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“Grandpa, when you were in President Clinton’s cabinet, did you always think you were doing good things?”

“We tried, sweetie.”

“But were there times when you worried you weren’t really helping people?”

“Oh yes, many.”

“Did you ever tell the President?”

“Yes. I also wrote him lots of memos.”

“What are memos?”

“They’re what you write a president you’re working for, when you’re so frustrated you don’t dare meet in person for fear you’ll blow up.”

From: Labor Secretary Robert Reich
Date: September 30, 1994
RE: Upcoming midterms

We’re in danger of losing the House in November, maybe even the Senate.

Yes, the economic plan is paying off. More than four million new jobs have been added. But there’s a huge amount of frustration and disillusionment in the land. Only a relative few are sharing in the newfound prosperity. The middle class is becoming an anxious class.

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Only the richest 5 percent of Americans are gaining much ground. In fact, their share of national income in 1993 (48.2 percent) is the highest on record. The gap is the widest since the Census began collecting data almost thirty years ago.,

In 1992, Americans voted for “change” because so many were losing ground. Your economic plan spurred the recovery, but didn’t stop the slide. As a result, these Americans feel betrayed. They’re likely to vote for “change” again in 1994.

Polls show that the voters who are most alienated from the administration are adults without college degrees, whose incomes have dropped the most. Many are “Reagan Democrats,” who were slowest to rally to you in 1992, are still distrustful of government, and are most likely to desert the Democrats this November. Others are the working poor, so disillusioned with politics that they’ve stopped voting.

The main economic strategies you’ve embarked on — deficit reduction and free trade — won’t reverse the slide.

Deficit reduction has added to national savings and initially reduced long-term interest rates, which has helped middle-class borrowers. But it hasn’t benefited the bottom half. Free trade is similarly good for the economy overall, but its benefits aren’t shared equally. The higher-skilled and better-educated gain a global market for their services, while those with low skills or no skills have to compete with lower-wage workers around the world.

What’s the answer?

  • Profitable companies must share part of their burgeoning profits with their employees, instead of simply seeking to put a lid on wages. There was once an implicit social contract in this nation which dictated that as companies did better, so should their workers. That compact has come undone. You should propose tax incentives to encourage companies to share profits and upgrade skills, rather than keep a lid on wages or fire workers.
  • Workers also need stronger unions. You should call for labor law reforms that make it easier to form unions.
  • They need looser monetary policy from the Fed, so interest rates fall and labor markets tighten. Not much you can do about this, but use whatever influence you have.
  • Signal your clear intention to raise the minimum wage. It will help workers at the bottom (the average minimum-wage worker brings home half the family income), and have a “ripple effect” upward on working-class wages.
  • Finally, between now and the midterm election, you (and other Democrats) must at least acknowledge the problem. Recognize the frustrations and fears of a large segment of the workforce. Talk about the challenge of widening inequality. Talk about the responsibilities of profitable corporations to share the good times with their employees.