By Joseph Cotton, Education and Enrichment Coordinator
In the Oct. 28 edition of Newswire, I wrote an explainer article on three themes in the economy: supply chains, inflation and inequality. Because these issues are so complex, the political discussion about how to fix these issues is clouded by special interests and outdated theories on how the economy works.
Corporations and politicians are more than happy to tell you that you are not smart enough to know how economic policies will affect the country, while actively making your life more difficult through legislation.
As a result of COVID-19, the economy has been split in half. Those who had economic privilege entering the pandemic are doing well, and those who did not are struggling. Billionaires have increased their share of wealth by over $1 trillion since the start of the COVID-19 recession, while the bottom 25% has seen a significant drop in earnings.
According to economic theory, we are supposed to cut taxes and increase government spending when the economy is slow and do the opposite when the economy is booming. In a world that made sense, our government would increase taxes and cut off subsidies for the upper income earners and lower taxes and increase spending on middle to lower income families.
The exact opposite is taking place in the negotiations surrounding the infrastructure and reconciliation bill. Provisions such as the State and Local Tax (SALT) subsidies, which is effectively a tax cut for people earning more than $1 million a year, are considered to be non-negotiable by both Democrats and Republicans.
On the other hand, Sens. Kyrsten Sinema (D-Ari.) and Joe Manchin (D-W.V.) are willing to throw provisions that lower drug costs out the window after collecting $1.1 million and $1.6 million in campaign contributions, respectively.
Things need to change with this country’s economic policy, especially surrounding the rights of labor and people who do not have economic privilege. But instead, workers are being gaslit as they are told that they need to get off of government programs and back to work.
The labor shortage does not exist, but to the extent that the shortage is real, the easiest way we can solve the problem is by increasing the federal minimum wage to at least $15 per hour. The reason why employers cannot fill jobs is that they are simply not compensating workers enough for their time. Since wages have been so depressed for so long, when COVID-19 finally hit, people realized that they would rather be doing anything else than work for less than what they believe they are worth.
Politicians will lead you to believe that an increase in the minimum wage will bankrupt the small businesses in local communities who cannot afford to pay their workers more. This is a vast oversimplification of the issue.
First, most workers in America work for a company that can afford to pay their workers much more than they are currently paid. Second, the adjustment period when the minimum wage is slowly raised will allow small businesses that deserve to remain open time to get their wages up to the new baseline.
The pandemic has exposed the deepest fault lines in this country, especially in terms of economic inequality. Every solution that has been proposed to fix these issues has been met with a condescending “no.” Dramatic action was needed yesterday. Every day that goes by without action pushes us further and further into dystopia.