The State of the Union Then and Now: Raising the Minimum Wage is Still a Good Idea

Jan 29, 2014David B. Woolner

Decades after FDR called for a national minimum wage, the debate continues -- and his arguments for it still ring true.

Decades after FDR called for a national minimum wage, the debate continues -- and his arguments for it still ring true.

We have not only seen minimum wage and maximum hour provisions prove their worth economically and socially under government auspices in 1933, 1934 and 1935, but the people of this country, by an overwhelming vote, are in favor of having the Congress—this Congress—put a floor below which industrial wages shall not fall, and a ceiling beyond which the hours of industrial labor shall not rise. – Franklin D. Roosevelt, State of the Union Address, January 3, 1938

In calling for an increase in the minimum wage in his State of the Union address, President Obama may have unwittingly echoed Franklin D. Roosevelt. For it was in the sixth year of FDR’s presidency, in the annual message to Congress that FDR delivered on January 3, 1938, that Roosevelt reiterated his increasingly vehement call for the passage of the Fair Labor Standards Act—the very law that would establish the national minimum wage.

In proposing the legislation, FDR used many of the same arguments that President Obama used to counter the conservative opposition that insisted—much as the conservative right does today—that the federal government has no business trying to increase the purchasing power of the average worker, and that the enactment of a national minimum wage law would hurt business and increase unemployment. Opposition in the largely non-union and racially segregated South—where there was a huge differential between the wages of white and black workers—was especially intense, and thanks to the actions of Southern Democrats in both the House and Senate, who had joined with conservative Republicans in the formation of an anti-New Deal coalition, passage of the Fair Labor Standards Act was not going to be easy.

To counter these arguments, FDR appealed, as he often did, to the moral sensibilities of the American people, insisting that government had “a final responsibility for the well-being of its citizenship” and this included enacting “legislation to end starvation wages and intolerable hours.” Furthermore, there were sound economic reasons to pass wage and hours legislation. In an earlier address on the subject, using language that is especially relevant to President Obama’s call for an increase in overseas exports, FDR observed that:

American industry has searched the outside world to find new markets—but it can create on its very doorstep the biggest and most permanent market it has ever seen… A few more dollars a week in wages, a better distribution of jobs with a shorter working day will almost overnight make millions of our lowest-paid workers actual buyers of billions of dollars of industrial and farm products. That increased volume of sales ought to lessen other cost of production so much that even a considerable increase in labor costs can be absorbed without imposing higher prices on the consumer. I am a firm believer in fully adequate pay for all labor. But right now I am most greatly concerned in increasing the pay of the lowest-paid labor—those who are our most numerous consuming group but who today do not make enough to maintain a decent standard of living or to buy the food, and the clothes and the other articles necessary to keep our factories and farms fully running.

Interestingly, a group of over 600 economists, including seven Nobel laureates, recently issued an open letter calling on President Obama and the congressional leadership in both parties to raise the minimum wage, arguing, as FDR did, that “the weight of evidence” shows that an increase in the minimum wage will “have little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market.”

It seems incredible that we should still be locked in the same debate about the moral and economic impact of an increase in the minimum wage more than three-quarters of a century later, at a time when even the McDonald’s Corporation had to admit after its own internal analysis that its minimum-wage workers could not survive on what they were receiving without the addition of a second job.

In 1938, Franklin Roosevelt argued that if we want to move “resolutely to extend the frontiers of social progress, we must… ever bear in mind that our objective is to improve and not to impair the standard of living of those who are now undernourished, poorly clad and ill-housed.” The Fair Labor Standards Act, which was signed into law on June 25, 1938, has helped improve the lives of millions of American workers—especially those at the bottom rung of the income scale—through its recognition of need to establish a minimum wage and through the provision that provides time and a half for overtime work. But in order for the law to be effective and have meaning, the minimum wage must keep up with the cost of living, and, as President Obama noted in last night’s address, the real wage of the average American worker has been in decline for decades when adjusted for inflation.

If Congress is serious about improving and not impairing the lives of the millions of working poor in this country, then it is high time to heed the president’s call to “give America a raise” and increase the minimum wage. To fail to do so would be yet another example of the callous indifference—most recently exemplified by the failure of Congress to extend long-term unemployment benefits—that those in positions of wealth and power have shown for the plight of the millions of Americans who struggle day by day to get by on wages that force even those working full-time to live a life of poverty. Indeed, the inability or unwillingness of this Congress to act on behalf of the most vulnerable in our society brings to mind the words of the late Pete Seeger, who died this week, when he sang, “which side are you boys, which side are you on?”

David B. Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute. 

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Roosevelt Reacts: What Worked and What Didn't in the 2014 State of the Union

Jan 29, 2014

Roosevelt Institute Fellows and Network members weigh in on what they liked about President Obama's fifth State of the Union and where it fell short.

Andrea Flynn, Roosevelt Institute Fellow:

Roosevelt Institute Fellows and Network members weigh in on what they liked about President Obama's fifth State of the Union and where it fell short.

Andrea Flynn, Roosevelt Institute Fellow:

Last night, President Obama again proved himself to be a champion of improving the economic security of American women. He addressed many policy initiatives – immigration reform, universal pre-K, paid sick and family leave, and strengthening the Earned Income Tax Credit – that, if advanced by Congress, would have a positive impact on women and their families. Most notable was his strong support for raising the minimum wage. Yesterday the president issued an executive order requiring federal contractors to pay their employees at least $10.10 an hour, and in his address he called on governors and state legislators around the country to follow his example. This is an issue that disproportionately affects women and their families. As of 2011, women represented 46.9 percent of the work force but more than 62 percent of minimum-wage workers. More than 2.5 million American women have incomes at or below the minimum wage. As President Obama noted, women still only get paid $.77 for every dollar earned by their male counterparts, with women of color being particularly impacted by wage discrepancies. Black women earn $.64 and Latina women $.55 for every dollar a white man earns. Conservatives are likely to criticize President Obama for using the power of his office to mandate such a sweeping change, but there is precedent for utilizing the power of executive orders to institute improvements in the workplace. In fact, more than 40 years ago, President Nixon issued an executive order prohibiting workplace discrimination based on sex, race, age and other characteristics. That order paved the way for an expansion of employment opportunities for women, just as President Obama’s order will begin to level the playing field for American women and their families.

