• Redressing the balance
    February 11,2014

    The push is on for a law requiring paid sick days for Vermont workers, even as pressure is mounting in Washington for a higher national minimum wage. Neither action is guaranteed, but it is clear that recognition is growing that helping working people requires policymakers actually to do something to help working people.

    For a generation we have been conducting an experiment in whether the best avenue for helping millions of low- and middle-income Americans is to help business. The doctrine of Reaganomics held that if government regulation and taxes were cut, business would thrive, allowing for more hiring and economic gains all around. Forcing burdens on business was seen as a job killer.

    After the Great Recession, it has dawned on more and more people that business is not always looking out for the interests of workers. As profits have returned to high levels and productivity has increased, wages are stagnating and unemployment remains stubbornly high. One of the reasons for the vast inequality afflicting the economy is that the wealth created in the post-recession recovery has gone almost exclusively to the top; the other reason is that businesses have little incentive actually to improve conditions for workers.

    Of course, altruism is not the job of business. Nor is profit the sole interest of business. Businesses exist as part of their communities, and the well-being of the people in the community also serves the well-being of businesses. It takes the long view to see it, but policies that make American workers ever poorer do not help business in the long run.

    Vermont’s minimum wage is now $8.73. It rose by 13 cents on Jan. 1 because it is pegged to inflation. The federal minimum wage of $7.25 has not kept pace with inflation. The peak purchasing power of the minimum wage occurred in 1968, when, in today’s dollars, it was the equivalent of $9.40. As The New York Times pointed out in an editorial, a full-time worker earning the minimum wage from the mid-1960s to the early 1980s was able to keep a family of two above the poverty line, earning about half of the average wage. Now the minimum wage earns about one-third of the average wage.

    A higher minimum wage would have far-reaching effects, helping about 27.8 million people earn more money. And they would not only be teenagers flipping burgers. The Times reports that the average age of a minimum wage worker is 35, and one-fourth of them are parents.

    Low-wage workers have little power to demand higher wages, which is why government put a floor under wages in 1938 during the Great Depression. The purpose is to bring balance to the economic forces and to allow workers to support themselves.

    In the same way, a law calling for paid sick days would improve working conditions for thousands of working Vermonters. Business groups oppose the law, but conversely many business owners say paid sick days are actually good for business, providing a healthier, more stable workforce. Businesses that provide paid sick days are sometimes at a competitive disadvantage in relation to those that don’t, and passing a law would level the playing field.

    These initiatives fall into the category of redressing the balance. For many years, tax breaks for business and lax regulation were seen as the panacea that would spread wealth and opportunity far and wide. The point isn’t to punish business, which must make a profit to employ people and spur innovation. The point is to take those steps needed to improve the quality of life for those millions of Americans who are struggling to get a foothold.

    Economic studies show that initiatives such as these do not weigh down business. Ultimately, however, these are political decisions, based on our perception of how the economy has failed in recent years and of how all benefit when the system does not place grinding burdens on struggling workers.

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