Is Income Equality A Problem?

What would you do if you won $550 million in the Mega-Million lottery? I am sure if you are like me you have thought about this; this amount to the kids, another number for grand children, and this much for various charities. So many people look  for get rich schemes which never happen. The odds of winning the grand prize is 1 in 259 million, but all of us have this feeling that if we invest we are sure to win. Then we never do.

What does this have to do with income inequality? Many people have the idea that poverty involves people sit around with their meager income, not wanting to work, and they buy mega-million tickets hoping to get rich. But I would venture to guess this is not a true picture of the majority who struggle with low wages.

According to recent surveys, as reported today by Froma Harrup, “The public may know that the top ten percent of wage earners pulled in about half of the pretax income in 2012 – and that income inequality is the widest its been since right before the Great Depression.” Any economically aware person knows that the elimination of a vibrant middle class will have horrible implications on the ability of this country to grow economically. What is interesting is the Europeans may get this better than we do. Even though the gaps between the rich and poor are less in Europe than here, the Europeans seems to have a bit more empathy. However, I think this assumption is a bit unfair.

We in the United States believe in work. We are a country founded upon a Puritan work ethic that seeks to use one’s gifts for productivity reasons and gain God’s favor. Although many of us would not recognize the connection with God, our early founders saw this “working hard” to achieve success as a sign of being saved. This idea of hard work is what drives our productivity.

What happens when someone is out of work for a long time is well documented. If this becomes a multigenerational event, then it becomes even more serious. “Americans look down on those deemed outside the work culture.” Those who are outside this culture are poor. “One need not be conservative to regard many in this group as lazy, preferring to milk various government programs rather than work a job.”

With many people falling off the job roles, these attitudes will become even more prevalent. People who can’t find a job will lose hope and become discouraged, and those that are working will think these people are lazy and just need to go to work at McDonalds. The fact is work in this country has changed, and as such, many “able-bodied, willing-to-work people” will find themselves without salable skills. This often leads to taking jobs with demoralizing low pay, and eventually creating a “who cares” mentality.

We are a nation of workers, and when people at Walmart stand up and say that a high percentage of them are on government assistance, we identify with them, and support fact they work for a living and need a livable wage. Even the most capitalist of us recognize the responsibility of a company to take care of its employees. It is good for them and it is good for the company, and it is good for the consumer.

Over 2 million people in the United States work for Walmart. Many of them work less than fulltime, and many of them are getting minimum wage. Many have families they are trying to raise on minimum wage, and as such many of them are on government assistance. Not a good scenario for creating a vibrant middle class.

As of July 7th of this year there were 2.6 million jobs unfilled in our nation. The reason involved a mismatch of skills. The number I read last year was 4 million. As I have mentioned before in this blog many middle class jobs are being replaced by technology. Many jobs are becoming more complicated requiring different analytical skills than what our workforce has. Therefore, fewer workers are needed, and those jobs available require higher level skills than what our workforce has.

On the other hand there are more lower level jobs which require less skills for which many of the middle class are over qualified. This too causes a problem because many companies don’t want to hire someone who is over qualified. They will often hire people with less skills leaving the individual with job experience in a serious situation. Or maybe the skilled worker is over fifty? Many companies don’t want to put those individuals into entry level positions.

Ok, how do we fix this? Higher taxes, so the government can create more government handouts? I don’t think so, all that will do is create a stronger poverty trap. Nope, I think we need government incentives for companies that need these 2.6 million employees to work with the communities around them and provide training that will help create the workforce needed for these jobs. Here is how this could happen.

Boeing needs aerospace workers. They could work with high schools in the area where they need these workers, and create a program that allows the high school students to work on site and learn machining skills. The company will then choose several of these students and provide them a scholarship to go to college for two years. This will give them the analytical skills they need to work as a machinist or inspector. Actually Boeing is doing this already, it is called tech prep. It is a very successful program, and other companies should do this too.

The problem with this is these workers are several years out, this does not meet the immediate need. Ok, so the company creates a partnership with community colleges where students learn a skill and work are the company during the day. Or the company creates a training program onsite for people who want to gain the skills to work these jobs that are unfilled. There are many ways this type of activity can be accomplished.

To do this there needs to be a partnership between the company, community, and government. These are the players who need to come together for the good of the middle class. If we don’t help people to learn how to work in this new environment, then our country is destined to be a country of haves and have-nots. This is not good, and will lead to our economic destruction.

And that is my thought for the day!

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