The Project to Raise America's Pay (RAMP) aims to end four decades of wage stagnation and reconnect worker pay with economic growth. By catalyzing changes in business compensation practices, we seek to overcome suppressed wages, revitalize upward economic mobility, and restore the American Dream.
The Project to Raise America's Pay (RAMP) aims to end four decades of wage stagnation and reconnect worker pay with economic growth. By catalyzing changes in business compensation practices, we seek to overcome suppressed wages, revitalize upward economic mobility, and restore the American Dream.
Over the past 45 years, practically all economic gains in the United States have gone to top earners and to profits, bypassing everyday workers and leaving the wages of most Americans flat. From 1973-2015, as the economy and worker productivity both doubled per capita, the share of total compensation and profits in the economy going to the bottom 90% of working Americans dropped from 61.8% to 48.5%. If distribution decisions were made today as they were in 1973, these workers would now be receiving an additional $2 trillion a year in pay—more than $15,000 in annual pay on average, per worker, and about $25,000 per typical working family.
The suppression of wages has held back living standards, stirred feelings of economic anxiety and marginalization, increased reliance on public assistance, weakened economic growth, eroded confidence in public institutions, and fueled a powerful political backlash. Addressing this problem is a central challenge of our time; it’s also one within our power to solve.
While today’s lopsided compensation practices partly stem from structural changes in the economy, like globalization and automation, the choices voluntarily made by businesses to send nearly all gains toward top employees and profits also play a crucial role in the wage story—and offer a powerful leverage point for reform to reconnect economic growth with worker pay.
A Plan for Action
Fixing the broken connection between worker pay and economic growth must become a core project in American public life. Yet even as stagnant wages have attracted growing attention, there’s a lack of new thinking for how to confront the central driver of wage inequality: the choices made by private employers. We believe the key to restoring the American Dream is to incentivize businesses to make different choices, one that more broadly share the fruits of growth. RAMP is focusing laser-like on changing corporate compensation practices through work that currently has five parts.
1. Research and Data. We are developing groundbreaking research and data to better track how well companies pay the bottom 90% of their workers. These new empirical tools for analyzing compensation ratio, or CR, at companies will allow for comparisons across firms and industries, as well as geographically. In addition, better data on CR will allow for a deeper understanding of how compensation practices can affect local economies and living standards, as well as corporate performance. We see new data and research as key building blocks for a multi-faceted campaign to change how businesses pay their workers. A variety of players—internal stakeholders, pension funds, activists, consumers, government, and the media—have a role to play in this effort.
2. Policy Development. We are developing new policy solutions to reduce wage inequality. The centerpiece of this work so far is a blueprint for a voluntary federal program that aims to catalyze changes in corporate compensation practices. The RAMP plan works in a simple fashion: It offers large tax incentives to businesses that commit to increasing pay to their workers, by holding their compensation ratios stable as earnings rise. In addition, participating businesses would receive priority for federal contracts and subcontracts. Businesses that do not participate in the plan wouldn’t enjoy these special benefits and would also lose many of the savings they’re receiving under the new tax law, as well as eligibility for a range of tax breaks available for corporations. In part, the plan would also achieve its goals by raising the minimum wage. (Read the detailed working paper on this proposal. We welcome comments and suggestions.) Beyond the RAMP plan, we are exploring other new policy levers for addressing wage inequality, including at the state and local level.
3. Assessing Business Performance. Enabling investors, consumers, local governments, and other stakeholders to hold businesses accountable for their record in sharing gains with their workers is another way to break wage stagnation and get wages for everyday workers moving ahead positively again. So, too, is employing the CR to uncover effective strategies that demonstrate how companies can lift wages and profits together. Our objective is to deploy the CR both to help identify and spread strategies that have proven effective for companies and also as a key metric of corporate social responsibility for investors and consumers to use in making purchasing decisions together with other indicators currently used, such as those related to the environment and diversity. We are in the process of analyzing data concerning wages and profits of 1,000 public companies. The research will soon be expanded to include more than 5,000 major companies.
4. Changing the Narrative. We aim to increase the urgency around wage suppression, as a top crisis of our time, and also to foster public faith that this a solvable problem, not a fait accompli. Related to this, we intend to make a strong moral case about the importance of overcoming wage stagnation. Stagnant pay doesn’t only drive multiple highly disturbing problems in U.S. society; it also stands at complete odds with bedrock American values of freedom and equality. To the Founders, economic freedom meant more than simply the presence of choice, competition, and a free market. It also meant the ability of individuals to provide a dignified living and get ahead through means under their own control, to be able to make their way and improve their living through their own efforts. Alongside bolstering empirical claims, we aim to provide a clearer explanation able to resonate across the political spectrum about why both individual liberty as bequeathed to us by the Founders, not to mention the common good, are both corrupted when we permit wage stagnation to persist, leaving the economy unable to work for great numbers of Americans. Along with this, we will activate voices within the business world who already understand that private companies have an obligation to operate in ways consistent with foundational American values.
4. Partnerships and Outreach. The Project to Raise America's Pay will work with a range of partners focused on changing how business operates, including pension funds, unions, CSR groups, business associations, think tanks, academic centers, foundations, community groups, and media outlets. Building a diverse and strong network of leaders committed to reducing wage inequality is critical to moving this issue to the forefront of American life and building momentum for change.
5. Advocacy. We are reaching out to public officials who have the power to enact the RAMP plan or other solutions to wage inequality. These efforts are mainly focused at the federal effort, but will be extended to state and local governments, which also have policy levers to help change business behavior.
Impact
Policy solutions that bring substantial real wage increases for most workers would have a range of positive impacts on U.S. society. We project, for example, that if the RAMP plan were enacted, it would not only raise living standards for a wide swath of Americans, but also reduce reliance on public assistance and social spending, boost rates of economic growth by strengthening both worker productivity and consumer demand, and improve the fiscal outlook for the federal government. Steady pay raises would also help alleviate a range of social problems associated with prolonged stagnant income, including family breakdown, crime, and poorer education and health outcomes. Finally, reviving shared economic prosperity would go a long way to restoring public faith in the American idea and reducing current political divisions.