 Hi, I'm Pedro Dacosta, Director of Communications at the Economic Policy Institute. Welcome to the State of Working America podcast, where we seek to elevate workers' voices to ensure they're heard in the economic policy debate here in Washington and beyond. Today, it's my pleasure to be joined by Heidi Schierholz, Director of Policy at EPI, and formerly the Chief Economist at the Labor Department under President Barack Obama. And I'm also pleased to have Rami Jackson as my co-host today. He's our Development Associate at EPI. And we're going to talk about all kinds of good stuff, including inequality, worker power, why it's eroding, and how to rebuild it. So thank you so much for joining me, Heidi. Thanks for having me. And I want to start just by asking you very broadly, EPI has been paying attention to economic inequality and issues like that before it was cool, I would like to say. And well before I joined EPI, so I wanted to ask you about why inequality is suddenly in the headlines, why it's suddenly such a big political issue, and whether it really is such a major problem, whether it's overstated. The main thing I would say to it now becoming something that people are talking about a lot is it's about time. It is an enormous problem, the scale of inequality that we see in our country is just breathtaking. And when you think about inequality today, it's actually useful to sort of step back and see where we came from. And if you look, because it didn't always used to be like this. So if you look at the period just past World War II, up until about the 70s, it was the case that when the overall economy grew, everyone saw gains. People at the low end, people at the middle, people at the top, everyone saw gains as the economy grew. And whenever I talk about that, I feel like I do have to step back and say, I am not trying to claim that everything was perfect in the 50s and 60s. There were huge disparities, particularly by race and gender, disparities that exist to this day. So I'm not at all trying to say we need to get back to where we were in the 50s and 60s. But despite those disparities, one thing really did work, that as the overall economy grew, low and middle income people also saw gains. That really, to a large extent, stopped in about the 70s. Since that time, the economy has continued to grow, but that growth has really been captured by the people at the very top of the distribution. And because I'm an EPI-er, I will throw some numbers on this. So since the late 70s, the inflation-adjusted annual wages of the bottom 90%. So that's, you know, everyone in the economy except for the richest 10%. The annual wages of the bottom 90% grew about 20% since the 70s. That's little more than stagnation. It's about a half a percentage point per year in inflation-adjusted terms. The wages of the top 1% grew more than 150% over that same period. And because the inequality in this country has this sort of fractal quality to it, that the smaller and smaller sliver you are at the top, the more and more growth you have seen. So the wages at the top one-tenth of 1% grew almost 350% over this period. So it's just been a breathtaking expansion of inequality over the last 40 years in this country. So could you talk about the forces behind that? Because there's some sense of inevitability in that that it was maybe just the way that capitalism works and maybe unions weren't that effective. And can you talk about the role of kind of the erosion of worker power over those decades and what happened? Yeah, I think that you touched on something that's so important in this conversation because I think the people who have benefited from the rigged economy that resulted in this increase in inequality, they really want us all to think that what's going on is just the natural outgrowth of a modern economy and there's nothing we would really want or are able to do about it. And that's just, it couldn't be farther from the truth. It was just very deliberate policy choices, either of commission or omission that led to where we are today. It is just, I think the key thing is that it is policy failures over the last 40 years that resulted in the rules that govern work in this country just being rigged against working people from their very first day on the job, the whole sort of legal and political framework favors corporate interests that just want to roll back workers' rights and also to make sure that fewer and fewer workers are actually covered by the worker protections of this country and then those workers who remain covered by those protections are often forced to do things like sign away their rights as a condition of employment through agreements that they're asked to sign like mandatory arbitration agreements. And I just, and then the perhaps the largest thing of them all is just the assault on workers' rights to come together to improve their wages and working conditions and has been probably the key factor that has led to rising inequality if you had to pick one. That's the one that has been the biggest contributor. Just the huge assault that we've seen on unions has played a very outsize role in the dynamics that we've seen over the last 40 years. Hi everyone, Rami Jackson here. Heidi, so EPI is strongly backed efforts to raise the federal minimum wage but is that enough? Are we too focused on that? Do we ignore larger structural issues when we do focus on raising the minimum wage? That's a really good question and I would say it's super, super important to focus on the minimum wage but we shouldn't just focus on that. So you make a very good point and just to underscore just how important it is to focus on the minimum wage. It has the real inflation-adjusted value of the minimum wage has eroded dramatically since its peak in the late 60s. It's now more than 25% below in real terms where it was at that time. There's a bill out there that would raise the minimum wage to $15 in 2024 