Yasemin Ayarci, President, George Washington University chapter, Roosevelt Institute | Campus Network:

While I was pleased to hear the announcement of an increase in minimum wage for federally contracted workers through an executive order, President Obama must also put in place limitations on executive pay, which will hold them accountable for funneling taxpayer money into their own pockets. But after spending the majority of his time in office coddling banks and wealthy donors, Obama is not the person to look to for decreasing income inequality. To the president, economic reform means tweaking payroll taxes and making hollow calls to end tax cuts for the rich. When you observe the policy, he has made the Bush tax cuts permanent, lowered Wall Street's capital gains and dividends taxes to 20 percent, and lowered the estate tax to 40 percent, among other things. A rearrangement of the tax code that allows Americans to take back the wealth created by labor and accumulated by corporatists is key for a progressive job creation plan and for reducing income inequality levels. That sort of change will not come from the White House, and so progressives must shift their focus to the grassroots, bottom-up approach.

Erik Pekkala, member, Greater Boston Network, Roosevelt Institute | Pipeline:

President Obama set a bold vision for our nation in his 2014 State of the Union address last night. He started the speech by citing various policy accomplishments and measures of growth, signaling "after five years of grit and determined effort, the United States is better-positioned for the 21st century than any other nation on Earth."

The President addressed head-on the Washington gridlock that led to October’s debt ceiling brinksmanship, shuttered the federal government and deeply frustrated the American people. President Obama said he is "eager" to work with Congress to make his vision for the nation a reality, but made it clear that "...wherever and whenever I can take steps without legislation to expand opportunity for more American families, that’s what I’m going to do." While the Commander-in-Chief should use the powers of his office to serve the American people, there are limits to executive authority. If congressional infighting continues to block legislative progress, the Obama administration can only go so far through executive orders and federal agencies.

This State of the Union got a warmer reception from Republican members of Congress than in recent years, with GOP applause for Obama's statements on reforming the immigration system and corporate tax code. As the Republican Party continues its internal debate about its image and connecting with voters, perhaps it will be more open to collaboration and finding common ground with the President and Democrats in Congress. The President seemed renewed as he told the nation that he is ready to go to work. Let's hope he can use that same energy and leadership displayed in last night's speech to unite both parties in Congress to work together for the American people. Only then will the President's vision for our country be realized.

Rajiv Narayan, former Senior Fellow for Health Policy, Roosevelt Institute | Campus Network:

Like many, I was struck by the president's now-crystallized shift away from a deeply unpopular and inactive Congress. While I look forward to 2014 being the politico-zodiac Year of the Executive, I think the "do-nothing" and "lame-duck" characterizations of Congress miss what the legislative branch is doing. On no less than the day of the State of the Union address, the do-nothing Congress did something pretty deplorable -- a farm bill finally moved from conference to the House and Senate floors, and it aims to cut monthly SNAP benefits to 850,000 households by $90. For a presidency increasingly focused on closing the income gap and reducing income inequality, this is a lunge in the wrong direction. As the administration focuses on action at the state and executive levels, it's important to remember we cannot make a powerful legislative body completely irrelevant. President Obama and voters need to draw the line between an unproductive Congress and a counterproductive one. 

David Meni, Vice President, George Washington University chapter, Roosevelt Institute | Campus Network:

I found this State of the Union address to be a much different animal than addresses in past years. There was less rhetoric involving cooperation with Congress, and more emphasis on executive actions that can be taken with some immediacy and without gridlock. President Obama's relative sidelining of Congress has been talked up enough by the news, but I think the implications of the speech are interesting; we saw more policy discussion, from the long-overdue minimum wage increase for federal workers to expanding school broadband access. These are all immediate proposals that will not have to be watered down. That is refreshing.

On the other hand, I was dismayed by the amount that was glossed over. The president's discussion of college affordability was more of the same. The proposal for a comprehensive immigration bill, the much-applauded statement that women should have equal pay, and the brief sentences on gun control and military spending--all of these are critical issues that should be at the core of any State of the Union address, but what I heard was very little tangible policy. So while I am glad that the president is finally talking about addressing issues that are within his executive power, I have to admit that this State of the Union lacked ambition on many of America's most pressing issues.

Jill Nguyen, Co-Director, Hendrix College chapter, Roosevelt Institute | Campus Network:

2013 ended with President Obama’s disapproval rating at an all-time high of 56%, according to CNN. It was a tough year, especially with the technical challenges of healthcare.gov, a much anticipated immigration reform bill kept out of the House’s agenda, and gun control actions achieved only through Executive Orders. Despite my disappointment with failed promises of previous years, the State of the Union address last night brought me back to the hope-filled time that was 2008. By recycling some promises from previous years, the President has managed to satisfy my wish list.

Considering his declaration of 2014 as a year of action, I was glad to see the President return to immigration reform. As I see it, an ideal law should keep families together, evaluate the broken deportation machine, and offer job trainings and education access to immigrants’ families. I was also pleased to see the President recognize the work of the First Lady. It was even more important that he recognized that women are still not paid equally to their male colleagues. The women who were in the chamber, who included the bipartisan group of female senators who led the negotiations that ended the government shutdown, are constitutionally guaranteed equal pay. It's well past time for all women to be paid fairly.

