In the early nineteen-nineties, when Arindrajit Dube was growing up in Seattle, where his parents were scientists, he took a low-wage part-time job at a McDonald’s. He was looking to earn spending money, but some of his co-workers were full-time employees trying to make a living for themselves and their families. “That stayed with me,” Dube told me last week, when I caught up with him by phone as he was driving home from the University of Massachusetts, Amherst, where he teaches. After majoring in economics at Stanford, Dube enrolled in a Ph.D. program at the University of Chicago. In his third year, he visited Harvard, where the noted labor economist Richard B. Freeman served as one of his thesis advisers.
Dube used state-of-the-art statistical techniques to study things like wage inequality and outsourcing. Outside his classes, he got to know Frank Morley, a working-class Bostonian who was a custodian at Littauer Hall, which houses the economics department. Despite working at Harvard, Morley wasn’t employed by the university. He worked for a company that supplied janitors and other service workers on a contract basis. These outsourced workers received markedly lower wages than janitors who worked directly for Harvard. (The university had both types.) “You didn’t have to do any fancy statistical analysis to see what was going on,” Dube recalled. “Same job, different pay.” Morley, who died in 2007, was active in the Harvard Living Wage Campaign, a student-led effort that demanded a minimum wage of $10.25 an hour (about $19.50 in today’s money) for everyone employed at the university, contract workers included. Dube joined the campaign, and his ambitious new book, “The Wage Standard: What’s Wrong in the Labor Market and How to Fix It,” is dedicated to Morley. “He was really inspiring,” Dube said. “He was really hardworking, he had many jobs, but he also found time for worker activism.”
Dube defines the term “wage standard” as the idea that “there is a socially acceptable range of pay for most jobs.” In the decades after the Second World War, this principle was widely enforced through labor contracts, and big companies tended to share their economic gains with their employees. As they invested in new equipment that enabled workers to create more output, wages rose along with productivity. But beginning in the nineteen-eighties this linkage broke down: productivity kept growing, but wages stagnated as employers concentrated more on cost cutting, through outsourcing and other tactics. Between 1980 and 2019, Dube notes, the hourly productivity of American workers rose by seventy-three per cent, while the inflation-adjusted hourly wage of the median worker—the person right in the middle of the wage distribution—increased by just twenty-three per cent. That’s a huge gap, and low-wage workers fared even worse.
Eventually, rich and liberal Harvard joined the cost-cutting trend. Looking back, Dube said that the Living Wage Campaign served, in some ways, as a microcosm of the broader struggle over wages and living standards that has engulfed this country for the past half century. In his book, he writes, “many workers and middle-class Americans have received paychecks smaller than they should be even as our society has grown more prosperous.” He goes on, “I aim to show you why—and more importantly how—we can change the labor market to work better for us all.” Even in more normal times, this would be a lofty goal. Coming at a moment when A.I. is threatening to bring an unprecedented wave of disruption to the world of work, it seems doubly ambitious. But Dube is undeterred. “I am not saying I know what exactly is going to happen,” he said, when I asked him about the impact of A.I. “But what I am proposing is a set of tools that can help us adapt to whatever the future crises are.”
These tools can be divided into three categories. At the ground (“micro”) level, Dube stresses the importance of unionization campaigns and other efforts to pressure employers to pay living wages. Even if these initiatives don’t wholly succeed, they can prompt companies to raise wages in an effort to counter them, he argues. (As examples, he cites Amazon and Walmart.) In some circumstances, moral suasion can also be effective. After four years, the Harvard Living Wage Campaign resulted in a new labor contract that raised the wages of university-employed janitors and mandated comparable wages for outsourced workers.
At the economy-wide (“macro”) level, Dube emphasizes the importance of maintaining full employment. When workers are scarce, firms have to offer higher wages to attract and keep them. Since the nineteen-seventies, Dube points out, the only periods in which the earnings of low- and middle-income workers saw notable growth were the late nineteen-nineties and (setting aside the COVID-19 pandemic) the years from 2018 to 2024. In both of these periods, the unemployment rate fell below four per cent. In the U.S. system, the Federal Reserve has primary responsibility for insuring that maximum employment falls, but it also has a mandate to contain inflation. Dube welcomes the Fed’s increased willingness, during the past decade, to keep interest rates low even as unemployment falls to low levels. He writes that an “accommodating monetary policy that doesn’t prematurely choke off growth is crucial to sustaining recoveries” and promoting shared prosperity.
Dube is best known for his research into minimum-wage laws. At the national level, the minimum wage has been stuck at a measly $7.25 an hour since 2009. But more than thirty cities and states have introduced higher minimums, with at least two of them—Seattle and Washington—setting them above twenty dollars. Dube’s own work, and the findings of other studies he details, indicated that raising minimum-wage laws does an effective job of increasing the wages of low-paid workers, while having little impact on employment levels—conclusions that contradict the warnings of business groups and conservative economists. Dube does concede that raising the minimum wage above some threshold could have an adverse impact on hiring. Based on a review of recent studies, he suggests setting it at two-thirds of the local median wage. That would translate to $12.73 an hour in Mississippi, where the federal minimum wage of $7.25 currently applies, and $22.64 in Maryland, where the state minimum wage is fifteen dollars.
