There are two basic ways to improve the economic situation of the middle and lower classes. First, you can use taxes and government spending to shift income down from the top, either via direct transfers or through services like health care. Second, you can change the laws governing markets, with the goal of producing better outcomes for low- and middle-wage workers. These two approaches are sometimes called redistribution and predistribution.
Much of the Democratic presidential contest has focused on redistribution _ higher taxes on the wealthy, nationalization of health insurance and so on. But candidate Pete Buttigieg recently released a plan for predistribution, to relatively little fanfare. Buttigieg's plan would raise the federal minimum wage to $15 an hour and peg it to inflation after that. It would strengthen anti-harassment laws, mandate that businesses reveal how much they pay men and women, beef up overtime rules, encourage predictable scheduling for hourly workers and implement various other workplace protections. But perhaps most importantly, Buttigieg's plan would rewrite U.S. labor law to strengthen unions.
Unions were a pillar of the mid-20th century U.S. corporate system developed during the New Deal. President Franklin Roosevelt envisioned unions as a source of power to counter the greater information, flexibility and legal protections of corporate owners and managers. A number of economic studies have underscored the importance of unions in supporting the middle class. But in the years since the mid-century, private-sector unions have declined into irrelevance.
Unions are probably a big part of the reason that people look back so fondly on the era of manufacturing. So far, the service-sector jobs that now employ a large majority of the American workforce have failed to unionize like manufacturing workers once did. A recent spate of strikes shows that this vast low-paid service class may finally be awakening to the possibility of collective bargaining.
But there are many obstacles. So-called right-to-work laws in some states have weakened unions' ability to hold sway in workplaces. Many employers have classified workers as independent contractors, preventing them from unionizing. Buttigieg's plan would crack down on both of those practices, banning anti-union right-to-work laws and severely restricting which employees could be deemed as contractors. Gig economy workers would be allowed to unionize under the plan.
Another possibility is wage boards. This system would create councils composed of representatives from labor, management and government. These boards would set minimum wage standards for industries and occupations where wages are already higher than the federal minimum.