Tarsi Dunlop, member, DC Network, Roosevelt Institute | Pipeline:

As someone who works in the nonprofit education sector, I tend to focus in on elements of the State of the Union that pertain to K-12 education, and to the status of young people in American more broadly. On a rhetorical note, I was thrilled to hear President Obama open the speech with an anecdote about a teacher helping a student. So often, it is the strength of this relationship and the effort and dedication of our teachers that reach those struggling students and help them succeed in the classroom. While education was not a primary focus of last night’s speech, the President did repeat a request from last year’s State of the Union for universal pre-K.

Many state governors are looking at universal pre-K as a possibility to help students start out on more equal footing. This seems to be the strongest acknowledgment we will get from our current government that growing up in poverty can have a negative influence on student learning and academic achievement. I’m familiar with the ‘no excuses’ refrain, and I agree, but the presence of poverty cannot be ignored. While pre-K is a start, kids who grow up in poverty are very unlikely to move out of it over the course of their childhood. We need to factor that into our efforts to support schools with high percentages of low-income students, whether it in wrap-around services, after-school programs or more targeted supports for student learning. Since the full implementation of universal pre-K will rest heavily on the states and cities, the President might also consider how his administration could support such efforts – other than competitive grant funding in the form of another race to the top program.  

Zach Komes, Policy Director, George Washington University chapter, Roosevelt Institute | Campus Network:

Globalization and technological change have dramatically transformed our urban economies from hubs for well-paying manufacturing jobs to neighborhoods suffering from extended structural unemployment. The president argued forcefully for a new year-long focus on boosting upward mobility and competitiveness in communities left behind by the economic growth of the past few decades. It's reassuring that the president has put emphasis on universal pre-kindergarten, education spending, job training, tax reform, and broadband access to help our struggling cities. However, specific and innovative urban community development policies were missing from much of the speech. In the end, though, many of the best solutions for our challenged metropolitan regions must come from far outside Washington in statehouses, city halls, college campuses, and our local communities. 

Magali Duque, Stanford University, Roosevelt Institute | Campus Network:

Last night's State of the Union address touched on many of the same issues the President has spoken on before, but he approached them in new ways. By using specific stories of ordinary citizens and aligning their struggles with policy arguments, the President is able to appeal to a broader audience – an audience focused on how their own issues fit into this democratic narrative. In that way, his speech was successful. My favorite moments were his appeal to women's equality, access to comprehensive health services including mental health, education innovations, socio-economic mobility, and fair policy. His hopes for women's equality in the economy appealed to not only women, but also to the American people as a whole because he framed "women's success" as "America's success."  In fact, this framework was reminiscent of John Stuart Mill's perspective on equality of the sexes in The Subjugation of Women, making an important point about the pervasiveness of gender inequality. Also, I appreciated how the President addressed educational, economic and immigration reform, because he simply laid out the facts for why they are so essential for our nation's progress. His calls to action such as "Congress, give these young people the chance they deserve" and "creating new jobs, not creating new crises," highlight the importance of a unified and unbiased approach towards policy because it "should be the power of our vote not size of our bank account that drives our policy. " The power of democracy should also be driving social progress rather than hindering it, and to do so, it should include more voices of our generation.

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State of the Union 2014: Obama Offers Action, Not Apologies

Jan 29, 2014Jeff Madrick

The president promised to do what he can without Congress, even if it isn't much.

From a political point of view, President Obama gave one of the best speeches of his presidency last night. In this, his fifth State of the Union Address, he avoided all apologies. No word about the slow progress on cutting unemployment, or the failure of the healthcare.gov rollout, or the inability to pass gun control, or the extreme excess of government intrusion on America privacy.

The president promised to do what he can without Congress, even if it isn't much.

From a political point of view, President Obama gave one of the best speeches of his presidency last night. In this, his fifth State of the Union Address, he avoided all apologies. No word about the slow progress on cutting unemployment, or the failure of the healthcare.gov rollout, or the inability to pass gun control, or the extreme excess of government intrusion on America privacy.

His tone was resolute and optimistic, and he struck many progressive chords. He made a nation that is down feel up. President Obama in particular made a strong case for a higher minimum wage. Commentators like David Brooks have pooh-poohed this because it wouldn’t raise that many families above the poverty line. This is the height of insensitivity. The poverty line is desperately low in America. But more than half the benefit would go to families that earn $40,000 or less, families in which one of its members will get a raise—usually an adult—if the minimum wage is raised. That’s a family, not an individual. And the higher minimum wage bumps up wages just above it.

Any idea that Americans are getting paid what they deserve, which is the assumption the Brookses of the world make, is a triumph of utopian insensitivity.

President Obama gave a shoutout to Senator Tom Harkin, who is leading the campaign for a $10.10 minimum wage in Congress. We are proud to say that Senator Harkin was our keynote speaker at the Bernard L. Schwartz Rediscovering Government Initiative's jobs emergency conference last year.  

But as I say, the president didn’t dwell in the realm of apology. He will raise pay for those on federal contracts. He talked about equal pay for women. He wants an immigration bill. He implied that inequality cannot be tolerated at this level in America. He would offer subsidies for business to bring jobs home.

All these struck optimistic notes. But he avoided the policies that really need doing. Sequestration has to be ended and government spending pumped up to get unemployment lower at a faster pace. But he did not talk about fiscal stimulus. He would live within the bounds of the austerity economics he helped bring about, even if he was not nearly as responsible for it as the Republicans.

