Ever wondered what the minimum wage would be if it had kept pace with inflation and productivity like it used to? Here’s a hint: $7.25, and even $15.00, don’t come close. Economist Dean Baker has been crunching the numbers on the minimum wage for years. He joins the podcast this week to share what he’s found and why it matters. Since the publication of this episode, the Center for Economic and Policy Research issued a correction to Dean Baker’s August 2021 report that a minimum wage that kept up with productivity would be $26 per hour. In fact, it would be $23 per hour.
Dean Baker is a Senior Economist at the Center for Economic and Policy Research.
Twitter: @DeanBaker13
Further reading:
This is What Minimum Wage Would Be If It Kept Pace with Productivity https://cepr.net/this-is-what-minimum-wage-would-be-if-it-kept-pace-with-productivity/
Work Should Pay: A $15 an Hour Minimum Wage Is a Start
https://cepr.net/work-should-pay-a-15-an-hour-minimum-wage-is-a-start/
Website: https://pitchforkeconomics.com/
Nick Hanauer:
We did such a good job as a country for so long, and then along comes neoliberalism and the whole thing falls apart.
Dean Baker:
We actually did have a minimum wage that kept pace with productivity growth, from when it was created in 1937 until 1968, so three decades.
Nick Hanauer:
The difference between $7.25 and $27 is just… It’s just mind boggling.
David Goldstein:
Well, it’s almost $20. Tell a minimum wage worker, “You’re going to get a $20 an hour raise,” and see how their lives would change.
Announcer:
From the home offices of Civic Ventures in downtown Seattle, this is Pitchfork Economics with Nick Hanauer, the best place to get the truth about who gets what and why.
Nick Hanauer:
I’m Nick Hanauer, Founder of Civic Ventures.
David Goldstein:
I’m David Goldstein, Senior Fellow at Civic Ventures.
David Goldstein:
Nick, it was very exciting. I think we talked about this on a previous podcast, that in President Biden’s first State of the Union Address, he called for a $15 minimum wage in 2022. When did you first call for a $15 minimum wage?
Nick Hanauer:
Fall of 2012.
David Goldstein:
Okay, so almost a decade ago, so a little bit ahead of your time. We do have a $15 minimum wage in a lot of places.
Nick Hanauer:
Yeah, we do.
David Goldstein:
And higher even in Seattle.
Nick Hanauer:
Yes. Do you know what it is right now in Seattle?
David Goldstein:
In Seattle, it is now $17.27 an hour.
Nick Hanauer:
Oh my God. Do we still have restaurants in Seattle?
David Goldstein:
We do. In fact, they’re still having trouble hiring enough employees.
Nick Hanauer:
Yeah.
David Goldstein:
Ten years since you called for a $15 minimum wage, and of course, we’ve had inflation. The economy has continued to grow. Productivity has continued to grow. The population has continued. Everything’s grown…
Nick Hanauer:
Except the minimum wage.
David Goldstein:
Yeah, well, except the minimum wage, which is still $7.25 an hour.
Nick Hanauer:
Federally.
David Goldstein:
And also $15. It was really nice, fight for $15, have that nice alliteration. Do you wonder what it might be today?
Nick Hanauer:
If it had tracked productivity and inflation.
David Goldstein:
Yeah. What might it be today?
Nick Hanauer:
Well, today we get to find out, because our friend, Dean Baker, who’s a Senior Economist at the Center for Economic and Policy Research is going to tell us, with updated analysis, and it should be very interesting to learn about where we would be if we weren’t governed by such idiots.
Dean Baker:
Dean Baker, Senior Economist at the Center for Economic and Policy Research. My most recent book, which is now somewhat dated, is Rigged: How Globalization and the Rules of Modern Economy Were Structured to Make the Rich Richer. I’ve been writing a lot on inflation, which people can find on our website.
Nick Hanauer:
You’ve been a longtime fellow traveler on the minimum wage and have done a lot of great research on what it was and what it should be and so on and so forth. In January 2020, you reported that if the minimum wage had kept place with inflation and risen in step with productivity growth, it’d be $24. Well, lots has changed since then, so it seems like a great time for an update. What would the minimum wage be today if it had kept pace with those things?
