Ethan Orr: How to grow the middle class — and it's not the minimum wage

In the early 1900s my great-grandfather emigrated from Ireland to America. He was young and penniless, but he was willing to work and learn. He embodied what become known as the American dream because he made each day better than the last.

As a result, every generation was more prosperous than the previous one. It was a dream defined by production rather than consumption, and it has been shared by millions of others since the inception of this country.

Today many people feel that dream is in peril, that America works for some but not others. Most importantly, many feel that it does not work for them. For people without a college education, our working and middle class, real wages have not increased since 1973. Today many college graduates are frustrated with the lack of well-paying jobs.

Since the late 1970s our investment in ourselves, spending in infrastructure, education and basic research, has effectively been 0%. Additionally, we have devalued the dollar and, starting in the ’80s, increased the national debt in order to feed our current consumption. One of George Washington’s greatest regrets was that he left personal debt for his children.

Most of us, when asked if we are doing well economically think of three things: Am I better off today then I was yesterday? Am I doing better than my parents were when they were my age? And, will my kids have more opportunity than I did? Economists call this “future preference;” we want tomorrow to be better than today. It is this hope that can sustain us through anything. Yet, only 37% of Americans believe that today’s children will be better off than their parents. We can change that.

In America, this hope works best when it works for all of us. The key to economic growth is increased productivity, and that happens when people are given the freedom and opportunity to add vitality and innovation to the economy. Historically, in this country political stability has been based on a prosperous middle class and the belief in economic mobility.

From the 1940s to the 1970s the American middle class experienced a time of unprecedented economic opportunity. The country experienced what is considered full employment; anyone who wanted a job could have a job. Economic growth averaged 6% annually, which means that if you stayed in the exact same job for 15 years, your real wages doubled. To help put that in context the best economic growth that we have seen since the ’70s was the tech boom in the late ’90s, and that growth rate was just over 3%.

One of the primary reasons for the prosperity of the ’40s, ’50s and ’60s was the reduction of racial and gender barriers in the workplace. This increased the number of innovators and workers in the marketplace and created an upward job market for everyone. We need to support individual entrepreneurs.

My friend Karla Morales is one such person. She was born in Nogales, Sonora. When Ronald Reagan signed the Immigration Reform and Control Act in 1986 it created a pathway for her and her family to contribute and be a part of America. Her dad saved up and applied for legal residency, and she and her family, like my great-grandfather from Ireland, became first-generation residents.

When they came to America, Karla’s father said, “Know that there will always be challenges and struggle but that there is also always going to be a solution.”

In 1994, Karla became a legal resident. In 1997, she started attending the University of Arizona, and, in 2012, she proudly became a U.S. citizen. Today she is the president of the Tucson Hispanic Chamber of Commerce Board of Directors and is halfway through completing a master’s degree. She has helped countless people in our community succeed in work, education and business.

Karla’s success has made all of our lives richer. Her work ethic helped create jobs in this country. She sought a better life for herself and helped to kindle the American dream in others.

We must enact policies that allow individuals and families to pursue their dreams and build the basic tenets of life and prosperity. These policies include expanding the Earned Income Tax Credit, reducing the Payroll Tax and eliminating the tax penalty on married couples with children.

In 2018, the Earned Income Tax Credit lifted over 5 million people out of poverty by reducing the tax burden on low-income families. In contrast, according to the Congressional Budget Office, raising the minimum wage to $15 would lift 900,000 people out of poverty but eliminate over 1.4 million jobs in the process. Focusing on increasing the Earned Income Tax Credit and reducing the payroll tax is the most effective way to support all of America’s workers.

Our goal should not be the redistribution of wealth or wages but rather clearing the path for workers, business owners and innovators to create wealth, which will result in increased wages for everyone. On a state-by-state basis, research has shown that increases in working class wages are directly tied to the number of patents filed from that state. By increasing the Pell Grant program, and expanding access to short-term technical and vocational training programs we can equip a generation of innovators to continue America’s global lead in technology.

Currently, the government taxes a dollar that we earn from working at a higher rate than a dollar that we earn from investing; balancing this unfairness will support our workers and increase economic mobility. In addition, many government regulations act as barriers to market entry, protecting big businesses from competition instead of protecting the public. We need to allow small business and startups the freedom to compete on equal ground.

Every time we foster an entrepreneurial spirit of innovation, every time we invest in a skilled workforce, and every time we free job creators to build their dreams, we help ensure that everyone, regardless of who they are or where they came from, can build a better life.