TIME Business

Labor Day: Raising the Minimum Wage Stiffs the Poor

Demonstrators take part in a protest to demand higher wages for fast-food workers outside McDonald's in Los Angeles on May 15, 2014.
Demonstrators take part in a protest to demand higher wages for fast-food workers outside McDonald's in Los Angeles on May 15, 2014. Lucy Nicholson—Reuters

There are at least three better ways to help low-income workers — and few ways that are worse

Another Labor Day, another bold plan to increase the minimum to help the working men and women of America!

On Monday, Los Angeles Mayor Eric Garcetti will announce a proposal to jack his city’s minimum wage from $9.00 all the way up to $13.25 over three years. That puts him ahead of President Obama, who has called for goosing the federal minimum wage from $7.25 to $10.10.

Increasing the minimum wage is typically sold as a way of aiding poor people — LA business magnate and philanthropist Eli Broad says Garcetti’s plan “would help lift people out of poverty.” But it’s actually a pretty rotten way to achieve that for a number of reasons.

For starters, minimum-wage workers represent a shrinking share of the U.S. workforce. According to the Bureau of Labor Statistics (BLS), the percentage of folks who earn the federal minimum wage or less (which is legal under certain circumstances) comes to just 4.3 percent of hourly employees and just 3 percent of all workers. That’s down from an early 1980s high of 15 percent of hourly workers, which is good news — even as it means minimum wage increases will reach fewer people.

What’s more, contrary to popular belief, minimum-wage workers are not clustered at the low end of the income spectrum. About 50 percent of all people earning the federal minimum wage live in households where total income is $40,000 or more. In fact, about 14 percent of minimum wage earners live in households that bring in six figures or more a year. When you raise the minimum wage, it goes to those folks too.

Also, most minimum-wage earners tend to be younger and are not the primary breadwinner in their households. So it’s not clear they’re the ones needing help. “Although workers under age 25 represented only about one-fifth of hourly paid workers,” says BLS, “they made up about half of those paid the federal minimum wage or less.” Unemployment rates are already substantially higher for younger workers — 20 percent for 16 to 19 year olds and 11.3 percent for 20 to 24 year olds, compared to just 5 percent for workers 25 years and older — and would almost certainly be made worse by raising the cost of their labor by government diktat. While a number of high-profile economists such as Paul Krugman have lately taken to arguing that minimum wage increases have no effect on employment, the matter is far from settled and basic economic logic suggests that increases in prices reduce demand, whether you’re talking about widgets or labor.

Finally, there’s no reason to believe that people making the minimum wage are stuck at the bottom end of the pay scale for very long. According to one study that looked at earning patterns between 1977 and 1997, about two-thirds of workers moved above the minimum wage within their first year on the job. Having a job, even one that pays poorly, starts workers on the road to increased earnings.

If we want to actually raise the standard of living for the working poor via government intervention, the best way to do it is via transfer payments — food stamps, housing subsidies, or even plain cash — that directly target individuals and families at or below the poverty line.

University of California sociologist Lane Kenworthy, a progressive who has called for a more generous social safety net, argues that virtually all increases in income for poor families in the U.S. and other wealthy countries since the late 1970s have been a function of “increases in net government transfers — transfers received minus taxes paid.” That’s partly because workers in poor households often have “psychological, cognitive, or physical conditions that limit their earnings capability” and partly because today’s “companies have more options for replacing workers, whether with machines or with low-cost laborers abroad.”

To be sure, arguing that you want to increase direct aid to poor families doesn’t give a politician the same sort of photo-op as standing with a bunch of union leaders on Labor Day and speechifying about the urgent need to make sure an honest day’s work is rewarded with a living wage.

But making just such a case could have the benefit of actually helping poor people in the here and now. Certainly a savvy politician could sell that to voters who know the value of hard work — and the limits of economic intervention.

TIME Opinion

Why Kirsten Gillibrand Should Keep Her Harassers’ Names Secret

She knows who they are, and they know she knows. America is half female, and a third obese. Checkmate.

