THE BLOG
09/03/2012 05:08 pm ET Updated Nov 03, 2012

Real Job Creators Are the Middle Class: Trickle-Down Doesn't Lift People Up

Like Republicans, I believe that U.S. policy should do all it can to help job-creators. The only difference is that I know who the real job-creators are and they don't.

As fellow-entrepreneur Nick Hanauer has pointed out, it is the middle class that is the driver of job creation. Not only do middle class people actually make the goods and deliver the services, it is their consumption that drives business to need more workers.

It will not come as a surprise to the Koch Boys that entrepreneurs do not create businesses for the purpose of creating jobs. They provide jobs only as necessary, and only if they cannot get the work done without them. Businesses do not invest in new equipment, they do not hire more people to use the new equipment, unless the ultimate purchaser needs and can afford their products or services.

So, as with most things, Republicans have it upside-down. Contrary to their policies, the best way to create jobs through economic growth is to focus policies to help our middle class.

Here are a few measures that would help the middle class create jobs:

1. Raise the minimum wage to $10 in stages over the next 12 months and index it to inflation (as we do in Washington State). That will put more purchasing power in the hands of the middle class and not cost the Treasury one dime. In fact, it will increase tax revenues because the middle class would not hide its income in the Cayman Islands.

2. Stop subsidizing offshoring jobs through the tax-code.

3. Pass a $2T "Domestic Marshall Plan" to rebuild America as we rebuilt Europe. Pay for it with a 0.5 percent tax on financial transactions that will bring in $150B/yr, and closing the Romney tax-shelter loopholes that will add another $100B/yr. In 8 years, the economic foundation of the United States would be modernized and paid for (neither of which would occur under Republican plans).

4. Replace the social security and payroll taxes with a progressive sales tax (exempting food, rent, medicines, physicians' fees and other categories on which working people spend most of their income) on goods and services. This puts American-made goods and services on a level playing field with imports.

In addition, something needs to be done to stop foreclosures on first homes. That is the subject of a longer piece, but I and others have suggested some version of reducing mortgage principals to reflect current value and providing mortgage holders a percent interest in the property in exchange.

Let us make this a truly "Happy" Labor Day by recognizing our real job creators, and by rallying behind policies that will them help themselves and create jobs for others.

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