He did not talk much about fixes to Obamacare but made clear it is helping millions already. This may sound like rhetoric, but it is critical. Too few realize how beneficial the new plan is—which has partly been Obama’s fault. He has avoided talking much about it. Last night he came out swinging, justifiably so. But it needs some fixes, and eventually a public option.

The headline is that Obama says he will do what he can with or without a recalcitrant Congress. The truth is he can’t do much. But for a president who has not taken the battle to the members on the Hill, this speech was a triumph and long in coming. He put Congress on the spot. He should keep using the bully pulpit, unafraid to do so, because he is right and they are mostly wrong. 

Jeff Madrick is a Senior Fellow at the Roosevelt Institute and Director of the Bernard L. Schwartz Rediscovering Government Initiative.

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Daily Digest - January 29: The State of Our Union Depends on Our Communities

Jan 29, 2014Rachel Goldfarb

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Student-Run Group to Evaluate Cornell-Community Relations (Ithaca Journal)

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Student-Run Group to Evaluate Cornell-Community Relations (Ithaca Journal)

D. W. Nutt speaks with Roosevelt Institute Associate Director of Networked Initiatives Alan Smith and Roosevelt Institute | Campus Network Cornell chapter president Matthew Clausen about the launch of Rethinking Communities, an initiative examining the ways that Cornell and its peers contribute to local economies.

  • Roosevelt Take: Alan discusses the theory behind the project, which focuses on driving change to economic and social policy at the hyper-local level.

State of the Union: Right on Wages, Wrong on Trade (The Nation)

John Nichols writes that the president's calls for free trade weakened another excellent discussion of income inequality and how to fix it. Back in 2008 on the campaign trail, Obama tied trade deals to growing inequality, and Nichols says that's still true.

Obama: Time for Congress to Get Out of the Way (MSNBC)

Suzy Khimm argues that the State of the Union emphasized the ways that Congress is blocking even the policies that both parties agree on. The president's willingness to work around Congress, as with his executive order raising the minimum wage for federal contractors, could be key.

Kain Colter Starts Union Movement (ESPN)

Tom Farrey reports on the Northwestern University football team's first steps toward collective bargaining. On Tuesday, they filed a petition and unions cards with the National Labor Relations Board, becoming the first college athletes to attempt to unionize.

Newark Passes The Country’s Eighth Paid Sick Leave Law (ThinkProgress)

Bryce Covert reports on the newest in a wave of paid sick leave laws, which the mayor of Newark, NJ has promised to sign. This is the second municipality in New Jersey to mandate paid sick leave, which she says puts more pressure on statewide lawmakers.

New on Next New Deal

It's Time to Raise Wages: Local Leaders Should Follow the President's Example

Roosevelt Institute Associate Director of Networked Initiatives Alan Smith urges anchor institutions, like universities or hospitals, to consider ways that they can quickly improve their economic impact, like paying a living wage and requiring contractors to do the same.

Republican Alternative to Obamacare: Pay More, Get Less, Put the Insurance Companies Back in Charge

Roosevelt Institute Senior Fellow Richard Kirsch says that the introduction of a GOP plan for replacing Obamacare gives Democrats a moment of opportunity. Comparing this plan to the Affordable Care Act demonstrates the ways the Republican plan will harm the health care system.

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Daily Digest - January 28: What Tonight's Speech Will Have, and What It Needs

Jan 28, 2014Rachel Goldfarb

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"Full Employment": The Two Words Obama Needs to Say Tonight (TNR)

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"Full Employment": The Two Words Obama Needs to Say Tonight (TNR)

Roosevelt Institute Fellow Mike Konczal argues for the return of full employment as a concept that refers to government responsibility for greater prosperity. Including it in the State of the Union address would highlight the best way to deal with economic inequality today.

Time Warner Cable Sale Will Cost Us All (Bloomberg View)

Roosevelt Institute Fellow Susan Crawford writes that if Charter Communications buys Time Warner Cable, the result will be decreased competition, increased profits, and higher prices for consumers, but no better product than before.

Obama to Raise Minimum Wage Under Federal Contractors (NYT)

Peter Baker reports that the president plans to sign an executive order requiring workers under federal contractors to be paid at least $10.10 per hour. Obama will highlight this order in tonight's State of the Union, which he used last year to call for a higher minimum wage for all.

Why Is the American Dream Dead in the South? (The Atlantic)

Matthew O'Brien considers the geography of the American Dream by looking at the differences in economic mobility across the country. Among the reasons he lists for these differences are segregation, social capital, and inequality.

The Liberal Case for a Basic Income (BINews)

Almaz Zelleke responds to Max Sawicky's guest post on Next New Deal, which presented a liberal case against a universal basic income. Zelleke argues that the universal and unconditional nature of a basic income marks its importance in the liberal project.

The People’s Bank (TAP)

Abby Rapoport looks at the history of the Bank of North Dakota, the state-run financial institution that helped keep the local economy afloat during the Great Recession. She also looks at proposals to start similar banks as other states try to learn from North Dakota.

GOP Offers Obamacare Replacement — and It’s a Mess (Salon)

Brian Beutler reports on the Republicans' first real plan to replace the Affordable Care Act. Beutler suggests that the GOP plan, which is far more regressive and requires major cuts to Medicaid, ignores the shift from health insurance as a privilege to health insurance as a guarantee.

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Daily Digest - January 24: Four Big Reasons Financial Reform Isn't Finished

Jan 24, 2014Rachel Goldfarb

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Washington Has Not Defeated Wall Street. Yet. (TNR)

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Washington Has Not Defeated Wall Street. Yet. (TNR)

Roosevelt Institute Fellow Mike Konczal writes that for all that Dodd-Frank accomplished, financial reform isn't done yet. He lays out four areas in particular where this fight is ongoing, and the solutions aren't quite clear: enforcement, Too Big to Fail, the mortgage market, and shadow banking.