Sen. Kirsten Gillibrand (D-N.Y.) revealed in a new book excerpt Wednesday that some male colleagues had called her “porky,” “chubby” and “fat.” Naturally, a shocked and offended public is demanding her harassers be brought to justice. Get the pitchforks! And the regular forks! Specifically, some male journalists are asking that Gillibrand name names, because they are so deeply concerned with curbing sexual harassment in American government:

Even I tweeted yesterday that we should try to guess the culprits, before I realized that that information is infinitely more valuable if it’s kept a secret.

Kay Steiger at Talking Points Memo wrote Thursday that demanding the names suggests we don’t believe Gillibrand, or we’re telling her not to speak out unless she goes whole hog with total transparency. Besides, she rightly points out, men who harass women rarely face major consequences.

But there’s another reason Gillibrand shouldn’t reveal the name of the colleague who told her not to lose weight because “I like my girls chubby.” It’s a total power move. She knows who they are. They know she knows. Checkmate.

Which means somewhere on Capitol Hill, the hapless male Senator who called Gillibrand “porky” is probably cowering in his office, running that interaction in his head over and over again. “How can I spin this?” he’s thinking, “Could I make this about Michelle Obama’s fat-kids-thing? Could I say I was making a point about pork-barrel spending? Where is Olivia Pope when you need her?” Sweat is pouring off his brow, he’s wiping his forehead with his red-and-blue tie, he’s trying desperately to remember whether he pinched her arm or her butt that one time in the House gym. If Gillibrand exposes him, he’ll have a tough time winning over pretty big portion of the electorate: women (more than 50% of the U.S. population) and fat people (more than a third of all Americans.)

Suddenly, a text appears on his phone. “Hey Porker” and then, as a quick follow-up, “;)” He’s in Gillibrand’s house now.

Now, if Gillibrand’s bill to revamp sexual assault reporting in the military comes to the floor again, she can count on a vote from Mr. “Porky.” Need some muscle on a bill to protect contraceptive rights? The guy who called her “Honey Badger” will lend a hand. Maybe the genius who called her the “hottest member of the Senate” could vote with her on climate change.

Even Nancy Pelosi says that Gillibrand’s decision whether to name her harasser is her decision, “but the fact is they know who they are.” Burn.

Revealing her harassers would satisfy our curiosity and expose some senators for the jerks they are, but it’s much better in the long run for Gillibrand to keep their names secret. Exposure could cause some political turmoil for her colleagues, but Steiger is right that it’s more likely to blow over without costing anyone their seat. The more powerful choice is to describe the harassment without naming names, generate public outrage about the treatment of women in government and then use it to persuade the guilty parties to vote the way she wants them to.

Besides, like most scandals, an element of secrecy adds to the power of the charge, and makes Gillibrand seem more dignified. If she appeared on the cover of People next to a block quote that said, “Senator So-and-So Called Me Fat!” she could risk being seen as whiney or petty, and the story could quickly devolve into tabloid fodder. This way, she holds all the cards and maintains control of her image.

It’s what Olivia Pope would do.

TIME conflict

This 75-Year-Old Map Shows Europe ‘Ready for War’

A portrait of a world days away from combustion

The declarations had not yet come, but on Aug. 28, 1939, Europe already knew war was on its way. On that day, 75 years ago, the armies that would fight what became World War II had gathered.

Just how many soldiers that meant differed by nation, as TIME pointed out to its readers with the map below, which ran in the Sept. 4, 1939 issue. The annotated chart also provides evidence that, no matter how many men were under arms, there was no way for the continent to be entirely ready for what was to follow. In Poland, for example, President Ignacy Moscicki was said to have told Roosevelt that he was willing to negotiate with Germany. By the time Sept. 4 came around — the magazine arrived on stands before then— that willingness had already proved pointless.

On desktop, roll over the map to get a closer look. If you’re reading on a mobile device, click to zoom.