which just so because everyone might not have inflation projections in their mind, that's roughly $13 in today's dollars. So the bill is sort of a $13 minimum wage in some important sense. We estimate that if the minimum wage were increased to $13 an hour, $15 in 2024, that would give over 30 million workers a raise. So it matters. It would get a lot of people, a lot of money in the pockets of people who really need it and are working very hard. But it's not enough. As we discussed, one key factor that led to this rising inequality we've seen over the last 40 years has been the erosion of unions. And so putting policies in place that would boost unionization, which we absolutely could do, would be a really important step that we also need to take. And then there's just a laundry list to undo some of the other factors that have contributed to rising inequality. I sort of mentioned this, but the fact that many more workers are now required to sign mandatory arbitration agreements as a condition of employment, which basically says that if I'm an employer, I'm asking a worker to sign when they walk in the door, if I violate your workplace rights, for example, if I don't pay you what you're owed or I don't give you the overtime when you work more than 40 hours a week, if you are a worker that's eligible for overtime protection, you're not going to take me to court. Instead, we have to deal with that dispute in a system of private arbitration that really favors me as the employer. So that's the kind of thing we could ban on and on and on. There's many levers we could pull to sort of set us on the right track. And you're giving a fairly tame example of the kinds of transgressions that, I mean, we're talking about even sexual harassment might come into the picture and the person might, any kind of abuse, any kind of workplace abuse, they might lose their right to a day in court, right? That's absolutely right. And can you talk a little bit about some of the calculations that you've done just about how many workers are affected by this? I don't think most people even know that they're signing the dotted line when they agree to these things. Yeah, that's a really good point. One of the ways this happens is people, after they have accepted a job, they'll come to their first day of the job when they're signing a whole bunch of forms. At that point, you have very little bargaining power. You've already said no to any other job opportunities you have. You've made a commitment to everything's in place. And at that point, the employer gives you papers and says, by the way, we're asking you right now. We didn't tell you before, but right now we're asking you to sign away your rights to ever take us to court if your rights are violated. This is becoming a more and more common practice. So we did a commission to survey in 2017 that found that more than half of private sector non-unionized workers are subject to mandatory arbitration agreements. And then you can look at where those numbers were 10 years ago, 20 years ago. And if you just do the extrapolation, I project that by 2024, more than 80% of private sector non-union workers will be subject to mandatory arbitration agreement. It's growing that fast. So it's almost everybody. It's getting to almost everybody really soon. So I wanted to ask you a couple more things to unpack the things that you said in your previous answer. One, to Rami's point about structural issues, can you talk a little bit about the profile of people who do earn the minimum wage? Because sometimes there are misconceptions about, you know, people think of a minimum wage worker as a college student who's kind of working a part-time job. But that's not necessarily the case. Yeah, no, and not even in some cases a college student, a high school student working like an after-school job for extra spending money is the kind of thing we hear all the time when people think about who gets a minimum wage increase. It could not be farther from the truth. I don't know if it ever was true, but it's certainly not true today. And we have these great data sets that allow us to really dig in and look at who, you can look at what people are making now and then look at a proposed minimum wage increase and see, okay, if that person, you can look at the demographic characteristics of those people who would get a raise if the minimum wage were increased. And so when you do that, for example, for the $15 in 2024, you find this remarkable profile of somebody who would see a raise. Far from being a teenager, the average age of somebody who would get a raise if the minimum wage were raised to $15 in 2024 is something like 35 years old. It's disproportionately women. It's disproportionately compared to their proportion in the larger workforce. It's disproportionately people of color. It's quite well targeted. There's many, many parents who would see an increase. It really is getting at people who depend on these earnings to make ends meet. So it's far from being, far from having a minimum wage increase go to people who are, they just need extra spending money. It's not important to their families. The majority of minimum wage workers who would, majority of workers who would see a raise if the minimum wage were increased, their families depend on those earnings to make ends meet. Wow, it's really powerful, Heidi. And going back to your previous point about the structural policy decisions being made to basically keep us where we are today. Could you talk about some of the worst examples being made by this current administration that has been pushing against workers and workers' rights? Every single decision President Trump has made essentially has been made with the interest of corporate executives and shareholders in mind, not workers. And the list is very long. One that's gotten a lot of attention has been the tax cuts that went, the vast, vast majority of spending from those tax cuts