U.S. Secretary of Labor Thomas E. Perez,
AFL-CIO National Summit on Raising Wages,
January 7, 2015
[as prepared for delivery]
Good morning brothers and sisters! MaryBe, thank you so much for that generous introduction—and more importantly for your great work and leadership in North Carolina. Thank you, Rich Trumka, for this opportunity—and for your remarkable, unflinching devotion every single day to the interests of working families.
I’m honored to start the new year with all of you, with so many of the nation’s most passionate champions for economic justice and the dignity of work. And I’m especially pleased to talk about an issue that I believe represents the unfinished business of this recovery and one of the most urgent challenges facing the nation.
But I want to start today by pulling back for a wide shot. You can’t fully understand today’s economy without understanding where we were just a few years ago. When President Obama took office, the nation was staring into the economic abyss. We had lost two million jobs in the previous three months. The bursting of the housing bubble had eroded home values in the blink of an eye. The auto industry, an iconic symbol of 20th century American economic strength, was on life support.
Fast forward six years, and the turnaround is nothing short of remarkable—thanks to the president’s steady hand, the leadership of the people in this room and the resilience of working families nationwide.
We’ve now had 57 consecutive months of private sector job growth—the longest streak on record—to the tune of nearly 11 million new jobs.
For nine straight months, the economy has generated at least 200,000 net new jobs. And 2014 will be the best year of job creation since 1999.
Most of the jobs created during the recovery have been full-time, with significant growth in industries that typically employ middle and high-wage workers—construction, manufacturing, professional and business services and education and health services.
The unemployment rate is down to 5.8 percent, its lowest level since the summer of 2008 and well below the predictions of forecasters.
At the peak of the Great Recession, there were seven jobseekers for each available job; that’s a lot of rejection letters and a lot of families sick with worry about how they’re going to get by. Today, the ratio is down to 2-to-1 and job openings are at pre-recession levels.
Consumer confidence hasn’t been this high since 2007; and long-term unemployment, while still worrisome, continues to decline.
November was the second-strongest month in auto sales in nearly a decade. And later today, I will fly to Michigan with the president to highlight the auto industry’s historic resurgence—how the Big Three picked themselves up off the canvass . . . how this Administration made a smart bet on American auto companies and American autoworkers, a bet that is now paying huge dividends.
I see this remarkable recovery not just in the data, but in the house calls I make as Labor Secretary, in the eyes of people around the country for whom hope has been restored.
I saw it in Boston a few months ago when I visited the sheet metal workers apprenticeship training facility and learned more about the incredible work Mayor Walsh did to create opportunity in the building trades.
I saw it when I met LeDaya Epps, a young woman raised in the Los Angeles foster care system, who was struggling to find work that could support her three children—until she had the opportunity to complete an apprenticeship in construction. She became one of only two women to complete this program, which included a rigorous boot camp, and now she has a good job—a union job—on the crew building the new Crenshaw/LAX light rail line.
I saw it in Alexis Smith, a young woman I first met in her hometown of Toledo and then again when she spoke at a recent AFL-CIO conference on career and technical education. The curriculum at her high school was geared toward STEM disciplines, sparking her interest in biomedical engineering, which she’s now studying at the University of Toledo. This is one young lady who’s got game. Her ambition is to create an MRI machine for people who are claustrophobic. And thanks to Labor Department funding, more high schools nationwide will be able to inspire more young people to pursue STEM careers. Through this investment and others, we are creating a pipeline of skilled workers that will strengthen the economy for decades to come.
I saw this recovery when I visited the Ford plant in Louisville, Kentucky. Flash back to 2007, and they were on the verge of being shuttered, with thousands of jobs hanging in the balance. But then, through an innovative partnership between Ford management and the UAW, they restructured plan operations and built a successful path forward that involved shared sacrifice leading to shared prosperity. They’ve emerged to become one of the most advanced manufacturing facilities in the world. At the peak of their crisis, they were down to roughly 800 employees. Today, they’re at 4,400 and that doesn’t even include the supply chain.
