Nicholas Lehman of the New Yorker has written an important column about how the soaring costs of higher education are perpetuating growing inequality.
Lehman writes:
"In higher education, the United States may be on its way to becoming more like the rest of the world, with a small group of schools controlling access to life
membership in the élite. And higher education is becoming more like other areas
of American life, with the fortunate few institutions distancing themselves ever
further from the many. All those things which commencement speakers talk
about—personal growth, critical-thinking skills, intellectual exploration,
breadth of learning—will survive at the top institutions, but other colleges
will come under increased pressure to adopt the model of trade schools. Student
loans open access to students, and give colleges more freedom. Obama and Romney
will have plenty to disagree about, and it’s good that the interest rate on
student loans isn’t on the list. For the federal government to pump extra
tuition money into the system, in the form of low-cost loans, in order to spread
opportunity more widely, and to allow more schools to provide more than skills
instruction, seems like a small price to pay for the kind of society it buys." -
The entire article is linked here.
Showing posts with label economic inequality. Show all posts
Showing posts with label economic inequality. Show all posts
Wednesday, June 13, 2012
Tuesday, December 14, 2010
College, Jobs and Inequality
In an editorial today the New York Times writes that a college education is not a cure-all for joblessness and income inequality, although it does correlate with higher incomes and lower unemployment.
Searching for solace in bleak unemployment numbers, policy makers and commentators often cite the relatively low joblessness among college graduates, which is currently 5.1 percent compared with 10 percent for high school graduates and an overall jobless rate of 9.8 percent. Ben Bernanke, the chairman of the Federal Reserve, cited the data recently on “60 Minutes” to make the point that “educational differences” are a root cause of income inequality.
A college education is better than no college education and correlates with higher pay. But as a cure for unemployment or as a way to narrow the chasm between the rich and everyone else, “more college” is a too-easy answer. Over the past year, for example, the unemployment rate for college grads under age 25 has averaged 9.2 percent, up from 8.8 percent a year earlier and 5.8 percent in the first year of the recession that began in December 2007. That means recent grads have about the same level of unemployment as the general population. It also suggests that many employed recent grads may be doing work that doesn’t require a college degree.
Even more disturbing, there is no guarantee that unemployed or underemployed college grads will move into much better jobs as conditions improve. Early bouts of joblessness, or starting in a lower-level job with lower pay, can mean lower levels of career attainment and earnings over a lifetime.Graduates who have been out of work or underemployed in the downturn may also find themselves at a competitive disadvantage with freshly minted college graduates as the economy improves.
When it comes to income inequality, college-educated workers make more than noncollege-educated ones. But higher pay for college grads cannot explain the profound inequality in the United States. The latest installment of the groundbreaking work on income inequality by the economists Thomas Piketty and Emmanuel Saez shows that the richest 1 percent of American households — those making more than $370,000 a year — received 21 percent of total income in 2008. That was slightly below the highs of the bubble years but still among the highest percentages since the Roaring Twenties.
The top 10 percent — those making more than $110,000 — received 48 percent of total income, leaving 52 percent for the bottom 90 percent. Where are college-educated workers? Their median pay has basically stagnated for the past 10 years, at roughly $72,000 a year for men and $52,000 a year for women.
A big reason for the huge gains at the top is the outsize pay of executives, bankers and traders. Lower on the income ladder, workers have not fared well, in part because health care has consumed an ever-larger share of compensation and bargaining power has diminished with the decline in labor unions.
College is still the path to higher-paying professions. But without a concerted effort to develop new industries, the weakened economy will be hard pressed to create enough better-paid positions to absorb all graduates.
And to combat inequality, the drive for more college and more jobs must coincide with efforts to preserve and improve the policies, programs and institutions that have fostered shared prosperity and broad opportunity — Social Security, Medicare, public schools, progressive taxation, unions, affirmative action, regulation of financial markets and enforcement of labor laws.
College is not a cure-all, but it will certainly take the best and brightest minds to confront those challenges.
Searching for solace in bleak unemployment numbers, policy makers and commentators often cite the relatively low joblessness among college graduates, which is currently 5.1 percent compared with 10 percent for high school graduates and an overall jobless rate of 9.8 percent. Ben Bernanke, the chairman of the Federal Reserve, cited the data recently on “60 Minutes” to make the point that “educational differences” are a root cause of income inequality.