went to the very wealthy. But there's been a ton of other action in the regulatory space. So for example, the Obama administration passed this rule that would increase the level below which workers are eligible for overtime pay. They increased that threshold. The Trump administration abandoned the 2016 rule that would have increased the threshold and just published a rule that dramatically lowered that threshold. I estimate using the department's own model, I estimate that 8.2 million workers are left behind by that rule who would have gotten new or strengthened protections under the 2016 rule. And just to put another number on it to show that those 8.2 million workers are losing out, the wage gains under the Trump rule are $1.4 billion less annually than they would have been under the Trump rule. So that, then they would have been under the Obama rule. So the new rule by this administration really does, it takes $1.4 billion out of the pockets of workers in 2020. And just sort of the cherry on top, they did not have that rule do automatic indexing going forward. And so that $1.4 billion that's taken out of workers' pockets as a result of this rule just grows and grows over time. So that's one rule. Another big one was the abandoning of the conflict, another big one was the abandoning of the fiduciary rule, what is known as the fiduciary rule. It sounds like a wonky word, but really all it means is that your financial advisor, your retirement advisor would be required just like your doctor, your lawyer are already required to do. Your financial advisor would be required to act in your best interest and wouldn't be able to do things like steer you towards investments that give them a high commission but give you a lower rate of return. That sort of stuff is very commonplace. The rule under the, that the Obama administration put through would have made that illegal. The Trump administration has abandoned that rule and that will cost retirement savers billions. And the list goes on and on. I could just say a couple more that we just dealt with recently. Like it's enormous, but one thing that happened within the last couple of weeks is the USDA finalized a rule related to hog slaughter plants that will reduce the number of government food safety inspectors from hog slaughter plants by 40%. And it removes any limits on how fast the hog slaughter line speeds can go. They already go at breathtaking speeds. It's an extremely dangerous industry and they're just taking the lid off of how fast that can go. That rule will hurt consumers. It will hurt animals and it will certainly hurt workers. And I'll just, I'll just list one more. I really could go on a great length about all these examples, but one more that also just happened. The NLRB just proposed a rule that would say, if it were finalized, that would say that graduate students and undergraduate student teachers and research assistants are not employees of the university where they work. And so that would mean that they would not be able to do things like unionize. So it just is, there's just example after example of this administration choosing to pass proactively do things that hurt workers. So I want to ask you about what seems like the icing on the cake of this anti-worker agenda, which is the nomination of Eugene Scalia to your former employer, the Labor Department. I wanted to ask you just if you could give us a little bit, given your insights of having worked there for, I think, three years, right? Yeah, two and a half. Two and a half years. So give us a sense of the institution, what it's supposed to stand for, and what it means to have someone with a corporate legal background like Eugene Scalia leading that department. Yeah, the phrase that comes to mind when you think of Eugene Scalia as being the Secretary of Labor is just fox guarding the henhouse. That is the situation that we're in with him. Working men and women deserve somebody at the Department of Labor who will actually look out for their interests and protect them from unscrupulous employers, will set strong health and safety standards, will safeguard their retirement security, but Eugene Scalia is not that person. He has built his career representing corporations, not workers, representing financial institutions, representing other business organizations, and he spent his career fighting worker protections like health and safety regulations. He was a big player in fighting that fiduciary rule that we talked about earlier. He's just, it is a real disaster for the working people. I want to get into some specifics because I think you're pretty amazing, right? This gentleman argued that ergonomics was kind of quack science and therefore people who have workplace injuries related to repetitive stress shouldn't really be paid back. I think he was the lawyer for Walmart on a case. Do you remember the specifics of that case? I don't remember the specifics of that one. He was a big lawyer for Walmart and he was also involved with the SeaWorld lawsuit. So the list really goes on and it's fairly egregious. It's colorful. Yeah, it really is. He absolutely has a track record. I mean, it fits with his administration. It's just, it's just many examples of a track record that just puts the interests of bosses over those of workers. And that is not the mission of the Department of Labor. Well, are you encouraged in any way by the upcoming, well, I guess, Democratic candidates supporting workers' rights? Because it seems like the party has been slacking on that for quite a while until relatively recently. Yeah, it's really exciting. It is, you know, it is about time that the inequality has been rising for 40 years. But we really are seeing candidates get out in front of really talking a lot and specifically about what's going on with dynamics of inequality in this country and specifically what we need to do to fix it. And a lot of candidates are putting out really bold