Dean Baker:
Well, I did look at that, and it would be over $27 an hour today-
Nick Hanauer:
Oh my God.
Dean Baker:
Which is kind of incredible to think about, but we’ve had, well, unfortunately, a fair bit of inflation, and then we actually have had pretty good productivity growth the last two years, a bit less than 5% over that period. We’d be over $27 an hour, if you added in inflation and productivity growth.
Nick Hanauer:
So the federal minimum wage today is in the range of one quarter of what it would be if those folks had effectively shared fairly in GDP growth over the last, whatever it’s been, 20 years or 30 years, 40 years.
Dean Baker:
Well, this goes back, I mean, [crosstalk 00:04:16]-
Nick Hanauer:
To the ’60s, yeah.
Dean Baker:
Yeah, yeah. Yeah, no, that’s right, and just to remind everyone, my reason for getting on this, why I thought to do this originally was we actually did have a minimum wage that kept pace with productivity growth from when it was created in 1937, the first federal minimum wage, because ’38 it took effect, until 1968, so three decades. We had a long period where we did do that, and of course, the economy did very well in that period.
Nick Hanauer:
Right.
Dean Baker:
I’m not saying that’s the reason, but it obviously did keep the economy from performing very well.
Nick Hanauer:
It is shocking that we did such a good job as a country for so long, and then along comes neoliberalism and the whole thing falls apart. It’s just really amazing, but the difference between $7.25 and $27 is just… It’s just mind boggling.
David Goldstein:
Well, it’s almost $20.
Nick Hanauer:
Yeah.
David Goldstein:
Tell a minimum wage worker, “You’re going to get a $20 an hour wage,” and see how their lives would change.
Dean Baker:
Yeah, I mean, it’s one of these things you think about. I almost feel embarrassed to say it, because it’s going to… Well, it sounds ridiculous, but it isn’t ridiculous. You go, okay, so imagine you had a worker putting in 40 hours a week, 50 weeks a year, 27 bucks an hour. That worker’s earning $54,000 a year. Imagine our lowest paid worker, the people cleaning the bathrooms, the people busing tables in restaurants, the lowest paid workers, getting $54,000 a year, or a couple. You have two minimum wage workers, both just right at the bottom; $108,000 a year would be their family income.
Nick Hanauer:
Yeah, and the country would be completely different. Our politics would be completely different. Budget deficits would not exist. I mean, it’s such a… The counterfactual is so profoundly different, it just boggles the mind.
David Goldstein:
So Nick, you started pushing for a $15 minimum wage back in 2012, so a decade ago.
Nick Hanauer:
Right, yeah.
David Goldstein:
One of the things that people would respond to you, and we still get it sometimes today, “Oh, if $15 is good, why not $50?” They thought they’d have you there, and the answer then was, “Well, $50 would probably be too high,” but if $15 is okay, why not $27? It turns out there’s no reason it couldn’t be $27.
Dean Baker:
I wouldn’t go quite that far, in the sense that we’ve changed the economy, so that without other changes, I think there would be a problem. If we were to, say, even over a five, six, seven year period raise the minimum wage to $27 or a little bit higher, adjusting for inflation, productivity growth over that period, there would be problems, because we’ve restructured the economy to give so much money to people at the high end.
Dean Baker:
I’ll just mention one example, because it really grates on me. Everyone’s heard of Moderna, of course, which developed one of the mRNA vaccines, which is great. I mean, I got their vaccine. I’m very happy for that. Obviously, hundreds of millions of others did, but we had a small number of people get enormously rich from that. Fortune had an article last summer that said we’ve created five Moderna billionaires. That was as of last summer, might be more by now. We didn’t have to do that. We gave them a patent monopoly.
Dean Baker:
If we just said, “Hey, we paid for a very large portion of the research.” We could’ve said, “Okay, we’re paying for the research. This is going to be in the public domain. This is going to be sold as a generic,” so it would be sold for probably about a tenth of the price that it was actually sold for. I realize the government picked up the tab, but whatever.