I couldn’t be prouder of the way the nation fought its way out of the Great Recession. But I also know that these stories I just cited don’t tell the whole story. Because I’ve also met with people whose hard work is reaping few rewards—who, despite that hard work, are falling behind when they should be getting ahead.
I know that there is significant work ahead. The national conversation we must have— the conversation you’re igniting today with this summit—is about whether workers are taking home a bigger paycheck at the end of a tough week’s work. That’s where the rubber meets the road in the day-to-day lives of working people and their families. Are they able to afford what their family needs to live a decent life? Do they have the benefits that allow them to enjoy good health and a secure retirement? Are they able to put a little money away, save for college and give their kids the chance to do a little better than they did?
By these measures, we have a lot of work still ahead of us. Specifically, we must address the continued trend of stagnant wages that has been eroding the economic security of the American middle class for decades now. Hourly and weekly earnings have ticked up slightly in recent months, but the long-term trend is unmistakable.
In the three-plus decades from the end of World War II to 1979, median family income more than doubled, reaching about $58,000 a year. That’s a hallmark of an economy that’s working for everyone. But in the three-plus decades that followed, taking us about to the present day, median income growth virtually stalled, increasing by only 8 percent. Shockingly, according to a study conducted last year, the United States of America, known for a thriving middle class, no longer has the most affluent middle class in the world.
It’s not that workers have failed to keep up their end of the bargain. The fact is that productivity has been robust since 1979, increasing by more than 90 percent, but wages have essentially flatlined if you’re not on the upper end of the income spectrum. Workers are doing everything being asked of them—working hard, adapting to change, contributing to a growing economy. But what do they have to show for it? The pie is getting bigger . . . American workers helped bake it . . . but most of them aren’t getting a bigger slice.
So, an entire generation is essentially running in place—unable to get ahead, their sweat equity not translating into financial equity. The America my immigrant parents embraced was one where hard work held out the promise of upward mobility. In the America where I’ve spent my adult years, ladders have opportunity have become more precarious and rickety for far too many. The America I want my children and yours to inherit is one where everyone can make it if they try, where your zip code doesn’t predestine your future, where the economy works for everyone and delivers broadly shared prosperity.
That’s the work we have cut out for us, my brothers and sisters. We don’t have to settle for another Gilded Age, a winner-take-all economy where the deck is stacked against the middle class, where some people are able to amass stratospheric wealth while everyone else gets kicked to the curb. We don’t have to settle for an economy where individual success requires that you be born on third base—we can give everyone a turn at bat to hit a triple.
We don’t have to live with flat wages and shrinking opportunity as facts of life. Some people think we do. You hear a lot about how this is just the new normal, that globalization and technology have made it so and that’s that. These problems are intractable or structural, part of systemic forces beyond our control, they say. Well, I don’t buy that. Labeling problems as “structural” is too often a way to justify inertia or rationalize gridlock—an excuse for just plain giving up.
Well, I’m not giving up, are you? I believe these problems are largely of our own making. We got into this hole through poor public policy choices, and we can climb out of it by making better ones.
It starts with a long-overdue increase in the minimum wage. Fifty years ago, a minimum wage salary could support a family; today it can barely keep the lights on. That’s why we need to raise the minimum wage and index it to inflation going forward—to ensure that the purchasing power of working families keeps pace with the rising cost of living.
This is the right thing to do for workers, and it’s also the smart thing to do to grow the economy. From coast to coast, I talk to employers who are paying above minimum wage because they know that an investment in their employees is an investment in their own bottom line. Popular, grass-roots support for a higher minimum wage is surging nationwide, leading to bold action at the state and local level—minimum wage increases took effect in 20 states and the District of Columbia on the first of the year. And also as of January 1, thanks to the leadership of this president, we’ve raised the minimum wage for workers on federal construction and service contracts.