The Populist Imperative (NYT)

Paul Krugman writes in favor of a focus on inequality in the State of the Union next week, because that rhetoric connects voters to macroeconomic issues. He argues that while some people may want more explicit discussion of jobs, the issues are interconnected.

Most Republicans Think Poverty Caused by Laziness, New Poll Finds (MSNBC)

Morgan Whitaker reports on the results of a new Pew poll on poverty. The poll shows that Americans recognize the growth of economic inequality in recent years, but a majority of Republicans think that if poor people put in more effort, they wouldn't be poor.

When Companies Break the Law and People Pay: The Scary Lesson of the Google Bus (Salon)

Julia Carrie Wong uses the Google Bus in San Francisco as a prime example of the ways that large corporations are allowed to flout laws that carry harsh penalties for individuals. The fine for blocking a bus stop is $271, but Google gets to pay San Francisco just $1 per stop used.

Big Money Doesn't Just Corrupt Politics. It Also Corrupts People (PolicyShop)

David Callahan argues that when public servants with relatively low government salaries spend so much of their time with wealthy lobbyists, corruption isn't so surprising. He suggests limiting lobbyists' access as one solution, but also calls for higher salaries for government officials.

WSJ Can't Figure Out Why Hiring Lags When Factories Are Not Humming (Beat the Press)

Dean Baker calls out the Wall Street Journal for a recent piece that questions why manufacturing isn't hiring when the industry is doing better. Data shows that factories are still functioning far below their capacity in the U.S., so Baker wonders why the Journal is asking that question.

Guatemala Factory Supplying Walmart and Other US Retailers Stole $6 Million From Workers (The Nation)

Steven Hsieh reports on the results of an Institute for Global Labor and Human Rights investigation into the wage theft at an Alianza Fashion factory in Guatemala. When retailers were asked about the wage theft, some blamed the middle men in the manufacturing chain.

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Daily Digest - January 21: Both Major Parties are a Work in Progress

Jan 21, 2014Rachel Goldfarb

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Independent Conservatives Growing (The Kudlow Report)

Roosevelt Institute Fellow Dorian Warren says the GOP must consider independents' views during the primary process. Otherwise, Tea Party primary challenges against moderate incumbents will result in general election candidates whom independents will never support.

Click here to receive the Daily Digest via email.

Independent Conservatives Growing (The Kudlow Report)

Roosevelt Institute Fellow Dorian Warren says the GOP must consider independents' views during the primary process. Otherwise, Tea Party primary challenges against moderate incumbents will result in general election candidates whom independents will never support.

Change in the Air (Harper's Magazine)

Roosevelt Institute Senior Fellow and Director of the Bernard L. Schwartz Rediscovering Government Initiative Jeff Madrick writes about the shift in Democratic politics that led to the election of progressives like New York City's new mayor, Bill de Blasio. He considers this proof that voters are paying attention to how long many elected officials have ignored rising inequality. This article is behind a paywall.

The Sunday Show with Philip Maldari (KPFA)

Jeff Madrick discusses the rise of inequality in the U.S., with a focus on the data. He touches on unemployment, individual and household wages, part-time work, increased productivity without increased wages, and more.

Back to the Digital Drawing Board (NYT)

Roosevelt Institute Fellow Susan Crawford argues that the circuit court ruling that eliminated the Federal Communications Commission's existing net neutrality rules offers an opportunity to declare the Internet a "common carrier," which would require equal service for all.

Class Divide on Campus: Adjunct Professors Fight for Better Pay, Benefits (NBC News)

Former Roosevelt Institute | Pipeline Fellow Nona Willis Aronowitz looks at the struggle of adjunct professors, who are paid poverty wages for jobs that require advanced degrees, and how their tenured peers have or have not been supportive of their push for changes.

Deficit Scolds Are Holding the Unemployed Hostage (NY Mag)

Jonathan Chait writes that by insisting that short-term stimulus, like extending unemployment insurance, absolutely must be offset by deficit reduction, the deficit scolds are doing far more to support gridlock than to create the political changes they want.

A Housing Relief Program with Policies That 'throw people into the grinder' (The Guardian)

David Dayen reports on the failure of one of the biggest housing relief programs in the country, Hardest-Hit, which was created in 2010 to provide foreclosure relief. The program's poor implementation has caused serious problems for homeowners seeking help.

Wall Street Group Aggressively Lobbied a Federal Agency to Thwart Eminent Domain Plans (The Nation)

Alexis Goldstein reports that Wall Street directly lobbied a key staffer at the Federal Housing Finance Agency, which has since threatened legal action against localities that attempt to use eminent domain to rescue underwater homeowners.

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Obama's 'Promise Zones' Have Potential if They Include Anchor Institutions

Jan 10, 2014Joelle Gamble

Efforts to promote economic development must shift to the local level, but they can't overlook some of the biggest players in these communities.

Efforts to promote economic development must shift to the local level, but they can't overlook some of the biggest players in these communities.

At a press conference yesterday, President Obama told the story of his time organizing in Chicago and highlighted the work local communities do to support their neighbors and prepare them to be contributors to the economy. This renewed emphasis on the importance of localities accompanied the President’s announcement of five “Promise Zones,” specially designated communities that will receive increased federal resources and coordinating support in their efforts to develop economically. This announcement comes as welcome news to advocates for equal economy opportunity in the United States, but the approach seems to be constrained by an overly narrow definition of community stakeholders.