Dean Baker:
It would be sold for about a tenth the price. You’d have the people who did the work on it, great work; they’d be well compensated. They wouldn’t be billionaires.
David Goldstein:
I’d like to step back a little bit and dive into a couple technical issues here. Dean, that $27 figure, that’s based on if the minimum wage had tracked productivity growth over the past half century now, I guess. Why is productivity the metric and not inflation?
Dean Baker:
Well, it’s actually both, I mean, to be honest. I’m adding in inflation, as well. What’s often been talked about in the debate, though, is simply getting back to the minimum wage that we had in ’68, adjusted for inflation, and what that means.
Dean Baker:
Let’s say we did that. Let’s say… I’d have to double check what that is today. It’s probably about $11 or $12 an hour, but I don’t know that off the top of my head. Anyhow, if we had done that, the implication is that, as the economy gets richer, workers at the bottom aren’t sharing in that. They’re just getting… They’re just able to basically run in place.
Dean Baker:
Over the last, at this point, ’68… 54 years, productivity’s probably gone up close to 200%, in other words close to triple what it was back in ’68. We might say that the average worker could, in principle, have three times the wage, but the minimum wage worker is still just where they were in 1968. The idea of saying minimum wage should rise in step with inflation and productivity, which it had done for three decades, from ’38 to ’68, is that those at the bottom share in the benefits of economic growth. That’s the logic of tying it to productivity. Again, that’s what we did do for three decades.
David Goldstein:
That was a period in which the benefits of economic growth were pretty equally shared across income groups.
Dean Baker:
Yeah, so if you look at an analyses… A number of people have done these, trying to break it down, what people do at the 50th percentile, the 25th percentile. Most of the evidence suggests that they shared roughly equally. Again, our data’s not that good to be able to say exactly, but it’s pretty close, so that no one could get too upset if we say, “Yeah, it was pretty evenly shared for those three decades.”
Dean Baker:
Just to be clear, we had very good growth during that period, so it wasn’t that we all shared poverty. We were seeing very rapid growth for those three decades. We both had very good growth, in fact much better growth than we’ve had in the subsequent half century, so we had very good growth, and it was evenly shared.
Nick Hanauer:
Yeah, well, and those two things, just to be clear, those two things seem to be inextricably intertwined. Evenly sharing the growth appears to create more growth.
Dean Baker:
I think there’s a very good argument for that, for two reasons. One is we know that when you have people that are in poverty, in relative poverty, they’re not productive. Their kids tend not to be productive. They have a difficult time caring for their kids. I mean, that’s not a secret. It’s not saying bad things about them, but if you’re at a minimum wage job, you’re struggling to pay the rent. You end up being evicted. You end up being homeless, not good for your kid. I mean, that’s hardly a secret, hardly even a controversial claim, so it’s true in that sense.
Dean Baker:
The other sense is just the standpoint of incentives from the standpoint of companies. If you can get a worker for $7.25 an hour, okay, you’re not going to have a lot of incentive to invest in equipment for them or in their own training. What do you care? You’re just going to go out and get another worker for $7.25 an hour.
David Goldstein:
Do you think our low minimum wage actually impedes productivity growth, because there’s no need to make those investments in increasing productivity?
Dean Baker:
I think there’s certainly a very good case for that. It’s one of these things I’m a little reluctant to say, because I don’t think I can nail that down and say, “Oh, well, if we had more rapid productivity and higher wage growth or higher minimum wage, we’d have more productivity.” I mean, I think there is some evidence to support that. I’m just saying I don’t feel like we have that totally nailed down, so I could say, “Oh yeah, if we’d had much higher minimum wage, we’d have much higher productivity,” but I’m inclined to believe that.
Dean Baker:
I mean, I think there’s good arguments for a higher minimum wage, whether or not that’s true. I mean, we want people to have a decent standard of living. We want their kids to have a decent upbringing, and that means that those at the bottom have to have higher wages, so I think that’s a good argument, whether or not it means higher productivity. I am inclined… I mean, if I had to put a bet on it one way or the other, higher productivity or not, I’d say, yeah, it probably will lead to higher productivity.