TIME

Stay tuned next week for further coverage of the 75th anniversary of the beginning of World War II.

TIME politics

A Battle of Two Veterans

In an edgy political year, a former Marine tests a longtime Democratic pol for a seat near Boston

I first wrote about former marine captain Seth Moulton three years ago–and he got ticked off at me. The story was about the leadership potential of the post-9/11 generation of veterans. I described Seth, who is 35, as “the” Harvard valedictorian in June 2001. “That’s not right,” he corrected me. “I was a commencement speaker. There were others. You make it sound like I’m bragging.” I wasn’t surprised that he got up in my face, though. When I’d first interviewed him, he said of his generation of veterans, “We hate the divisive politics of the baby-boom generation. They’re running the country into the ground.” Oof, I replied.

Moulton’s commencement speech was notable because he used the occasion to announce that he was joining the Marines. He said it was his civic responsibility to serve his country. If he didn’t, someone else would have had to take his place in Iraq, a war he thought was “crazy.” He served four tours there, the first two as leader of a combat platoon involved in heavy fighting. But Moulton’s real distinction was his ability to put together teams of Iraqis to build things. General David Petraeus heard about this and asked Moulton to assemble a team–architects, engineers, construction workers–to build a fort on the Iran border. He would be competing against an American private contractor, who had won a similar contract on the border. Moulton’s Iraqi team finished the job in one-third the time as the private contractor and at one-fifth the cost.

Three years later, moulton is running for Congress in Massachusetts’ Sixth District, which covers the suburbs north of Boston. He is running as a Democrat against John Tierney, 63, a nine-term Democratic incumbent. The winner of the Sept. 9 primary will face Richard Tisei, a formidable moderate Republican who is gay and who nearly beat Tierney in 2012. I know the district well, having begun my career covering politics in Peabody, Mass., centuries ago. Indeed, I covered Tierney’s uncle: city councillor James “Silver Fox” Tierney, of whom the city purchasing manager once said, “If we’d had the wisdom to send the Silver Fox to the [state legislature], he might have put half the city on the payroll.”

That is what politics is like in Boston, or used to be. John Tierney isn’t as colorful as his uncle. He has been reliable but not particularly inspiring. He has been a lockstep liberal vote. When you ask him about the paralysis in Washington, he will cite several recent cases of bipartisan triumph–the Veterans Affairs reform bill–but ultimately blames it all on the Republicans, with some good reason. He is a strong favorite to win the primary, well organized, well funded and well endorsed, by Senator Elizabeth Warren among others.

But he has two very serious problems. The first is the tinge of corruption, which stems from his wife’s rather sketchy family–two brothers, one on the lam in Antigua, who were indicted for their involvement in illegal gambling activities. Tierney’s wife Patrice pleaded guilty to helping her brother file false tax returns as part of the case. The brothers said the Congressman knew everything. A close friend of Tierney’s described the brothers as “dirtbags” who were getting back at Tierney because he refused to help them. The scandal was the big issue when the Republican Tisei nearly beat Tierney in 2012. It remains semitoxic.

In August, retired general Stanley McChrystal endorsed Moulton–the general’s first venture into partisan politics–and said the race was about “character.” I asked Tierney what he felt about that, and he said, “Well, [Moulton] worked for the guy.” Which was not true: McChrystal noted how painful it was for an Army officer to endorse a Marine.

Tierney’s other problem is that this may just be the year when the public starts to toss out incumbents on general principle. I saw several people approach Moulton during a day of campaigning and tell him that it was time for Tierney to go. Moulton has, sadly, become more prudent about what comes out of his mouth–and he has refused to distinguish himself from Tierney on most issues. He’s running on freshness and dynamism. He’s shown some of that in his campaign, joining his staff and volunteers in public-service projects throughout the district. And with more decisions looming on Iraq, he says, “the veterans on the committees that make those decisions shouldn’t only be Republicans.”

