How to beat GOP on inequality: Key reforms that don’t involve Congress

If President Obama is serious about economic progressivism, here are four dramatic actions he can take on his own

Topics: Paul Krugman, obstruction, GOP, Barack Obama, Inequality, Minimum wage, living wage, living wages, Food Stamps, Unemployment Insurance, Labor, Trade agreements,

How to beat GOP on inequality: Key reforms that <em>don't involve Congress</em> (Credit: AP)

“A relentlessly growing deficit of opportunity is a bigger threat to our future than our rapidly shrinking fiscal deficit.” So said President Obama in his recent speech on increasing economic inequality, which he said “challenges the very essence of who we are as a people.”

Perhaps one might agree with Paul Krugman that it’s a hopeful sign, with Obama “finally sounding like the progressive many of his supporters thought they were backing in 2008.”  But what about the next thing Krugman said, on his column’s final sentence: “This is going to change the discourse — and, eventually, I believe, actual policy”?

If Obama were really serious, he could have announced significant policy changes as part of that speech — and even woven them into its very texture. True, congressional gridlock remains a dominant factor in Washington today, but there are things Obama can do on his own, as well as ways that he can seek to reshape political discourse over the long haul. By taking decisive action on the former, he could have given a lot more weight to the latter, particularly since he was speaking a week before the new budget deal was announced — an advantage he has already squandered.  Had he really been serious, here are four dramatic actions Obama could have taken to begin translating his words into deeds:

1. Ensure a living wage for federal contract workers:  In May, the think tank Demos released a report, “Underwriting Bad Jobs: How Our Tax Dollars Are Funding Low-Wage Work and Fueling Inequality.”  It estimated that “nearly two million private sector employees working on behalf of America earn wages too low to support a family, making $12 or less per hour. This is more than the number of low-wage workers at Walmart and McDonalds combined.”  It was an admittedly incomplete figure, not including subsidies for agribusiness giants employing “more than a million farm workers,” or Department of Education grants funding “low-wage assistant teachers, bus monitors and cooks in Head Start and other programs,” among other programs.



But it was clearly a good place to start, as was recognized by the Congressional Progressive Caucus. On July 3, citing the Demos report, CPC co-chairs Reps. Raúl M. Grijalva, D-Ariz., and Keith Ellison, D-Minn., and 15 other representatives wrote a letter calling on Obama to take immediate action via a working group of federal agencies. On Sept. 25, they sent a follow-up letter with 50 signatories urging Obama to “issue an executive order to raise wage standards, safeguard the legal rights and safety and provide labor stability for the low-wage workers on whom these federal agencies rely to fulfill their mission.” Yet, the same day Obama gave his inequality speech, Salon’s Josh Eidelson reported that Obama’s White House has offered “no response” to the letter. Not a single word. The speech would have been the ideal place to break that silence.

2. Preannounce a veto of any cuts to food stamps or unemployment insurance in any legislation — including budget deals. Of course, vetoes can be overridden — in theory. But it’s harder in practice, and since everyone in Washington knows that, a preannounced intention not to allow any further cuts to the safety net would have substantially changed the political dynamic.  Not least, it could have helped to refocus attention on the actual value of food stamps (SNAP) and unemployment insurance (UI) in fighting poverty and economic inequality, a value that’s beyond dispute in the reality-based world. For example, in early November, after the census released its 2012 supplemental poverty measure (SPM) statistics, an analysis by the Center for Budget and Policy Priorities found that “SNAP’s food assistance benefits kept 4.9 million people above the SPM poverty line, including 2.2 million children,” while “UI kept 2.5 million people, including 600,000 children, above the SPM poverty line in 2012.”

What’s more, as noted in the Washington Post, a paper just released on Dec. 5 by researchers at Columbia University using the SPM found that “Government programs such as food stamps and unemployment insurance have made significant progress in easing the plight of the poor in the half-century since the launch of the war on poverty.” More specifically, the safety net helped reduce the poverty rate from 26 percent in 1967 to 16 percent in 2012. In contrast, the market economy alone has done less than nothing to fight poverty over that same time-frame: “Without taking into account the role of government policy, more Americans — 29 percent — would be in poverty today, compared with 27 percent in 1967.” Facts may have a hard time getting noticed these days, but attaching them to a veto warning is one way to focus attention on them. Now, with a budget deal announced letting extended unemployment insurance lapse for 1.3 million unemployed, Obama’s failure to take a veto stand against such cuts is already taking its toll.