David Goldstein:
Yeah, it’s funny because, again, one of the arguments against raising the minimum wage is that, oh, if you raise the minimum wage, then companies will just invest in labor saving technology. That is pretty much the definition of investing in raising productivity.
Nick Hanauer:
Yes.
Dean Baker:
Exactly, exactly.
Nick Hanauer:
In the absence of that, we have no productivity increases. It’s just like… Yeah.
Dean Baker:
Yeah, no, it’s… We get very strange arguments.
Nick Hanauer:
And productivity’s our friend. Yeah, right.
Dean Baker:
Like we’re supposed to be fearful that we’ll have more productivity growth. I’m going, isn’t that what we want?
David Goldstein:
Yeah, you would think so. You mentioned you were paying a lot of attention to inflation, and obviously, inflation has been high for the past year. What’s happening? Is it supply? Is it demand? Is it a combination of the two?
Dean Baker:
It’s definitely a combination of the two. There’s a school of thought, Larry Summers, the former Clinton and Obama advisor, for that matter, has been the most prominent proponent of it, that the big problem was we over-stimulated the economy with President Biden’s Recovery Act that was passed just about a year ago today, a little more, and that it’s a demand side story. I hold that he’s not totally wrong. I mean, I think there’s clearly an element of demand here, but I think that most of the story is the supply chain, supply side of the story that we’ve ended up with because of the pandemic, or the reopening from the pandemic, actually and because the pandemic is, I mean, we’re not fully over it today, but Omicron’s just faded in the last month or so, that we’ve seen serious impediments to supply that wouldn’t otherwise be there.
Dean Baker:
Again, I’ve had arguments with people. “Well, what are you saying? If we can’t supply enough, isn’t that too much demand?” Well, the point is that, ordinarily, we would be able to supply this much.
David Goldstein:
Right.
Dean Baker:
But because we had this reopening worldwide, we’re not able to meet that demand, which we otherwise would’ve been able to meet. The strongest piece of evidence for this is that other countries that didn’t have big stimulus… If we look at UK, look at Spain, look at Germany, they all saw big leaps in their inflation rate. It’s over 5%. I think Spain’s over 6%. We’re somewhat higher, no doubt about it, but they’ve all seen big leaps in their inflation rate, even though they didn’t have any big stimulus, so that strongly pushes me toward saying it’s a supply chain problem. For that reason, I don’t want to get caught up in temporary, transitory. We will overcome this, because the supply chain problem is not going to be permanent.
Nick Hanauer:
Yeah, I mean, speaking as a businessperson with a lot of connection to what’s happening globally in this, but the whole fall in Europe last year… Every country in the world is experiencing the same supply constraints, right?
Dean Baker:
Yeah, yeah.
Nick Hanauer:
They can’t find truck drivers in Sweden either. It’s just ludicrous to believe that the biggest problem here is that we helped families out a little bit through the pandemic. I mean, Larry Summers, of course, has his head up his ass, as he always does with respect to virtually everything. Larry Summers is my true south. If Larry hates it, I know I must be on the right track. Ninety percent of the inflation going on right now is supply chain disruption created by the pandemic. All of it will work itself out over the next year, and prices will stabilize or begin to decline again, as commodity producers and manufacturers and good producers of all kinds normalize their ability to meet demand. It’s just, demand didn’t increase in the United States as a consequence of the stimulus.
Dean Baker:
Well, we did get a jump in demand, if you look to the months that they’re paying out the checks. If you look to March and April, there were big jumps in demand.
Nick Hanauer:
But GDP didn’t increase.
Dean Baker:
No, and the story there, of course, was that there was a shift in demand, so that money that people would ordinarily spend going to restaurants or taking vacation-
Nick Hanauer:
Yeah, went somewhere else.
Dean Baker:
Yeah, yeah.
Nick Hanauer:
Right.
Dean Baker:
But again, we’re getting over that, and there’s already evidence for that, so one of the really big factors in the jump in prices has been cars, both new and used.
Nick Hanauer:
Right.
