant evidence to show that businesses – and cities and towns – flourish with higher wages, rather than lower.

This also should make sense to any of us who manage other people. Making decisions to pay employees enough so they aren’t stressed in the rest of their lives makes good business sense, and good common sense.

And, we are learning from very recent research.  I will cite just two important pieces.  The first is a massive study of 200 years of capital accumulation, incomes, and growth just published here in the United States.  The research suggests the problem is very big, and in fact lies in the structure of today’s entire global economy. Too much capital is concentrated in the hands of too few, and the global economy has gone awry.

The second piece is a recent IMF study of inequality and growth in hundreds of countries showing that many equality-enhancing redistributive policies – higher taxes, more public investment – can increase growth. Win-wins are possible.  

So these findings should give us courage. And should push us to act – because recalibrating the minimum wage is one very big step towards fixing the broken economic system and promoting growth in ways that will work for everyone.

Let me be clear: raising the minimum wage isn’t anti-democratic, isn’t anti-capitalist, isn’t anti-free market.  FDR saved capitalism from itself.  That is what you are trying to do here today.

It’s no surprise that we’re having this conversation in Seattle. Your city is a great hub of American business and social innovation. This city has brought to life trends and technologies, from Starbucks coffee to Excel spreadsheets, which revolutionize the way we live. And you in Seattle know that people are at the center of that innovation. Companies like Costco have built their business models on paying decent wages and benefits, retaining valued employees, and fostering strong communities.

It’s not a top-down, trickle-down proposition. Economies grow, as our friend Nick Hanauer said this morning, from the middle out.  You have seen it work in Seattle, and that’s why Seattle is the right incubator for the sound labor policies that will shape the American economy of the future.

By voting for a 15 dollar an hour wage floor, Seattle can move the entire region’s economy forward.  You can also set the trend for the whole country – in addition to possible federal legislation, at least eight states are considering minimum wage increases this year. You can show all of us how to build the kind of economy that grows, that is stable, and that spreads prosperity broadly.  It is a virtuous cycle.  

If adopted nationwide, the Economic Policy Institute estimates that the raise in the minimum wage proposed by President Obama could affect more than 28 million people and lift many of them out of poverty. 28 million people. At a time when the American Dream of opportunity for all is rapidly fading, those are 28 million reasons to support this proposal.

Beyond the potential economic impact, this policy would show what government can achieve when it responds to the needs of working families. As Justice Louis Brandeis once said, “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.” Individual companies, as great as they are, can’t do this alone.  Our fates are linked, and we have to act together.  By raising the minimum wage to fifteen-dollars-an-hour, Seattle can choose democracy and start to reverse the trends that have been crushing the middle class.

Let me close by urging the members of Seattle’s City Council to approve the 15 dollar an hour minimum wage. And as FDR told his own supporters, it is up to all of us to make them do it. A lot has changed about our country since the days of the New Deal, but one thing remains the same: Progress is possible when we commit to it and fight for it. Now is the time for us to decide what kind of economy, what kind of government, and what kind of future we want for ourselves. Now is the time for Seattle to lead the way. Thank you.

Felicia Wong is President and CEO of the Roosevelt Institute.

 

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