Perez Calls for Shared Prosperity Through Paid Leave, Higher Minimum Wage

By Kathy Gurchiek Oct 24, 2014
Paid leave, a higher minimum wage, collective bargaining and college-employer job-training partnerships are among the many “on-ramps and off-ramps” on the superhighway to the nation’s prosperity, U.S. Department of Labor (DOL) Secretary Thomas Perez said during a luncheon at the National Press Club on Oct. 20, 2014.

In his remarks, Perez extolled improvements to the economy under President Barack Obama’s administration, noting that in September 2014 the country experienced the 55th consecutive month of uninterrupted job creation. He also cited what he called the “historic comeback” that manufacturing continues to make.

However, American workers are not sharing in the prosperity.

“The pie is getting bigger. American workers helped bake it, but they’re not getting a bigger slice … in private-sector job growth,” he said. “Shared prosperity is not a fringe concept. … and it’s a lynchpin of a thriving middle class.”

He repeatedly pointed to Massachusetts-based supermarket chain Market Basket as a model of an employer respecting the voice and contributions of its workers. Thousands of its employees risked their jobs this summer to lobby for the return of their beloved CEO, who was ousted by family members on the company’s executive board. Customers, vendors, the community and two governors also weighed in and, just before Labor Day 2014, Arthur T. Demoulas returned as CEO.

The employees’ actions, Perez said, “illustrated the importance of the worker voice.”

“[Demoulas] created an environment where every worker felt empowered, validated and respected. To him, worker voice wasn’t a threat to the company; it was an indispensable asset.”

Perez called for a “shared prosperity” that he said relies, in part, on providing paid leave, raising the minimum wage and unions. He stressed the Obama administration’s resolution to protect collective bargaining rights, which he noted “have come under withering attack in recent years.”

He also called for comprehensive immigration reform, which he said would increase the nation’s gross domestic product (GDP) 5.4 percent over the next two decades.

Raising the Minimum Wage

Perez is an advocate for boosting the minimum wage, and he has been meeting with business leaders across the country to argue that higher wages can improve the economy.

“There’s no dignity in working 40, 50 hours a week and getting your food at the food pantry. … If the breadwinner in your family is out of work, the unemployment rate might as well be 100 percent,” he observed.

”A majority of small businesses support an increase in minimum wages,” he said and noted that the U.S. is behind other countries on this issue. The United Kingdom, for example, recently announced it was raising the minimum wage there to the equivalent of $11.05 per hour.

Paid Leave

“We stand alone as the only industrialized nation where paid leave is not the law of the land,” he said, citing what he called the United States’ “dismal record” on this issue. “Why are we making people choose between the job that they need and the family that they love?”

Care-giving responsibilities often cause women in the U.S. to drop out of, or lessen their participation in, the workforce. Perez called employer paid leave “an important strategy” for keeping women in the workforce.

Comparing the U.S. to Canada, the labor force participation rate for women ages 25 to 44 was about the same as it was in 2000. Today Canada is ahead of the U.S. by about 8 percentage points “in large measure because [Canada has] generous paid leave laws and [provides] access to affordable child care.”

If it had kept pace with Canada, he said, the U.S. would have 5.5 million more women in the workforce. That would increase the nation’s GDP by an estimated 3.5 percent, “which translates to more than $500 million of additional economic activity.”

In June 2014, the DOL announced new grants for states to conduct feasibility studies about the development or implementation of paid leave, and the president directed the DOL to invest $25 million to help people who want to enroll in job training programs but have difficulty accessing child care. In addition, the DOL is investing in research about lessons learned from states innovating with paid leave, according to a June 2014 opinion piece he wrote.

Job Training and Unions

The United States has “massively under-invested in apprenticeship programs,” Perez said. There are millions of middle-class jobs that can support a family that are “available for the taking,” he explained, noting that many of these jobs do not require a college degree.

“We are in the middle of … a transformation in the way we prepare job-seekers of all ages,” he said. A grants program the DOL and Department of Education co-administers has provided funds to colleges that partner with employers to devise the training that organizations say that job candidates need.

Perez also espoused the role of unions in lifting up the middle class by championing for superior benefits and wages and giving a voice to workers.

“There is an absolute direct relationship between the health of the middle class and the health and vitality of the labor union,” he said. He cited U.S. Bureau of Labor statistics that found in 2013 the median weekly income for union members was $200 higher than for nonunion members.

“Unions don’t succeed at the expense of business. They succeed in partnership with business,” he said, and pointed to areas around the globe to illustrate his point.

Canada’s union density, for example is more than twice that of the United States—27 percent versus approximately 11 percent, respectively. Germany also has a high density of trade unions and enjoys a robust economy and low youth unemployment.

“It gets back to this issue of voice,” said Perez. “We need to make sure we have multiple mechanisms to give workers a level playing field.”

He travels to Germany next week where he will stop at Volkswagen to study its works councils, which he called “a wonderful model that we should consider importing.” Volkswagen considers its works councils “a competitive advantage.”

“We need to create space in America,” he said, “for new forms of collaboration between workers and their employers.”

Kathy Gurchiek is the associate editor at HR News.

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