Dean Baker:
If you look at the January data, new car prices were stable. They didn’t rise at all. Used car prices still went up. We had data from a private source. I’m forgetting the name now, but there’s a private company that tracks used car prices. They showed them falling over 2% in the single month, in February. We’ll see what the Consumer Price Index shows later this week, but the point is, we seem to be turning around there.
Dean Baker:
There’s other items, television prices, which jumped almost 10% between March and August of last year. They’ve since fallen back about 8%. There’s examples here that, to my view, indicate what we should expect to see in a lot of other items that jumped in price in 2021, that they’re not only going to stabilize, but they’re likely actually going to come down. That’s why I’m much less worried about this than Larry Summers.
Nick Hanauer:
Let’s move on. We don’t mean to put you on the spot here, but the labor standard beyond the minimum wage that is nearest and dearest to our hearts is the overtime threshold, which is inexplicably intertwined with the minimum wage, because it’s the thing that governs maximum hours, right?
Dean Baker:
Yeah, yeah.
Nick Hanauer:
It does no good to have a minimum wage if somebody can make you work 100 hours a week, you know?
Dean Baker:
Right.
Nick Hanauer:
We have been in a war with various administrations over restoring the overtime threshold to its previous high water mark, which would be in the range of $90,000 a year today, I suspect. What’s your view on that?
Dean Baker:
Yeah, I think we very much have to raise it. I haven’t looked at the exact number where we’d be, but the basic story, as I’m sure you know, we had set the threshold, and I think it hit its peak in the late ’70s, and it hasn’t risen in step with wages and productivity, as again, just as with the minimum wage, we would’ve expected the threshold.
Dean Baker:
Employers have the option… I shouldn’t say they have the option. They could say workers are exempt from being eligible for overtime if they’re in a managerial capacity. How do you define a managerial capacity? Okay, your CEO’s clearly a manager, but they invariably play games, so you have the night manager at a McDonald’s that might not be paid all that much more than minimum wage, and they say, “Oh, they’re in a managerial capacity,” so the threshold is to get around that trick.
Dean Baker:
It just says, okay, if you’re paid below this amount, we don’t care what you call the person, you’re not in a managerial position. Again, I haven’t looked to whether $90,000 is the right number. If you’ve done the arithmetic on that, I certainly trust you, but it has not kept pace with wages and productivity growth, and that’s allowed employers to gain this.
Nick Hanauer:
Yeah.
Dean Baker:
Just to be clear, it’s not just that you’re not getting paid your overtime. You might not even be getting paid your normal wage, because the whole point is, they’re saying, “Oh, you’re a salaried worker. We could have you work 55-60 hours a week. You’re a salaried worker. You’re not… The Fair Labor Standards Act, the 40-hour work week, that doesn’t apply to you.” In effect, you’re putting in those extra hours for free.
Nick Hanauer:
Yeah, 100%.
David Goldstein:
I just did some math for you, Dean. Initially, when minimum wage and overtime threshold came out, and for decades following, minimum wage was about half the median, and the overtime threshold was three times the minimum wage, so if you say the minimum wage should be $27 an hour, that would bring the overtime threshold to about $168,000.
Dean Baker:
Yeah, yeah.
David Goldstein:
$168,000 a year. Our previous math would be [inaudible 00:19:55] to cover the same percentages of the population that was covered in the 1970s. It’d be around $100,000.
Nick Hanauer:
Yeah.
Dean Baker:
Okay.
Nick Hanauer:
Yeah. Obviously, there are a ton of ways to look at this particular threshold and standard, but the common sense way we want to look at is that if you earn more than two thirds of your fellow citizens, you’re probably fine and on your own, but if you earn less than two thirds of your fellow citizen, the top one third, then almost certainly, someone is telling you what to do, and they should pay you overtime if they want you to work more than 40 hours a week.
Dean Baker:
Yeah, and this is just kind of common sense, in that if you… We know this at this point, that if you give employers an option to play games, obviously not every employer, but many will. If they could save money by saying, “Oh, you’re a manager,” then if that gets them out of paying overtime, they’re going to do that.
Nick Hanauer:
What else should we be thinking about or working on, Dean?