According to the White House, the Promise Zones, which will be established in Los Angeles, San Antonio, Philadelphia, southeastern Kentucky, and the Choctaw Nation of Oklahoma, will focus on replacing distressed housing, reducing crime rates, increasing student high school graduation prospects, and stimulating economic growth via tax incentives. As I’ve written before, the ineffectiveness of the modern United States Congress has made federal legislation to address rising inequality a pipe dream. Thus, the local level is the new battleground for tackling pressing economic challenges such as these.

However, questions still remain as to whether these new Promise Zones take the best possible approach to generating sustainable economic development. At this point, information provided by the Department of Housing and Urban Development and the White House focuses primarily on the usual community stakeholders: businesses, K-12 programs, the local government, etc. Given the financial constraints many localities and school districts are facing and the natural limitations of tax incentives, it would behoove the administration to widen the scope of the policies they implement in pursuit of growth.

Anchor institutions, such as universities and hospitals, are an untapped source of job growth, financial investments, intellectual capital, and community support. Hospitals and universities spend over $1 trillion a year and employ 8 percent of the total U.S. labor force. My colleague Alan Smith recently wrote about the work that the Roosevelt Institute is doing to analyze the local impact of these anchor institutions through its new Rethinking Communities initiative.

Identifying and engaging with anchor institutions would not be difficult. For example, local governments could recommend the allocation of federal grants to universities and hospitals that make targeted hiring efforts in particularly distressed portions of the Promise Zone communities.

Shifting responsibility for economic development away from the dysfunctional legislative branch and toward our local communities will require us to think more broadly about what community means and what kinds of actors shape it. With this challenge in mind, Promise Zones would benefit greatly from the incorporation of anchor institutions in their strategies for promoting long-term growth and economic opportunity.

Joelle Gamble is the Roosevelt Institute | Campus Network's National Field Strategist.

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The Bernard L. Schwartz Rediscovering Government Initiative: Building on the Successes of 2013 in the New Year

Jan 6, 2014Jeff Madrick

The Rediscovering Government Initiative takes a look back and a look ahead...

The Rediscovering Government Initiative takes a look back and a look ahead...

The Bernard L. Schwartz Rediscovering Government Initiative had an active and rewarding second year. Our programs continue to be directed toward broadening the public discourse on the purposes of government, and in particular, countering the ideological anti-government attitudes that have so influenced discourse about public policies since the 1970s. We believe that many of America’s most challenging problems are a consequence of the neglect and misuse of government.

In 2013, we emphasized job creation. The facts are stark: America has a 7 percent unemployment rate four years into a recovery. It has a record-low employment-to-population ratio, especially for young workers. A record number of workers have been unemployed for more than six months.

In addition, the large majority of jobs created in the recovery have been low-wage jobs. As a result, typical household income is no higher than it was more than a decade ago. Unequal and stagnating incomes cannot be separated from the jobs crisis. There is concern that weak job markets are now a long-term reality.

To us, this is not just a jobs crisis. It is a full-fledged jobs emergency.

We also pursued other programs related to government and the perpetuation of the New Deal legacy of Franklin and Eleanor Roosevelt.

Here are a few of the 2013 successes we plan to build on in 2014:

A Conference: A Bold Approach to the Jobs Emergency

The crown jewel of our 2013 efforts was a June conference in Washington, D.C., which we called “A Bold Approach to the Jobs Emergency.” Our keynote speakers, Senator Tom Harkin (D-IA), Former Federal Reserve Vice Chairman Alan Blinder, and Congresswoman Jan Schakowsky (D-IL), addressed the jobs emergency from a variety of viewpoints to a jam-packed auditorium.

At the conference, we held seven separate panels on solutions to the jobs emergency. These included fiscal stimulus, public-private infrastructure projects, financial regulations to encourage jobs, improved education, raising the minimum wage, labor law reform, and local political advocacy programs.

Our panelists represented a diversity of backgrounds and perspectives, and included Ai-Jen Poo of the National Domestic Workers Alliance, Federal Reserve Board Governor Sarah Bloom Raskin, Gar Alperovitz of the Democracy Collaborative, Dean Baker of the Center for Economic and Policy Research, Damon Silver of the AFL-CIO, and Maya Wiley of the Center for Social Inclusion, along with Roosevelt Institute Fellows Dorian Warren, Annette Bernhardt, Richard Kirsch, and Mike Konczal.

The video and transcripts of the proceedings, along with summaries of the key points made in each panel, are available on our website.

A Report: “A Bold Approach to the Jobs Emergency: 15 Policy Ideas”

Despite a pessimistic and persistent refrain that government cannot solve America’s jobs problems, we learned from the many experts at our jobs conference that there are multiple ways to return to full employment. Based on these and other ideas we researched over the course of 2013, we will publish a report in January outlining 15 bold ideas to deal with the jobs emergency. Our report amounts to a call for renewed optimism about how we can solve this central economic problem.

A New Book: Myths of Government

In 2013, UC Press offered the Initiative a book contract, based on the essays presented by several participants at our Washington, D.C. conference on the purpose of government in summer 2012. Myths of Government will include contributions from Lane Kenworthy of the University of Arizona, Peter Lindert of the University of California at Davis, Jon Bakija of Williams College, and Rediscovering Government Director Jeff Madrick. The book debunks major economic claims that government’s role must be limited if economic growth and the standard of living are to be improved. To the contrary, it shows that constructive government policies are critical to the future of the economy and a rising standard of living for all.

Other Public Events

Here are a few of the public events we held:

-- In April, we hosted Mark Levitan and Moe Magali of the New York City Center for Economic Opportunity to discuss the staggering 30 percent youth unemployment rate in New York City and the job creation programs that the city government is implementing to mitigate this problem.

