The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory. The last five decades of trickle-down economics haven't worked. But what's the alternative? Middle-out economics is the answer. Because the middle class is the source of growth, not its consequence. That's right. This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show. Hey, Pitchfork listeners, Goldie here. A couple of weeks ago, Nick and I attended a conference in D.C. in which our friends at Democracy Journal packed some of our nation's leading progressive thinkers into a room. And one of the more interesting sessions was a series of three-minute speeches from a dozen or so attendees answering the question, if you could order a presidential administration to do one specific thing to improve the lives of working people, what would it be? That's what we here on the pod used to call the benevolent dictator question. Before that, malevolent dick in the White House gave all types of taters a bad name. Now we call it the magic wand question. And in the remainder of this episode, we're going to present some of our favorite answers. It's like a poo-poo platter of mini TED Talks designed to please the palate of economic policy wonks like you. But before I give up the mic, I'd like to offer a little policy appetizer of my own. For if I could order a presidential administration to do just one specific thing to improve the lives of working people, well, I would radically reform the tax code to eliminate all personal income tax deductions. And I mean all of them, even the popular ones like the mortgage interest deduction, the state and local tax deduction. Yes, even the deduction for charitable contributions. I'd eliminate all these deductions and more, except for one, the standard deduction. And that, I'd more than triple it to a generous $65,000 for an individual and $130,000 for a married couple. This simple reform would achieve two big things. First, it would make our tax code far more progressive and fair, reducing taxes for a for the vast majority of Americans, totally eliminating income taxes for well more than half of them, while also eliminating the many loopholes through which billionaires like Nick managed to pay a far lower effective tax rate than employees like me. And second, it would make our tax code far simpler, allowing most of us to file our taxes on one side of a postcard. And amazingly, even with a standard deduction this high and no change in rates, my proposal would be revenue neutral. That's right, this vastly more simple and more equitable tax code would raise just as much revenue as that monstrously complicated super rich rig tax system we currently have. Think about it. Even at the current level of about $16,000 per individual or $32,000 per household, most filers already take the standard deduction instead of all those other ones would be eliminating. Only about 11% of filers currently bother to itemize. So you can imagine what a huge tax break quadrupling this deduction would be for working and middle-class Americans, adding hundreds or even thousands of dollars to every paycheck, week after week, month after month, or technically fortnight after fortnight if you're paid twice monthly like me. In fact, apart from those at the top who would finally be forced to pay their fair share, Nick, the only people who might be hurt by this modest proposal would be the army of lobbyists whose job it is to rewrite the tax code on behalf of the rich and the powerful, and the army of tax accountants who make their living off a tax code that is far more complicated than it needs to be. Republicans have long championed the idea of simplifying the tax code by replacing the various brackets with one flat rate. But figuring out your effective tax rate isn't complicated. No, it's figuring out your taxable income. My proposal would deliver where Republican proposals have always intentionally failed. So that's it. That's my one big wonky policy idea for improving the lives of working Americans. We hope you will find the following big ideas just as intriguing. Hi, I'm Elizabeth Garlow from New America. For too many Americans, the agency over their time has become a luxury. It's reserved for those with income, with flexibility and security to control it. Quote, I'm typically running on empty trying to get everything done. One mother told New America New Practice Lab and another said that she would do anything for a breakfast where her family could simply sit down together In other words Americans want time for themselves and for the people they love Nearly 100 years ago, John Maynard Keynes predicted that by 2030, we'd work far fewer hours and focus on, quote, the art of life itself. He was right about productivity. He was profoundly wrong about time. Despite unprecedented productivity, Americans' time is more squeezed than ever. And this squeeze is structural. It's driven by working hours, by technologies and other arrangements that can be changed. The next president should go beyond a narrow affordability agenda and take on securing both money and time to support a good life. Can public policy tackle time? Yes. We want to establish the weekend, the 40-hour work week. It's time to make time an organizing principle for today's policy agenda. While we can't create more time, we can restore agency over it at work, at home, in our communities. Here are four pillars of a time-honoring policy agenda. First, predictable work. Today, 60% of service workers get less than two weeks' notice of their schedules. 