A lot of research now suggests the American dream of earning more than your parents is pretty much dead. Don’t look to the federal government for help in the near future. Look to your local jurisdiction — and don’t give up.
Portland is trying to deal with a problem that requires a national solution. Seattle is trying, too, and so are many other cities and a few states. The problem they’re all trying to fix: the enormous — and growing — income and wealth inequality.
I’ll grant that some degree of economic inequality can be motivational, but vast gaps leave people feeling hopeless and powerless. And at the levels we see today, for far too many people it’s not just a feeling.
We’re not a healthy society right now, and we need to try to break the fever and get well.
Back in the good old days that some folks would like to get back to, CEOs were expected to make a few times more than their workers, and to pay taxes that reflected their level of wealth. Bankers were content to make loans, rather than creating ways to siphon vast sums from the economy without delivering anything of value in return.
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Of course, the so-called good old days were bad in more ways than I can count, and we wouldn’t want to go backward. But we should remember that it is possible to have a different distribution of wealth than we have today, and to still have plenty of room for wealth creation. In fact, when there was less inequality, more people were able to earn enough and save enough to move up and help their children move up economically.
A few days ago I read what amounts to an obituary for the American dream, that belief that each generation would climb higher up the economic ladder than the last. It was a piece by David Leonhardt of The New York Times, and was based on new research that removes any remaining doubt about how Americans are faring in this period of hyper-inequality.
Americans born in 1940 had a 92 percent chance of making more money than their parents. Americans born in 1980 have only a 50 percent chance of making more money. The U.S. is a much wealthier country today, and average incomes grew by 61 percent from 1980 to 2014, but most of that growth went to the top 10 percent of earners. And worse, since the 1970s, working-age Americans in the lower half of the population in earnings saw virtually no economic growth.
Those statistics were from two other articles based on recent economic research, and altogether the stories and analyses suggest that our problem with inequality continues to worsen, even despite some government efforts to slow it down. One of the articles quoted an economist saying that based on history, significantly reining in rampant inequality might require some deeply disruptive event, like social collapse or war.
It doesn’t have to be that way. A concerted effort by the federal government could make a real difference, but so far only President Obama has been fighting that battle, and now that effort is about to come to an end.
Government help for families at the lower end could help reduce inequality, but it looks like we could have Ben Carson as secretary of the U.S. Department of Housing and Urban Development, and he thinks people ought to pull themselves out of poverty on their own.
Improving education is a proven way of helping young people find success in an economy that requires increasing levels of education. The nominee to run the U.S. Department of Education, Betsy DeVos, is a fan of school vouchers and has been against the idea of common standards. Countries whose students do well on international tests usually have strong national standards.
Another factor that has restrained income inequality in the past is a strong labor movement supported by federal regulations. But the person nominated to run the Department of Labor is Andrew Puzder. Puzder, the CEO of a fast-food company, has argued against just about every policy that might help ordinary workers economically.
And, oh yes, another thing experts say can help families improve their living standards is access to affordable health care. And we know prospects for that are not bright.
So, back to Portland.
Portland is about people not just throwing up their hands and giving in to the erosion of American aspirations that over-the-top income inequality causes.
Last Wednesday, Portland’s City Council voted to impose a surtax on publicly traded companies that operate in the city if they pay their CEOs more than 100 times the median pay of all their employees.
One city can’t fix a national problem, but it can start the process. Seattle’s minimum-wage increase spread across the country, and Portland’s action may inspire replication and other kinds of actions.
If you can’t scale the mountain one way, find another route. That is the way to get to the mountaintop.