I’ve written recently that Donald Trump understands the politics of jobs in a way few Republican or Democratic politicians do. He hammered home the message that his economic agenda was about creating and retaining middle-income jobs with decent and rising wages.
Most Republicans and Democrats for years failed to present an agenda organized around this goal. Trump offered an agenda that at least treats this goal as central, even if he’s likely to fail to meet it.
Below, I have some ideas for how Democrats can beat Trump at his own game, especially if (as is likely) his economic ideas fail to live up to their promises for ordinary Americans.
Where Democrats have missed before
If you’re supporting your family on $25 an hour, you probably support a minimum wage increase, but you don’t expect it to raise your own income or living standard. You probably already had health insurance before the Affordable Care Act.
Your key economic wish isn’t a new government program to help you – it’s an expectation that your wages will rise steadily and your friends and relatives will have decent, well-paying work.
There is no reason a left-of-center economic agenda cannot meet these ends. It will just require some new policies and shifts in emphasis for Democrats.
Democrats should set an agenda around work with four key goals: reduce inequality by making sure workers are taking more money home in their paychecks; honor the centrality of work in American society and tie uplifting policies to work; increase workers’ power in the workplace, whether or not they are unionized; and provide gains to workers that are easy to identify and understand.
A pro-work, pro-worker, pro-wage agenda for Democrats
This isn’t an exhaustive list, and I’d love to hear your ideas. It’s a partial list of policies that I see as likely to encourage work while increasing the rewards to work for lower- and middle-income workers.
1. Exempt the first $11,500 of every American’s wage and salary income from the employee part of payroll tax. The principle here is simple: Workers should not have to pay any federal tax on the wages they need to earn simply to stay above the poverty line.
Federal income tax is already designed in accordance with this goal, but payroll tax begins at the first dollar of income and is a significant burden on the working poor. This universal tax exclusion would raise the typical two-parent family’s after-tax income by $1,750, which would mean a material increase in standard of living for the working poor and a noticeable increase for the middle class.
This near-universal tax cut would admittedly be expensive. It could be financed by expanding the payroll tax base to cover high incomes, including by abolishing the cap that currently limits Social Security taxes to the first $127,200 of income. This would be a large tax increase on the rich, but given the way economic changes over the last four decades have favored the wealthiest Americans, it makes sense to change Social Security’s financing structure so the tax exclusion goes to the bottom of the income scale instead of the top.
Tax increases on the rich are popular in the abstract, but do not necessarily help Democrats who propose them because voters fear the new tax revenue will be wasted or spent on somebody else. Applying the tax proceeds directly to a broad tax cut for nearly all working Americans would answer the “What’s in it for me?” question and make the government more progressive without making it any larger or more complicated.
2. Enforce labor law to protect American workers from competition from unauthorized immigrants. There is no such thing as a job Americans won’t do – there are only jobs Americans won’t do for a poverty wage. Employers should not be allowed to undercut wages by employing unauthorized immigrants – whom they can exploit, including by paying less than minimum wage.
In particular, employers should be required to use E-verify to ensure that their employees are authorized to work in the United States. Penalties for employing workers illegally should be imposed vigorously.
In recent years, Democrats have agreed in principle that employment laws around immigration should be enforced, but have insisted that enforcement measures should be tied to a broad immigration-reform package that would offer citizenship, in time, to a large number of unauthorized immigrants. Republicans have been reluctant to push employment enforcement because it is unpopular with employers, who would like to avoid both regulatory burdens and higher wages.
This issue will be a key test for Trump. Unlike “the wall,” stringent enforcement of work authorization is plausibly linked to wage growth, but it will draw strong resistance from Republican business constituencies. Is his immigration stance really about raising American workers’ wages, or is it just about scapegoating Mexican immigrants?
If Trump declines to pursue the part of his immigration agenda most directly related to the interests of American workers, Democrats have an opportunity to outflank him, using a policy whose enforcement mechanism is aimed at companies, not at unauthorized immigrants themselves.
3. Provide child-care and maternity-leave benefits to working parents. There is a reason Trump co-opted these ideas from Democrats: They are popular, work-affirming policies that would make life easier for the working and middle classes.