Dean Baker:
Well, since you’re talking about overtime, I mean, one of the things that I would love to see is a reduction in what is the standard work week, because there’s nothing about 40 hours that was magic.
Nick Hanauer:
Right.
Dean Baker:
It had been 48 hours prior to that. I mean, 12-hour days to be a demand for unions back in the 19th century, so shortening the work week. It could take different forms, of course. It could mean more vacation time, which, again, is a great thing. The point is that workers should be able to enjoy more time off to do whatever they want.
Nick Hanauer:
Right.
Dean Baker:
It’s unfortunate that we’ve pretty much frozen the 40-hour work week. That’s not true elsewhere. France, 35 hours is the norm, you know?
Nick Hanauer:
Yeah.
Dean Baker:
That, I think, is a great thing, to try and get people more leisure time. Again, it could be both a shorter work week and vacations. In France, they have mandatory vacations. Everyone has to get… I forget whether it’s four or five weeks a year.
Nick Hanauer:
Yeah.
Dean Baker:
People need more leisure time. These are really big deals, you know? I was mentioning drug patents. I mean, that might be a sidebar here, but I mean, there really is a huge amount of money there. We spend about $500 billion a year, more than that in fact, on prescription drugs. If we snapped our fingers, and there were no drug patents or other protections, it’d be less than $100 billion. That difference, $400 billion, comes to about $3,000 for every family in the country.
Dean Baker:
I understand we have to pay for the research. I realize that, but I think that the patent monopoly system is just a horrible, horrible way to do that. That’s something that I’ve been… kind of a spare time project for me in many years, a little less than spare time in the last year and a half with the vaccines, where I think… I mean, again, great we have the vaccines, horrible that they weren’t widely spread throughout the world as quickly as possible. Anyhow, those are some items.
Nick Hanauer:
Yeah, so we always ask the benevolent dictator question. If you were in charge and politics was not at play, what would you do about the minimum wage? If you were in charge, what would you do?
Dean Baker:
Well, I would certainly look to up it and set a schedule. Again, we can’t get to $27 an hour this year, next year, and probably not even 10 years, but I think setting a target where we would say, in some reasonably not too distant future, we’re going to get the minimum wage back in line with productivity growth and inflation. Then I’d give the other things that we’d have to change to make that possible, the other things, the drug patents being one, downsize our financial sector, fix corporate governance. CEOs shouldn’t be getting $30 million a year, particularly the incompetent ones. I have a whole agenda I could push through there, but I think setting the minimum wage back to where it would be if we had kept it in line with productivity growth and inflation is sort of the really great target, and then say, let’s make the other changes that will allow that to be possible.
Nick Hanauer:
Yep. That’s great. One final question: Why do you do this work?
Dean Baker:
You know, I think the one reason we all do, you want to make the world a better place. I mean, you decide what’s important to you. I mean, that might sound hokey, but that’s the reality. I want to do something that I hope would have an impact. Sometimes you do. Most of the time you don’t, or you don’t know if you did. Yeah, I want to try to make the world a better place.
David Goldstein:
I don’t think that sounds hokey.
Nick Hanauer:
Yeah.
David Goldstein:
I think, especially nowadays, when there seems to be so many people out there who are intent on making it a worse place.
Dean Baker:
Yes, unfortunately.
Nick Hanauer:
Yeah. Well, Dean, thank you again for your work, and thank you for joining us on the podcast. Super interesting.
Dean Baker:
Well, thanks a lot for having me on. I enjoyed it.
Nick Hanauer:
So, Goldy, 27 bucks an hour. Wow. It’s shocking and depressing how badly the federal government has failed working people. By the way, if you are a median worker, listening to this podcast, there is nothing I want to underscore more than that your wages are inextricably tied to the minimum wage, too.
David Goldstein:
Right.
Nick Hanauer:
Because when the minimum wage rises, that compresses the median wage upward. One of the stupidest arguments neoclassical economists make is that there has to be this magical relationship between the minimum and the median, and that if we push the minimum up too far towards the existing median, that something bad will happen. This is just arithmetic nonsense.