At a lovely Democratic Party reception in Gloucester harbor, the local establishment came together to support Tierney. He gave a relatively rousing stump speech, but his friends seemed worried. Jean Villa, a local activist who ran his first campaign, said, “I’ve been talking issues with him forever. He knows his stuff.” But, she added, “I always have a sense of how a race is breaking. This time, I’m just not sure.”

TIME politics

Mitt Romney Took the ALS Ice Bucket Challenge With Some Help From Paul Ryan

His hair stayed perfect

Former presidential candidate Mitt Romney went were his opponent, President Barack Obama, dared not go and took the ALS Ice Bucket Challenge — with a little help from his former running mate, Rep. Paul Ryan.

Romney accepted the challenge from Hewlett Packard CEO Meg Whitman, Sen. Rob Portman, and Salt Lake City resident Creighton Rider, who suffers from ALS. He nominated his wife Ann Romney and comedian Jason Sudeikis, who played Mitt on SNL.

Are we the only ones who think his hair looked even better after the ice bucket dousing?

TIME politics

Why the Government Is Terrible at Helping You Get a Job

US-POLITICS-HR 803-OBAMA
Vice President Joe Biden watches as President Barack Obama speaks during a signing ceremony for H.R. 803, the Workforce Innovation and Opportunity Act, on July 22, 2014 in the South Court Auditorium of the Eisenhower Executive Office Building, next to the White House in Washington, DC. MANDEL NGAN—AFP/Getty Images

Federal job training programs are stuck in time

This summer, Congress enacted the Workforce Innovation and Opportunity Act (WIOA), which governs the $3 billion or so spent each year by the federal government on job training. Secretary of Labor Thomas Perez announced that the Act would bring U.S. job training into the 21st Century.

I started in the public workforce system in 1979 with a community job training agency and have seen the system improve over the years. Today’s system is more focused on linking training to jobs, in involving employers, in making data on job placement rates more transparent. The new legislation helps nudge along these improvements.

However, WIOA will not significantly change the system or outcomes. Like its predecessors, the Job Training Partnership Act (1982) and the Workforce Investment Act (1998), WIOA involves modest adjustments to job training approaches (despite hundreds of meetings, conferences, and discussions). The same forms of recruitment, assessment, training, and placement will continue, usually by the same training and placement agencies.

Accompanying the enactment of WIOA, Vice President Joe Biden released a highly touted report on the future of job training, “What Works in Job Training: A Synthesis of the Evidence.” The report is mainly a rehash of the same ideas—sector-based training, employer-driven training—that were being discussed in 1979. It’s filled with empty job training government-speak, such as calls for “coordinated strategies across systems” or “flexible, innovative training strategies.”

In contrast to the limited change in the public workforce system, the private sector job training and placement system today is a frenzy of entrepreneurship, creativity, and energy. Much of this entrepreneurship is centered on Internet job training and placement tools.

A recent study by Transmosis, a nonprofit of tech entrepreneurs working on labor and employment, identified over 100 recently established websites aimed at improving the ability of job seekers to identify and apply for jobs, and/or improving the ability of employers to identify candidates who would be good fits. New websites are launching each week.

Some of these websites target specific industries and occupations, such as Doostang (finance) and Proven (hospitality). These sites can only succeed with the participation of employers, so their success hinges on deep knowledge of the industry and what businesses need. Other websites, such as MindSumo, Take the Interview, and Careerflo, enable job seekers to go beyond the traditional resume and supplement their applications with video demonstrations, interviews, and portfolios. Still others, like YesGraph and Work4, expand the ability of job seekers to draw on referrals.

There are websites that are trying to expand the opportunities for internships (InternBound, Koofers, LaunchPath Project) and ones trying to expand the opportunities for project-based work (TaskRabbit, Thumbtack). There are more than 20 major websites aimed at helping job seekers better set and manage career goals.

