I need a little help this week. I was unable to attend the World Economic Forum, held each January at Davos in the Swiss Alps. The crème de la crème were there, of course, and concerned about the stagnant state of the global economy, which is in a rut of slow growth and lagging wages despite the fabulous wealth of a few.
Jeff Greene, a Florida billionaire who arrived on his private jet with his family and two nannies, warned in an interview that for America especially, "lifestyle expectations are far too high and need to be adjusted so we have less things and"—he added hopefully—"a better existence."
I'll fly commercial if he will.
Snark aside, this year every serious person must be heard about the wealth and income inequality that is spiraling out of control in the U.S. and around the globe. A new report by Oxfam noted that the richest 80 people in the world are now worth as much as the 3.6 billion people who constitute the lower economic half.
The 80, including 14 Americans—seven in the top 10—have seen their wealth double since 2009. Wealth for the 3.6 billion declined.
Even Mitt Romney, auditioning again for the Republican presidential nomination, observed that, "Under President Obama, the rich have gotten richer, income equality has gotten worse and there are more people in poverty than ever before."
The question is, what to do about it? Jeff Greene's presence in Davos reminds me that, when the Great Recession hit, U.S. policy—Republican and Democratic—was to save the lenders, not the borrowers. Greene, a real estate investor, amassed a fortune by betting against (buying short) the subprime mortgages that helped bring Wall Street to the brink of collapse. There were winners and losers in the casino, which is how markets are supposed to work.
But when the biggest losers turned out to be major American banks, the U.S. government sent them trillions in cash because they were "too big to fail."
Now it's workers who are failing. How about some cash for them?
Here's my plan, and since I didn't get to Davos, I need your help to refine it for Mitt and any other 2016 candidates who want it:
The U.S. government should send money to every adult who works for a living.
Oh, I know, the national debt is too high and you can't just take money from the rich and hand it to everyone else because—well, for one thing, Congress won't allow it. But I'm not taking from the rich—not now, anyway.
I want the government to print up some money, the same as it did for the banks, and mail it to everyone over the age of 18 who works, files a tax return and is not yet collecting Social Security.
Follow the Social Security model and send checks regardless of other income—not based on the recipient's need, in other words—but unlike Social Security, all checks would be equal.
How much? I'm thinking an additional $2 an hour up to 40 hours a week, or up to $80 a week sent to anyone who reports earnings at or above the federal minimum wage. Up to an extra $4,000 a year.
My talking points are:
• The plan rewards work. It isn't welfare. People who can't work or can't find work need a lot more help than $2 an hour—and other programs.
• The plan isn't a subsidy for health-care providers or education or any product or service, because the money goes to workers, not to pay workers' bills. So it shouldn't drive up prices.
• The plan is race-neutral, gender-neutral, and functions regardless of religious preferences. If you work, you get the money. No reason to resent that someone else is getting it.
• At higher income levels, much of what's paid out will come back to the government in higher taxes. So it's less expensive than you think.
• Most will be spent on American products and services, boosting the American economy. It's trickle-up, not trickle-down—or trickle abroad. The federal deficit should come down.
I'm not married to the numbers. Perhaps the supplement should be $3 an hour. Perhaps require a minimum number of hours worked. It's tricky, because some people make a lot of money per hour but don't work many hours. Should they be disqualified?
No, because the maximum for everyone is $80 a week, which for the low-wage worker will be a godsend and for the $1,000-an-hour consultant won't matter much even if she fibs and says she worked 40 hours when she only worked two.
The point is to increase take-home pay substantially for people who don't earn much money, and do it in a way that is uncomplicated and that most of us, when we see it in action, will support. As they do Social Security.
By the way, this is not in lieu of raising the minimum wage. It's in addition to it.
A majority of states (though not, sadly, North Carolina) already set their minimum-wage levels above the federal $7.25; President Obama proposed hiking the federal minimum to $10.10.
So what? Add $2 and make it $12.10 an hour and it's still not enough to raise a family or save for retirement. (Duke University is raising its minimum hourly pay for regular employees to $12 effective July 1. It currently pays $10.91 an hour, minimum.)
In his State of the Union address, Obama proposed new tax credits for working parents, and making community colleges tuition-free. Both are good ideas. Neither will do a lot to create jobs or transform the American economy. Putting another $4,000 into the pockets of every American worker would.
This article appeared in print with the headline, "How to revive the middle class."