This article in the blog Urbanomics has some ideas on what can be done to combat rising inequality. The blog is India focused, but the suggestions are more or less general.

• Increase minimum wage.
• Increase labor’s bargaining power “through institutional (unions, workplace management councils, etc.) and regulatory measures. At some time in future, broad caps on the salary and compensation ratios across levels becoming a norm cannot be ruled out.”
• Stop exempting gig and contract work from various laws and policies [things like not requiring the entity hiring them to provide health care and other benefits?]
• Labour-intensive sectors should become the focus of industrial policy. Scarce resources should not be wasted on low-labour-intensity sectors like semiconductor fabrication or data centres… internships, apprentices, reduction in EPF and other costs, wage support for new entrants, industrial policy support through employment generation-linked incentives, etc. [this one is more in a developing country context I suppose]

All this seems…complicated…to me. But maybe these are politically feasible policies. Simple but maybe politically infeasible policies would be to just raise taxes on the rich and powerful and redistribute the proceeds to the masses, as cash, services directly provided by the government, or services indirectly subsidized by the government. In the U.S., perhaps taxes wouldn’t have to be raised as much as we think if we shifted away from some of the massive hidden subsidies we already have – low capital gains tax rates, the cap on social security payroll taxes, deduction of mortgage interest, the 30-year fixed rate mortgage, gas taxes that support highways but not public transportation, and many others. All of this would be politically difficult, of course. But with the Democrats seemingly having become the party of no big ideas, perhaps there is not so much to lose if somebody were to start proposing some.