In the lead up to the American Rescue Plan (ARP), a number of leading Democrats proposed raising the federal minimum wage from its current $7.25/hour to $15/hour. The Democratic Party failed to get this increase passed because it did not want to bypass or remove the filibuster in the Senate.
While minimum wage is a noble goal (because so many people in the U.S. are paid considerably less than the living wage in their area, among other reasons) a minimum wage is not the only way to achieve minimum income. A perfectly viable way to help poor American workers is for the government to give direct payments to workers.
This is why I’m proposing Equality Payments. Instead of increasing the minimum wage, Congress should create weekly payments for all working-age adults to provide a minimum income.
This is a version of Universal Basic Income, widely promoted by the Andrew Yang campaign leading up to the 2020 presidential election. However, Equality Payments would not be a full UBI. Instead, they would inject cash directly into the working part of the economy by providing a noticeable boost to income for all working Americans.
While the minimum wage was thwarted in the Senate by the cloture rules, this isn’t possible with Equality Payments. Direct payments passed through reconciliation in the ARP. There’s no material difference between a direct payment to a working-age adult and a direct payment to an American citizen for covid relief. There’s no difference between Equality Payments and increases to the child tax credit, in terms of how they qualify for reconciliation.
The only thing stopping Equality Payments right now is getting 50 Democratic Senators on board to pass this legislation.
What do these payments mean for workers earning the minimum wage? If you are working 40 hours/week at federal minimum wage, you make $290/week. Let that sink in for a moment. Is there a single reader here who can make ends meet on $290/week?
But let’s say you also got $300/week in your Equality Payment. Now, you would have $590/week income, which is the equivalent of $14.75/hour. This nearly reaches the goal of $15/hour, without changing the minimum wage at all.
There are about 212 million Americans who fall into this age group*, and I suggest we start with $100/week payments, increasing the amount each year until we achieve a high enough Equality Payment for all Americans to have a suitable minimum income. One hundred dollars a week for each of these people is about $21 billion per week, a little over a trillion dollars per year. This is on par with what we spend on national defense (if you total up what we actually spend, not just the Pentagon budget). So, this is an entirely feasible amount.
To pay for Equality Payments, we should increase corporate taxes. This increase should come with a graduated schedule for corporate payments, like we had before the Republicans messed with the tax system in 2017. We should make sure small businesses are not hit with large tax increases. A good tax schedule would benefit small businesses by increasing the money workers have available to spend without unduly taking money from small businesses to make it happen.
The reason we need these payments in the first place is because of gross under-payment of workers. Business interests in this country have systematically chipped away at workers’ rights. They combined to make trade unions in the private sector all but non-existent. They worked to get favorable trade laws, so that much of the production previously done in the U.S. has been shipped to other countries, putting downward pressure on wages. And, of course, companies have automated, making jobs harder to find and more expensive to train for.
All these factors have systematically destroyed worker’s ability to seek higher incomes. While productivity has skyrocketed, all those gains went to businesses and none to workers.
The only means left for workers to negotiate wages is to do so using the government for bargaining. Equality Payments are the natural result of hollowing out workers’ bargain position. The only means left to keep from starving is to set wages by law, and since business interests blocked an increase in the minimum wage, Equality Payments are the only means remaining to fix the problem.
One area of particular concern is the gig economy, which exploits a vast workforce of “independent contractors” to avoid collective bargaining, workplace and pay regulations, and the need to provide retirement and healthcare benefits. If companies have to pay through taxes to support minimum income for all workers, at least Equality Payments would provide some of the income the gig companies don’t.
And, speaking of healthcare, the need for a higher minimum income would be minimized by providing fair, affordable, and universal healthcare through a system like my recommended Healthcare for All proposal. In addition to increasing minimum income, we should decrease family costs.
Details: Equality Payments would go to full U.S. citizens, either by birth or by naturalization. They would be for all adults ages 18 through 67 (the current retirement age for Social Security). They would be tax free for people in terms of the federal personal income tax. (Congress should pass separate legislation making them tax free at the local and state levels, but that cannot be done through reconciliation.) These payments should be $100/week at a minimum to start with, and should increase by possibly $80/week each year until workers are receiving the equivalent of $25/hour (taking the minimum wage into account). They should not be counted for any other benefits, including SSI, SNAP, or any other federal program. This is intended to provide an unencumbered payment to every working-age American, so that they can have at lease enough to get by, even if they are working at a minimum wage job.
One of the huge advantages of Equality Payments is that they do not discourage people from working. That’s because they would go to both the employed and unemployed. The wage incentive would still exist for everyone. It’s just that now you could take a minimum wage job without living on the streets, perhaps.
There are fundamental questions of equality answered by Equality Payments. While a raise in the minimum wage helps people who are working, all the systemic biases that work against women and people of color in the workplace are reinforced by an increase to the minimum wage. Not so with Equality Payments.
- You get the same Equality Payment regardless of whether you are a woman or a man (or even non-binary).
- You get the same Equality Payment regardless of your race.
- You get the same Equality Payment regardless of whether you are a parent or not.
- You get the same Equality Payment regardless of whether you were born in the U.S. or are a naturalized citizen.
- You get the same Equality Payment regardless of whether you work inside or outside your home.
Equality Payments do not discriminate against you on any basis (other than being working age).
In this sense, Equality Payments are a great equalizer. They aren’t going to suddenly make up for historical injustices, of course. But over time they would tend to eliminate them.
Democrats should put forward Equality Payment legislation in Congress, and press for it to be included in the next round of reconciliation.
* From 2019 figures from Annual Estimates of the Resident Population by Single Year of Age and Sex for the United States: April 1, 2010 to July 1, 2019, at U.S. Census page 2019 Population Estimates by Age, Sex, Race and Hispanic Origin
June 25, 2020
The 2019 total for age groups 18-67 is 211,999,213. This is an upper bound on the total, because not all people in the census data are U.S. citizens.