I learned last week that income inequality, a term frequently used in the Presidential primaries as a provocative soundbite, has meaning and substance beyond the current political slugfest.
To provide some context, Geoff Oxnam and I, both graduates of Leadership Maryland–a statewide program to expose leaders in the for-profit, non-profit and government worlds to the major issues facing our state–organized a forum last week at Easton Utilities to talk about economic disparity. Leading the lively discussion were two Salisbury University educators, Dr. Dustin Chambers and Dr. Memo Diriker.
Here’s what I learned:(not necessarily in the order of importance):
* Simple solutions are not the best ones. Our economy is complex.
* Income inequality (economic disparity) is the nature of our economy.
* What’s particularly important is opportunity, unblocked by government/corporate policies and unhindered by corruption and cronyism, political instability and redistributive tax policies.
* Part of economic opportunity and growth is the overriding need to increase skills through education and training. I will discuss this more when I have completed this list.
* New technology can be disruptive to parts of our economy. It’s also beneficial. While a few entrepreneurs and their associates can become terrifically wealthy, their products, such as IPads and IPhones, can change consumers’ lifestyles for the better. Ancillary industries can result. Employment can grow. More risk-taking entrepreneurs are good for the economy.
* Depending on the metric used by economists, from 1976 to 2006, wages declined 4%, increased 10% according to another measuring tool, or shot up 26% if compensation benefits were considered.
* In terms of economic mobility, from 1996 to 2005, 50 percent of people moved to different income brackets; of the top 1%, only 25% who were there in 1996 stayed there by 2005.
* To boost our economy, both political parties need to agree on greater investment in infrastructure and research and development.
For the sake of readers, I will list no more. Instead, taking my cue from Chambers and Diriker, I will focus on education. Remembering that a simple solution typically is flawed, I do believe, however, that educational opportunity for all economic strata provides a direct route to individual growth and more universal economic improvement.
For the sake of this column, I’m including “training” in education, though the purists in the academic arena argue that training is separate and distinct. Perhaps they are right, in a pure, sometimes territorial way. While I realize that Chesapeake College offers specific, critically necessary training in the allied medical professions, I also believe that the acquisition of a specific skill involves learning, though it is more hands-on than requiring an essay about Shakespeare or Mozart.
Allow me to remain ever so briefly on my soapbox. As discussed at our Leadership Maryland forum, vocational training may be just the right fit for young people ill-suited for a conventional four-year college education. And vocational training, whether it’s becoming a tractor trailer driver or an automotive mechanic, should be honored, not stigmatized.
While I seriously question a free education subsidized by government, as some have suggested, I came away from the forum with the firm thought that accessibility to higher education, whether on a community college or four-year level, needs fixing. After making this declarative statement, I am incapable of saying more. Possible solutions evade me.
Are many young college graduates saddled with enormous loan obligations that burden them for years? Yes, that’s the case. Should these loans be forgiven, since these financial obligations impede qualifying for a mortgage? I just can’t fathom the cost of such an idea.
Two other adjuncts to economic growth and opportunity arose during our discussion, and they were mentoring and apprenticeship. The former is vital for any person dealing with the demands of a first job, or even a second or third one. The latter is a concept once very common and useful in our country. I think it should be revived.
A free-ranging discussion led by two capable and practical educators is difficult to summarize. Income inequality is more complex than a political cudgel, though both parties have expressed concern. As always, solutions are complex but worth pursuing.
Education is a good place to start.
Columnist Howard Freedlander retired in 2011 as Deputy State Treasurer of the State of Maryland. Previously, he was the executive officer of the Maryland National Guard. He also served as community editor for Chesapeake Publishing, lastly at the Queen Anne’s Record-Observer. In retirement, Howard serves on the boards of several non-profits on the Eastern Shore, Annapolis and Philadelphia.
Jennifer Hicks says
To the Editor –
I disagree on many of the points made in Mr. Freelander’s recent column about income inequality, however, I do concur with two: increasing “all educational opportunity for all economic strata” is a way to improve individual situations and that this issue is complex with no simple answer.
The column’s premise, as I understood it, is that income inequality 1. Is natural 2. can be addressed if more people obtained post-secondary education, gained more skills, and had more access to apprenticeships; 3. is bolstered by the way government gets in the way of innovation and opportunities. But according to studies that I have read these beliefs about inequality support a false narrative that really only serves as a distraction from the core issues. Instead our focus should be on the large scale trends that reveal a troubling pattern.
Income disparity did not grow because of a lack of education (I know many people with masters and doctorate degrees who are barely getting by) but because of how our country has been recovering from the Great Recession. While the stock market has seen an incredible improvement since the crash in 2008 and, according to the US Commerce Department, in 2014 corporate profits are at their highest levels in at least 85 years, employee compensation was at its lowest level in 65 years. While top CEO salaries are now 300 times more than the average workers’ salaries and CEO compensation is up 54.3 percent since the recovery began in 2009 the increase in the real value of the minimum wage since 1990 has only been 21% even though the increase in cost of living has risen 67%. And even though we know that the minimum wage has not kept up with cost of living the proposal to increase in the minimum wage to $15.00 an hour is facing major push back from our elected officials who argue that if people want a higher wage they need to get better jobs. That argument doesn’t work on many levels but most importantly, as Senator Bernie Sanders has said many times, “nobody who works 40 hours a week should be living in poverty.”
Income inequality in the US has developed and grown over the past 40 years but it hasn’t always been the nature of our economy. Data from the late 1940s to the early 1970s show that there was a time when wages across all income levels grew at the same rate more or less doubling over that period. The Center on Budget and Policy Priorities reports that between 1979 to 2011 real income for the 99% grew on average by about 50%. During the same period the real income for the 1% increased by 200% – most of that gain occurring during the past 15 years. It is not natural nor healthy to have an economy where the top .1% of Americans own the same amount of wealth as the bottom 90%. If we are to continue being the “greatest country on Earth” we must do everything necessary to stop and reverse this grotesque growth of income and wealth disparity and to the chagrin to some it will take significant government regulation and the closing of tax loopholes and electing people who understand and are willing to work to move the needle on this issue.