With Joe Biden in the White House and Democrats holding the narrowest of congressional majorities, progressives have managed to put their economic agenda at the center of national political debate. And whether it’s a $15-an-hour minimum wage, expanded unemployment insurance, or an ongoing deficit to support the economy, there’s likely a stack of research from the Economic Policy Institute by doing so.
The left-wing think tank is more relevant than ever. The center of the Democratic Party has shifted policy over the past decade, and some of the institute’s long-term goals, like a massive overhaul of US labor law, are close to reality. The prospect of a GOP takeover of the House or Senate next year has made the debate all the more urgent.
Heidi Shierholz, EPI’s new leader, called it a “remarkable moment”.
“It’s a moment that EPI kind of laid the groundwork for,” she said. “EPI was formed 35 years ago. In all this time, there has never been a moment like this.
Shierholz, a former chief economist for the Labor Department, was most recently the group’s policy director. She takes the reins from Thea Lee, who in May was appointed the Department of Labor’s deputy undersecretary for international affairs.
Shierholz said she believed PPE, founded in 1986, was meant to be a counterweight to the “neoliberal consensus” that people are “paid what they’re worth in quotes.” If there’s one idea economists and think tank researchers keep coming back to, it’s that low wages and economic inequality are not inevitable, but the result of specific policy choices made in Washington and inside the states.
Pressure from progressive activists and unions, backed by research from groups like EPI, has pushed elected Democrats toward more aggressive economic policy stances in recent years.
The broad acceptance on the left of the need for a $15 federal minimum wage is an example of this transformation. But so are the different responses to the 2008 financial crisis and the more recent pandemic-induced recession, Shierholz said. This time, we were much less reluctant to go into debt and we were more concerned about achieving full employment.
“In the aftermath of the Great Recession, we didn’t do enough and immediately turned to austerity,” she said. “It is obviously very different from what happened this time: interventions on the scale of what was needed to revive the economy. It was a remarkable change.
“If there’s one idea EPI economists and researchers keep coming back to, it’s that low wages and economic inequality are not inevitable but the result of specific policy choices.”
Shierholz and other PPE experts are often the ones Democrats lure to hearings to argue for progresssive policies. The group has been a prominent voice for the supplemental unemployment benefits that Congress passed to help the unemployed through the recession and which are now coming to an end. He also spent a lot of time strengthening the law on the protection of the right to organize, or PRO lawDemocrats’ proposal to make sweeping changes to collective bargaining laws.
The bill passed the House but lacks enough support to overcome a filibuster in the Senate, where not even all Democrats are on board yet. Some lawmakers want to try to pass certain aspects of the law using the budget reconciliation process, which would allow online voting.
Shierholz argued that no other legislation being considered could do more to reverse wage stagnation than the PRO Act.
“There is nothing bigger, more important to the kind of economy where overall growth is more widely shared and not just captured by the people who already have the most,” she said. “There is no substitute for this [bill] this could move the dial to the necessary scale.
Despite the tight labor market pushing up wages in many industries this year, Shierholz doubts workers’ influence will endure without systemic changes like the PRO law.
“I don’t see anything that makes me think there’s been any sort of permanent change,” she said. “These pockets of economic leverage created by massive flows in the labor market, they will dry up.”
Former President Barack Obama tapped Shierholz to be the Labor Department’s chief economist in 2014, a role she held until the end of that administration. The Labor Department became a focal point for ambitious economic policies during the second half of the Obama presidency, but some of them were made too late to matter.
The Obama administration’s plan to dramatically expand overtime protections to more workers was beaten back in court and then watered down by the Trump administration. Other policies pursued through the rulemaking process were also reversed by the GOP upon Trump’s arrival in the White House.
There was a lesson there, Shierholz said, and she thinks the Biden administration understands. “If you look back, the biggest regret [was] things unravel because they were implemented late,” she said. “There is no time to lose. You need to move on this and implement it quickly.
Democrats in Congress could find themselves with only a short window to get things done if Republicans get enough seats in 2022, or if their own more centrist colleagues manage to block the party’s legislative agenda. Whatever happens, Shierholz said she expects an ideological backlash now that so many progressive policies are on the table.
“There are certainly huge pockets of resistance to the idea that rising inequality is more than just a natural consequence of the modern economy,” she said. “In any change in mentality, there will probably be a backlash. It will be a big job for PPE to limit the damage or rollbacks that always happen.