Former Secretary of Labor Robert Reich spoke at Town Hall over the weekend as part of Working Washington's ongoing Reclaiming Prosperity lecture series. At the lecture, Reich said he wanted to personally celebrate Seattle's recent adoption of the $15-an-hour minimum wage as a huge step forward in the fight for income equality. Before the lecture, Reich sat down with The Stranger to discuss the politics of economics and why cities should be at the forefront of the battle over income inequality.

The city’s focus really landed on the minimum wage when a socialist running for city council, Kshama Sawant, made the movement the centerpiece of her campaign. Her campaign signs promised a $15 minimum wage, the issue took center stage at her events, and the mayoral candidates at the time both pledged support to the minimum wage campaign after Sawant made it an issue. Between Sawant’s endorsement of the issue and the way Occupy Wall Street made economic injustice a hot topic, do you think matters of economics are best served by starting outside the two-party system and working their way inward?

Generally speaking, yes. Because the two-party system, as it's evolved, is not a system whose leaders are necessarily thought leaders or progressive leaders. They are political leaders. The paradox is that a political leader follows politics. A political leader wants to do what most people want that political leader to do at any given time. So true leadership normally has to come from outside. Talk about the civil rights movement, talk about the gay rights movement, talk about the labor movement—these movements did not start with politicians.

One thing that concerns me about the $15 minimum wage in terms of income inequality is the fact that Washington state already has the most regressive tax structure in the country, and as I understand from your work, a huge problem with the economy is that so much money is frozen up in the assets of the one percent. Simply raising the wages of the poorest workers in the city doesn’t seem like it will help the problem of income disparity, because the money to pay low-wage workers is going to come primarily from the lower and middle classes, isn’t it? It doesn't touch the money that the one percent is sitting on, does it?

The money to pay low-wage workers is coming from, generally speaking, wherever the money is. There is no particular retail, restaurant, hotel, hospital, surface transportation, child care, or elder care occupation that caters more to low wage workers than to middle-class workers. I mean, these are occuaptions in which services are bought across the board. You are right, though, that it is not the whole answer to income inequality. It is a piece of an answer. It's a step in the right direction, but many other things need to be done and regressive tax systems need to be reversed.

Do you have any ideas for what Seattle and Washington should do next to address income inequality?

It would be presumptuous of me to tell the state of Washington what to do, but let me just say more generally: Income taxes, if they are progressive—that is, if they take a larger bite out of the incomes of higher-income people—are always superior to sales taxes. Sales taxes are regressive in the sense that they invariably take a larger bite out of the income of low-wage people than middle- and high-wage people. Some states have tried to raise money on the basis of lotteries. Lotteries are the most regressive of all. There are some states right now, like Tennessee, considering a constitutional amendment to the state constitution prohibiting all income taxes ever. The problem there should be obvious. Tennessee is going to find itself with its hands tied if it wants to improve its schools or its social services. It already has one of the highest sales taxes in the country. The problem is that most people don't know that the sales tax is as regressive as it is, and most people don't like income taxes because it feels like a direct incursion on somebody's own earnings. But again, I'm not going to presume to tell the state what to do.

In your book Aftershock, you proposed a federal wage supplement program funded by higher taxes on the wealthy. Those earning $20,000 or less a year would get $15,000 annually, $30,000 or less would get supplements of $10,000, and so on up to people who make $50,000 a year, where taxes would begin. You haven't spoken much about this plan recently. Is it something that you still support?

Oh, very much. We have wage supplements right now in this country, and some states also do it. It's called the earned income tax credit. It's the most important anti-poverty policy we have. It's about 61 billion dollars a year, last time I looked. It is based on exactly the principle I outlined in my book, although I take it to the next obvious iteration, the next step. But it's already there, and I think it would be very helpful for states to consider suppplementing the earned income tax credit, just as certain states have raised the minimum wage.

Do you think this is a battle that's best fought on a city level? Is this something you think is going to be a big deal in the next presidential election?

It could be. It was a big deal in the 1996 presidential election. In fact, the Republicans agreed to a national minimum wage increase before the election because they were afraid Democrats would beat them over the heads with it. A minimum wage increase is very popular. 75 to 85 percent of Americans are in favor of an increase and always have been. When people realize that the current federal minimum wage is 20 percent of what it was in 1968 when adjusted for inflation, and that most minimum wage workers are not teenagers but are major breadwinners for their families, it could have even more of an impact. Now, it's very useful to have it begin at the local and state level because then we have, as Justice Louis Brandeis described the country, we have laboratories of democracy. We can have even more studies to prove what studies have already shown—the more studies the better—that hikes in the minimum wage do not reduce employment. They actually increase employment because it puts more money in the pockets of people who are going to spend the money, and that generates more purchases, which generate more jobs.

That was a major point of contention in Seattle, that Target and McDonald's could afford the minimum wage hike while mom-and-pop businesses couldn't. But there are recent studies that suggest otherwise?

Well, there are a lot of studies that show that—in fact, there are 400 separate studies that have paired municipal areas that straddle higher minimum wage states with lower minimum wage states and cities. That is, where a state or a city has chosen to raise a minimum wage versus a state or city that has chosen not to. Those studies have looked at pairs that are geographically contiguous, right next to each other, and shown that job growth is healthier in those parts of those greater metropolitan areas where you have the higher minimum wage. How can that possibly be? Well, there are two reasons. Number one, people who get the higher minimum wage tend to spend all of it, and they tend to spend all of it in the vicinity. Secondly, because when you have a higher minimum wage, it brings in additional people into the labor force who might not otherwise want to work—it may not be worthwhile to them. And when additional people are brought into the labor force, employers have more choice of whom to hire, and that reduces turnover and the costs of recruiting, hiring, and retraining.

Do you think Seattle's rollout schedule is appropriate, that it will allow business time to grow into the minimum wage?

As my understanding, it is a seven-year rollout. That sounds to me quite adequate. There are adjustments that have to be made, but over seven years every business and every worker will make those adjustments. It provides ample time for all the adjustments to be made.