Aspen is a place for leaders to lift their sights above the possessions which possess them. To confront their own nature as human beings, to regain control over their own humanity by becoming more self-aware, more self-correcting, and hence more self-fulfilling.
Walter P. Paepcke, Aspen Institute Co-Founder
Aspen Institute
Expanding Economic Opportunity for More Americans, and Longform
Economic Strategy for Higher Wages and Expanded Labor Participation
February 4, 2019
Authors
Jason Furman
, Professor of the Practice of Economic Policy, John F. Kennedy School of Government, Harvard University Phillip Swagel, Professor in International Economic Policy, University of Maryland School of Public Policy
Working Group Members
Wally Adeyemo, Center for Strategic & International Studies
Martin Feldstein, Harvard University
Maya MacGuineas, Committee for a Responsible Federal Budget
We propose two alternative policy options for promoting increased earnings and employment of low-income households: expanding the Earned Income Tax Credit (EITC) among childless workers, and implementing a wage subsidy for low-income workers that would be administered through employers. The EITC is based on household income and administered as a tax credit, while the subsidy based on hourly wages would require no filing or administrative effort by workers. We compare and contrast the costs and benefits of these two approaches to raising wages. Our two policy options are meant as part of a response to the sluggish income growth at the bottom of the distribution over the past several decades. Over the long term, a broad set of policies is needed to boost productivity and ensure that the resulting incomes gains are widely shared—and we discuss the elements of such an agenda that should receive bipartisan support. Over the near-term, however, the policies we propose are well-targeted to improving the incomes and participation rate of workers at the bottom who have been left behind by the rising prosperity of the U.S. economy.
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