For the past 40 years, the gap between the wealthy and everyone else in the United States has steadily widened. According to a 2012 study by Berkley Professor Emmanuel Saez, income inequality in the United States is at its highest levels since the deep disparities of the 1920s. And though just 47 percent of Americans said last year that they were concerned with the income gap, more than three-quarters support raising the federal minimum wage.
Robert Reich — political economist, author, Chancellor's Professor of Public Policy at the University of California at Berkeley, and former U.S. Secretary of Labor under President Bill Clinton — is a strong proponent of minimum wage increase and longtime advocate against income inequality. His 2013 documentary Inequality for All centers on the implications of the ever-widening income gap in the U.S. On Saturday, Reich spoke to a sold-out audience at Seattle’s Town Hall about income inequality, the potential impact of Seattle’s $15 minimum wage on the region and the income gap undermining democracy. Reich sat down beforehand to talk about tools for fighting income inequality; cities and states leading the wage gap fight in the country. This is a slightly edited version of the interview.
Minimum wage has been lauded recently as one of the best tools to close the income gap in the U.S. Is minimum wage the best path forward for equality in this country? Are there other efforts afoot that you think deserve equal attention and energy?
It is one important tool. There are many others that deserve a lot of attention. The earned income tax credit, which is a wage subsidy, is a very important anti-poverty program in the United States. Many people don’t know about it. It is large and it needs to be extended. Providing excellent early childhood education, improving K-12 and affordable higher education, including world-class vocational and technical education, is also very important. It’s also quite important to provide paid family and medical leave and enough opportunities for parents to take care of their children and parents and loved ones without paying a large penalty.
In addition, the tax system needs to be more progressive. I don’t think it wise to rely excessively on the sales tax because that is a regressive tax. It takes a larger percentage of the paychecks of poor people than wealthy people. We’ve got to look for opportunities for people to be able to borrow and start businesses. Financial markets are often very unavailable to many people and in fact quite punitive. Right now, if you are a student in debt, you cannot even use bankruptcy to alleviate your debt burden. That is imposing a huge and growing hardship on many of our young people. I could go on. There’s no one magic bullet. Increasing minimum wage is very important, but not the sole issue.
Given the paralysis of our national political system these days, it seems unlikely that we'll see meaningful federal action on minimum wage. How can other cities follow Seattle's lead and enact livable minimum wages?
Other cities can look carefully at what Seattle and a few others around the country have done and how they’ve done it. Increasing the minimum wage is very popular. Polls have shown for years that 75 to 85 percent of the public is in favor. But the restaurant industry and other business groups are very powerful and they fight very hard. It’s important the public know the truth, know the studies showing that minimum wage increases do not reduce job growth. In fact, quite the contrary, the studies show that they increase job growth because more people have more money to spend. There is a multiplier effect that goes with every dollar of spending in terms of job creation.
The biggest problem we have in our economy today is our vast middle class and the poor don’t have enough purchasing power to turn around and keep the economy going — which is why the economy is growing very slowly and why job growth is perilously slow.
Do you see a mass movement of cities enacting higher minimum wages leading to meaningful change at the state and federal level?
I wouldn’t say mass movement. Certainly you have a number of states that have raised their minimum wage and a number of cities that have moved also in that same direction. In many points in our history the federal government has followed states and cities. Not always. Civil rights is a glaring exception obviously. But in terms of economic justice — the eight-hour day, 40-hour work week with time and a half for overtime; minimum workplace safety — a lot of economic provisions originally came out of states and locales.
A big piece of your work these days centers on the intersection of income inequality and democracy. Why is income inequality so harmful to democracy?