Nick Hanauer:
The median wage is inextricably intertwined with the minimum wage. If we raise the minimum wage to $25 an hour, then the median wage, instead of being approximately $25 an hour, would be $40 or $50 an hour.
David Goldstein:
Right. This is what people have to imagine. If you can’t empathize for minimum wage workers, if you still think that these are unskilled, lazy people, who don’t deserve anything better than $7.25 working at a McDonald’s or something, okay, and you are a median wage worker, guess what? You’re earning minimum wage.
Nick Hanauer:
Right.
David Goldstein:
You are earning… Think about it this way. You are earning, right now, as a median worker, you’re making 50-some-thousand dollars a year. That is the median wage. That is what a minimum wage worker would have been making today had the minimum wage tracked productivity and inflation exactly as it had for the previous 30 years.
Nick Hanauer:
Right.
David Goldstein:
From the time the minimum wage was created until sometime in the 1970s, it tracked inflation and productivity, and then it separated. Something similar happened to median wages, not quite as bad as happened to the folks at the bottom of the pay scale, but you’re making half what you would have been making had the median wage continued to track productivity and inflation.
Nick Hanauer:
Right, which, by the way, aligns almost perfectly with the Rand Corporation study on inequality, which basically shows that the median full-time worker in America, who earns about 50 grand a year, would earn almost 100 grand a year-
David Goldstein:
Right.
Nick Hanauer:
If they had kept their same share of GDP since ’75, yeah.
David Goldstein:
Here’s the thing. Let’s say you’re making $80,000 a year. You think you’re doing pretty well right now. You’re doing way above median. You’d be earning like $130,000 a year.
Nick Hanauer:
Even people in the top 10%, in the 90th percentile, I believe earn about $125,000 or $130,000 a year, but if they had been held harmless by the last 45 years of neoliberal economic policies, if their share of income had kept up with GDP growth, they’d earn like $180,000 a year.
Nick Hanauer:
Basically, the only people in the economy that either fairly shared or disproportionately shared are people in the top 1% or 2%. It’s just… It is shocking, shocking how fucked up this is. If there was ever an indictment of the failure of the federal government and Congress to do what’s right for American families, this is it. It just boggles the mind.
David Goldstein:
Again, getting back to that State of the Union address, Biden very clearly called for a $15 minimum wage. Does that give you hope, Nick?
Nick Hanauer:
You know, like a little bit. Look, there is forward progress in the sense that at least the democratic administration and the majority of democratic members in Congress are on the right side of this issue. It’s a small thing, but at least they’re also not the enemy here, which they were previous.
David Goldstein:
Which they used to be.
Nick Hanauer:
They used to be.
David Goldstein:
Right, where they thought, oh no, $10, that might be too much.
Nick Hanauer:
Yeah, right. I mean, you know, listeners need to recognize that the people who should’ve been on the right side of this issue for the last 20 years haven’t been until very recently, so we are making some political progress, but obviously, the proof is in the pudding.
David Goldstein:
Right.
Nick Hanauer:
Change the goddamn law, you clowns.
David Goldstein:
Right. Well, I think part of the problem is… Hate to blame democrats. If they had functional control of the Senate, a lot of the thing that Biden advocates for, a lot of those programs would be passed.
Nick Hanauer:
Yeah, yeah.
David Goldstein:
But they don’t have functional control of the Senate. They have 50, and then you have to subtract Manchin and Sinema in most of this stuff, so that’s not real control. Again, I just want to end on the fact how, how much things have moved over the past 10 years.
Nick Hanauer:
Yeah.
David Goldstein:
Ten years ago, when you said $15, people laughed at you.
Nick Hanauer:
Correct.
David Goldstein:
They thought you were crazy.
Nick Hanauer:
Yeah.
David Goldstein:
That was not just bad economics. It was bad politics.
Nick Hanauer:
Yeah.
David Goldstein:
Now, let’s be clear, the majority of economists have come around to the fact that the minimum wage is not a job killer. There’s no evidence that it slows the economy, slows productivity, kills job growth, et cetera, and the overwhelming majority of one political party has come around to the fact that it’s not bad politics either.
Nick Hanauer:
Yeah.
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