Who are the real moochers?

Meeting Minutes from InspireSeattle Social on June 8, 2013

Our speaker was John Burbank, Executive Director of the Economic Opportunity Institute, or EOI.  EOI’s mission is to restore the promise of the middle class by advancing public policies that promote educational opportunity, good jobs, healthy families and workplaces, and a dignified retirement for all.  EOI is an independent, nonpartisan, non-profit public policy center using research, education and advocacy to shape public debate and advance new policy ideas that help build an economy that works for everyone.  Working in concert with grassroots organizations, community coalitions and elected officials, EOI publishes research, shapes public debate and catalyzes policy initiatives that make Washington state better.  Before founding EOI, John was political director of the Washington State Labor Council.  John is a member of the National Academy of Social Insurance.

In 1998, John and others saw the need for a public policy institute in Washington state.  Existing “public policy” organizations at that time were advocates of market solutions for state needs, and in John’s mind actually worked against the interests of the public.  EOI is a think tank for the middle class, not the wealthy class.  A key goal of EOI is to assist lower income people moving into the middle class, and to protect those people from unfair policies.  He stressed the importance of being nonpartisan and he also labeled actions of EOI as “extra-partisan” in many ways.

EOI works at the state level, not the national level.  John indicated that achieving success at a national level is very difficult, but at a state level, EOI has had many successes, including:

• In 1998, leading the effort to establish the strongest minimum wage law in the country here in Washington state
• Basic healthcare expansion to an additional 175,000 state residents
• Establishment of a state estate tax
• Working with the City of Seattle on a new ordinance for employee sick days

EOI also led the effort to add 10 cents to the cost of espresso drinks to help fund early learning initiatives, but this was defeated at the polls.  However, John stressed how work on issues at a state level can then springboard to success at a national level.

The goal of EOI is to enhance economic opportunity and security for state residents.  John explained that Washington state has the most regressive tax system in the entire country, and that this trend towards greater and greater regression has been proceeding since 1980.  As an example, John spoke of tuition costs for state universities.  In 1980, the state paid 80% of the costs associated with running our state universities, with tuition covering the remaining 20%.  Today, this ratio has flipped, with the state covering 29% and tuition covering 71%.

The vast majority of citizens have faced rising costs yet wages (adjusted for inflation) have stagnated over the past 30+ years (i.e., since the beginning of the “Reagan Revolution”).  In 1980 a significant number of employees received pensions from their employer; today this is rare.  In the place of pensions, if one is lucky, there are 401K plans that put the onus of managing retirement funds on the employee, who much more often than not doesn’t have the experience or know how to do so effectively.  This is a far riskier situation for employees.  Also, health care and childcare costs have dramatically increased.  In 1980, the typical home could get by with just one parent working.  The other parent (usually Mom) could stay home to provide childcare.  This is not the case today.

Since World War II, there has been a remarkable increase in the nation’s economic productivity.  Up until 1980, wages and benefits moved roughly in parallel with these increases in productivity.  These increases were also accompanied by a tremendous increase in state infrastructure investment.  These trends were effectively broken when Reagan fired striking air traffic control workers, and a nationwide attack on unions and workers began.  As a result, in spite of a continuing rise in productivity, we have had wage stagnation for all except those at the very, very top.

Today there are far more resources in an expanded economy.  The question is “who owns them?”  The answer is corporations (and those that own and run them).  The distribution of income in the US now shows:

• The bottom 90% of workers average annual salary is $29,000
• 90% to 95% is $125,000
• 95% to 99% is $205,000
• 99% to 99.5% is $418,000
• 99.5% to 99.9% is $2,000,000
• For the 99.99% and above it is $22,000,000

In Washington state, the average hourly wage for men (adjusted for inflation) has dropped since 1980 from $26 to $23.  For women it has increased from $13 to $17, but the gender inequality is still significant.  As average wages for the vast majority of workers have eroded, the cost of healthcare has increased, which translates into less income for saving and for paying bills.

John then spoke of the need for reform in our tax system.  The audience mentioned how Apple’s CEO Tim Cook was called before Congress based on the tax avoidance schemes of the US’s largest corporation.  At the same time the Internal Revenue Service is itself under a critical lens.  These events point to the strong sense in our country that tax collectors are conspirators (and downright evil) and that it is one’s patriotic duty to avoid paying taxes as much as possible.  Meanwhile fear around national debt is constantly raging.  John gave a local example of highly successful tax avoidance:  Microsoft is now using Reno, Nevada as its sole distributor of software to avoid paying taxes in Washington state.

John then asked “who is to blame for how things have gone in the past 30 years?”  The audience answered “Republicans”, “rich people”, etc., but John pointed out that both political parties are to blame.  Democrats have not been leading a fight to reverse these trends.

John then spoke of Social Security.  There has been a long-term campaign to diminish Social Security, instead of working on what is truly needed:  greater benefits.  John mentioned that Maria Cantwell has been doing some work in this area, including drafting a bill to couple Social Security payouts to an alternative inflation index, the CPIE, where the “E” stands for “Elderly”.  This CPIE would be a consumer price index based on the expenses typically faced by the retired folks who actually depend on Social Security.  Sadly, Cantwell failed to introduce this bill to Congress.

John spoke of the “Social Security penalty” on working women.  If a woman stays at home to work on raising her family, this labor is not eligible for Social Security.  Also, childcare, which is a labor area largely filled by women, is typically a lower wage job.  This reflects the low value that our country has placed on raising families, and contrasts us with other countries.

Two thirds of retirees depend on Social Security to see them through to the end of their lives.  Yet there remains a strong push in this country to weaken it.  John pointed out that an electorate democracy (one vote for each citizen) is not the same thing as a true “social democracy”.  John believes those politicians seeking to weaken Social Security are passionately against the idea of a social democracy, and want to reverse previous efforts made to obtain a more equal society.  (George Lakoff writes about this in his book Don’t Think of an Elephant)

To make Social Security sustainable there is a simple fix — eliminate the cap on annual employee contributions.  If this were to happen, there would be no more concerns about an under-funded Social Security system.  EOI has prepared a video to demonstrate how this could work.  John also indicated we need to think about a supplemental Social Security program at the state level and indicated he believes that it will come to this in the future to keep retirees solvent.

John then talked about the value of our state’s initiative process.  Initiatives are a valuable tool for public input to state government.  Tim Eyman has put this process in a bad light for many with his constant efforts, pushing initiatives year after year until they pass, but John urged us to look past this and use initiatives to benefit progressive causes.  The initiative process needs well-thought-out efforts to ensure success.  Potential initiative topics John mentioned included K-12 education, higher education and leave-from-work for new parents.

Other issues John mentioned that EOI is working on included:

• See Washington state implement a 401K plan to cover the 50% of workers that don’t have a 401K plan at their current place of employment.
• Pay It Forward – under this proposed program, students get free tuition to state schools but then must contribute a percentage of their income upon graduation back to the state over the first block of their post-graduate working years.  EOI is still working on the details as to how this system could work to make it cost effective.  The state would need to track student’s 1040 IRS forms for income data, thus a federal buy-in to the program is necessary.
• EOI continues to defend the minimum wage but is now considering how to take this a step further and secure a living wage for all workers.
• Today it is common for a CEO to make 400 to 600 times the salary of the average employee within the company. EOI is also working to develop a program that would set a “maximum compensation”.
• EOI would also like to see a switch to proportional representation in the Olympia legislature.

John ended by passing around an EOI sign-up sheet and encouraged all to visit their website.