proposals, stuff that's doable, but that we haven't seen before to boost labor standards, to boost unionization. I mean, on the union front, we are seeing candidates not just talk about the importance of unions, but actually getting out on picket lines and striking with striking workers. It's just, it's a huge shift. It's really important. I think it is a big, bright spot in where we are right now. And so what are some of the vibrant spots of labor activism that you've been really paying attention to? What really gets you excited? So the teacher strikes of last spring, that felt like a real turning point for me. It was just the energy that those teacher strikes happened really organically. There was a ton of energy, a ton of support for them. They were incredibly courageous and it started in West Virginia, but their courage just bled everywhere and it happened in many more places. They were really, really smart about what they were doing and they really were striking. They care about their own wages. They need higher wages, but not just for their wages, for the common good, for the quality of education, for the kids that they are teaching. Parents were supportive of it. It just was a really exciting time. And just going off of that, I know you can't support specific candidates, but is there any policy or idea that you're seeing related to labor coming from just the variety of different proposals being shot out there that you're really excited about? So one of the things that many of the candidates are now talking about is something that is getting more conversation. It hasn't been really pinned down exactly how this would work, but implementing some mechanism that would help us move from a system of enterprise bargaining, which is where a union organizes individual workplaces to more of a system of sectoral bargaining, where you could have bargaining at the level of the whole industry. Which happens in other countries? Totally happens in other countries, very successfully. It's not something that we've done here, but it is something that candidates are seeing, all right, this is maybe it's time here. So there's a lot of really great discussions about that sort of thing. It's just really exciting. Sorry, what about the notion of workplace democracy? And I've even seen proposals, I can't recall quite from whom, about the notion of rather than having to opt into a union that workers might automatically be unionized. That sounds like fairly far away from where we are now. It certainly is. But how do you view the concept of workplace democracy? Just the idea. Where we are right now is so, so far from that. Where we have good survey data that shows workers who, and we can look at it over time, non-union workers who say that they would vote for a union in their workplace if there was an election tomorrow. And the numbers are huge. They're really high. Workers know that unions would be really important to them sort of getting their fair share of economic growth. But they're thwarted in many ways. When there is an organizing drive at a workplace, employers now typically hire a union avoidance firm, a union busting firm, consulting firm, that just has tried and true playbook for how to keep this from happening. And they throw everything at the organizers to try to thwart the drive. And they have been very successful. And then there's also the case where even when a union does have a successful drive, then employers will drag their feet into being able to actually get to a collective bargaining agreement so workers will actually be able to see the benefit of that union. So just at every turn, democracy in the workplace is not where it should be. So there's many, many policies that we can put in place to reverse some of those trends and get us back to a place where workers really have a legitimate voice at work. So one of the exciting things recently is that we're not just seeing movement as far as activism from unions themselves, but if you think about it, 5 for 15, it became a union movement, but it originally came from non-unionized workers. You have Uber workers organizing, and you even have white-collar Google tech workers organizing. Could you talk about that in the context of API's research on the benefits of unions beyond the people who are actually union members? Yeah, that's really important. So there's two things there that we are seeing in many ways, not just in unions, workers coming together to improve their wages and working conditions. Through Fight for 15, through Google workers walking out because they were not okay with the environment of sexual harassment at the company, et cetera, et cetera, et cetera. There's just a lot of vibrant stuff going on right now. The data are really clear about the sort of spillover effects from unions, and it's in some ways a little bit separate from this issue of workers organizing around other issues. This spillover effect from unions is also talking about the fact that when there's a sector or a place that's highly unionized, non-union workers also benefit because the union then kind of sets the standard in that sector or in that area. So, for example, if I'm an employer and I'm not unionized, but I know that there's a union shop around the block and in order to be able to get and keep the workers that I need, I have to actually pay decent wages, benefits in order to keep my workers from going around the corner to that union shop to get the benefits of unionization. And that effect, that spillover effect, that ripple effect from unions is a really large effect, and it really does underscore the... unions are actually good for all workers, union workers and non-union workers alike. Wonderful. Thank you so much, Heidi. I really appreciate you taking the time. This is the State of Working America podcast. You can tune in on YouTube, on iTunes, Spotify, wherever you get your podcasts. Thank you for joining us. See you next time.