Talking Political Economy for Thanksgiving

With Thanksgiving just a day away, I wanted to send along some guidance on how to deal with the inevitable political debate that breaks out over Thanksgiving dinner. When your conservative cousin insists that raising the minimum wage is a bad idea, I want you to know how to push back. When your cantankerous uncle vilifies unions, I want you to be prepared with the facts. Let’s start with the erroneous attacks on unions. MYTH: "Unions haven’t done anything for us."   Wrong. Unions do not damage productivity or employment growth. Instead, unions help distribute income gains more equitably toward workers from corporate owners and their executive managers. Evidence shows that when unions are empowered, the higher pay and standards they set—such as overtime pay and the 40-hour workweek—spill over and benefit all workers.   The accelerating decline in union membership in recent decades has been a prime reason for the extraordinary concentration of income at the very top. The chart below clearly demonstrates this. Stronger unions would help narrow America’s startling income gap.

Click here to read my full article on arguing economics at the dinner table. You may also hear versions of these misguided arguments this Thanksgiving: MYTH: “The government is spending too much money. It should tighten its belt the same way households had to following the Great Recession.” Not true. Simply put, when everybody (households, businesses, and governments) tightens their belts together (i.e., stops spending money), the result is a steep recession. Even with increased federal government spending, tightened household and business spending in 2008–2009 led to a savage economic downturn. Actively cutting government spending would’ve made it all much worse. Further, in terms of government spending, the recovery from the Great Recession has been the most austere recovery on record. This spending restraint has strangled growth—and is the prime reason why a full recovery has been so long in coming. [Read more] MYTH: “To create more jobs and raise wages, we need to cut taxes.” Wrong. Since 1979 we have steadily cut taxes for everybody—including the very rich, who have seen most of the income gains since then. Because taxes for everybody have gone down steadily in recent decades, too-high taxes can’t explain our economic problems over that time. [Read more] MYTH: “Raising the minimum wage is a bad idea because it will just make everything cost more.” Nope. Most critics have dropped the fear-mongering about the employment impacts of minimum-wage increases; these critics now claim that raising the minimum wage will just lead to higher prices. Is this possible? Sure, raising workers’ wages could put upward pressure on the prices of the things they produce. But why don’t people worry about this when they hear about exploding CEO pay? So, an increase in the minimum wage could raise prices of, say, fast food. But by boosting pay for tens of millions of struggling workers, it would also help workers who haven’t shared in economic growth in recent decades. In contrast, astronomical CEO pay only serves to exacerbate inequality. [Read more] MYTH: “The real problem with today’s economy is that workers don’t have the right skills to keep pace with technology.” Misleading and inaccurate. Even for workers with a four-year college degree, wages (adjusted for inflation) have been flat for over a decade. This doesn’t look like an economy rewarding skill; instead, the economy seems to be rewarding a very narrow slice at the top. [Read more] Take a moment to read my article debunking these tired and erroneous claims. With this information at the ready, you are now prepared to inject some facts into the political debate that emerges between courses this Thanksgiving. Happy Thanksgiving, Josh Bivens Research and Policy Director Economic Policy Institute