You Decide 2008: Stagnating Wages

As Labor Day approaches and the presidential campaign kicks into high gear we begin a series examining Democrat Barack Obama and Republican John McCain’s plans to revive America’s falling economy.

As wages for American workers continue to stagnate and the economy falls deeper and deeper into recession both major party presidential candidates have offered solutions to fix the ailing economy and improve the quality of life for the average American. However, there are stark differences between the two candidates when it comes to their solutions. Today we examine how each candidate plans to deal with stagnating wages.

Senator Obama’s plan calls for creating jobs through government investment aimed at helping the struggling middle class. Senator McCain, on the other hard, plans to focus on cutting taxes for business to spur economic growth that will create more jobs.

The presumptive Democratic nominee has unveiled his “Making Work Pay” tax credit that will lower the tax rates of individuals by $500, or $1,000 for working families. According to his campaign Web site this would totally eliminate income taxes for 10 million Americans. Another key aspect of his plan is an extension of unemployment benefits to meet the needs of those facing long-term unemployment. To create jobs Obama plans to invest $150 billion in alternative energy which he claims will create hundreds of thousands of new “green-collar” jobs. Obama has also called for an increase in the minimum wage to $9.50 per hour, which would then be indexed to rise with inflation, and also initiatives making it easier for workers to bargain collectively. To pay for these proposals, Senator Obama plans to raise taxes on those making more than $250,000 a year.

His Republican counterpart, Senator John McCain has a much more laizze-faire approach to the problem of stagnating wages. Under the McCain plan we could expect to see more of a trickle-down economic model. One of the Senator’s key proposals is to cut the corporate tax rate from 35 to 25 percent, making America more business friendly and creating more good jobs. To deal with the pain Americans are feeling in their wallets because of high energy and food prices McCain plans to suspend the 18.4-cent federal gas tax. McCain would also keep the top tax rate at 35 percent while also lowering the tax rate on to 15 percent on dividends and capital gains.

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