These Internet tools are aimed at generating revenues, as they must be. But talk to the entrepreneurs behind them and you hear a social mission: improving the labor exchange, matching job seekers and employers, or giving job seekers options beyond the black holes of traditional job boards.

For example, Workpop.com is a Los Angeles start-up founded by Chris Ovitz and Reed Shaffner, who see a better way than the online job boards to connect entry-level restaurant workers (busboys, waiters, bartenders) to job openings. Their site enables workers to apply for jobs through their phones, to store resumes on the site, and to make videos demonstrating what motivates them to do their jobs. Workhands.com, a start-up in San Francisco, is a type of LinkedIn for skilled workers in crafts such as carpentry, welding, and automotive repair. Akimboconnect.com, a start-up in New York and California, helps workers with disabilities better showcase their skills, and helps employers seek out such workers.

To be sure, many of these new websites will not be in operation two or three years from now. Employers have limited funds to spend on job placement, and the number of firms already competing for these dollars is far too many. Other attempts to monetize the job placement services have yet to gain traction.

Still, these entrepreneurs are trying to build a better system, and some will succeed, because they are not about meetings, process, forms. They are about enrolling job seekers, testing ideas, pivoting, adapting, moving on to the next idea.

Their enterprises will never replace the low-tech networking and one-to-one job counseling that remain the best route to employment today. Furthermore, they cannot replace the experience and knowledge that the public workforce has built over the past five decades.

Indeed, the most promising path for better job placement is to integrate the old government workforce system with the innovation of private-sector entrepreneurs. This is starting to happen in Southern California. The South Bay Workforce Investment Board (SBWIB), which oversees the public workforce system in nine cities in south Los Angeles County, has joined with Workpop.com to increase hospitality industry placements, especially for entry-level workers. Workpop is not receiving any public funds—but it is drawing on SBWIB’s research on the hospitality sector and its ability to identify job seekers. SBWIB and its jobseeking clients benefit from Workpop.com’s Internet and mobile tools.

SBWIB director Jan Vogel has been in the training field for nearly 40 years. Rather than be dismissive of the new entrants, he welcomes them. “Partnering with these entrepreneurs enables our job centers to reach more companies and individuals faster and more effectively,” he said. “The new companies optimize the technological spirit that is exploding in California. ”

Michael Bernick is the former director of California’s labor department, the Employment Development Department, and has been involved in job training and placement since 1979. He currently is a Milken Institute Fellow and a contributing editor at Zocalo Public Square, for which he wrote this.

TIME States

See Governor Rick Perry’s New Mugshot

+ READ ARTICLE

Texas Governor Rick Perry indictment over charges of alleged abuse of power left him required to something not common of a sitting governor: take a mugshot.

Perry turned himself in to have his mugshot taken on Tuesday at the Travis County Courthouse in Austin, Texas.

Perry ardently objects to charges laid out against him by the Travis County District Attorney. He stated on Tuesday that he remained confident because of his belief that “the rule of law would prevail.”

Perry followed up his trip to the courthouse with a trip to an ice cream shop.

TIME Opinion

Why Troubled Politicians Blame Women Even When It’s Not a Sex Scandal

Former Virginia Gov. McDonnell And Wife Appear In Court For Federal Corruption Case
Former Virginia governor Bob McDonnell and his wife Maureen leave the court in Richmond, Va., on Jan. 24, 2014 Mark Wilson—Getty Images

The trial of former Virginia governor Bob McDonnell shows that it's convenient to have a female scapegoat

Updated Aug. 20, 10:10 a.m. E.T.

Men have been blaming their screwups on women ever since the Garden of Eden. Because Adam totally didn’t mean to eat that apple! He only did it because that crazy Eve chick tricked him into it. She must have had a crush on the snake.

This week, former Virginia governor Bob McDonnell’s defense team started bringing witnesses to testify about Maureen McDonnell’s craziness and the former governor’s saintliness. The couple is facing federal corruption charges related to luxury gifts and loans they accepted from a political donor. The defense strategy so far has been to pin the blame for the whole mess on the ex-governor’s wife, saying she had a “crush” on big donor Jonnie Williams, but wasn’t a public official herself so lavish presents to her don’t count as corruption.

