Labor Day: Investing in Our Future to Deliver Higher Wages

Fundamental to being American is our desire to work hard and through the fruits of our labor be able to fully participate in the American Dream. A dream inspired by our founders, our Constitution and nurtured by the hard work, courage and sacrifice of Americans across generations. This weekend we celebrate all of the contributions that workers have made to the strength, prosperity and well-being of our country. It’s America’s labor and our determination, persistence and effort that has allowed America to thrive and achieve being the greatest nation on our planet.

Since the 1980’s, we’ve seen a shift in our economy from manufacturing-based to information-based and as a result — some American workers have experienced significant wage gains — while others have had little to no wage growth for decades. American workers are not working any less hard today than they did in the past. In fact, Americans work an average of 47 hours a week according to Gallup and all (full time and part time) U.S. workers average more hours per week (34.4 hours) than their counterparts in Japan (33.25), Canada (32.75), United Kingdom (32.25), and Germany (26.26). Americans are definitely working a lot of hours and working hard, but hard work alone isn’t enough to raise wages across the economy and for all Americans.

Traditionally, the key to higher wages was to increase productivity. A more productive workforce meant that business owners could achieve greater output for a lower cost and had more margin to increase wages. Higher productivity also meant that additional workers wouldn’t need to be hired to achieve the same output, so those wage savings could be passed along to the existing workforce in the form of higher wages. In a traditional manufacturing and people-driven economy this model worked, but our economy has been transformed by technology and we need to adapt to our new economic reality.

Since the mid-1970’s, increases in productivity hasn’t translated to higher wages for all Americans. Technology innovations and increases in automation has driven great increases in productivity, but instead of higher wages — these advancements have eroded traditional labor jobs and have contributed to flat wages for that sector of the American workforce. Conversely, knowledge workers across the economy have seen their wages start to grow again post the Great Recession.

They key to growing the U.S. economy is higher wages for all Americans. This can be achieved with a holistic approach that first recognizes and acknowledges our changing economy and the type of workers that will be in demand in the future. Then we need to develop a plan to help American workers become more competitive, marketable and adapt to this changing economic landscape for 21st century career opportunities. Thirdly, we need to invest in our infrastructure to support a bustling economy of the future that attracts business investment and demand for our growing high-skilled workforce.

The shear rate of change in our economy due to technology innovation has outpaced our ability to keep up and transform our workforce — leading to large pockets of our population struggling to find jobs and grow their wages. The short-term fix is to provide government assistance to those in need, but this isn’t a viable long-term solution. Politicians making false promises of returning to old and outdated industries, jobs and skill sets isn’t going to solve this issue either. Providing free college opens up higher education to all Americans, but is a costly approach that fundamentally doesn’t tackle all of the issues underlying this problem. Finally, tax cuts are another short-term fix that will inject immediate dollars into the economy, but do not incentivize, support and help American workers move into higher paying jobs of the future.

There isn’t one simple, soundbite friendly solution that will solve this issue and help grow wages across America’s hardworking labor force. Instead, we need to promote an agenda that focuses on public, business and personal investment in the following areas:

• Education: We need to build the most effective public, early-to-adult education system on the globe, one that prepares us for a rapidly changing world and enables successful life-long learning without incurring life-altering debt. We must update our education model to provide Americans with the skills and training required to join the labor force, but also to acquire new skills as they progress throughout their career. Americans will require more education than what has been traditionally offered, so we need to innovate and build a system that is cost-effective for both students (and their families) and doesn’t require massive government spending.
• Infrastructure: World-class infrastructure (e.g. roads, broadband internet, water supply, energy systems) attract businesses, since they provide a foundation for building cost-effective and highly productive operations. It also attracts labor to communities, since these are better places to live and have greater opportunity. Investment in our communities becomes vital to bringing economic growth and higher-paying jobs. Our Federal, State and Local governments need to work together to ensure infrastructure across America isn’t crumbling and instead the model for the world. Businesses do not want to deal with power losses due to a faulty electrical grids, wasted hours of workers and shipments stuck in traffic, poor schools discouraging high skilled workers from raising families near their offices, and other issues that arise when government doesn’t properly maintain and invest in infrastructure. In today’s economic reality, businesses can easily move their operations to any part of the world, so we need to ensure businesses want to move to America.
• Government Efficiency: We must bring innovation and efficiency to the Federal government to drive a solid return on investment for our tax dollars, eliminate wasteful spending, ensure regulatory efficiency, so we can sustain taxes at reasonable levels for businesses and individuals. The answer isn’t to simply cut taxes or increase spending, but to find the right balance. Government can be a key partner in developing the economy, but it has to invest in the right activities and be mindful of increasing our national debt and spending outside our means. In the past, cutting taxes had a minimal impact on building infrastructure and helping workers develop new skills required for economic growth. Instead, we saw major impacts on our economy and worker wages when the government invested in massive infrastructure projects such as the Tennessee Valley Authority under FDR and the national interstate highway system under President Eisenhower. Finally, regulations are necessary when business and people do not act in good faith for each other, the public good and those they serve. Unfortunately, regulations are needed, but we must ensure we do not over regulate and add too many costs to government, our businesses and our economy.
• Economic Equality: As we invest in hard working Americans and our communities, we need to ensure that all Americans are rewarded for their hard work and receive equal pay for equal work. This means that we need to invest throughout America and across our diverse communities. Our economic growth plan cannot leave anyone out regardless of race, gender, sexual orientation, religious affiliation, economic status and if you choose to live in a rural or urban area. The advantage of an information economy and knowledge-based workforce is the freedom to live where-ever and not having to be tied to a physical manufacturing plant. We need to embrace new ways of working and the diversity of thought and ideas that comes from a vibrant, diverse workforce.

As we celebrate the accomplishments and hard work of America’s labor force this weekend, we also need to begin thinking about investing in our future. Growing our wages and increasing opportunity is the key to building prosperity for all. Economic growth will not come by chance, but through the right plan, execution and investment. We need to think boldly, innovate and work together to transform our workforce as rapidly as our economy. This will not be easy, but with history as our guide — we know Americans have always been up to the challenge and willing to put in the hard work. In the future, Americans will celebrate our ability to have successfully navigated this time in our history and improved the economic prospects for all Americans.

Also Read by Charlie Breit: Estimated 47% of jobs available today could be automated by 2030

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