The thinking is that these changes would induce companies to invest in equipment, software and plants that would make their workers more productive. As these workers became more efficient, the thinking goes, they would be rewarded with higher pay. An effusive White House predicted in October that the average American household would enjoy a $4,000 raise.
Rising wages could ease another big economic problem: a shortage of workers. The percentage of Americans who are either working or are looking for work has declined as the vast baby boom generation retires. To grow at a healthy pace, an economy steady needs a steady infusion of workers.
“To the extent this heats up the economy, that will help draw people back into the labor force,” says Phillip Swagel, a University of Maryland economist who served in President George W. Bush’s Treasury Department.
But it’s more than just an aging population: Even working-age Americans — ages 25 to 54 — are less likely to work than they used to, in part because so many blue-collar jobs have disappeared.