Williams, who testified for federal prosecutors under a generous immunity deal, denied any romantic intrigue with Mrs. McDonnell, saying his relationship with the family was a business transaction to help sell health supplements through his company, Star Scientific. “I thought the governor could help bring this product to the marketplace, and it was not the right thing to do,” he testified.

But the defense is arguing that the governor didn’t have anything to do with the $165,000 in cash and gifts that Williams gave him over a two-year period, it was just little ol’ Maureen being a silly woman in love. Love makes women dumb, right?

Longtime McDonnell aide Janet Vestal Kelly testified for the defense on Monday, calling the former governor “Mr. Honest,” but said his wife was “divaish” and “pathologically incapable of taking any responsibility.” She explained that it was “well known” that Maureen McDonnell would “hide things,” and that she seemed “kind of flirty” with Williams. Kelly said she didn’t want to “pile on” the former Virginia first lady, but that her staff even worried that Maureen McDonnell might be mentally ill and they once staged a mutiny because she was so difficult to work for. The defense also presented a letter signed by Maureen McDonnell’s staff detailing the “worst kind of bullying.” And on Tuesday, Maureen McDonnell’s sister-in-law, also named Maureen McDonnell, testified that she was “very manipulative, very unpredictable and very deceptive.” Suddenly, it’s the first lady’s personality that’s on trial, not her husband’s role as an elected official.

It’s possible that Maureen McDonnell, the former governor’s wife, is the lovesick crazy woman the defense team is making her out to be (she did text Williams: “I just felt the earth move, and I wasn’t having sex” after an earthquake.) But it’s also possible this is an elaborate ruse to blame the wife in order to get both McDonnells out of some serious prison time. (They face 14 counts of public corruption, obstruction of justice and lying on financial documents.) This could be a clever experiment in political alchemy: by transforming a corruption scandal into a sex scandal, it puts the focus on the woman’s behavior instead of the money trail. And it makes sense: sex scandals are easier for the public to understand, and blaming the woman tends to take some of the heat off the man — just ask Paula Broadwell or Rielle Hunter.

But now “blaming the woman” (or using a woman’s behavior to distract pesky critics and prosecutors) is becoming a catchall strategy for exonerating male politicians from calamities that might not have much to do with sex at all. New Jersey Governor Chris Christie said he was “blindsided” by the scandal surrounding the George Washington Bridge closures in Fort Lee, N.J., which he says was orchestrated by his aide Bridget Anne Kelly (who was later publicly shamed for a “personal relationship” she had with another staff member). Chinese politician Bo Xilai last year blamed his “crazy” wife for embezzling government money and taking bribes (she was convicted in 2012 of murdering a British business associate). Newt Gingrich staffers blamed the collapse of his 2011 presidential campaign on a takeover by his wife Callista. And former Alaska Senator Ted Stevens blamed the $250,000 worth of home renovations from a wealthy oil contractor that led to federal corruption charges in 2008 on his wife Catherine (an investigation later found that prosecutors withheld evidence that would have helped Stevens, who lost his Senate seat and then died in a 2010 plane crash). None of these were explicitly sex scandals, but they were still spun as the woman’s fault.

Of course, the woman isn’t always blameless — for Stevens, at least, there might have been some truth to his claim that his wife paid the renovation bills and he might not have known about the thousands of dollars worth of gifts. And it’s possible that Maureen McDonnell did accept Williams’ money without her husband’s knowledge (although this picture of the governor driving Williams’ car makes that seem unlikely). Some lawyers say Bob McDonnell’s “crush” defense is so nutty it just might work, others say it could be the truth. But it’s still a mighty convenient tactic, and it’s not just used by men; Hillary Clinton was all too willing to blame Monica Lewinsky for the affair with Bill, even though Lewinsky was a young, inexperienced intern and Bill Clinton was the President of the United States.

