High-Wage Economy: How Sustained Public Investment Can Reverse Decades of Wage Stagnation

July 7, 2021

This is a transformative moment for the US economy. 

Because of smart policy choices, jobs are returning more quickly than they usually do after recessions, and workers are experiencing long-needed wage gains. This will feel and be different from the last three recoveries—in 2007, 2001, and 1990—which started with slow and weak jobs numbers and growth. We are beginning this recovery with a boom like the one we most recently saw in the late 1990s, and we have the potential to go beyond what that boom accomplished.


If our recovery continues at this pace, we can create a better economy than we had before the pandemic: We can lock in and accelerate today’s wage gains, reduce inequities, expand economic sectors, and reach full employment.

But there’s no guarantee. 

To ensure that today’s boom lasts, and that it continues to benefit workers, policymakers must remember these three points:

  • Today’s rising wages are a direct and enormously positive consequence of the American Rescue Plan, reversing decades of wage stagnation for 70 percent of workers.
  • Myths and misunderstandings about labor shortages and inflation shouldn’t be a concern.
  • To translate a temporary recovery into a permanent high-wage economy, government policy should defend the progress we have made and start investing more now.

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