Newsweek • David Madland
President Trump’s nomination of fast food CEO Andrew Puzder to head the U.S. Department of Labor is a betrayal to American workers—including the very workers Trump promised to champion.
The reasons are plenty: Puzder’s firms have a long record of violating basic workplace standards. Puzder opposes raising the minimum wage. He expresses disdain for allowing workers to earn overtime, take breaks, or bargain collectively with corporate headquarters.
He even once said he would be interested in trading his workers with machines, because machines “never take a vacation, they never show up late, there’s never a slip-and-fall, or an age, sex, or race discrimination case.”
But perhaps the ultimate betrayal comes from the fact that Puzder, whose confirmation hearing is set for February 2, believes that trickle-down economics is somehow good for the economy.
Trickle-down economics maintains that tax cuts for the rich, low wages for workers, high inequality and less regulations will increase job creation and boost productivity growth. Or as Puzder put it in his book: “Job creation would flourish if government would dramatically cut taxes, decrease regulations, and reduce runaway spending.”
But we tried trickle-down economics for nearly four decades, and it failed. In fact, it is the same failed ideology that caused four decades of wage stagnation, near-record high levels of inequality and that drove the world to a financial crisis in 2007.
Not only did middle class wages stagnate under trickle-down economics, but productivity growth also slowed, the percentage of prime-age American men in the labor market fell and entrepreneurship cratered – even before the Great Recession.
Even worse, trickle-down policies threw the economy into the deep hole from which it is only now starting to recover. Because wages stagnated for decades, Americans had less money in their pockets to buy things, which made the economy reliant on debt-fueled spending.
Coupled with banking deregulation, this toxic mix fueled the Great Recession, causing millions of workers to lose their jobs, millions of homeowners to lose their houses and further depressed wages.
To be sure, trickle-down policies are not the only cause of low wages and high inequality—technology and globalization also play a contributing role. But other countries exposed to these same economic forces as the United States—such as Canada, Sweden, and Australia—charted a different public policy course, one that benefitted most workers.
These countries did not see inequality rise to anywhere near the United States’ levels, and their middle classes have experienced significant wage gains over the last few decades.