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Longer Weekends and Higher Wages? 5 Surprising Ways That Would Help Improve the Economy

Americans have been told that austerity measures and shared suffering are the path to economic recovery, but in fact, many fixes could dramatically improve our lives.

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“Major improvements in bike infrastructure wouldn’t just make it easier to get to work. They would also create work, a high priority in our high-unemployment economy.

Construction of bike paths offers more job creation per infrastructure dollar than investment in roads. (For more details, see this recent study by my University of Massachusetts colleague Heidi Garrett-Peltier, who analyzed 58 projects in 11 cities, using an input-output model to measure employment impact).”

When people drive less or give up owning cars entirely, the money they would have spent on gasoline and car insurance then can be pushed back into the economy in other ways— Philly CarShare noted that cutting back on driving increased people's purchasing power by nearly $3000 a year.

In addition to bicycling, the Center for Economic and Policy Research suggested another green transit stimulus—a temporary reduction in the cost of mass transit for one year. This would put money back in commuters' pockets, as well as providing an incentive for people to switch to mass transit from their cars. Mass transit doesn't provide the health benefits of bicycling, but it is much greener—and cheaper—than automobile use, and making it still cheaper would help out the very people who, once again, are most likely to spend the money they save in other ways.

5. Raise wages.

Republican presidential candidates like Rick Perry have been trying to score with the talking point that 46 percent of Americans don't pay any income taxes.

Perry, especially, doesn't like to follow that point up with an explanation of why. It would undermine his chief campaign promise: that he's a job creator, that as governor of Texas he's been good for the economy, because the jobs created on his watch have been low-wage jobs, the kind that keep workers poor and thus under the minimum income required for federal income taxes.

The answer that is little discussed by Republicans or indeed Democrats is that increasing wages for workers would actually mean more tax revenue for the government—without a need to actually “raise” taxes. It would mean more money in the economy, as those workers would have more to spend.

Grantham, hardly a raving socialist, argued:

“Today the artificial sugar-coating of increasing debt has been removed and we must live with the reality that an average hour’s work has not received a material increase for 40 years. Without increased debt and without gains in hourly wages, how can there be sustained broad gains in consumption? Only Chanel suits, Hermes scarves, BMWs, and their ilk have very strong sales, and these top-end items are just too small a fraction to carry the day. If we want to dig out of our current morass, don’t we have to change this equation and isn’t the most direct way of doing this to divide the pie more evenly?

. . . Wouldn’t it be better for us to decide deliberately and by ourselves that income distribution which creates the best balance of social justice and incentive to work?”

The federal minimum wage isn't enough to support one person, and certainly not enough for a family—a full-time minimum wage worker makes $15,080 a year, nearly $3,500 below the poverty line. Raising the minimum wage to a living wage would create an economic stimulus, putting additional money into the hands of those who are the most likely to spend it, rather than save it.

While Michele Bachmann and others have argued that the minimum wage is a "job-killer,"  Doug Hall noted that this isn't true. ”Previous research showing a significant negative impact have been displaced by studies showing that an increase in the minimum wage has a small — and even positive — impact on employment.”

 
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