A college education is better than no college education and correlates with higher pay. But as a cure for unemployment or as a way to narrow the chasm between the rich and everyone else, “more college” is a too-easy answer. Over the past year, for example, the unemployment rate for college grads under age 25 has averaged 9.2 percent, up from 8.8 percent a year earlier and 5.8 percent in the first year of the recession that began in December 2007. That means recent grads have about the same level of unemployment as the general population. It also suggests that many employed recent grads may be doing work that doesn’t require a college degree.
Even more disturbing, there is no guarantee that unemployed or underemployed college grads will move into much better jobs as conditions improve. Early bouts of joblessness, or starting in a lower-level job with lower pay, can mean lower levels of career attainment and earnings over a lifetime.Graduates who have been out of work or underemployed in the downturn may also find themselves at a competitive disadvantage with freshly minted college graduates as the economy improves.
When it comes to income inequality, college-educated workers make more than noncollege-educated ones. But higher pay for college grads cannot explain the profound inequality in the United States. The latest installment of the groundbreaking work on income inequality by the economists Thomas Piketty and Emmanuel Saez shows that the richest 1 percent of American households — those making more than $370,000 a year — received 21 percent of total income in 2008. That was slightly below the highs of the bubble years but still among the highest percentages since the Roaring Twenties.
The top 10 percent — those making more than $110,000 — received 48 percent of total income, leaving 52 percent for the bottom 90 percent. Where are college-educated workers? Their median pay has basically stagnated for the past 10 years, at roughly $72,000 a year for men and $52,000 a year for women.
A big reason for the huge gains at the top is the outsize pay of executives, bankers and traders. Lower on the income ladder, workers have not fared well, in part because health care has consumed an ever-larger share of compensation and bargaining power has diminished with the decline in labor unions.
College is still the path to higher-paying professions. But without a concerted effort to develop new industries, the weakened economy will be hard pressed to create enough better-paid positions to absorb all graduates.
And to combat inequality, the drive for more college and more jobs must coincide with efforts to preserve and improve the policies, programs and institutions that have fostered shared prosperity and broad opportunity — Social Security, Medicare, public schools, progressive taxation, unions, affirmative action, regulation of financial markets and enforcement of labor laws.
College is not a cure-all, but it will certainly take the best and brightest minds to confront those challenges.
Monday, December 6, 2010
Thursday, February 7, 2008
Main street's been in recession for years!
Barbara Ehrenreich writes that far removed from Wall Street, most Americans have been living in their own personal recession for years.
Read the entire Washington Post op ed.
Read the entire Washington Post op ed.
Thursday, October 18, 2007
Fischer Island-the rich are different from you and me!
Fischer Island is an exclusive, private island residential community just off the Miami coast.
Less than 10 minutes from Miami Beach, Fischer Island is in a world of its own, the richest zip code in the U.S.
Its residence lead extravagant lives or as F. Scott Fitzgerald famously said: "Let me tell you about the very rich. They are different from you and me."
The New York Times described this idyllic paradise:"... from the imported Bahamian sand coating the beaches to the marble and mahogany-encrusted Vanderbilt mansion and the 186-foot, $250,000-a-week chartered yacht bobbing in the marina just outside, everything bespeaks luxury. The gilded trappings are a potent reminder of the great income gap that prevailed when Mr. Vanderbilt used to alight his hydroplane in the inviting waters offshore, in the early decades of the 20th century, a gap that has re-emerged today."
A share in the Fischer Island golf club costs $250,000 and dues run to $20,000 a year.
Yes, Fischer Island is a beautiful place...as long as you don't have to work there.
The workers tending the grounds or washing linens make as little as $8.50 an hour.
Fischer Island's workers, 21st century servants, travel daily to this man made island from Miami which has the highest degree of housing inequality in the country and where one on five children live in poverty.
In February a local organization of religious leaders sent a letter to all residents, alerting them to “serious and tragic poverty within your midst.”
