How To Fight Income Inequality With Better Paying Jobs

Guest post from Jack Hatch on his upcoming book

The Second Security: Fight Income Inequality By Creating Better Paying Jobs For Working Families

No greater security exists for an Iowa family than that of a decent job that has the potential to lead to a better life.  There is no more urgent issue facing policymakers than the rising income inequality that is hollowing out the middle class, reducing overall consumer purchasing power and threatening our economy’s long-term survival.

As more and more economic power is concentrated in the hands of a few, Iowans question whether our economic system will continue to work for them.  They wonder, maybe for the first time, whether their children will have the opportunity for a better life than they themselves enjoyed.  At a time in which the economy under President Obama has grown at a slow but steady pace, many families continue to experience economic anxiety they didn’t expect and don’t see a way out over the long term, let alone soon.

Iowa needs a comprehensive economic policy and plan to lift individual incomes of Iowans and create a business climate that creates higher paying jobs.  Progressive values focus on both of these objectives and there are achievable policy proposals we can take right now.

INCOME INEQUALITY DRIVING VOTER ANGER

Voter anger around inequality has been building for more than three decades. Despite slow and steady growth after the Great Recession of 2008, the average family income for Americans only recently matched its 2007 peak, and losses in the housing market over that time are well-documented.

We can turn around Iowa’s anemic growth.  Our economic security will be in good hands when all Iowans have a chance to keep more of what they earn, participate in determining their community’s destiny and be part of a growing, vibrant economy as a result.

These are the progressive policies that will minimize income inequality:

1. Raise the Minimum Wage. The foundation of economic inequality legislation would be an increase in the minimum wage to $15.00 per hour over the fastest possible time period.  We should tie it to the cost of living and allow certain industries the ability to institute a training wage and to workers who receive tips. It’s been nine years since Iowa increased the minimum wage, which remains an astonishingly low $7.25 per hour. Elected Supervisors in Johnson, Woodbury, Linn, Lee and Polk Counties are leading the way with proposals to increase the local minimum wage. Today, there is no sense of fundamental fairness in the middle class and Democrats need to continue to stand up in the public arena.

1. Improve Employee Health Care.  We should implement a 25% state income tax credit to Iowa’s small businesses for a partial share of premium costs.  This is allowed by the Affordable Health Care Act, and is an example of the right kind of tax break that rewards good corporate citizens.  The contrary policy is allowing low-wage large employers like Wal-Mart to purposely avoid providing health benefits for their full-time employees and throw the responsibility onto taxpayers through programs like Medicaid.

3. Provide Paid Family and Medical Leave.  Iowa is in the top five  states for families in which both parents work outside the home.  Among other things, that means there’s no one at home to take the kids to the doctor or care for an aging parent.  In addition to family obligations, this policy will benefit Iowans when workers with contagious illness, especially in restaurants, do not come to work sick and infect co-workers or customers. Paid sick days also protect workers from being disciplined or fired when they are too sick to work; help families and communities economically by preventing lost income due to illness; and offer savings to employers by reducing turnover and minimizing absenteeism.
4. End Predatory Lending. Too many families are trying to stretch their paychecks using shady payday loans to pay the bills in the short term.  Predatory lenders are not banks or credit unions.  They are out of state loan shark organizations that charge 356% interest on short term loans.  They prey on cash-strapped Iowa families for huge returns.  The big banks, who survived the 2008 Great Recession because they were too big to fail, are the financiers of the loan sharks, enabling their fleecing of Americans.   This has to stop.
5. Protect Collective Bargaining. We should prioritize the expansion of the scope of the bargaining for public workers.  Liberals should get behind a law that would grant public sector workers the right to bargain over the same issues granted by the National Labor Relations Act

6. Ensure Good Public Jobs. We should oppose privatization of state, county and municipal government jobs.  Our objective must be to keep quality public jobs public, while emphasizing efficiency and outcomes for state employees.
7. Adopt Self-Employment Assistance. Self-Employment Assistance provides eligible individuals with income support while they access resources and training to get their new small businesses off the ground. Seven states have active SEA programs.  Iowa should pilot an effort and track results to see whether unemployment can be reduced even further.
8. Strengthen Apprenticeship Programs.  Iowa has a small union trade apprenticeship program that recognizes the necessity to train workers for higher skilled vocational jobs and we should expand it.    Apprenticeship prepares workers to master occupational skills and undertake productive work for their employer, earn a salary, receive training primarily through supervised work‐ based learning, and take academic instruction that is related to the apprenticeship occupation.

Growing OUR Entrepreneurial Climate

Iowa’s present economic growth policy is to invest in large corporate interest from a limited pool of applicants.  It forces the state’s agency to pick winners and losers. Not only can a top-down approach be clunky and ill-fitting, it can actually be counterproductive to the success of the vision people in towns or cities have for themselves and their future.  This is especially true at the state level where competing economic interests are made up of very urban and very rural communities.  Managing growth across the diversity of our state requires more involvement form local communities.

1. Energize Small Towns and City Neighborhoods to Drive Their Own Growth. We can begin to nurture our small towns and city neighborhoods by restructuring all of the departments in state government to favor regionalism in their approach.

As a state we will find our best ideas when we allow communities to determine their own destiny, whether attracting jobs, enhancing culture, improving infrastructure or preserving history. Government picking winners and losers does not build a better state. The 2013 commercial property tax bill and the excessive tax credits to fertilizer plants like Orascom are two of the most recent in a long chain of state actions.

We should harness and promote the power of Iowans’ ideas and encourage innovation through a competitive process in which communities compete for state resources in a manner similar to the Vision Iowa program under t Governor Tom Vilsack.   We should build an economy that leverages the strength of Iowa’s small-business entrepreneurs and the communities they live in.

2. Establish an Iowa Creative Growth Fund. We need increased investment in technology, historic preservation and creative industries in communities across state using the principles of flexible regional management described above. Through this initiative we should re-engage our towns and cities large and small.  We should invest in a creative economy to attract young professionals back to our cities and counties to build businesses by using incubators, favorable tax policy and housing and entertainment centers.

3. Grow the Technology Prairie. We should partner with the state’s best economic development tools — Iowa’s universities, community colleges, and technology-focused private companies — to build communities that will attract and retain the best and brightest Iowans.  We should lay the groundwork to engage and attract startup companies by promoting a technology-oriented workforce; investing in training programs; building the teaching talent in our public schools and colleges; and create an investment fund of private capital that, in turn, makes use of tax credits.

4. Build a Better Iowa. Along the way, we’ll need to update our state’s infrastructure.  We should rebuild roads and bridges too long ignored.  We should attend to our lakes, rivers, and local water supply.   We should update our technology infrastructure with rural community broadband connectivity and ISP security initiatives.  And, we should build Iowa’s rail future with improvements to hundreds of miles of freight lines and new passenger rail initiatives.

A STRONGER IOWA

These objectives will have the effect of increasing family income, strengthening our state’s economy and attracting the kind of employers who will help build an economic foundation for the long-term.  We also will have demonstrated our willingness to prioritize wins for people who aren’t necessarily members of our party or in agreement with our ideology on other issues.  Only then can progressives in Iowa experience a resurgence of working-class support as we did when our policies were producing success for those families.

What Iowans want is not newer and better rhetoric that will sound good for the next election but rather a bold economic agenda that will actually change the way Iowa works and of earning back the trust of working middle-class families who have come to believe our hearts are elsewhere.

by Jack Hatch
Posted 10/3/16