Hey John,

I recently coauthored an op-ed in The Hill about the massive 40-year upward redistribution of income in our nation – a redistribution that has fostered radical and rising economic inequality, which can largely be attributed to policies intentionally designed to suppress the wages of American workers.

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We are at a consequential point in our country where income inequality is stark and undeniable – and I need you to join me in taking action to reverse these policy failures and build an economy that works for everyone.

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The main focus of the op-ed was this: A new report from the Economic Policy Institute discovered that if U.S. workers’ wages had risen at the same rate as their productivity over the last four decades, the typical worker would be earning about $10 more per hour right now. That finding confirms what most of us know to be true – if it feels like you’re working harder than your parents but earning less, it’s because you are. But what’s groundbreaking about this new report is that, for the first time, we know exactly what’s kept your wages low – down to the dollars and cents.

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This wage suppression was not an unintended consequence; it was the intentional outcome of policies deliberately implemented to keep your wages low. Our leaders, of both parties, chose to suppress wages on behalf of the rich and corporations – and with spectacular success.

In the post-World War II boom, from 1948 to 1979, wages broadly rose in lockstep with economy-wide productivity, helping to build the largest and most prosperous middle class the world had ever seen. But after 1979, the interests of the wealthiest Americans sharply diverged from everyone else. Productivity rose by 56% between 1979 and 2017, a period during which the top 0.1% saw their earnings soar at least five times that rate, while median hourly compensation gained only 13% and the bottom third of workers actually saw their real wages fall. This shift of national income from the bottom 90% of earners to the very top earners is costing the typical American worker nearly $10.00 an hour – almost $20,700 a year for a full-time worker!

Many neoliberal politicians and economists have sought to blame suppressed wages on magical market forces, but the only forces at work here are deliberate policy choices – particularly excessive unemployment, eroded collective bargaining, and corporate-driven globalization. 

Of those policy decisions, the most consequential, and least known, is the fact that the Federal Reserve allows the American workforce to persist in a state of perpetual excessive unemployment. The Federal Reserve has consistently reined in job growth by hiking interest rates whenever unemployment approached the allegedly “natural rate” over fears of inflation that were, well, inflated. The result was an unnecessarily high unemployment rate that averaged 6.3% from 1979 through 2017, a full point higher than during the previous three decades, intentionally denying workers the opportunity to benefit from tighter labor markets. 

The Fed intentionally raises interest rates and slows job growth in order to diminish the power of workers to demand higher wages. This is a fact. And the same holds true of the litany of other policy choices that suppress wages.

For example, the primary purpose of collective bargaining is to bargain for higher compensation, which means any policy that erodes the right to unionize also intentionally suppresses wages. The purpose of outsourcing, both offshore and domestically, is to reduce labor costs, which suppresses wages. Misclassification, non-competes, anti-poaching agreements, forced arbitration agreements, and most other labor market “innovations” are all implemented in an effort to suppress wages. And then, of course, there’s the federal minimum wage, which has gone unchanged since 2009.

Wage suppression has become so common that employers are totally flummoxed by the reluctance of some workers to come back on the job at pre-COVID wages in the midst of a deadly pandemic. It apparently never occurred to them to entice workers back by offering higher pay. Instead, they blame more generous unemployment benefits for creating a “labor shortage.” But in truth, what we have now – what we’ve long had – is a wage shortage created by decades of policies – enabled by economists and implemented on behalf of corporations and the wealthy – deliberately designed to keep wages low.

So, what now? What do we do with irrefutable evidence that our policymakers built an economy that robbed everyday workers of their earning potential and fueled income inequality? First, we need a decisive majority of lawmakers on Capitol Hill to acknowledge and take responsibility for the intentional policy choices that got us here. And we need a commitment from them to walk away from the failed trickle-down economic policies of the last 40 years. 

And then we also need to build up robust worker protections, and get American paychecks growing in a meaningful way again.

It’s up to grassroots movements like this one – movements that have fought for progressive economic policy change and won – to speak out and force bold action at the federal level. We cannot sit idly by and let economic inequality continue to run wild for another four decades.

So I’m calling on 5,000 members of this team to speak out and force our lawmakers to listen: Will you add your name now to demand Congress take bold, immediate action to reduce income inequality and build an economy that works for everyone?

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Thank you,

Nick Hanauer
Founder
Civic Ventures



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