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Growth, mobility, inequality: Three policy experts write their own State of the Union

Published: Tuesday, Jan. 28 2014 8:40 a.m. MST

This Feb. 12, 2013 file photo shows President Barack Obama, flanked by Vice President Joe Biden and House Speaker John Boehner of Ohio, giving his State of the Union address during a joint session of Congress on Capitol Hill in Washington.

Charles Dharapak, Associated Press

When President Barack Obama takes the podium tonight for his annual State of the Union address, many expect him to center on income inequality, an angle already signaled a week ago with his radio address, as well as in speeches last month.

Wages have stagnated since the Great Recession officially ended, and the majority of new jobs created since then have been at the low end of the pay scale. Labor Department data last summer showed that inflation and seasonally adjusted non-government hourly wages had actually declined since June 2009, from $8.85 to $8.77, even as a booming stock market has boosted wealth among the investor class.

Most analysts agree on the basic picture, which is sure to be a strong focus in the president's address. But there is wide disagreement on what to do about it.

“I would start with the minimum wage,” said Ben Olinsky, senior fellow for economic policy at the left-leaning Center for American Progress, when asked how he would write the speech.

“When you give a few more dollars to low-wage workers, they spend it almost immediately in their communities, strengthening local businesses and creating a cycle of prosperity.”

Jim Kessler, senior vice president for policy at Third Way, a centrist Democratic policy group, agrees that the minimum wage must be raised, but he argues that is not a long-term solution. “The problem now is that middle class jobs do not provide a middle class life,” Kessler said.

“Raising the minimum wage is more than a Band-Aid and less than a strategy,” said Isabell Sawhill, co-director of the Center on Children and Families at the Brookings Institution, who like Kessler favors the wage hike but doesn’t think it's an economic game changer for those who are struggling.

The three policy analysts, all Democrats, reflect the range of perspectives likely vying for attention within the Oval Office. All three view the minimum wage as a necessary beginning, but all agree that it is only the first move in addressing inequality, opportunity and stagnating middle class confidence.

Dissenting voices

There are voices of dissent on the minimum wage. One of these is Dan Mitchell, a senior fellow at the libertarian Cato Institute, who argues that minimum wage hikes would work well for those who keep their jobs, but many will not.

If the minimum wage is forced up, some lower-skilled workers will end up unemployed, Mitchell said, "and their income is going to be zero.”

Veronique de Rugy, senior research fellow at the Mercatus Institute, a libertarian think tank, agrees with Mitchell that raising the minimum wage could adversely affect the least skilled workers. “The only dispute is how large the effect will be, and whether it is worth the tradeoff.”

Apprenticeships

Olinsky has a raft of policy suggestions he would insert in the president's speech. Some, like apprenticeships, have the virtue of broad bipartisan appeal. The wage advantage of going to college has gone up, Olinsky said, but college is still out of reach for many. In December, Olinsky coauthored a report calling for a new generation of apprenticeship training following models in Australia and Europe that put young people in the workforce immediately after college, learning and earning at the same time.

Cato's Mitchell agrees that innovations such as apprenticeships seem appealing, but hopes it wouldn't be implemented as a top down, one-size-fits all program run by the federal government.

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