Because money and power are almost interchangeable. When you have 95 percent of the gains of economic growth going to the top 1 percent as we have now, that means the top 1 percent has extraordinary political power. They can translate that money into political contributions, lobbying, public relations campaigns, subtle promises of jobs and the rest. We see it happening all around us. The Supreme Court’s decisions in Citizens United against the Federal Election Commission and the McCutcheon decision were two more blows against campaign finance and have opened the floodgates. It’s a perfect storm. We’ve got a huge concentration of income and wealth at the very top. The Supreme Court opened the floodgates of money — much of it secret — into politics. We have gridlock in Washington. And public cynicism. That’s all dangerous to a democracy.
There's talk by a local initiative promoter of trying to roll back Seattle's $15 minimum wage with a statewide measure. Should progressives be worried or is the initiative arena an area where there might be strong voter support for addressing inequality?
I don’t think it likely in a state like Washington [that will happen]. Wisconsin, given its currently regressive politics, did pass that kind of provision. Even though Milwaukee wanted to raise its minimum wage, that statewide provision stopped it. It’s hard to justify to the public why a city’s residents should not be allowed to do something the city’s residents want to do. This [initiative] is not exactly a pro-democratic movement. But nevertheless, if I were a supporter of the minimum wage increase here — and I certainly am, but I’m not a citizen of this state — I wouldn’t take anything for granted.
A big piece of the income inequality conversation in Seattle right now centers on the rising cost of housing. Are there any good answers for keeping housing costs affordable in a city or region that's experiencing tremendous growth?
You want to be very careful to avoid exclusionary zoning inside the city or in the suburbs. Be on the lookout for it and try to prevent it and root it out. Secondly, you want to induce development with inclusionary zoning. If developers are going to do fancy high rises with a lot of high-priced condos, they need to also include lower income people and lower income residences. You want to make sure your building codes and ordinances do not inadvertently make it more difficult to provide low-income housing. Those three steps are important.
How do you compare the strengths and failures of the Clinton and Obama administrations on income inequality?
Well, I was part of the Clinton administration, so I’m not a completely neutral observer. At the same time, while we saw income inequality starting to widen, I certainly never expected we’d get to the point we are today. I wrote a book in 1991 fearing that we would get to something like today, but I was never actually expecting my fears would be reality. President Obama, in my view, has done an excellent job given the cards that were handed to him. He inherited a terrible economy, a financial panic, the near meltdown of Wall Street, a huge deficit, two terrible wars and recalcitrant Republicans who, beginning in 2010, would not let him do a thing. I call that a bad hand.
Given that the cards are stacked wildly against equality in this country right now, more so than they have been in many decades, do you see a path forward to equality?
Well, we’re not talking about a path toward equality. That’s not a realistic objective and probably shouldn’t be the objective. What we need to do is reverse the trend toward widening inequality, which is ruining our economy, ruining our democracy, preventing upward mobility and seriously eroding social solidarity. The last time we faced anything like this was the later decades of the 19th century. And then starting in 1901 the nation began working on the problem seriously and began reversing that trend. We did it again in the 1930s. We did it again to a limited extent in the 1960s. I have great faith in the political will and capacity of this country when we understand a problem and the seriousness of a problem to reverse direction and solve that problem. The big question in the future is whether we as a nation will understand the seriousness of this problem.
Do you have hope that we can get to some point of mass understanding of the problem?
Oh, I’m absolutely sure we will. But how much damage will be done until we get there? Right now, this is the first recovery since the Second World War where the median household income has dropped in the recovery. We’ve never seen this before. The only people who are doing better in this recovery are at the top 10 percent. The only people who are doing far better are the people in the top 1/10th of 1 percent. This is unheard of. When the majority of people are actually losing ground in a recovery, what’s going to happen when we turn toward recession? It’ll obviously be much worse. If you think there is a lot of anger in the public today, just wait. I frankly worry about that free-floating anger.
Will that anger be detrimental to progress?
It’s detrimental only because it’s free floating. When so many people are disillusioned and feel like the game is rigged — and to a significant extent it is — they are easily captured by the politics of resentment, which scapegoats various groups: the poor, immigrants, the government, even the rich. The problem with the politics of resentment is it gets you further from solutions rather than toward solutions.