The trend could be an unfortunate by-product of women’s rights: as women are seen as increasingly capable of succeeding, they’re also seen as increasingly capable of screwing up. For example, Mary Todd Lincoln was famous for overspending on White House decorations and falsifying spending records, but Lincoln didn’t try to blame any of his political woes on her (then again Honest Abe had bigger fish to fry).

There’s an old saying that says, “Behind every great man, there’s a great woman.” These days, it seems the inverse is also true: in front of every embarrassed man is an embarrassing woman.

TIME Economics

The Wealthy and Powerful Discover Inequality

President Obama Hosts Summit On Working Families
Goldman Sachs Chairman and CEO Lloyd Blankfein participates in a panel discussion on 'Talent Attraction and Retention' during the White House Summit On Working Families at the Omni Shoreham hotel June 23, 2014 in Washington, DC. Chip Somodevilla—Getty Images

Even the rich are admitting that inequality is bad for business

As the Gilded Age has been peaking, a number of the rich and their foundations have been helping the hungry, the sick, the homeless, the battered, the less educated and veterans in need of opportunity. However, aside from the palliative approach, “the system,” as President Franklin D. Roosevelt liked to call it, until now, has had no serious proactive strategy to address the inequality in incomes and wealth.

The dominant social message has been that for most of the population – the huge middle class – one can work hard and raise oneself up through education, solid contributions, good performance and, ultimately, economic rewards that will be the fruit of these virtues and labor. But there are signs everywhere that this is no longer the case. Wages are flat, returns to education are down, and solid-paying jobs with benefits are the old, not the new, norm. As recent data from the U.S. Department of Commerce shows, employee compensation – wages and benefits – comprise an ever-smaller piece of the economic pie, while wealthy Americans collect significantly more in capital income – interest and dividend payments. As Brookings Institution labor economist Gary Burtless put it, “everything’s coming up roses for people who own a chunk of American capital.” The structure of the economy rewards those who own capital and derive income from that capital. Work hours alone simply do not cut it. Automation and robotization will only accelerate the process.

Who has stepped forward to analyze the problem and start a national conversation about the solution? Many have, but one recent surprising group of trenchant commentators this summer is the wealthy and powerful themselves. In defining the problem of inequality in early June, Goldman Sachs Chairman and CEO Lloyd Blankfein told CBS This Morning that inequality is “destabilizing” and “responsible for the divisions in the country. The divisions could get wider. If you can’t legislate, you can’t deal with problems. If you can’t deal with problems, you can’t drive growth and you can’t drive the success of the country. It’s a very big issue and something that has to be dealt with.” In mid-July, Bill Gross, a billionaire in Southern California and the founder of PIMCO Asset Management, headlined a USA Today op-ed with the claim that “Economic inequality threatens capitalism.” In the piece, Gross goes on to argue that “income equality is good for business” – underscoring this group of observers’ concern that inequality threatens economic growth – and says that solutions to inequality should guide a Republican platform. In the July issue of Politico, billionaire Nick Hanauer wrote a “memo” to his “fellow zillionaires.” As the first nonfamily investor in Amazon.com and founder of an Internet company that sold to Microsoft to for $6.4 billion, Hanauer represents the high technology side of “the system.” His message would be downright scary if it were not written by a billionaire himself. In his piece, “The Pitchforks Are Coming…For Us Plutocrats,” he wrote, “Our country is rapidly becoming less a capitalist society and a more feudal society…. No society can sustain this kind of rising inequality.” In mid-July, Walmart President and CEO Bill Simon commented to Reuters and CNBC that its lowered sales were because the “middle and down are still pretty challenged.” Even philanthropy magazines are filled with worry about the inequality conundrum. Alms for the poor and vulnerable just won’t cut it anymore.

