Middle-out economic policies—those that adhere to the theory that a strong middle class promotes economic growth—caused the U.S. economy to thrive during the decades following World War II, wrote Heidi Shierholz, the president of the Economic Policy Institute, although the term “middle-out economics” was not coined at the time. Starting in the late 1970s, however, trickle-down economics took hold, causing employees to lose ground and production and wage growth to slow dramatically.
A core pillar of middle-out economics is to give workers the tools they need to be part of economic growth, and Shierholz said that there needs to be a sweeping transformation to set the country back on the right path.
Some of the key policies that can help close the productivity pay gap include keeping unemployment low, because tight labor markets means higher wages. Additionally, Shierholz said, policymakers should pass labor laws that protect a worker’s rights to unionization and collective bargaining. Workers in unions have higher wages and better benefits than those who are not, she added.
Shierholz also believes that the country should strengthen the implementation and enforcement of labor standards such as overtime and minimum wage, as well as ban noncompete agreements, forced arbitration, and collective and class-action waivers.
