The Republican War on Wages

With wealth inequality in America now at levels rivaling the banana republics of the past and many working Americans having seen no increase in the buying power since 1979, both political parties are talking about the need to spur economic growth and jobs.  The problem, as laid out in a piece in Politico Magazine by former Congressman Barney Frank, the supposed solutions being offer by the Republicans is in reality more of the same policies that have spurred soaring wealth for the few and wage stagnation for the many.  How do they get away with it?  In a number of ways.  First, much of the GOP base is ignorant and uneducated in contrast to the country club Republicans who are benefiting from toxic GOP policies.  Perhaps more importantly, the GOP cynically use appeals to religious - read Christian - extremism, racism and mindless patriotism to sucker voters into voting against their own best financial interests.  Here are column highlights:

The conflict between the two major parties over inequality has given rise to the most fundamental debate about economic issues since the end of World War II. Superficially, there has been some convergence. The reality that our increasing national wealth has gone disproportionately to a small percentage of the population has become impossible to ignore — even by Republican candidates seeking to appeal to a very conservative primary electorate. Yet the proposed solutions suggested to the problem by the two parties are even more diametrically opposed than often realized.

To a great extent, the inequality debate has been presented as a choice between Democrats advocating specific interventions to diminish the wealth and income gaps, and Republicans countering that this will only exacerbate the situation; instead, they call for removing obstacles to economic growth. 

But this is a very incomplete picture of the Republicans’ agenda. What is too infrequently made explicit is that prominent on their list of impediments to that growth are both that wages earned by many working people are too high, and that several legal and institutional factors obstruct efforts to lower them.

The Republican tax agenda actually seeks to increase the inequality gap, both by diminishing the share of taxes paid by the wealthiest, and in turn, reducing the revenue available for paying public sector salaries, subsidizing higher education for working and middle-class families, providing income supplements to the working poor and easing the cost of health care.

Republicans actively pursue efforts to restrain wages — and push them lower. One of the most important is the assault on the bipartisan efforts of the Federal Reserve under Ben Bernanke and Janet Yellen to combat unemployment through quantitative easing and low interest rates. Paul Krugman has documented the persistence of conservative predictions that these policies would somehow simultaneously cause inflation, recession and general economic malaise — outcomes in total contradiction to the impact they have actually had since their adoption in 2010.

Some other Republican income-depressing initiatives are more familiar: fighting any increase in — or even the very concept of — the minimum wage; denouncing any move toward local efforts to require a “living wage”; repealing Davis-Bacon so that construction workers can be paid less; and their general assault on unions both in the public and private sectors. 

Collectively, these efforts add up to a comprehensive, intellectually interlinked program to diminish the compensation paid to a very wide range of wage earners. The efforts are given greater force by the interaction of two important factors: the conservative drive to dismantle federal programs and send their missions to the states; and the interstate competition for economic activity that then ensues.

Once again, this first phenomenon is an indication of how far right the Republicans have moved. Prominent among the Federalizers of public functions whose work they now seek to undo is Dwight Eisenhower, whose signal accomplishment of the interstate highway program would be essentially de-federalized and turned back to the states by today’s conservatives. One the main attractions this effort holds for its advocates is the substantially lower pay for those who build highways.

[O]ne of the most significant and least generally recognized examples of the Republicans assault on working people’s wages I have seen: The use of public money by Tennessee Republicans to coerce the company and the workers at a Volkswagen factory there to abandon what had been a mutual desire to recognize the United Auto Workers as the bargaining agent at the plant.

[T]he Tennessee Republican Party intervened, using public money as an anti-union club. State Sen. Bo Watson, a Republican from Chattanooga, said in a statement, “Should the workers choose to be represented by the United Auto Workers, then I believe additional incentives for expansion will have a very tough time passing the Tennessee Senate.” Tennessee had planning to give VW public funds to increase its manufacturing capacity — funds which, evidently, were to be withheld if the majority of workers exercised their federal statutory right to support union representation.

The last crucial part of this tale is why Corker and his colleagues used so much muscle to protect Volkswagen from a union it welcomed. Why was this a victory for his “community … state … (and) … citizens”? The answer he and others give is that it helped hold down wages, not just at the Volkswagen plant, but throughout the state. Had the UAW won, they said, it could have boosted pay for their members. This, in turn, would have put upward pressure on wages elsewhere in the state, and this, in turn, would have made it harder for Tennessee to lure businesses from other, higher wage jurisdictions.

The morals — and morality — of this sordid story are too important not to emphasize. First, it stands as a repudiation of the argument that unions do not help raise wages.

Second, it is an even more explicit acknowledgment that keeping wages lower than they might otherwise be is a deliberate part of the conservatives’ strategy for economic development in their states.

Finally, it demonstrates that if Republicans succeed in having more and more programs conducted at the state as opposed to the national level, it would make it easier and easier to depress the wages of those who carry them out — and that’s an agenda that should concern every working family in America.