Monday, November 21, 2016

Will Trump Increase Wages For American Workers ?

Throughout his campaign, Donald Trump promised his supporters that he would create a massive amount of new and good-paying jobs -- and that his policies will result in higher wages for American workers. Will he actually do that?

The following post is from Lawrence Michel at the Economic Policy Institute. In it, he details how Trump could increase worker wages.

President-elect Donald Trump succeeded, in part, through an appeal to working class voters who have seen their incomes stagnate or fall for decades, the jobs they depended on moved off-shore, and their hopes for a secure retirement dwindle.
Trump correctly told them that U.S. trade treaties contributed to these problems and that the Trans-Pacific Partnership would only make matters worse. However, these trade treaties are just one way that policy has indeed been rigged to suppress wages for the vast majority of Americans. Millions of working Americans of all races are struggling, while the benefits of growth have gone only to people at the very top of the income ladder.
Working class Americans want what everyone wants: good jobs and hope for a better future. Now, the Trump administration and a GOP congress will have to deliver. How will a Trump administration lift wages for low and middle income Americans? As EPI has been promoting for decades, there are specific policies that will raise wages. The only way to raise wages for the vast majority of American workers is to give workers more power. For far too long, employers have held all the cards.
Trump has called for a higher minimum wage. A truly bold increase in the minimum wage would lift pay for the bottom quarter or more of the workforce.
He has called for a massive increase in spending on infrastructure to have highways, bridges, airports, tunnels, and schools that are second to none, which would create hundreds of thousands of jobs on its own. If infrastructure is paid for by gutting other Federal spending then its job creation benefits would be neutralized. Whether infrastructure jobs will pay middle class wages depends on federal law and whether union contractors do the lion’s share of the work. Trump’s support for prevailing wage laws will be a key test of his commitment to higher wages for middle class workers.
With respect to immigration, a path to citizenship and reforming work visas are a better road to improving wages for the vast majority of Americans than building walls. Immigration policy should be changed so that employers do not have the easy option of undercutting wages by importing workers on non-immigrant guest visas that fail to provide basic labor protections.
Most of Trump’s economics agenda is the tax cutting and deregulation approach that Republicans have pursued over the last few decades, the approach that failed to produce rising wages for the vast majority of American workers. Revisiting those policies is not a recipe for middle class economic success.
The question though is not how Trump can raise worker wages, but whether he will institute policies that will do that. I don't think he will. Trump has always fought unions, and I doubt that will change. If any action is taken on unions, it will be to further weaken them.

He won't substantially raise the minimum wage either, and if he tried, his Republican cohorts in Congress would quickly kill it. They would like to abolish the minimum wage -- not raise it.

A huge infrastructure rebuilding program, would create some jobs, but by itself would not put much pressure on employers to raise wages. And if it was paid for by huge cuts in other government spending  (instead of higher taxes on corporations and the rich), probably would not have any effect on wage (or overall job growth).

Trump's only real solution to higher wages and more jobs is to cut taxes for corporations and the rich -- not just a little bit, but by a massive amount. He says that employers will use the tax savings to create jobs (and raise wages). But the Republicans have been pursuing that kind of economic policy since 1980 -- and it has just resulted in stagnant wages and a growing income (and wealth) gap between the rich and the rest of America.

Will Trump create jobs and raise worker wages. I doubt it. He won't increase the minimum wage, strengthen unions, or increase government spending by taxing the rich and corporations more -- the only policies that could have a real effect on both demand (which creates jobs) and wage growth.

(NOTE -- The caricature of Donald Trump above is by DonkeyHotey.)

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