THE BLOG
11/10/2014 02:16 pm ET Updated Jan 10, 2015

Raising the Minimum Wage Isn't Enough

Scott Olson via Getty Images

As I wrote last month, for millions of American families, the recession has never ended, despite a booming stock market and a lower official rate of unemployment. As Republicans and Democrats sort out the changed political landscape they'll have to navigate next year, one lesson from our recent election is unmistakable:

Americans get that economic inequality is crippling our nation and they want our leaders to address it. Even as Democrats were getting their heads handed to them in both red and blue states, voters in those same states were doing what they could to help working families. In every state where a minimum wage increase was on the ballot, it passed easily, with some the biggest margins in red states. The same Arkansas voters who handed Democratic Sen. Mark Pryor a 16-point defeat passed a minimum wage increase by a nearly two-to-one margin. Voters in Alaska, Illinois, Nebraska and South Dakota did likewise.

Congress should pass a federal minimum wage increase yesterday (and if Republican leaders are listening to their own voters, they should lead the charge), but that's not enough. A higher minimum wage will help millions who are stuck in low-end jobs to make ends meet, but if families are to prosper -- especially in the communities of color that got most hammered by the Great Recession -- they need pathways to real careers and opportunities to build assets and prosperity.

The good news is that there are ways to help that happen. The bad news is that some things that could help probably can't get done politically, and some things that may be politically feasible could take us in the wrong direction if not done right.

For example, there is a lot of talk about corporate tax reform. The Greenlining Institute and others have complained for years about big companies parking hundreds of billions of dollars in profits overseas to avoid paying taxes on them. So far, the political talk is mostly about lowering corporate tax rates, but anything deserving to be called "reform" must include a push to collect the taxes that these companies are dodging -- and then use that money for education and investment in communities that still struggle. Think about what could be done if we collected those missing billions and put them to work helping students pay for college, or on infrastructure projects that could generate contracts for thousands of small and medium-sized businesses across the country, many of them rooted in the communities of color that have been on the wrong end of the racial wealth gap.

That shouldn't be a political non-starter given the election results, but in our dysfunctional politics, it may be. Even so, officials can still take meaningful action. Recently, my colleagues on The Greenlining Institute's Economic Equity team raised a few of them with policymakers in Washington:

Small businesses play a critical role in generating jobs and building wealth, especially in our nation's African American, Latino and Asian communities, and the Small Business Administration must take a more aggressive role in ensuring that these entrepreneurs can access the capital they need to grow and prosper. Happily, SBA Administrator Maria Contreras-Sweet's statements suggest she understands the importance of these diverse small businesses.

The SBA can take numerous actions that will make a difference. It can push banks to increase SBA lending to Main Street small businesses. It can help these small businesses build capacity by connecting them to technical assistance and training that will help them put those loans to work. It can pilot an SBA direct loan program that targets businesses in areas lacking access to capital.

And on a variety of fronts, government financial regulators can collect -- and make public -- better, more detailed data that give us a clearer picture of how our banking and financial system serves (or fails to serve) the needs of all our communities. This sounds wonky and obscure, but remember: We can't fix what we don't know.

Congress and the administration can act to protect and expand crucial reforms contained in the Dodd-Frank Act. They can start with the Consumer Financial Protection Bureau, which continues to do important work protecting consumers from the sorts of abuses that tanked our economy in the first place.

Less known but just as important are the Offices of Minority and Women Inclusion, created because Congress understood that including diverse voices in the management of both financial businesses and the agencies that regulate them can not only help communities of color and low- to moderate-income Americans, but ultimately strengthen our whole economy. For example, the OMWIs can encourage the financial industry to open up narrow "old-boy networks" of suppliers and contractors and provide more opportunities to diverse small businesses.

The OMWIs don't have the power to enforce diversity practices, but they can collect data and use their bully pulpit to lend a hand to small businesses in underserved communities. Right now, it's not clear that they're stepping up to the plate in a meaningful way, but our whole economy will benefit if they do.

Also, Congress must act to prevent a whopping tax bill from hitting homeowners who got their loans modified as part of settlements reached with major banks. This is simple: Just renew the Mortgage Debt Relief Act that was unfortunately allowed to lapse last year.

These suggestions aren't dramatic or headline-grabbing, but small actions done right can make a big difference. Large portions of our society are still hurting, and officials of both parties must act.