We Can’t Trust ‘Growth’ or ‘The Market’

Wage Basics

We Can’t Trust ‘Growth’ or ‘The Market’

We don’t need more growth, we need more of the growth we’ve already had going towards the people who actually need it.

Too many politicians keep calling for more growth, as if growth is some magic pill that will cure all of America’s problems. Here’s a little secret – if someone says their policies are “pro-growth,” you know that they’re full of it.

Growth isn’t what’s going to fix the actual problem we’re facing, it’s going to fix the problem they want you to think we have. They want you to think that the issue is that the economy is barely getting by, that everyone could be doing better. But for years before our current downturn, the economy was working just fine – the issue was with how the benefits of the economy were being divided. We didn’t need more growth, we needed more of the growth we’ve already had going towards the people who actually need it. 

We also don’t need more jobs, another common deflection from politicians who are unwilling to address the problems that real Americans are facing. We need better paying jobs. Two months ago, the unemployment rate was 4%, yet somehow 40% of Americans still couldn’t afford to meet their own basic needs. 

Now those people who worked hard have nothing to show for it. Ballooning expenses and stagnant pay deprived millions of Americans of the ability to build a nest egg. It’s about to cost all of us; when those expenses are still due, but a one-time, $1,200 check from the government isn’t enough to both pay the phone bill and put food on the table.

Those people didn’t need a job. They already had one. They needed a better job.

Source: Bloomberg View

For the last several decades, we’ve let unfettered market forces run our economy. For a few Americans at the very top, this has been wonderful. For millions more in the middle and at the lower end of the income spectrum, it’s been a disaster. As the stock market and corporate profits rose, most of the country was desperately treading water, trying not to drown. Wages are stagnant even for those in the middle, and of those towards the bottom, millions work full-time and still earn so little that they’re not able to afford their basic needs. These people work full time and still live in poverty, in modern day wage slavery. And it’s no wonder, when you look at how our so-called “free market” is structured.

The only people benefitting from our current economy system are those who are already at the top. The vast majority of our much-touted growth have been funneled directly towards the top 1%, with an even more disproportionate amount being concentrated with the top 0.01%. That’s why economic growth for growth’s sake feels so empty to most Americans. It’s like bringing an extra 10 pizzas to a party and then giving 9 of those pizzas to just one person. Sure, there’s more pizza at the party, but why should anyone care about the total amount when most people won’t even get an extra slice?

With the decline in unions and the rise in corporate profits and consolidation, the balance of power between workers and employers has never been more skewed. Combine that with the fact that the labor market doesn’t work like a regular market (after all, if you don’t have a job you really can’t just decide not to get one – the standard supply and demand link in normal markets doesn’t apply here), and you’ve got a status quo that leaves employers able to pay workers dramatically less than what those workers might rightly be able to demand based on their productivity. In an economy in which massive corporations hold all the power and base their actions completely on maximizing shareholder value, we can’t trust them to compensate workers fairly. After all, just look at the $1 trillion in tax cuts they just received. That hasn’t led to new hiring or higher wages, it’s led to over $1 trillion in stock buybacks in 2018 alone. 

We need something else to keep wages strong, and the minimum wage has a proven record of doing so effectively. We have ample evidence that a higher minimum wage (like we used to have decades ago before inflation and inaction in Congress weakened it) does not undermine the growth of the economy as a whole, but in fact supports it.

NEXT: What Fuels the Economy →