Harold Meyerson: Eight Ways to Raise American’s Wages

Harold Meyerson

Harold Meyerson

Harold Meyerson has an important  long form article on American Prospect.  Here is a taste of “How to Raise Americans’ Wages: Eight proposals to jump-start the incomes of workers.”

The fist step is to identify the problem.  Meyerson writes:

As economists Robert Gordon and Ian Dew-Becker have established, the gains in workers’ productivity for the past three decades have gone entirely to the wealthiest 10 percent. The portion of the nation’s economy that went to workers’ pay and benefits—which had held remarkably steady from 1947 through 1973 at 66 percent or 67 percent—last year fell to a record low of 58 percent, while profits reached a postwar high.

Today, the drive to restore workers’ share has been narrowed down to the campaign to raise the minimum wage. That raise is long overdue. The real value of the federal minimum wage of $7.25 an hour is less than two-thirds of its level in 1968, which, in current dollars, would be $10.71. But even raising that wage wouldn’t do much for most workers; they make well more than the minimum, but their own wages have been stagnating or shrinking for decades as well.

What, then, do we do for American workers more generally? How do we raise their wages? How do we re-create a growing and vibrant middle class?


According to Myerson

The transfer of income from labor to capital, then, is chiefly the consequence of capitalists’ design. But precisely because that transfer has been so thorough, reversing it will be exquisitely difficult.

The two most effective tools to increase workers wage, he notes, are increasing collective bargaining and full employment. But since those appear out of reach for the present, what now?

Meyerson presents eight ideas starting with those that are already being acted on by state and local governments and moving  on to more innovative, harder to enact proposals.  In a few cases, we have added a brief description from the article.

1. Legislate Wage Hikes in States and Cities

2. Link Corporate Tax Rates to Worker Productivity

3. Link Corporate Tax Rates to CEO-Employee Pay Ratios

4. Make Corporations Responsible for All Their Workers

Many of the problems American workers encounter in making a decent wage stem from a confusion about who employs them. In recent decades, companies have routinely shifted the production and delivery of their goods and services and other tasks needed to run their businesses from their own employees to workers employed by contractors, subcontractors, franchisees, or temporary job agencies or to workers who are labeled independent contractors. In many cases, these workers are the same workers the parent company once employed. In most cases, they could be employed directly by the parent company, but they’re not, chiefly because having the labor done by nonemployees saves the parent company money.

5. Help Create Benefit Corporations, and Don’t Tax Them So Much

Boosting workers’ interests and incomes within the corporate framework ultimately requires changes to the framework itself. A new model that shifts the balance of power within the corporation away from shareholders and—probably but not definitely—more toward workers is something called a “benefit corporation.” Under its charter, the directors and management are legally required to weigh the social and environmental impact of their decisions.

6. Help Workers Claim Their Share of Capital Income

Last year, Rutgers management professors Joseph Blasi and Douglas Kruse and Harvard economics professor Richard Freeman wrote The Citizen’s Share: Putting Ownership Back into Democracy. They argued that worker ownership had a long history in the American economy and a long history of bipartisan and cross-ideological support, with advocates ranging from Ronald Reagan to liberal Democratic senators Amy Klobuchar of Minnesota and Debbie Stabenow of Michigan. Companies with profit sharing benefit from greater levels of worker involvement and innovation, while workers benefit from their profit sharing—but only modestly. To boost productivity and re-establish its link to workers’ incomes, the authors call for revising those plans so that workers can receive a larger share of their employer’s profits.

7. Raise Taxes on Capital Income and Redistribute It to Labor

Another solution to the rise of investment income and the decline of income from work would be to use the tax code to explicitly redistribute capital income to labor. The current tax code comes close to doing the reverse. Capital income—income from qualified dividends and capital gains—can be taxed at a rate no higher than 20 percent, while income from wages and salaries is subjected to a progressive tax that tops out at 39.6 percent. As Warren Buffett frequently notes, upper-middle-class and middle-class Americans sometimes pay more taxes on their wages and salaries than billionaires pay on their investments.

8. Change the Governance of Corporations

Now, the most fundamental change of all.

Boosting workers’ power within the corporate framework requires more than expanding profit sharing or altering the company’s charter. It requires altering the corporate structure—in particular, the structure of its governing body. or encourage them through corporate tax reform to adopt co-determination.

Read the entire article, here.

4 Responses

  1. […] Harold Meyerson: Eight Ways to Raise American’s Wages […]

  2. Please support my crowd funding effort to raise wages for Logan Airport Workers.


  3. $10.10 ph is $8.00 ANNUALLY over the poverty level! It well succeed at one thing stopping the workers action campaign.

  4. Reblogged this on johnomason and commented:
    Waging workers’ wages, rather than giving all the money to the already wealthy, is the way to prosperity.

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