Cross-posted from Robert Reich Blog
I was in Seattle, Washington, recently, to congratulate union and community organizers who helped Seattle enact the first $15 per hour minimum wage in the country.
Other cities and states should follow Seattle's example.
Contrary to the dire predictions of opponents, the hike won't cost Seattle jobs. In fact, it will put more money into the hands of low-wage workers who are likely to spend almost all of it in the vicinity. That will create jobs.
Conservatives believe the economy functions better if the rich have more money and everyone else has less. But they're wrong. It's just the opposite.
The real job creators are not CEOs or corporations or wealthy investors. The job creators are members of America's vast middle class and the poor, whose purchases cause businesses to expand and invest.
America's wealthy are richer than they've ever been. Big corporations are sitting on more cash they know what to do with. Corporate profits are at record levels. CEO pay continues to soar.
But the wealthy aren't investing in new companies. Between 1980 and 2014, the rate of new business formation in the United States dropped by half, according to a Brookings study released in May.
Corporations aren't expanding production or investing in research and development. Instead, they're using their money to buy back their shares of stock.
There's no reason for them to expand or invest if customers aren't buying.
Consumer spending has grown more slowly in this recovery than in any previous one because consumers don't have enough money to buy.
All the economic gains have been going to the top.
The Commerce Department reported last Friday that the economy grew at a 4.6 percent annual rate in the second quarter of the year.
So what? The median household's income continues to drop.
Median household income is now 8 percent below what it was in 2007, adjusted for inflation. It's 11 percent below its level in 2000.
It used to be that economic expansions improved the incomes of the bottom 90 percent more than the top 10 percent.