”A great invisible work force, unseen by many, maintains Fisher Island's condominiums, golf courses and tennis courts, prepares and serves food to its residents, cleans their rooms and common areas, and maintains the critical equipment that keeps the air-conditioning and other mechanics of the island running smoothly. Their stories are chilling."
It is time the residents of Fischer island start treating their employees with the same respect they treat their cars. It's time for the plantation mentality to stop!
To see how you can help visit http://www.onemiaminow.org/
And watch the video:
Less than 10 minutes from Miami Beach, Fischer Island is in a world of its own, the richest zip code in the U.S.
Its residence lead extravagant lives or as F. Scott Fitzgerald famously said: "Let me tell you about the very rich. They are different from you and me."
The New York Times described this idyllic paradise:"... from the imported Bahamian sand coating the beaches to the marble and mahogany-encrusted Vanderbilt mansion and the 186-foot, $250,000-a-week chartered yacht bobbing in the marina just outside, everything bespeaks luxury. The gilded trappings are a potent reminder of the great income gap that prevailed when Mr. Vanderbilt used to alight his hydroplane in the inviting waters offshore, in the early decades of the 20th century, a gap that has re-emerged today."
A share in the Fischer Island golf club costs $250,000 and dues run to $20,000 a year.
Yes, Fischer Island is a beautiful place...as long as you don't have to work there.
The workers tending the grounds or washing linens make as little as $8.50 an hour.
Fischer Island's workers, 21st century servants, travel daily to this man made island from Miami which has the highest degree of housing inequality in the country and where one on five children live in poverty.
In February a local organization of religious leaders sent a letter to all residents, alerting them to “serious and tragic poverty within your midst.”
”A great invisible work force, unseen by many, maintains Fisher Island's condominiums, golf courses and tennis courts, prepares and serves food to its residents, cleans their rooms and common areas, and maintains the critical equipment that keeps the air-conditioning and other mechanics of the island running smoothly. Their stories are chilling."
It is time the residents of Fischer island start treating their employees with the same respect they treat their cars. It's time for the plantation mentality to stop!
To see how you can help visit http://www.onemiaminow.org/
And watch the video:
Tuesday, July 17, 2007
The rich get richer and auto negotiations
The following is excerpted from Mortimer Zuckerman article that first appeared in U.S. News and World Report, June 11, 2007.
President Bush and his advisers who continue to be puzzled that working and middle class folks are dissatisfied with the economy should read it. Oh I forgot, he doesn't read magazines and newspapers!
That's too bad. Because this article neatly sums up how our winner take all economy is leaving more and more people behind!
The New York Times reports that the United Automobile Workers Union is starting negotiations with GM, Ford and Chrylser (or whatever it is called these days!).
Because of the number of layoffs, there are now more retirees in the Big Three than there are active workers. This means that healthcare and pension benefits will be a major focus of these upcoming talks.
The high cost of healthcare (more expensive in the US than in any other country) is born by the employer in our privatized system. It increases their cost of production, $1500 per vehicle for GM. It creates a significant competitive disadvantage.
The Big Three's would benefit if the federal government assumed these costs. But auto executives have not joined the growing reform coalition for universal healthcare.
That's because the men who run Ford, GM and Chrylser are country club guys. And country club guys support their class brethren.
They remain silent about healthcare reform while their companies tetter on the verge of bankruptcy, But they won't be silent in negotiations. When its working class men and women sitting across the table, they will shout loudly that they need concessions from their current employees and retirees. Class solidarity at the top and, as Doug Fraser, former UAW president said in 1978, one sided class war against labor at the bottom!
The negotiations focusing on legacy costs (a euphemism for benefits deferred) will raise the economic anxiety level of the nation's working people. Wall Street, on the other hand, will recline, cigar in one hand, martini in the other, as the Dow climbs past 14,000!
Uneasy in the Middle
By Mortimer B. Zuckerman
"The American middle class is worried-and with reason.
Middle-class workers have long been the foundation of American society. In recent decades, they have seemed more prosperously buoyant than ever, living in bigger houses with a panoply of utilities, gadgets, and entertainment systems.
So why the angst?
