Economic Dignity Not GDP Should Be Our Goal
Gene Sperling served as the director of the National Economic Council under both President Obama and President Clinton. Earlier this year he wrote a book titled Economic Dignity where he advances the idea that our economic policies are pursuing goals that are inappropriate for the problems we are attempting to solve. This idea that some of our most treasured economic goals miss the mark is nothing new.
As far back as 1970, Campbell McConnell, an economist at the University of Nebraska, wrote that to use GDP as a measure of welfare you would have to account for how output was distributed. In 2010 Joseph Stiglitz, winner of the Nobel Prize in economics, talked at length about why focusing on GDP gave us a false sense of prosperity.
One of the first Presidents to actively advocate for an expansive view of what worker focused economic policies would look like was Franklin Roosevelt. FDR talked about economic truths that are self-evident. Among these were, the right to a useful and remunerative job, the right to earn enough to provide adequate food and clothing and recreation, the right of every family to a decent home, a good education, to adequate medical care, and the right to protection from the economic fears of old age, accident, and unemployment.
So if we know that GDP is a deficient measure of welfare, why do we persist in measuring and reporting it? The answer up until now has been that a true measure of economic progress or well-being is nebulous and hard to quantify, so we defaulted to a highly quantified measure of output as a proxy for what we were really interested in, economic and social well being.
Still, even FDR’s generalized list leaves significant gaps in what any society would want for its families. Thus Sperling believes that we need to redefine our ultimate goal as one that is dedicated to the achievement of Economic Dignity. For Sperling this type of dignity can be achieved by focusing on three areas economic life, the ability to care for one’s family without economic deprivation or desperation, the capacity to pursue potential and a sense of purpose and meaning, and finally, the ability to contribute and participate in the economy with respect, free from domination and humiliation.
In America today, one in five families, earns, on average, only $1,500 per month. For some of these families it takes two part-time jobs to earn that income. For many other families who face last minute (dynamic) scheduling, having two part-time jobs is impossible. To make matters worse, for many workers, vacation time, sick leave, and personal time are virtually unknown, so after school or evening family events are impossible. For many individuals, especially women, meaningful participation in labor is not a possibility due to the absence of affordable child care.
Most disturbing is the way many workers are treated by employers. Some employers track employees key strokes, in some firms warehouse workers are required to handle a specific number of packages per hour regardless of any extenuating circumstances. In poultry processing plants, assembly line speeds are so fast, and breaks so infrequent, that workers must resort to using adult diapers, which by any standard would be considered humiliating. Workers who are classified as contract labor have no benefits even though they work along side workers who are classified as “employees.” Non-Compete Agreements stipulate that one party will not compete in the same industry or geographical area with another party. This prevents even the lowest paid workers from working in a competing firm regardless of the reason they were separated from their employer. And binding arbitration, as a condition of employment, prevents workers from using the courts to remedy injustices.
Workers must not be seen as a means to an end, but as the end in and of themselves. Once we accept this concept, welfare and not profits should be our policy priorities. Raising the minimum wage would be a good start at ending the desperation many families face. Requiring supervising firms to provide benefits to contract labor would end the whole contract labor charade. As the pandemic has highlighted, without child care many family members cannot return to work, federally funded child care similar to what exists in Finland would allow those out of the labor force for child care reasons to return to a job of their choice. And, as a final example, we need new labor legislation that will limit the kind of management practices that treat employees like indentured servants.
In the end, achieving “economic dignity” won’t require us to find better economic tools than the ones we already have, rather it will require us to redefine what constitutes fiscal and regulatory success.