The Fair Wage Guarantee: A Once-in-a-Generation Opportunity to Raise Wages and Accelerate Our Economic Recovery

July 22, 2020

For decades, American workers have seen their power diminish and their wages barely budge. Today, Congress can reverse these trends and accelerate our economic recovery by implementing a fair wage guarantee.

The unemployment insurance (UI) supplement that Congress enacted in response to the coronavirus pandemic in March has been an enormous success. Millions have been able to sustain their income in unemployment, and millions more are now bringing in more from UI than they did at their former lower-wage jobs. Unemployment benefits are allowing workers to stay home—which helps to stop the spread of the virus—without deterring people from looking for jobs or returning to work where it is safe to do so. With limited job openings and more new COVID-19 cases now than there were in March, Congress should extend the supplement before it expires at the end of July.

But an extension alone will not insulate millions of Americans from a steep drop in income in the months ahead. To maintain their UI benefits, people must actively search for work and must not turn down a job offer with wages comparable to their last job—even if that pay is less than what they currently receive in UI. As employers pick up hiring, millions could experience painful income cuts as they return to work. Our economic recovery will be at war with itself: Economic expansion and hiring will produce income losses and contraction. Congress can address this problem by adopting what Bharat Ramamurti and Lindsay Owens call a fair wage guarantee.