But we’re not stopping there. At the Labor Department we’re working overtime to update the nation’s overtime regulation, which hasn’t kept up with inflation or with changes in the economy. The overtime bottom line is pretty straightforward: if you work more, you should get paid more. The assistant manager at a fast food place putting in 60-70 hours a week for $455 and unable to get overtime—she’s getting a raw deal. We’re going to fix the rule so that her hard work is rewarded with a fair wage.
Better laws on the books are critical—but the law is only as effective as the political will of those enforcing it. Well, the President and the Labor Department have mustered that will from day one—getting tough on unscrupulous employers who game the system and ensuring that hard-working people get the pay that they have earned.
We’ve put more cops on the wage protection beat, and since 2009 we have recovered more than $1 billion in back pay for American workers—that’s a powerful contribution to shared prosperity.
Wage violations are still pervasive in many low-paying sectors, making vulnerable workers that much more vulnerable. The Labor Department recently commissioned a study that found that workers in New York and California covered by the FLSA are losing as much as 40 percent of their income because they are illegally being paid less than the minimum wage.
Imagine that: 40 cents out of every dollar you earned doesn’t show up in your paycheck but in your employer’s pocket. For every hour of hard work—taking care of children, preparing food, cleaning homes or making hotel beds—it’s possible you could be working 24 minutes for free.
And it’s not just low-wage workers who are victimized. In many traditionally middle-class occupations, workers are undercut by the abusive practice of misclassification. Let me be clear: when you improperly categorize your employees as independent contractors—stripping them of rights and benefits in the process, dodging your own tax obligations as an employer—what you’re doing is committing fraud, plain and simple.
There’s more we can and must do. For the life of me, I can’t figure out why we’re the only industrialized nation on earth that doesn’t offer some form of national paid family leave. A great nation should not make people choose between the job they need and the family they love. A great nation must give them the tools to be both attentive parents and productive employees, to meet their obligations both at work and at home. We need paid leave in order to maintain a thriving middle class, in order to create truly shared prosperity in America.
Infrastructure, Immigration and Skills
There are still other steps we must take, steps that have historically enjoyed strong bipartisan support. Investing in transportation infrastructure will create good-paying, middle-class jobs. Congressional action on comprehensive immigration will increase GDP, adding jobs and putting upward pressure on wages.
And we need to make bold investments in our human capital—in the skills and talents of our people. I’m proud to say we’re doing just that at the Labor Department. We’ve put a billion dollars in workforce development grants on the street this year—investments in community colleges, apprenticeship programs and more. We’re not just tinkering with the workforce system; we’re transforming it for the 21st century.
And we can’t have shared prosperity or seriously address wage gaps without ensuring that workers have a voice. That’s why this administration is resolute in its support for collective bargaining rights—rights that have come under withering attack, but rights that have provided so much economic security to so many people for so many years.
The bottom line is this: there is a direct link throughout our nation’s history between a vibrant middle class and the vitality of the labor movement. The economy is strong when the middle class is strong, and the middle class is strong when unions are strong—when workers have a seat at the table, when they have a voice, when they have a chance to organize and negotiate for their fair share of the value they helped create. By contrast, it’s not a coincidence that middle-class wage stagnation coincides with a decline in the percentage of workers represented by unions.
It’s simple: if you belong to a union, you’re likely to make more money. In a few weeks, the Labor Department will release 2014 numbers on union wages. Last year’s data showed that median weekly earnings for union members were $200 higher than for their non-union counterparts. That’s not pocket change, and it doesn’t even account for the superior benefits enjoyed by union workers.
There is no more powerful force for shared prosperity than the American labor movement. And one of the reasons is that the labor movement fights for more than just its own members. You’ve led the struggle for a higher minimum wage even though most minimum wage workers don’t belong to a union. You’re standing with fast food workers and retail workers who want a raise, who want a say. You’re standing up for immigrant workers, for paid sick days, for Senator Warren’s fair scheduling bill—why?