--In August, in New Orleans, we gathered leading local experts on youth unemployment, including Amy Barad of the Cowen Institute for Public Education Initiative, Cherie LaCour-Duckworth of the Urban League of Greater New Orleans, Lauren Bierbaum of Partnership for Youth Development, and Jerome Jupiter of the Youth Empowerment Project, to discuss strategies to reconnect the 6.7 million young people nationwide who are both out of work and out of school. Jeff Madrick wrote about the gathering in his monthly Harper’s magazine column, and Program Manager Nell Abernathy wrote a comprehensive post on the subject of youth unemployment for the Roosevelt Institute’s blog, Next New Deal. Jeff Madrick was interviewed on NPR’s Marketplace on these issues.  Roosevelt Institute | Pipeline, our nationwide network of young progressive professionals, co-hosted the event.

--In September, we hosted a panel in New York City entitled “Inequality: The Next Mayor’s Challenge.” Local experts outlined policies the mayor’s office could enact to fight rising inequality. The panel included David Jones of the Community Services Society, NYU professor Lawrence Aber, Maya Wiley of the Center for Social Inclusion, Tsedeye Gebreselassie of the National Employment Law Project, and James Parrot of the Fiscal Policy Institute.

--In October, as part of our commitment to updating the Roosevelts’ New Deal legacy, we partnered with the Frances Perkins Center in Portland, Maine to host a discussion on the changing attitudes of Americans toward government and how to keep the New Deal’s spirit alive. The event highlighted Perkins’s role as the FDR adviser most responsible for Social Security. Participants included Ai-Jen Poo, Sally Greenberg of the National Consumers League, and Jeff Madrick.

--Also in October, Jeff Madrick participated in “Progressivism in America: Past, Present, and Future,” a conference in Dublin, Ireland hosted by the Roosevelt Institute and University College Dublin’s Clinton Institute for American Studies. Madrick contributed an essay on the future of progressivism to be published in 2014.

Publications

Throughout the year, the Rediscovering Government staff published a range of longer-form essays and blogs that reflected the central themes of the Initiative.

The subjects we focused on most closely are listed below.

Youth Unemployment:

The Real Lost Generation, by Jeff Madrick for Harper’s Magazine

Tragedy as a Generation for US Youth, Jeff Madrick with David Brancaccio for Marketplace on NPR

How Can We Help America’s Opportunity Youth? Five Lessons Learned in New Orleans, by Nell Abernathy for Next New Deal

Fiscal Policy and Public Investment:

America Is Having the Wrong Fiscal Argument, by Jeff Madrick for Harper’s Magazine

Simpson-Bowles Consensus isn’t Common Sense. It’s Nonsense, by Jeff Madrick for Next New Deal

The Truth About the GOP's Phony Shutdown Offer, by Jeff Madrick for Next New Deal

Social Security:

No Need to Cut the Little that Recipients Get, by Jeff Madrick for The New York Times

Good News on the Deficit Makes Social Security Cuts Even Worse, by Jeff Madrick for Next New Deal

Monetary Policy:

A Bit of Good News, by Jeff Madrick for Harper’s Magazine

Summers’ View on Monetary Policy Not So Hidden, by Jeff Madrick for Next New Deal

It Would be Tragic to Raise Rates Now, by Jeff Madrick for U.S. News & World Report

Unemployment Benefits:

Conservatives and Progressives Agree: Congress Should Not Cut Unemployment Benefits, by Nell Abernathy for Next New Deal

Looking Ahead: 2014 

In 2014, we will continue to develop and promote ideas about the positive role of government in the U.S. in general as well as how government can and should improve employment opportunities for all Americans. We specifically plan to host public events and commission papers on three key strategies for improved employment and GDP growth: the minimum wage, infrastructure investment, and government support of research and development.

In addition, we will increasingly focus our efforts on reducing the number of children living in poverty in America, arguably America’s greatest social problem and a major contributor to inequality and stagnating wages. In June, we will host a conference in Washington, D.C. that will bring together top policymakers and advocates to promote an agenda for fighting child poverty and reducing inequality overall.

In September, Alfred A. Knopf will publish Jeff Madrick’s new book, Seven Bad Ideas; How Economists Damaged America and the World. Its theme is related to the neglect of government, and much of the contents of the book reflect issues and ideas pursued by Rediscovering Government. 

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Looking to 2014: The Emerging Movement for the Next New Deal

Jan 2, 2014Richard Kirsch

The rise of a new progressive organizing is cause to believe that economic reform and a shift toward broadly shared prosperity are within reach.

The rise of a new progressive organizing is cause to believe that economic reform and a shift toward broadly shared prosperity are within reach.

Thomas Edsall, who now is capping off his long career writing insightfully about the relationship between economics and public opinion as a blogger for The New York Times, concluded a piece in late December by saying, “Progressives are now dependent on the fragile possibility that inequality and socioeconomic immobility will push the social order to the breaking point and force the political system to respond.”

Edsall’s bleak prognosis raises the biggest question facing not only progressives, but the future of our democracy: is the political system in the United States capable of responding to the escalating crisis of stagnant wages, shrinking benefits, dissolving economic opportunity, and disappearing hopes of living anything that resembles the American Dream?

It is a question I ask myself every day. But I reach a different conclusion than Edsall, because for all his powers of observation, he misses the role that people play in changing history. I see a growing movement of Americans organized by progressives who are not waiting for the social order to break, but are instead forcing the political system to respond.

Edsall reaches his conclusion by way of two commentators, my colleague Mike Konczal at the Roosevelt Institute and Harvard economist Ben Friedman. Konczal’s analysis of the quandary is cogent, as he provided “a two part description of the liberal state” in a 2011 post:

#1 you would have the government maintaining full employment, empowering workers and giving them more bargaining power, and #2 you would have a safety net for those who fell through the cracks… I think it is safe to say that liberals have abandoned #1 and doubled-down on #2… Without a strong middle and working class you don’t have natural constituencies ready to fight and defend the implementation and maintenance of a safety net and public goods. The welfare state is one part, complementing full employment, of empowering people and balancing power in a financial capitalist society.

