By Phil Erro
To win back the House, U.S. Senate and the state houses, Democrats need to focus on one thing: higher pay. Millions of people are working for the minimum wage at fast-food restaurants, small businesses and farms. Other people such as software app writers, ride hailing service drivers and freelance designers have little bargaining power when they sell their services. If Democrats increase the earnings of all these people, they will again become the workers’ party.
Pay Increase Tax Credits
In states that have income and capital gains taxes, employers with fewer than 50 employees could be awarded dollar-for-dollar tax credits to offset wage increases. If the wages ramp up over five years, workers could quickly earn a living wage. These states would tax corporations that hire foreign tech workers and export jobs to replace revenues lost from employers who get pay increase tax credits. Let me illustrate how this would work with two examples.
Landers’ Tire Shop has three employees. Employee turnover has caused the shop owner to spend his time training employees and correcting mistakes made by new employees. He’d like to raise wages to retain his most promising employees. He decides to use a new law that makes wage increases painless by offsetting their cost with tax credits. The law sunsets in five years and offsets a 15% wage increase in Year 1, 10% wage increases in Years 2 and 3, and 5% increases in Years 4 and 5.
He raises one employee’s minimum wage of $10.50 per hour 15% to $12.08 per hour in Year 1, another 10% in Year 2 to $13.28, another 10% in Year 3 to $14.61 and 5% in Year 4 to $15.34. The employee has stayed at the tire shop, has learned a good deal about tires and has become a skilled worker. The raises haven’t cost the shop owner anything because of the tax credits.
He raises another worker’s $10.50 wage 10% in Year 2 to $11.55, another 10% in Year 3 to $12.71, then 5% in Year 4 to $13.34 and finally 5% in Year 5 to $14.01. This worker stays at the shop and learns the trade as well. Again, the wage increases are repaid with tax credits.
He recruits another worker with experience in tires and wheels in Year 3 by offering $13.50 per hour. He combines new technology and equipment with improved worker skills to attain increased productivity that gives his shop a competitive edge.
Santos Organic Farm has two employees. The farm produces premium quality organic vegetables, and the owner doesn’t want other farms to hire his workers and their knowledge away from him. He decides to take advantage of the wage ramp law to reward and retain his workers. He raises their $10.50 per hour wage 15% in Year 1 and 10% in Years 2 and 3 to $14.61 per hour. His workers stay and improve their knowledge and skills, resulting in an increase in the quality of his produce. He sells his improved produce at a higher price to compensate for his increased labor costs.
Collective Bargaining for Freelance Workers
Democrats also need to organize app writers, hair stylists and others into collective bargaining units so that they earn at least a living wage. The organizing and collective bargaining would be done on mobile devices to connect workers doing various kinds of work in scattered locations. Software companies, hair salon operators and ride hailing companies would have to negotiate with worker collectives to reach agreement on the fees charged by workers.
The construction industry includes residential, commercial, industrial and infrastructure construction and employs entry-level carpenters, equipment operators and workers with special skills. Most of these workers are not unionized. With residential construction growing and large infrastructure projects about to begin, now is the time to unionize construction workers. Unionization could increase the pay of low skill house framers to highly skilled workers by 20%.
The aerospace industry is also a good candidate for unionization. Boeing built a plant in South Carolina to avoid unions, but its bad treatment of workers has motivated them to form a union. Many of the same people who demonstrated in Washington, D.C., on Inauguration Day could travel to South Carolina to support the Boeing workers.
If Democrats successfully organize construction workers, support freelance workers to create collective bargaining units and get states to pass pay increase tax credit laws, workers will prosper and become enthusiastic supporters of Democratic candidates. By concentrating on majority low- and moderate-income Congressional districts, Democrats could handily defeat incumbent Republicans.
Phil Erro is a native of Fresno, a social justice activist and the founder of Fresno Hunger Count. Contact him at philiperro@ hunger-count.org or 559-263-1575.