Because you measure success not simply by the size of your membership, but by the number of people you help. Because your commitment is to empowering all working people—to shared prosperity in the broadest sense. Because an injury to one really is an injury to all. Because you know that we all succeed only when we all succeed.
And you know what? If unions didn’t make a difference, you wouldn’t see so many folks lined up to take shots at them. A few months ago, one well-known right-winger was caught on tape telling an industry group: “I get up every morning and I try to figure out how to screw with . . . labor unions.”
Government workers in particular, in Wisconsin and elsewhere, have been the target of a ferocious slash-and-burn campaign designed not just to weaken public employee unions but to eliminate them. The men and women who strengthen our communities by teaching our children, patrolling our streets and putting out our fires deserve better. They deserve better than to demeaned and denigrated.
Besides, what we need right now to sustain this recovery is not contentiousness but cooperation. Shared prosperity is greatest when unions and their employers come together around mutual goals and interests. From the Ford-UAW collaboration that turned around the Louisville plant . . . to apprenticeship programs led by IBEW, by Ken Rigmaiden at IUPAT and so many others, we see time and time again that unions don’t succeed at the expense of business; they succeed in partnership with business.
Notwithstanding the challenges we face, my brothers and sisters, I come to you today with an unrelenting sense of optimism. I am bullish because, as Dr. King said, “the arc of the moral universe is long, but it bends toward justice.” Throughout our history, we’ve seen it. We’ve seen that those who seek to expand opportunity prevail in the long run… while those who seek to restrict opportunity find themselves time and time again on the wrong side of history. I mean, there’s a reason later this month that we’ll be celebrating Martin Luther King Day and not George Wallace Day.
Those who want greater economic inequality—who have contempt for unions and seek to muzzle worker voice—they have a big megaphone and deep pockets for sure. What they don’t have is a connection to the nation’s most cherished values and deepest aspirations. Ultimately, they’re cutting against the grain, and in the long run their views will be exposed and marginalized. Because what’s always defined America is the article of faith that opportunity is within the grasp of everyone willing to work for it, that everyone has the chance to reach their highest and best dreams.
In 1892, a trade journal called Manufacturer and Builder railed against the radical notion of an 8-hour work days for workers on federal contracts, calling it “about as vicious a piece of demagogy that could be conceived.”
Almost half a century later, the rhetoric directed against the Fair Labor Standards Act was just as outlandish. One version of the bill, according to opponents, would lead the nation toward a “tyrannical industrial dictatorship.” Some businesses said that a 25-cent minimum wage would force them to fire all their employees. But President Roosevelt pressed forward, ignoring what he called “calamity-howling” and passing what he accurately described as, with the exception of Social Security, “the most far-reaching, the most far-sighted program for the benefit of workers ever adopted.”
And in the 1960s, Medicare inspired opposition that sounds tone-deaf to 21st century ears. Ronald Reagan himself said that Medicare would lead to socialism. And if it were not stopped, he warned, “one of these days we are going to spend our sunset years telling our children and our children’s children what it once was like in America when men were free.”
Defeating this kind of extremism, and ushering in progress, is not inevitable. It requires persistence and leadership. The arc of the moral universe doesn’t bend toward justice on its own — it bends thanks to the sheer power and exertion of concerned citizens and dedicated advocates like you.
Together, we’ve emerged from one of the darkest, most difficult crises in our nation’s history. Thankfully, we once again have an economy that’s growing strong. Now we must come together to create an economy that truly works for everyone—where each person’s contribution is valued, where hard work is rewarded, where wages grow in line with productivity. I look forward to standing with you in that struggle. Together—and only together — we can bend that arc ever closer toward justice. Together, we can create the shared prosperity that our working families deserve. Thank you so much.