Friedman’s contribution is to point out, as Edsall summarizes, that “during hard times people become less altruistic and more inclined to see the poor as undeserving.” Friedman says that when people are squeezed economically, rather than identifying with those still worse off, they “enter a period of retreat and retrenchment.” That is certainly what we are seeing now, with the government cutting unemployment benefits, food stamps, and a much larger swath of the safety net in a shrinking budget.

On the other hand, Friedman says times of broadly-shared prosperity encourage “greater generosity toward those who, through some combination of natural circumstance, market forces and sheer luck, have been left behind.”

When we look at the big periods of progressive change in the 20th century through this lens, we can ask, are we more similar to the soaring post-World War II middle class that led to the Great Society, or to the wrecked economy that led to the New Deal? After the Great Recession, that’s a no-brainer.

So is Edsall then correct in concluding that the only way to get to the next New Deal is waiting for another disintegration of the economy like we saw after the Great Depression? Or is even that a misreading of New Deal history, in which decades of building a movement of working people laid the groundwork for the New Deal laws that established the right to organize unions, fair labor standards like a minimum wage, and social insurance programs like Social Security and unemployment compensation?

If we have to wait, we’re in big trouble, because as we saw in 2008, we are much less likely to see another collapse like the Great Depression thanks to the progressive accomplishments of the 20th century. The aggressive use of the Federal Reserve and banking regulations prevented a total collapse of the financial system. The safety net – food stamps, Medicaid, etc. – and the social insurance programs of unemployment insurance, Social Security, and Medicare prevented widespread destitution. These measures allowed us to have a Great Recession rather than a second Great Depression.  

But the Great Recession also deepened the three-decade-long trend of families seeing their incomes and lifestyles squeezed by stagnant wages, eroding benefits, and the rising costs of gateways to opportunity. As a result, we are seeing an escalation of the path to the next New Deal: organizing people to demand that we create a 21st century economy of broadly-shared opportunity and prosperity.

The past year saw the explosion of organized fast food workers, from a handful of community-supported walk-outs demanding higher wages a year ago to actions involving thousands of workers and supporters in some 130 cities in December. The growing movement earned national as well as local news coverage.

Less visible, but deeper, is the emergence of new forms of worker organizing, taking place largely outside of traditional unions and the national labor law, known generally as the workers’ center movement. Domestic workers, through the National Domestic Workers Union, have won passage of laws giving them new labor protections in California and New York. Tomato pickers in Florida, under the banner of the Coalition of Immokalee Workers, have won higher wages by building consumer pressure against the supermarkets and restaurant chains that buy the crops they pick. Immigrant and low-wage workers around the country, at workers’ centers that are part of the National Day Laborers Organizing Network, have resisted wage theft and won basic protections in day labor and construction. The examples go on and are analogous to the emergence of the labor movement in the late 19th and early 20th centuries.

The long-simmering pressure for raising the minimum wage is now becoming a national political force, with Democrats embracing the issue. The passage of a $15 minimum wage in Sea-Tac, outside of Seattle, will be a harbinger of more local actions to define a minimum wage in ways that make sense for people’s lives, not some political calculation about what’s possible.

In New York City, City Council Speaker Christine Quinn’s reluctance to support paid sick days, siding with the business community, destroyed her support among the progressive base, paving the way for the election of Bill de Blasio, who rose both on his progressive platform and as the result of a decades-long base-building project in the city. These contests will continue to escalate, as we’ve seen in Philadelphia, where a Democratic mayor has twice vetoed a paid sick day ordinance approved by the City Council. As they do, Democrats who take the Quinn route will find themselves on the sidelines with her.

Cultural and demographic trends are encouraging, too. While the progressive politics of the growing numbers of the young, single women, and Latinos have garnered notice, another hopeful trend is that among non-college-educated whites, one of the most conservative groups in the country, the young are much more progressive than their older counterparts. Pope Francis has become an instant hero not just by easing back on his church’s focus on sex, but by directly challenging trickle-down economics.

In all this, history will look at President Obama as a transitional figure. He has pledged to make income inequality the defining issue of the day, but he still chooses a low-wage Amazon warehouse as a venue to address the issue. He still seeks to reconcile the destruction of the middle class with the rise of Wall Street.

Wall Street and K Street and the U.S. Chamber of Commerce, all greasing the system while stoking resentment of “the takers” and people of color, in a nation with a deep “it’s up to me and my family alone” streak, remain huge obstacles to building an America that works for all. The change we are making will take time.

What gives me hope is that, for all its flaws, we still live in a nation where popular will can make change. And we have a history of creating change from below and then electing leaders who, like FDR, drilled into the deep well of hope that has given life to the best of America, from the Revolution, through the Civil War, the Progressive era, the New Deal, the Civil Rights Movement, and the Great Society.

Earlier this week, on the last day of 2013, I called up Mike Konczal and asked him to reflect on Edsall’s dark conclusion. Here’s what he told me: “I’m more optimistic than I was when I wrote that piece two years ago. People are agitating, building new infrastructure. Issues like the minimum wage are gaining prominence. We’re seeing mobilizing among non-traditional workers like day-care workers.”

It is up to us to make history. Let’s get to work in 2014. 

Richard Kirsch is a Senior Fellow at the Roosevelt Institute, a Senior Adviser to USAction, and the author of Fighting for Our Health. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.

 

2014 banner image via Shutterstock.com

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