57% face last-minute changes. and this unstable scheduling makes it impossible for the 40% of those service workers who are parents to arrange childcare or show up for their families. AI-driven scheduling threatens to make this instability worse. We need fair scheduling standards so workers can plan their lives. Second, align work and school days. When schedules don't match, families are forced to choose between time with their kids and the paycheck they need to care for them. In 2024, 73% of kids had all available parents in the workforce, but before and after school hours remain a daily scramble. Where possible, we should realign work and school hours and in the short term, expand after school care and safe places to play. Third, paid time to care. Without national paid sick days or paid family leave, time off is a privilege. Too many are choosing between a paycheck and caring for a sick loved one or a newborn. FMLA covers only 56% of workers and provides unpaid leave. So let's provide a basic floor of paid time to heal, to bond with a new baby, to care for loved ones who need us or ourselves. And finally, cut the time tax. The federal government wastes people's time with forms, duplicative reporting, and outdated processes we need to streamline benefits access, reduce administrative burden, and tell the American people we're giving them hundreds of hours back. Time is our most precious resource, but Americans across the class spectrum feel increasingly powerless over it. In a time of unpredictable work, accelerating AI and attention economies built to keep us always on, we need to make the case that we cannot only afford what we need, but that we can reclaim time for the art of life and the people we love. It's like speed dating. I'm Nick Hanauer of Civic Ventures. Today, a nurse, a teacher, or a firefighter devotes hundreds of times more of their income to Social Security than the rich. That's not a rhetorical flourish. It's how the system actually works. If you make $60,000 a year, you pay Social Security tax on every dollar you earn. If you earn $60 million a year, you stop paying after the cap of $168,000. After that, nothing. No sane person would design a system like that today. We inherited it from a much less unequal economy where even rich people lived on their paychecks. Today, they live on capital gains and dividends, which is why half of all national income is now above the cap. The problem with Social Security isn't that the benefits are too generous. that the tax base has collapsed as inequality has shifted more and more national income above the cap. So here's an incredibly simple idea. Let's cut the Social Security payroll tax in half from 12.4% to 6.2%. And then, this is key, apply the same 6.2% to all income with no cap. Wages, capital gains, dividends. Everyone pays the same rate. No loopholes, no cliffs, no exemptions. What happens? First, we give 95% of Americans a 6% raise overnight. A real raise, not a tax credit, not a rebate, a permanent increase in take-home pay. For a median household, that's between $3,000 $6,000 a year, every year, forever. Second, Social Security is fixed permanently, not patched, not kicked down the road. It's fixed. The reform modernizes the system for a 21st century economy and locks in insolvency. And third, finally, the economy grows a lot. When you give working people more money, they spend it. That demand flows straight to small businesses, local services, in hiring, conservative estimates show a $450 to $600 billion in additional GDP every year. That's middle-out economics in action, by the way. And finally this is the part voters get instantly It great politics Everyone pays the same rate No special rules for rich people just one system that asks the same thing of everyone Try justifying to a school bus driver why they should devote 12% of their income to Social Security, but a hedge fund manager devotes 0.12% or less. You can't. This is one of those rare policies that does four things at once. It raises wages. It grows the economy. It fixes Social Security. And it unambiguously shows the bottom 95% of Americans. We care about them. A 6% raise for 95% of Americans. If we're serious about strengthening the middle class and saving Social Security, halve the rate and extend it to all income. hey there uh jim kessler with third way work should create wealth not just for the professional class but for everyone who earns a wage a lifetime of work should make an ordinary person wealthy here's how to make every working family a middle class millionaire we have a minimum wage we have minimum health care requirements for most jobs, we should have a minimum employer contribution into a private retirement account that is personally owned and completely separate from and on top of social security. This middle-class millionaire proposal calls for a minimum employer contribution of $1 per hour. It would go into a low-fee 401k life cycle retirement account. The account would be owned by the employee, would be managed by Fidelity, Vanguard, et cetera. This is what almost every person in this room has, but not the people who set up this room and not the people who will clean up this room after we leave. They should get what we have. And if financial markets perform over the next 45 years like they performed over the last 45 years, a person who does nothing more, who starts work at age 22, does nothing more than what the employer contributes into this account and retires at age 67, would have $407,000 in this account in 2025 dollars. A couple would have over $800,000. On top of other assets they would surely own, this ordinary couple, they would be millionaires. They would have money for retirement. They would have money to pass on to their heirs. How much would this cost the federal government? As little as zero, as much as $10 billion a year, depending on design. Would employees who offer traditional pension plans or their own 401ks, would they be exempt? Yes. Can an employee contribute their own money into this account or move the account into another fund or to another financial manager? Yes. Would middle-class millionaire accounts count against safety net programs like Pell, Snap, Section 8? No, it doesn't count against it until you withdraw the money at retirement. Over the last 45 years, U.S. wages have grown six-fold in nominal dollars. Over the last 45 years, the S&P 500 has grown 60-fold. That's not going to change. We, folks in this room, we get a piece of the growing economy. So should the person taking your order at McDonald's, changing your oil at Jiffy Lube, delivering your package at Amazon. We get a piece of the rock. So should they. I yield back the balance of my time. Good afternoon. I'm Thea Lee, visiting fellow at the American University School of International Service. My recommendation is to transform labor protections in global supply chains by taking enforcement to a new level. When I served