Joe Biden’s five ideas for the future of the middle class
Editor’s note: On May 8, 2018, Vice President Joe Biden delivered the keynote address at a Brookings Institution event marking the launch of their new Future of the Middle Class Initiative. He spoke to the factors that contribute to economic inequality, including restrictions on workers’ rights, skewed tax codes, and geographic disparities. Read his full remarks below. (Remarks are published as prepared, and have been condensed for clarity.)
Folks, we’re here today for a simple reason: to talk about the middle class. From the start, I think it worth asking why do we care about the middle class in the first place? It’s an honest question.
From where I sit, a strong middle class brings social stability. Americans are more connected when we share economic circumstances, when we know that the other man or woman is facing the same struggles and successes we are.
A strong middle class breeds opportunity. We’re starting to see this more in studies — that the communities that best allow people to move up the economic ladder are ones with a big middle class.
When the middle class is strong, our economy does well, too. American companies rely on millions of consumers to buy their products, which feeds a virtuous cycle of prosperity. Jobs are added. Everyone wins.
But if we have a weak middle class, we become a fractured country. Opportunity fades. People feel left out — and they either drop out or fight for radical change. And that’s what we’re starting to see — a younger generation that’s questioning the very essence of our capitalist system. And it’s this lack of hope, lack of opportunity that’s driving so much of what’s happening today.
America is all about possibilities. That’s what separates us from every other country. Every generation believes there is something better waiting for their kids. But when people start to think their kids aren’t going to do as well, things begin to erode. People stop believing the American dream is possible. When that dream lives, anything is possible. Whether that means digging out of tough times, or getting stronger in good times. But it’s all built on the premise that kids will do better than we have done.
A lot of this hope and optimism was based on a basic bargain we used to have in this country. If you contributed to the success of an enterprise, you got to share in its success. But that’s not true anymore. The bargain has been broken. The gap between productivity and income has been growing for decades. Workers are delivering more — and getting less and less in return.
Folks, the middle class is in trouble. Now it’s all about taking care of the folks at the top, it’s all about stock buybacks, it’s all about taking care of the shareholders. And very little has gone into the pockets of workers — and even less into investment in things like research and development or worker training.
While it can be argued that at a macroeconomic level, globalization and automation and technology have been successful — it’s left a lot of people behind. It’s left a lot of people fearful for their future. It’s left a lot of people unable to maintain their quality of life.
Take that guy making $60,000 on the assembly line and his wife making another $30,000 — together they’re making $90,000. They’ve got two kids, a mortgage payment, a car payment, basically no retirement savings — and they can’t make it. And they’re scared.
Every generation believes there is something better waiting for their kids. But when people start to think their kids aren’t going to do as well, things begin to erode. People stop believing the American dream is possible.
The problem isn’t just the salary. It’s the soaring cost of college with nothing put aside for tuition. The huge mortgage. The empty retirement savings account, or no pension. The fear that you’re going to have to ask your kids for help.
The middle class is not a number. Some economists might say the middle class is $50,000 a year. Or $52,000. But it’s really a value set. It’s living in a neighborhood where you know your kids will come home safe. It’s having a retirement where you can take care of yourself. It’s being able to send your kids to college. It’s owning your own home.
My dad used to have an expression. He used to say that a job was about a lot more than a paycheck. It’s about dignity, it’s about respect, it’s about one’s place in the community. It’s about being able to look your child in the eye and say everything is going to be okay. Well, far too many people today can’t do that. They can’t look their child in the eye and say it’s going to be okay. That’s what we have to change. And there are answers.
So what do we have to do?
First, we’ve got to deal with income inequality.
It not only hurts growth, it’s pulling us apart. And the country won’t stand for it forever. So we have to deal with the tax code. It’s wildly skewed towards taking care of those at the top. It favors investors over workers. And it’s riddled with unproductive tax expenditures.
Look at what just happened with the latest tax cut: Once again, those at the very top got the biggest break. And what will we have to show for it? Even Republicans admit there is no evidence these tax cuts are being put to work in the economy. No new growth, just more debt — and that puts middle-class programs like Social Security and Medicare in jeopardy.
What we need is a pro-growth, progressive tax code that treats workers as job creators, not just investors. That gets rid of unproductive loopholes like stepped-up basis. And that raises enough revenue to make sure that Social Security and Medicare are here to stay.
Second, we’ve got to educate our people.
My wife has an expression. She says any country that out-educates us will out-compete us. It’s not just my wife. In 2014, President Obama asked me to lead a year-long process on the workforce and the jobs of the future. I traveled the country meeting with major CEO and business leaders in the nation — and the overwhelming message from the business community was we need a better-educated, better-trained workforce. We found that by the end of this decade six in ten jobs would require some education beyond high school. And it doesn’t end there. Digitalization, automation, artificial intelligence, Moore’s law — the changes are coming so fast that if you don’t commit yourself to lifelong education, you’ll be obsolete.