3. Aggressively prosecute and suppress labor law violations that cost low-income workers billions of dollars annually.  A three-city 2009 study, “Broken Laws, Unprotected Workers,” found that wage theft among the bottom 15 percent of the workforce was so widespread that it dwarfed the ordinary forms of property theft. It found that 15 million low-wage workers in just three cities — Los Angeles, Chicago and New York City — had roughly $2.9 billion in wages stolen from them in 2008, a rate more than double that of reported property theft in California, where 38 million people lost $2.8 billion in 2007. While awareness, local legislation and enforcement actions have continued to spread since then, federal labor law enforcement remains vastly inadequate to the scale of wage theft that low-wage workers are suffering.

An additional contributing factor that makes wage theft easier for employers to pull off is the misclassification of employees as “independent contractors” who are essentially exempt from most labor law protections. A 2010 study, “The Big Rig: Poverty, Pollution and the Misclassification of Truck Drivers at America’s Ports,” found that 82 percent of the 110,000 drivers serving the nation’s ports were misclassified as independent contractors, although they clearly did not qualify as such under the law. The report found that:

Surveyed drivers classified as independent contractors reported average net incomes 18 percent lower than employee drivers. Independent contractors were two-and-a-half times less likely than employee drivers to have health insurance and almost three times less likely to have retirement benefits.

The income inequality impacts of wage theft and misclassification are clearly quite substantial in and of themselves. But by dragging down workers on the bottom, they distort the job market and undermine the social contract for workers all the way up the job ladder. Nothing more than changes in law enforcement priorities are needed to substantially improve the lot of tens of millions of low-wage workers, and indirectly benefit many times more that number as well.

4. Abandon secretive job-killing trade deals: The Obama administration is currently leading secret trade negotiations on two proposed multilateral trade agreements, the Trans Pacific Partnership and the Trans-Atlantic Free Trade Area.  WikiLeaks made headlines in mid-November by releasing the August draft of the TPP chapter on intellectual property, causing an international uproar, since it showed the U.S. in conflict with international norms, and deeply at odds with its negotiating partners.

The Electronic Freedom Foundation noted that “the IP chapter would have extensive negative ramifications for users’ freedom of speech, right to privacy and due process, and hinder peoples’ abilities to innovate,”  and Knowledge Ecology International (with an advisory board of Joseph Stiglitz, John Sulston and Amartya Sen) concurred, calling it “bad for access to knowledge, bad for access to medicine, and profoundly bad for innovation,” and adding that “The text reveals that the most anti-consumer and anti-freedom country in the negotiations is the United States, taking the most extreme and hard-line positions on most issues.”

But Pulitzer Prize-winning author/reporter David Cay Johnston focused on the potential jobs and economic inequality impact, noting that with the U.S. still down 9 million to 11 million jobs due to the Great Recession, these proposed pacts  “would destroy more jobs at home and enhance the power of multinational corporations.”

“[T]here is no such thing as free trade. All trade is governed by complex and detailed rules,” Johnston noted. And those rules don’t write themselves.  “The new pacts are being negotiated by the same narrow group of multinational corporate interests that in two decades of badly negotiated trade deals lost more than 5 million American jobs, half of them to China,” Johnston wrote. So, measured against Obama’s professed concern over income inequality, this, too, should be an easy call. It’s entirely in the hands of the executive branch.

But there’s a catch: the industries most intimately involved in seeking increased intellectual property protections include key Obama allies — motion pictures and pharmaceuticals. As two commentators for Al Jazeera America noted:

In the first brief interview commenting on the leak, the U.S. Trade Representative Michael Froman defended the proposal saying it is within the bounds of U.S. law. He happened to make this comment while touring Paramount Pictures studios in Los Angeles.

Paul Rosenberg is a California-based writer/activist, senior editor for Random Lengths News, and a columnist for Al Jazeera English. Follow him on Twitter at @PaulHRosenberg.

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