2 Stephen Eide, “Not Transformative—Just Expensive,” City Journal, January 22, 2021.
3 Nicole Bateman and Martha Ross, “Meet the Low-Wage Workforce,” Brookings Institution, November 7, 2019.
4 Oren Cass, “The Cost of Thriving,” American Affairs 4, no. 1 (Spring 2020).
5 Fred Block, “Beyond the Commodity: Toward a New Understanding of Political Economy,” American Affairs 4, no. 3 (Fall 2020). This is not necessarily to endorse in full Block’s claims concerning the extent to which neoclassical models still describe our economy.
6 Theodore Roosevelt, “National Duties,” Sept. 2, 1901.
7 Theodore Roosevelt, An Autobiography (New York: Charles Scribner’s Sons, 1913), 114.
8 Data for 2020 at http://www.selfsufficiencystandard.org/node/53 and https://livingwage.mit.edu/counties/18141. A low but realistic standard of living is assumed: Cell phones are deemed necessary, but restaurants are not; some toys for the kids and personal care products are accounted for, but vacations are not. Childcare and housing are typically the two most expensive categories, with housing pegged at the fortieth percentile of the local market; if only one parent is assumed to be working, elimination of childcare costs reduces the necessary income by approximately $10,000. See https://livingwage.mit.edu/resources/Living-Wage-Users-Guide-Technical-Documentation-2021-02-03.pdf.
9 Data at https://fred.stlouisfed.org/series/MHIIN18141A052NCEN. State data is more detailed, letting us note that Indiana’s median income is $57,603, with 15.7 percent of households making below $25,000 and an additional 23.6 percent earning $25,000–50,000.
11 Low wages were defined as making less than two-thirds of the median hourly wage for full-time male workers in that region. Nicole Bateman and Martha Ross, “Meet the Low-Wage Workforce.”
12 Chad Shearer and Isah Shah, “Opportunity Industries,” Brookings Institution, 2018.
13 The two jobs are industrial machinery mechanics and licensed practical nurses. Bureau of Labor Statistics, “Occupations with the Most Job Growth.”
14 Cass’s original analysis extends back to 1985. The Bureau of Labor Statistics does not report for income quartiles before 2000, however, so we will use a smaller data set.
15 Cass’s measure uses the cost of renting a three-bedroom house in Raleigh, N.C., as his reference point. This is a reasonable midpoint for the country as a whole, but of course there is tremendous variance in housing cost by county. The “burdened households” measure—showing the percentage of households which pay 30 percent or more of their income on housing—is a useful way to gain a sense of the problem; see https://fred.stlouisfed.org/release?rid=413.
16 Workers who did in fact see their standard of living rise during this period are typically those whose compensation package included healthcare coverage, as benefits are not taken into account by the wage data reported by the BLS. As Cass notes, however, “among full-time workers with income up to 250% of the federal poverty line ($62,000 for a family of four), fewer than half have employer coverage.” For the fortunate minority who do have coverage through work, contributions to premiums are still a major expense. Cass, “The Cost of Thriving,” 26.
17 The two largest outliers were manufacturing, where pressures from globalization were likely responsible for suppressing wage increases, and mining, where growth in wages actually outpaced growth in productive value. Michael Brill, et al., “Understanding the Labor Productivity and Compensation Gap,” U.S. Bureau of Labor Statistics, Beyond the Numbers 6, no. 6 (June 2017).
18 See the Industry Productivity viewer from the Bureau of Labor Statistics at https://beta.bls.gov/api-charts/home.htm.
19 Michael Lind, “Salary Bands and the Truth About Wages,” American Compass, December 11, 2020.
20 Adam Isen, “Essays on Labor and Public Economics: Dissertation Summary,” W. E. Upjohn Institute for Employment Research, January 1, 2013.
21 Lind, “Salary Bands.”
22 Lauren Kelly, “The Coles Warehouse Lockout Is a Front-Line Struggle in the Battle over Automation,” Jacobin, December 19, 2020.
23 Zeynep Ton, The Good Jobs Strategy: How the Smartest Companies Invest in Employees to Lower Costs and Boost Profits (Boston: New Harvest, 2014). In Ton’s terminology, a good job pays or offers a path to a self-sufficiency wage, as well as offering dignity, satisfaction, and stability in the workplace.
24 Ton, Good Jobs Strategy, 9, 63.
25 Paul Osterman, ed., Creating Good Jobs: An Industry-Based Strategy (Cambridge: MIT Press, 2019), 11. Osterman finds the good jobs strategy to be less promising in other sectors, which is partly why the policy interventions discussed below are necessary rather than supplementary.
26 Natalia Emanuel and Emma Harrington, “The Payoffs of Higher Pay: Elasticities of Productivity and Labor Supply with Respect to Wages” (unpublished manuscript), December 28, 2020.
27 Roger Frantz, “Harvey Leibenstein, and an Anomaly Called X-Efficiency,” Journal of Behavioral Econonomics for Policy 2, no. 1 (2018): 25–31.
28 Zeynep Ton and Hazhir Rahmandad, “If Higher Pay Is Profitable, Why Is It So Rare? Modeling Competing Strategies in Mass Market Services” (unpublished manuscript, September 24, 2019).
29 Dani Rodrik and Charles F. Sabel, “Building a Good Jobs Economy,” Harvard Kennedy School Faculty Research Working Paper RWP20-001, 2019.
30 Jana Kasperkevic, “Paul Romer: ‘If You Think Moderation Is Censorship, You’ve Got a Competition Problem,’” Promarket, January 15, 2021.
31 While our argument focuses on long-run growth in productivity and wages, we do not mean to neglect or disparage those seeking to offer immediate help. Extending “universal basic economic dignity”—instead of universal basic income—should be a goal to be accomplished as soon as possible rather than in the vague future. On this, see Gene Sperling, “A Dignity Net for All,” chap. 12 in Economic Dignity (New York: Penguin, 2020).
32 Mariana Mazzucato, Rainer Kattel, and Josh Ryan-Collins, “Challenge-Driven Innovation Policy: Towards a New Policy Toolkit,” Journal of Industry, Competition and Trade 20 (2020): 421–37.
33 David Autor, Anran Li, and Matthew Notowidigdo, “Preparing for the Work of the Future,” Poverty Action Lab Research Agenda (2019).
34 Theodore Roosevelt, “Labor Day Address to the New York State Fair,” September 7, 1903.
35 John Bates Clark, Social Justice without Socialism (New York: Houghton Mifflin, 1914), 7.