But Trump’s proposals have some significant structural flaws, and he will face a lot of skepticism about providing any such benefits at all from conservatives in Congress. This is likely to be an area where Democrats can point out Trump broke a promise to improve the lives of middle-class workers, even as he keeps promises to the wealthy.
- Timothy Hiatt/Getty Images for Knowledge Universe
4. Reform disability insurance and push employers to find ways to accommodate disabled workers.Democrats should advance proposals similar to the one by MIT economist David Autor that would push employers to accommodate more of their newly disabled employees, so they can stay in the workforce instead of collecting benefits.
Social Security Disability Insurance is an important bulwark that protects American workers against destitution due to disability that may arise during their working life. Contrary to conservative narratives, SSDI is not the primary driver of declining workforce participation by prime-age Americans.
That said, SSDI is a driver of declining workforce participation. Over the last 20 years, the rise in SSDI caseloads has steadily outpaced the growth of the US population. Today, 2.7% of Americans collect SSDI, up from 1.6% 20 years ago. And people who qualify for SSDI tend to continue receiving it until they die or qualify for old-age Social Security. Returns to the workforce are rare in part because work is penalized with loss of benefits.
Under Autor’s reform, employers would be charged for part of disability insurance, similar to the way they are now charged for unemployment and workers’ compensation insurance. Because employers’ premiums would go up if more of their employees become disabled and unable to work, they would have an incentive to accommodate workers who become affected by a disability on the job.
On-the-job disability accommodations could also be subsidized by the government, a policy that would produce net savings if it reduces the number of workers who end up collecting SSDI.
5. Give workers clarity and certainty over their job schedules. I was interested in this focus group write-up from the Institute for Family Studies, which asked white working-class voters in Ohio (most of them Trump supporters) about workplace policy ideas without identifying which party was behind them.
One of the most popular proposals was one from Democrats to obligate employers to provide greater certainty to employees about their work schedules. There are several political advantages to this idea. It has no direct fiscal cost. It appeals to the idea that workers and employers have obligations to treat each other fairly. And it directs the greatest benefits to lower-wage workers who are least likely to already have control over their time.
- Thomson Reuters
6. Bring back antitrust enforcement to reduce corporate power over both employees and consumers. Industry consolidation increases corporations’ ability to raise prices and lower wages. In recent decades, the federal government has become too reluctant to block mergers, let alone break up large companies. Democrats should call for a reinvigoration of antitrust enforcement and market it as a pro-consumer, pro-worker policy.
7. Control healthcare prices, including by resisting hospital system consolidation, so less of your pay goes to health insurance and more goes to you.A great place to start the antitrust push would be in health care. Antitrust seems like an abstract issue (how does it affect me if two companies merge?), but this is an area where Democrats can draw a direct line between corporate mergers and lower take-home pay.
Hospital system mergers lead to higher health insurance premiums and therefore lower wages, because the mergers give healthcare providers more and more market power, allowing them to push healthcare prices ever higher. Democrats should be pro-fragmentation in healthcare, so consumers save.
8. Directly support places that are losing jobs. It’s not good enough to tell the residents of de-industrializing cities and states to move. Many people can’t move and others don’t want to. There is a lot of disruptive change that is destabilizing the world. We can improve stability if we make it easier for people to stay in their hometowns if they want to.
That said, place-based policy is hard, and delaying the inevitable decline of an industry can be very expensive. I don’t laugh at Trump’s intervention at Carrier, as some do, but I don’t believe an approach of individual incentives to individual firms is likely to be scalable or cost-effective.
One good idea, from Vox’s Matt Yglesias, is to move government agencies that do not need to be in Washington away from the capital to areas that have been losing jobs and residents.
The core idea is not simply that displaced Midwestern workers could get jobs with the federal government (though some would). It’s more that, by stepping in to replace core industries that have lost jobs over decades, these agencies would support ancillary employment across the economy. If the Census Bureau moves to town, for instance, it will create jobs in medicine and schools and restaurants and everything else.
In the long run, these moves would also generate savings for federal taxpayers, because it’s less expensive to do business in troubled metros than in the very expensive Washington, DC, region. And they might even do something to reduce the social distance that exists between federal bureaucrats and much of the country.