Minimum-wage laws are examples of intermediate, or “meso”-level, interventions, the third wrench in Dube’s tool kit. To boost earnings further up the pay scale, he also advocates the introduction of industry-wide pay standards. In parts of Europe, including France and Germany, wage bargaining between employers and labor unions often takes place at the sectoral level, rather than at the individual-company level, and collective-bargaining agreements set pay levels and work conditions for entire industries. In Australia, a government-appointed Fair Work Commission sets minimum-wage levels for many industries, including retail, hospitality, and health care.
Could a similar approach work in the United States? Dube discusses some recent initiatives along these lines. In California, in 2023, a lengthy strike by health-care workers at Kaiser Permanente ended with the company agreeing to introduce a minimum hourly wage of twenty-five dollars by 2026. Shortly thereafter, Governor Gavin Newsom signed legislation extending this goal to most of the health-care workers in the state. The same year, California established a Fast Food Council and gave it the authority to raise the minimum wage at fast-food chains to twenty dollars an hour. Elsewhere, a 2023 Minnesota law created an official wages board for nursing homes in the state. The following year, the new board, which includes workers, employers, and government officials, set a series of wage floors to go into effect by 2027: $28.50 an hour for licensed nurses, twenty-four dollars for certified nursing assistants, and $20.50 for other workers, including contract employees. Dube sees scope for extending this approach to the gig economy. He notes that, in Massachusetts, the state has established an earnings floor of $32.50 an hour for Uber and Lyft drivers.
To Dube, these developments are encouraging signs that, at least in some places, the “wage standard is already being rebuilt.” One of the merits of his book is his account of its creation and dismemberment during the past century, beginning with New Deal reforms, including the Wagner Act, which established workers’ right to organize labor unions, and the 1950 Treaty of Detroit, in which the Big Three automakers reached a five-year contract with the United Auto Workers which, in addition to raising wages, expanded vacation time and health and pension benefits. This contract—or wage bargain—codified the principle of shared gains and served as a model for other industries until the nineteen-eighties. That’s when the Reagan Administration launched a concerted attack on organized labor, and corporate leaders like General Electric’s Jack Welch abandoned the sharing principle in favor of cost cutting and enhancing “shareholder value,” a doctrine expounded by Milton Friedman and taught in business schools. Dube cites a study that found when a firm appoints a C.E.O. with a degree in business, wages at that firm subsequently decline by six per cent, on average.
Some economists attribute wage stagnation and rising inequality to globalization and technological progress that displaced well-paid jobs, particularly in manufacturing. Dube says that these factors “help explain how we got here—but they aren’t destiny.” He points out that other countries, such as Canada, faced similar challenges but didn’t experience the same degree of wage stagnation and rising inequality. “Market forces are important, but they are not irresistible.”
That brings us back to A.I., which big companies and the stock market are eagerly embracing. Dube isn’t as panicked about its impact on wages and employment as many other observers are. In his book, he suggests that it could boost the productivity of workers who don’t have advanced technical skills and raise their wages relative to those of star performers, “promoting a more equitable distribution of benefits from technological enhancements.” When I pressed him on this optimistic take, he said that he had two things to say about A.I. The first was “Nobody knows what is going to happen.” The second was “Whatever the outcome, we can create institutions and structures to determine what impact it has.”
As an example, he cited the agreement that ended the 2023 writers’ strike, in Hollywood, which included restrictions on studios’ use of A.I., including a stipulation that A.I.-generated writing can’t be considered “source material,” meaning that human writers get credit for originating it, and a prohibition on studios forcing writers to use A.I. programs in their work. In setting new standards for the film-and-television industry, while also raising wages and benefits, this agreement was precisely the sort of thing Dube is advocating for other sectors to adopt, even though it was enacted through collective bargaining rather than by government action. “Some people get overly pessimistic,” he told me. “They say there’s nothing we can do about it: it’s just the onward march of capitalism. The reality is that, over the course of history, we’ve had very different types of capitalism, and we do have agency.”
That’s surely true. Still, the writers’ strike failed to resolve some important issues, such as whether studios can train A.I. models on existing scripts, and A.I.’s long-term impact on Hollywood remains uncertain. As A.I. spreads, it’s easy to imagine similar disputes involving architects, doctors, lawyers, and other professionals. And that’s not considering the prospects for less highly paid workers who are in the firing line of A.I., such as truck drivers, clerks, and customer-service representatives. From Hollywood, California, to Hollywood, Florida, the wage standard needs nurturing and protecting with whatever tools are available. Inaction isn’t an option. That, essentially, is Dube’s argument. ♦