This group has not been shy about discussing possible solutions. Bill Gross called attention to Henry Ford’s “broad-based” solution to expand incomes early in the last century – which echo the generous cash profit-sharing checks on top of wages, which every Ford worker still enjoys today – and suggested large increases in the minimum wage. While not offering specifics, Hanauer suggests our policies must “change dramatically,” and he admits the performance/reward gap of the new economy by saying that “I’m not the smartest guy you’ve ever met, or the hardest-working.” Blankfein’s solution is to “grow the pie” and “distribute it in a proper way.” He lays out this criterion for a solution: “If you grow the pie and too few people enjoy the benefits of it and the fruit, then you have an unstable society.”

The insights from the top do not let up, and their analyses are wide-ranging and sharp. However, “the system” has not been systematic about exploring solutions. If one trolls the websites of the foundations of the rich and powerful, there is a decided lack of willingness to look at systematic economic solutions. Occasional ideas should not be mistaken for careful and deliberate problem-solving on this complex problem.

We will never solve the problem of inequality unless we develop mechanisms for the middle class to share in the ownership and profits – the capital – of the economy. The reason is that the private ownership of capital assets, such as businesses, stocks and bonds, are highly concentrated. Moreover, in 2011 almost 90% of all capital gains and all capital income, such as dividends and interest, went to the top 20% of the population.

One possible avenue is to apply to the middle class at large the approaches that the rich and powerful apply to themselves. Most of their income is from having a share of ownership and profits in businesses. In order to give middle class workers access to these types of capital income, we must dramatically expand the tax incentives for businesses of every size to offer shares of ownership to all of their employees. This ownership can come in the form of grants of restricted stock, stock options, ESOPS (Employee Stock Ownership Plans) and profit sharing, a la Henry Ford. There is a long history of citizen shares in American workplaces since the late 1700s, with many worthy examples among the Fortune 500, high tech firms and the thousands of privately held corporations offering generous ESOPs.

Shares of profits and equity at the workplace will help, but will not be sufficient because much of the population works in the public sector – in the military, government or non-profits. Big ideas are necessary. For soldiers and teachers and others, we need to explore how to apply the lessons of the Alaska Permanent Fund Corporation to the rest of America. The Corporation receives oil and mineral rental, royalty and revenue-sharing payments from corporations allowed to use Alaska’s resources. This capital is invested in a diversified portfolio so that every Alaskan citizen can receive an annual dividend check.

To replicate this arrangement here, assets and leases of the Federal government and states should be made available to private corporations – similar to the Alaskan initiative – in order to pay citizen dividends nationwide. The wind and solar energy fields popping up around the nation should be largely owned by these corporations, as should the wireless spectrum controlled by the Federal Communications Commission and other future technologies receiving tax subsidies funded by citizens at large. States and cities should stop the corporate welfare of huge tax abatements and receive ownership shares to be deposited in citizen share corporations. For example, the DeBlasio Administration should do a top to bottom review of New York City’s tax abatements and monetize them as equity shares for the middle class. These corporations can be licensed by the Treasury and borrow funds to invest in the new technologies and robots of the future. As a sign of hope for the younger generation, we should revisit the idea of Baby Bonds, where an account is set up for each newborn using the same low interest loans that the Treasury and the Federal Reserve recently used to bail out Wall Street and revive its capital ownership. These Baby Bond funds would also be privately managed to be invested in assets that pay regular capital income. Relatives and the rich could make deposits to the accounts, the children could learn how to track them in elementary school, and the dividend income could supplement wages in adult life.

If citizens do not privately own more of the economy, the flat wages of the middle class will never dig us out of inequality. It is time for the rich and powerful to encourage both political parties to set up a national bipartisan commission to explore these and other useful ideas. Charity and philanthropy will never be enough.

Joseph Blasi’s latest book, The Citizen’s Share: Reducing Inequality in the Twenty First Century (written with Richard B. Freeman and Douglas L. Kruse) tells the story of the American history of the shares in business and the economy. Blasi is the J. Robert Beyster Distinguished Professor at Rutgers University.

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