The roots are primarily economic. Even in these boom times, anxiety levels rival those of the early Reagan recession years. In particular, people have great and growing fear about losing their jobs. And we are at one of the rare points in our history when Americans have stopped dreaming of a better life for their children. Now the hope is negative: that their children won't be forced into a lower standard of living. Americans used to feel sure each generation would do better than the last˜but someone has run away with the ladder.
Now the middle class lives with the same uncertainties that dog the poor. So close do many feel to the economic margin that they fear they're but one illness or one job loss away from catastrophe.The paranoia is not idle. In the 1970s, a family had a roughly 7 percent chance of its income dropping by half or more. Today the odds are 17 percent. Almost two thirds of workers believe that it is harder to earn a decent living now than it was 20 or 30 years ago, according to the Pew Research Center.
Workers with fewer years of formal education feel it most, as earnings of the college educated have about doubled compared with high school graduates. Yet the public education system, once the great equalizer, is perceived to be deteriorating, even as it has become dramatically harder to finance a college education.
Fairness.
The economy as a whole is performing well, but most people are not sharing in it. In 2005, the average income of those in the "bottom" 90 percent of the economy dipped from the year before. That's just one broad indicator of the problems confronting many of the groups within that 90 percent˜no college education, single parent, minority.
Meanwhile, at the top end of the economic spectrum, the gains have been spectacular. Just look at CEO pay, for example, which has risen in the past decade at triple the rate of the median worker's pay.What is clear is that our richest 10 percent have gained the most. That top slice now receives 44 percent of pretax income, the highest since the 1920s and 1930s, and up from 32 percent between 1945 and 1980. The richest 1 percent has done even better, with pretax income growing from 8 percent of national income in 1980 to 17 percent in 2005. Another way to look at it is that the richest 1 percent of Americans took in 21.8 percent of all recorded income in 2005˜double their share in 1980.
This means that the 300,000 Americans at the top made almost as much money as the 150 million Americans at the bottom. Along with sluggish median earnings, these 150 million are having to meet rising healthcare costs no longer funded by government and employers.
Even Americans who went to college are now experiencing the kind of income instability high school dropouts faced in the 1970s. And many fewer can count on the fixed-benefit plans provided by larger firms: Fewer than about a third provide such benefits today, compared with 80 percent 30 years ago. Millions of people are now on their own to ride the economic roller coaster...."
This story appears in the June 11, 2007 print edition of US News & World Report.]
President Bush and his advisers who continue to be puzzled that working and middle class folks are dissatisfied with the economy should read it. Oh I forgot, he doesn't read magazines and newspapers!
That's too bad. Because this article neatly sums up how our winner take all economy is leaving more and more people behind!
The New York Times reports that the United Automobile Workers Union is starting negotiations with GM, Ford and Chrylser (or whatever it is called these days!).
Because of the number of layoffs, there are now more retirees in the Big Three than there are active workers. This means that healthcare and pension benefits will be a major focus of these upcoming talks.
The high cost of healthcare (more expensive in the US than in any other country) is born by the employer in our privatized system. It increases their cost of production, $1500 per vehicle for GM. It creates a significant competitive disadvantage.
The Big Three's would benefit if the federal government assumed these costs. But auto executives have not joined the growing reform coalition for universal healthcare.
That's because the men who run Ford, GM and Chrylser are country club guys. And country club guys support their class brethren.
They remain silent about healthcare reform while their companies tetter on the verge of bankruptcy, But they won't be silent in negotiations. When its working class men and women sitting across the table, they will shout loudly that they need concessions from their current employees and retirees. Class solidarity at the top and, as Doug Fraser, former UAW president said in 1978, one sided class war against labor at the bottom!
The negotiations focusing on legacy costs (a euphemism for benefits deferred) will raise the economic anxiety level of the nation's working people. Wall Street, on the other hand, will recline, cigar in one hand, martini in the other, as the Dow climbs past 14,000!
Uneasy in the Middle
By Mortimer B. Zuckerman
"The American middle class is worried-and with reason.
Middle-class workers have long been the foundation of American society. In recent decades, they have seemed more prosperously buoyant than ever, living in bigger houses with a panoply of utilities, gadgets, and entertainment systems.
So why the angst?
