Reducing inequality and raising the minimum wage could boost the US economy – White House

By Andrea Shalal

WASHINGTON (Reuters) – Stronger anti-discrimination and antitrust enforcement, higher federal minimum wages and higher unionization rates could significantly boost U.S. economic growth, a new report from President Joe’s top economic advisers concludes. Biden.

The annual economic report, prepared by the Council of Economic Advisers, argues for restoring the public sector as a partner in long-term growth and adopting policies to reduce the disproportionate market power of businesses and employers that limits economic equality.

“Government has a role to play in reducing inequality,” Cecilia Rouse, who chairs the council, told Reuters, stressing that ending persistent disparities in the US labor market and racial wealth gaps would “absolutely” boost US growth and competitiveness after years of little progress.

“The real point is that these market imperfections have real economic costs in terms of our GDP growth,” she said, citing research https://www.brookings.edu/bpea-articles/the- economic-gains-from- by San Francisco Federal Reserve Chair Mary Daly, who concluded that systemic disparities cost the US economy nearly $23 trillion over the 30-year period from 1990 to 2019, and that fairer access to labor markets would add $790 billion to the US economy each year.

Biden welcomed the report in a statement and pledged to continue working to ensure “more equitable growth” and increase the productive capacity of the US economy.

The report delves into the impact of uncompetitive labor markets, the market power of employers and monopolies in maintaining wage inequality and unfair hiring practices that ultimately hold back economic growth for all.

“The cost of ignoring these structural forces is increased inequality and reduced economic growth and output,” the report concludes, citing inefficient labor market outcomes, poor distribution of talent, suppressed innovation and reduced incentives to invest in human capital.

He noted that nearly 20% of American workers said they were bound by non-competition agreements that limited an employee’s ability to join or start a competing business, and said employers’ market power was responsible for keeping salaries 15% below what they would be in a perfectly competitive situation. market.

He said government actions could reduce these market forces through increased enforcement of current labor protection and anti-discrimination laws, in support of greater unionization, which can lead to lower wages. higher, and raising the federal minimum wage to $7.25 an hour, where it has been set since 2009. .

He also highlighted the beneficial impact of providing affordable childcare and early childhood education, as well as paid family and medical leave, and a child tax credit – all measures included in Biden’s ill-fated $1.7 trillion Build Back Better spending package that failed Congress last year.

(Reporting by Andrea Shalal; Editing by Leslie Adler)