Quite simply, 12 years of education is no longer enough. Does anyone think if we were building our public school system today, we would stop at 12 years of education?
So we need widespread access to affordable college. Community college should be free. In my view, four-year public colleges should be free, too. And we need to make lifelong learning commonplace: From the PhD engineer to the factory line worker, education has to be part of every worker’s lifeblood.
Third, we’ve got to empower workers.
Workers have no leverage. They’ve got no power. The deck has been stacked against them. Look at the studies. We used to think wage stagnation was only driven by globalization and automation. But now we know lack of competition matters too. All the power is with employers, with companies. And they’re squeezing the life out of workers because workers have no bargaining power.
So we need competitive labor markets and protections for workers. Nearly 40 percent of workers will be subject to a non-compete in their career. One-fourth of workers can’t even talk about wages. There are over 4 million workers who because of a false classification are denied overtime — costing them $1.2 billion in lost wages every year.
So we need to get rid of abusive non-compete clauses. Let workers know what their fellow employees are being paid. Provide fair pay for people who work overtime.
Fourth, we’ve got to rebuild this nation’s infrastructure.
The country is falling apart. We need roads, waterways, and ports to move our products. We need highways and transit to get workers to and from work. We need lightning-fast broadband to communicate. It’s not a luxury; it’s a necessity to compete with the rest of the world.
So we need massive investment in infrastructure. Roads, bridges, airports, broadband. We’ve been lagging behind our competitors for too many years.
And fifth, we’ve got to get every part of this nation in the game.
Innovation and entrepreneurship are at the heart of the American economy. It’s always been this way. It’s how we got on top and why we’ve stayed on top for so long.
But so many Americans are being left out. Three-fourths of all venture capital goes to just four cities. Think of all the great ideas that never got funding because the entrepreneur lived in the wrong city. We can’t have ZIP codes deciding the future of this nation.
So we need policies that get investment capital to every state in the nation. During the recession, President Obama added parts to the Recovery Act that got small business funding to innovators in forgotten towns around the country. We need to make this permanent. One idea is a ‘race to the top’ that gives federal dollars to states that are willing to make their economies friendlier for investors.
How did we get to a place where the people who repair our bridges and put roofs on our homes, who keep the lights on in our cities and the water systems flowing and our streets safe, and who teach our kids and take care of our sick and elderly parents — how did we get to a place where they don’t feel respected for what they do?
Folks, as I’ve thought about what’s happened to the middle class in America — and why so much frustration has grown, why so many Americans feel left out, why so many Americans feel disrespected, why has there been such fertile ground for this phony populism being peddled across America — what I see is an abuse of power.
I see a greater and greater concentration of wealth. More and more tax benefits going to fewer and fewer people. A rise in monopolies. Weakened labor. One obstacle after another thrown up in labor’s way. And so much big money in the political system that ordinary folks just don’t think they have a prayer.
Ask yourself: Why are we giving hedge fund millionaires tax breaks, but we can’t find the money to give families a real tax break for child care? Why are sandwich makers being forced to sign non-compete clauses? Why are low-wage workers re-classified as managers? What possible reason is there for why an employee can’t tell other people what he or she makes? Is there any other reason than to depress wages? What is it?
And while we’re at it — how did we wake up one day and stop looking at people like my dad who ran an automobile dealership as a job creator? I applaud investors, but do I think they are greater job creators than the people who do the work in a company? No. I don’t.
How did we see tax expenditures double since Ronald Reagan was president to over $1.6 trillion today — and still argue that things like protecting stepped-up basis makes more sense than educating our kids? Does anyone believe there isn’t significant room for savings in tax expenditures to pay for health care or child care or education or rebuilding this nation? Look, this is a fundamental choice: Unproductive tax expenditures versus policies that make the middle class better off. What choice are we going to make?
One more thing — how did we get to a place where the people who repair our bridges and put roofs on our homes, who keep the lights on in our cities and the water systems flowing and our streets safe, and who teach our kids and take care of our sick and elderly parents — how did we get to a place where they don’t feel respected for what they do? Where they don’t feel valued?
Folks, that’s what we have to change. And I believe we can.
And if we make the decisions we need to make, I believe that not only will we revitalize the middle class in this nation, but we will build a more inclusive middle class that brings everyone along: women, black men, Hispanic men, and so many others who in the past have been left out — or blocked out — of the middle class.
You know when I look at all the strengths this country has — from the biggest economy to the strongest military to the greatest research universities to the most innovative entrepreneurs to an energy capacity unimagined just a few years ago to some of the most productive workers in the world — I believe there is no reason America can’t lead the world in the 21st century.
Folks, this has always been a nation of possibilities. We’ve always believed that, regardless of where people started in life, there wasn’t anything they couldn’t achieve. In fact, when I was Vice President I remember the now President of China, Xi Jinping, asking me if I could explain to him the secret of America. And I said yes I could, in one word: Possibilities. That in America, anything is possible.
I believe that’s still true. It’s our job to make sure America still believes it’s true too.