Remember the Workers

At NRO, I look at the current employment picture and suggest some of the need for the GOP to develop policy alternatives:

This breakdown in opportunity also increases government spending and public intervention in the marketplace, sometimes with disastrous results. It is very likely, for instance, that the slowdown in economic growth in the 2000s encouraged many politicians of both parties to look the other way during the inflation of the housing bubble of the 2000s: Accelerating housing values helped make up for wage stagnation and the other trials of the middle and working classes. Meanwhile, cheap labor might be cheap for the employer, but it is rather expensive for today’s American taxpayer. Every worker struggling at the economic margins adds to the growing appetite for government subsidies, from Medicaid to SNAP to housing programs. For those serious about reducing the deficit, improving the economic circumstances of those at the economic margins (and those in the middle) would be a decisive step forward.
Republicans have an opportunity to confront these issues in the months ahead by laying out a set of policy alternatives. But they need to keep their eyes on the big picture. Many on the right note that an increased minimum wage is far from an economic panacea, but explaining the limits of minimum-wage increases is not enough. Nor is another round of financial brinksmanship over the budget likely to address these concerns fully. Collaborating with the Senate on its immigration bill, which would hurt workers already here, seems unlikely to improve the bargaining power of labor. As neoliberal writer Mickey Kaus has argued, for all the president’s protestations about income inequality, the signature domestic initiative of his second term (his immigration agenda) could very well worsen inequality. There is little reason for Republicans — or, frankly, Democrats — to sign on to that outcome.
Reigniting economic vitality and growth would be a key step to turning around the employment picture. Stronger economic growth could generate an upward demand for workers. A stronger demand increases workers’ opportunities for better employment conditions and higher wages in two ways: It helps workers increase their wages at their current job, and it creates opportunities for workers to move on to higher-paying jobs. When there is a glut of the unemployed, it is easy to fill a staff with part-timers. A tighter labor market due to a strongly growing economy would encourage employers to be more efficient and to invest in new technologies, while also making the labor of the employee a more valuable commodity.

Read the rest here.