Want Stronger Families? Pay Workers More

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Hell to Pay: 
How the Suppression of Wages is Destroying America
by michael lind
portfolio, 213 pages, $29 

Among the intellectual godfathers of today’s “realignment” on the American right, few figures loom larger than University of Texas economist and political scientist Michael Lind. For decades Lind was a prophet in the wilderness, rejecting both the culture war fixations of the right and the identity politics of the left, and fulminating against both parties’ free trade globalist consensus. In recent years, however, he has emerged from the shadows with a steady stream of essays in New Right journals like American Affairs and speaking appearances at New Right gatherings like the National Conservatism Conference. His once-heterodox enthusiasm for the long-discarded political economy of Alexander Hamilton and Henry Clay’s “American System” has rapidly become something of a new orthodoxy among post-Trumpian young conservatives, for whom protectionism and “industrial policy” are no longer dirty words.

This embrace might seem puzzling among cultural conservatives and religious traditionalists, given Lind’s past contempt of such groups, but common ground has emerged around the ideal of a “pro-family politics.” Lind may not share a religious or moral motivation to defend the traditional family, but he is a realist, and you cannot have a strong nation or a strong economy without strong families. Accordingly, Lind has regularly harped on the need to recover the economic and political conditions for a family living wage.

All of these themes are on display in his newest book, Hell to Pay: How the Suppression of Wages is Destroying America. Like his previous book, The New Class War, this volume is relatively slender and popular-level, restating arguments from his frequent essays more than breaking new ground. Skeptics may demand fuller documentation of several of its key claims, but the core argument is refreshingly straightforward, with remarkable explanatory power. Real wages in America have stagnated for decades due to declining worker bargaining power, leading to dysfunctional workplaces (the gig economy), dysfunctional industrial policy (as we outsource critical industries to China), dysfunctional fiscal policy (increasing government redistribution to subsidize low wages), a dysfunctional education system (a “credential arms race” in higher education to increase future earning potential), and a dysfunctional fiscal “solution” that makes matters worse: increasing government redistribution to subsidize low wages. These in turn have contributed to demographic crisis (as poor wages postpone family formation and reduce birth rates) and declining social health (loneliness, drug addictions, and deaths of despair). Lind even manages to fit the rise of identity politics and partisan polarization into his narrative, suggesting that the former serves as a “make-work” initiative for the over-educated overclass, and the latter stems from declining working-class political participation.

Some elements of this narrative are more persuasive than others, with the most far-reaching claims packed into a single underdeveloped chapter (Chapter Eight, “Cascade Effect”). Any explanation of identity politics that ignores its religious dimension is woefully incomplete, as Joshua Mitchell has shown, and in my view conservatives should be skeptical of attempts to blame only economic headwinds for declining birth rates. Still, while we should always beware grand narratives that purport to trace all the trouble in the world to one root problem, there is something intuitively compelling about Lind’s account. Indeed, given conservatives’ longstanding emphasis on the dignity of work, Lind’s proposal to build a political movement around the empowerment of workers, and the just reward for their labor, is one that the right should leap to embrace, uncomfortable as it may seem to a leadership class long beholden to shareholder interests.

But are Lind’s fundamental premises true? Both the major premise (wages are determined by worker bargaining power) and minor premise (wages have stagnated) are anathema to most neoliberal economists whose thinking has shaped political economy on the right for the last generation. Sam Gregg’s review of Lind’s book in The Dispatch is a case in point. Attacking the minor premise, he cites a slew of “serious economic thinkers and commentators” who have made the case that the American worker is doing great, with median incomes up twenty to forty percent over the last three or four decades. These sources, however, miss two points essential to Lind’s argument. First, it is wages, not income, he is interested in; it is very curious to find conservatives who hate government redistribution cheerily reassuring us that “all is well, welfare payments are doing wonders for low-income workers.” Lind’s whole point is that over the past four decades we have increasingly substituted government transfer payments for wage raises, leading to dependency, despondency, and resentment—conservatives should be shouting “Amen” rather than dismissing him as a leftist. Second, as Oren Cass has compellingly shown in his “Cost of Thriving Index,” which Lind cites, traditional measures of inflation dramatically understate the rising cost of participation in society. Poverty and wealth are largely social phenomena, not strictly material or technical. If my one-thousand-dollar smartphone has one-hundred-times the computing power of a one-hundred-dollar flip-phone twenty years ago, that does not mean I’ve experienced a ninety-percent reduction in the cost of calling my wife.

Lind’s major premise, though, is the decisive hinge on which not only his book turns, but on which realignment political economy should turn. Dominant economic theory has long maintained that wages are determined by productivity: As productivity rises, median wages must also rise, and if a worker is stuck earning twelve dollars an hour, that is just proof that he is incapable of generating more than twelve dollars an hour of value for his employer. This theory would hold true as long as we assumed that every worker had equal bargaining power with his employer. But only people with PhDs in economics could assume something so at odds with common sense or historical experience. Indeed, Adam Smith knew better, observing that there is a fundamental asymmetry: “It is not, however, difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the other into a compliance with their terms. . . . Many workmen could not subsist a week, few could subsist a month, and scarce any a year without employment. In the long run the workman may be as necessary to his master as his master is to him; but the necessity is not so immediate.”

Lind handily disposes of the standard productivity-driven theory of wages in his first chapter, “The Big Lie.” In most American industries, wage stagnation has gone hand-in-hand with skyrocketing CEO compensation and returns to capital, suggesting that the problem is not insufficient productivity, but unequal bargaining power between labor and capital. Even in those cases where low wages seem tied to low productivity, we should remember that productivity is rarely static. Companies can and will invest in labor-saving technology to increase worker productivity, but will not bother to do so if they can just pay subsistence wages instead—something government transfer payments and lax immigration policy allow many industries to do. The goal of our political economy should be to foster a truly free market—that is, one in which both parties, workers and employers, come to the negotiating table with equal power. Only such a market will create the incentives that actually drive innovation and national prosperity, and build harmony rather than resentment among the various segments of society. Without such a market, impoverished workers will increasingly turn to government handouts or ham-handed regulations like the minimum wage to compensate for their lack of bargaining power.

Lind offers a range of proposals for rebuilding worker power. Some make more sense than others, and even the best will take a lot of time, hard work, and experimentation to implement. But even if we may quibble here and there with Lind’s grand narratives and quirky prescriptions, he offers a roadmap for renewing an authentically conservative politics in America. It’s time we grabbed the keys and discovered how far that map can take us.

Brad Littlejohn is a fellow of the Ethics and Public Policy Center and president of the Davenant Institute.

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