A Bold New Idea to Boost Wages

Robert Reich

Robert Reich Former U.S. Secretary of Labor, Professor at Berkeley

The challenges are well known: Working Americans are struggling to keep up with the increasing cost of living. Unemployment is low, but wages of most Americans have remained flat. More than three-quarters of Americans are now living paycheck to paycheck. Most can’t afford a $500 emergency.

There’s a simple and bold solution that would cost about as much as the Trump tax cut. But instead of helping corporations and the rich, it would help millions of working and middle-class Americans by putting money directly in their pockets.

I’m talking about expanding something called the Earned Income Tax Credit, or EITC. And although it’s been around for decades, it can be the basis of a revolutionary change in the lives of millions of people. 

As it now stands, the EITC gives thousands of dollars to the working poor, with the amount of money they receive gradually decreasing as their earnings rise until they reach a cap, which is now a little over $50,000.

It works so well because it directly boosts the incomes of people who need it the most. Cash gives people freedom and dignity— the power to decide, for example, whether to have their car repaired or buy new shoes for their kids or save for a rainy day. 

When working people have money to spend, they spend most of it in the communities they live in. This, in turn, causes businesses to hire more people to meet the demand. It’s a virtuous cycle that lessens poverty, makes the tax code fairer, and boosts the overall economy.

A bold new idea would be to expand this successful program in 4 simple ways:

First: Raise the maximum amount that very poor Americans receive from the Earned Income Tax Credit by several thousand dollars. This would dramatically reduce poverty in all families with someone who works full time. 

Right now, a job at a $15 minimum wage plus Medicaid and food stamps still doesn’t meet basic needs in much of America. Raising the Earned Income Tax Credit would ensure that every family with a full-time worker is out of poverty.

Second: Extend the Earned Income Tax Credit into the middle class, so even families earning the median family income – which was just about $76,000 in 2017 – will benefit. This would be a huge help to working-class families, many of whom are now one paycheck away from poverty.

Third: Expand the benefits of the Earned Income Tax Credit to two groups of Americans who are working hard, but not necessarily collecting paychecks: people (most of whom are women) who are caring for a child or for a senior in their family, and low-income students.

Fourth: Let people receive this money each month rather than in a lump-sum once a year at tax time, so it helps with monthly expenses – rent, food, education – or can be saved to build a financial cushion.

Presto. We create a kind of cost-of-living refund to lift the incomes of a third of Americans, the people who need it most, and we also include the working class and lower middle class. 

At the same time, we begin to rewrite the tax code in favor of ordinary Americans, instead of large corporations and the wealthy. 

Eighty-three percent of the benefits of the Trump tax cuts will go to the top 1 percent of Americans by 2027. Expanding and modernizing the Earned Income Tax Credit can help put things back in balance.

It’s simple. It’s fair. It’s necessary. It’s big and bold. Enlarge and expand the Earned Income Tax Credit. 

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Reposted from Robert Reich

Robert Reich served as the nation’s 22nd Secretary of Labor and now is a professor of public policy at the University of California at Berkeley. His latest book, Aftershock: The Next Economy and America’s Future, is now in bookstores. His earlier book, “Supercapitalism,” is out in paperback. For copies of his articles, books, and public radio commentaries, go to www.RobertReich.org.

Posted In: Allied Approaches

Union Matters

Human Service Workers at Persad Center Vote to Join the USW

From the USW

Workers at Persad Center, a human service organization that serves the LGBTQ+ and HIV/AIDS communities of the Pittsburgh area, voted last week to join the United Steelworkers (USW) union.

The unit of 24 workers, ranging from therapists and program coordinators to case managers and administrative staff, announced their union campaign as the Persad Staff Union last month and filed for an election with the National Labor Relations Board (NLRB).

“We care about our work and the communities we serve,” said Johanna Smith, Persad’s Development, Communications, and Events Associate. “We strongly believe this work and our connections to our clients will only improve now that we will be represented by a union.”

The Persad workers join the growing number of white-collar professionals organizing with the USW, especially in the Pittsburgh region. Their membership is also in line with the recent work the Steelworkers have been doing to engage LGBTQ+ members and improve contract language regarding issues that affect their lives.

“Workplaces are changing and evolving, and the labor movement is changing and evolving along with that,” said USW Vice President Fred Redmond, who oversees the union’s LGBTQ+ Advisory Committee as well as the USW Health Care Workers Council. “This campaign gives us an opportunity to diversify our great union while uplifting and empowering a group of workers who give their all for others.”

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There is Dignity in All Work

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