in the Biden administration, I had the opportunity to enforce labor provisions and trade agreements alongside dedicated professionals throughout the administration. I am enormously proud of that work, But I can see in retrospect that we were not fast enough, bold enough, or loud enough. Most of our current trade agreements require signatories to respect the International Labor Organization's core labor rights and reflect them in law and policy. In addition, a 1930 law, strengthened in 2016, bans the import of goods produced in whole or in part with forced labor, meaning that customs officials can detain goods at the border if they have reason to believe the goods are made with forced labor. These provisions, taken together and enforced, could be game changers, both in the United States and globally. But the sad truth is that the U.S. government does not allocate the resources necessary to fulfill the promise of these provisions. And honestly, with a few notable exceptions, like U.S. Trade Rep Catherine Tai, most high-level government officials in both Democratic and Republican administrations find labor rights to be an embarrassing distraction, subordinate to foreign policy, environmental goals, and business concerns. Global supply chains are riddled with shameful and horrifying labor abuses, many of them under the purview of U.S. multinational corporations with products that we consume daily. What could be done First with adequate resources and clear authority federal employees could dramatically increase the number and scope of labor cases brought under existing authority protecting workers rights to organize and bargain collectively among others Second with respect to the forced labor import ban Customs and Border Protection could target entire sectors for forced labor enforcement rather than individual companies. Third and most important, we need to flip the burden of proof from customs to corporations. Currently, corporations practice convenient ignorance regarding their supply chains. They outsource with abandon and then disingenuously declare that they have no idea that workers are being abused, maimed, or killed while producing their goods. Rather than asking under-resourced customs officials to track down these abuses, we could, under existing statutes, require corporations to provide thorough documentation of working conditions at every tier of supply chains with penalties for false disclosures and, where feasible, a central role for unions and worker organizations. To be clear, the Trump second-term tariff policy is arbitrary, corrupt, and deeply unstrategic. But if we could take the fearlessness, energy, and speed of the Trump tariffs and redirect them towards vigorous enforcement of internationally recognized labor rights, we could empower workers in developing countries, make global supply chains more transparent and equitable, and ensure that American workers were not in competition with workers who lack basic rights and protections. Thank you. Wow, the timer starts going right away. Okay, I'm Heidi Sherholtz. I'm with the Economic Policy Institute. Affordability is clearly the new buzzword in the public conversation about the economy, as buzzwords go, it's not terrible. It actually gets at something important about what the economy is delivering for working people. The problem is that pundits are talking about affordability almost entirely in terms of prices, as if the only way to make life more affordable is to make things cheaper. But affordability depends on both prices and pay. There are two sides to it. And the evidence is actually very clear that the root of today's affordability crisis is not in the price spikes of the recent years. It is in the long-term suppression of workers' pay. For more than four decades, employers aided by policymakers have actively suppressed the wages of working people so that corporate executives and owners can claim an ever larger share of the income generated by what workers produce. To give you a sense of the scale, if pay for working people had kept pace with productivity over the last 45 years, instead of being suppressed, paychecks today would be roughly 40% larger. In that scenario, there would be no affordability crisis. That wage shortfall is actually what is driving the crisis, and reversing it has to be core to any serious affordability agenda. No policy can fix the, no one policy can fix the wage shortfall. If I had to pick one, I would start with the most effective way to raise wages, which is getting workers into unions. How do you do that? The PRO Act would be great. This president is never going to sign that into law. There is a bill with bipartisan support that could get us part of the way there. The Faster Labor Contracts Act, the problem it solves is a big one. When a company's union-busting tactics fail to stop workers from organizing, like Starbucks stores all over the country winning unions, The next page in the union-busting handbook is for that company to drag their feet, often for years, on negotiating a first contract. They can do that with impunity under current labor law. And without a contract, newly unionized workers don't see any of the benefits of unionization. It's exactly what's happening at Starbucks right now. The bill gets first contracts for new unions by stopping companies from slow rolling negotiations, which it does by moving stalled negotiations to mediation and, if needed, to binding arbitration. It would help ensure that when workers win a union, they actually see the benefits of unionization. It would raise wages and take a bite out of the affordability crisis. Thank you. Pitchfork Economics is produced by Civic Ventures. If you like the show, make sure to follow, rate, and review us wherever you get your podcasts. Find us on other platforms like Twitter, Facebook, Instagram, and threads at Pitchfork Economics. Nick's on Twitter and Facebook as well, at Nick Hanauer. For more content from us, you can subscribe to our weekly newsletter, The Pitch, over on Substack. And for links to everything we just mentioned, plus transcripts and more, visit our website, pitchforkeconomics.com. As always, from our team at Civic Ventures, thanks for listening. See you next week.