The roots are primarily economic. Even in these boom times, anxiety levels rival those of the early Reagan recession years. In particular, people have great and growing fear about losing their jobs. And we are at one of the rare points in our history when Americans have stopped dreaming of a better life for their children. Now the hope is negative: that their children won't be forced into a lower standard of living. Americans used to feel sure each generation would do better than the last˜but someone has run away with the ladder.
Now the middle class lives with the same uncertainties that dog the poor. So close do many feel to the economic margin that they fear they're but one illness or one job loss away from catastrophe.The paranoia is not idle. In the 1970s, a family had a roughly 7 percent chance of its income dropping by half or more. Today the odds are 17 percent. Almost two thirds of workers believe that it is harder to earn a decent living now than it was 20 or 30 years ago, according to the Pew Research Center.
Workers with fewer years of formal education feel it most, as earnings of the college educated have about doubled compared with high school graduates. Yet the public education system, once the great equalizer, is perceived to be deteriorating, even as it has become dramatically harder to finance a college education.
Fairness.
The economy as a whole is performing well, but most people are not sharing in it. In 2005, the average income of those in the "bottom" 90 percent of the economy dipped from the year before. That's just one broad indicator of the problems confronting many of the groups within that 90 percent˜no college education, single parent, minority.
Meanwhile, at the top end of the economic spectrum, the gains have been spectacular. Just look at CEO pay, for example, which has risen in the past decade at triple the rate of the median worker's pay.What is clear is that our richest 10 percent have gained the most. That top slice now receives 44 percent of pretax income, the highest since the 1920s and 1930s, and up from 32 percent between 1945 and 1980. The richest 1 percent has done even better, with pretax income growing from 8 percent of national income in 1980 to 17 percent in 2005. Another way to look at it is that the richest 1 percent of Americans took in 21.8 percent of all recorded income in 2005˜double their share in 1980.
This means that the 300,000 Americans at the top made almost as much money as the 150 million Americans at the bottom. Along with sluggish median earnings, these 150 million are having to meet rising healthcare costs no longer funded by government and employers.
Even Americans who went to college are now experiencing the kind of income instability high school dropouts faced in the 1970s. And many fewer can count on the fixed-benefit plans provided by larger firms: Fewer than about a third provide such benefits today, compared with 80 percent 30 years ago. Millions of people are now on their own to ride the economic roller coaster...."
This story appears in the June 11, 2007 print edition of US News & World Report.]
Wednesday, May 9, 2007
Living Wages in Maryland: Is the Sky Falling?
The state of Maryland has eacted living wage legislation in an effort to address the nation's growing economic divide.
Gov. Martin O’Malley of Maryland signed the nation’s first statewide living wage bill on WEdsnesday, giving new momentum to the movement to raise wages through legislation and putting Maryland in the forefront of a national debate over government's role in fighting poverty and ineqiality.
"What this bill simply says is, 'If you're working on a contract funded by the people of Maryland, we are going to treat you in a fair and just way so you can put food on the table for your family after a day's work,'" O'Malley said.
Under the law, employers with state contracts will generally have to pay workers a minimum amount — $11.30 an hour in the Baltimore-Washington corridor and $8.50 an hour in the rural counties, where wages and prices are usually lower.
The Maryland state minimum wage is $6.15 an hour, one dollar above the federal minimum.
“This law lifts tens of thousands of families out of poverty and into the middle class,” said Tom Hucker, a first-term Democratic delegate to the Maryland House and before that the executive director of Progressive Maryland, the main group backing the bill. “Today Maryland shows the rest of the country a good way to honor work and fight poverty.”
Nationwide, 145 cities and counties have enacted living-wage bills, which generally require businesses that receive government contracts — and sometimes those that receive subsidies — to pay an amount above the federal or state minimum wage. The highest living wage in the nation is $14.75 an hour in Fairfax, Calif.
Republican bitterly opposed the bill just as they have opposed any legislation (minimum wage increases, social security legislation, affirmative action, business taxes, mandating seat belts and clean air regs. to name just a few) that increase their costs.
Ellen Valentino, the state director of the National Federation of Independent Business (NFIB) in Maryland, said her group strongly opposed the both minimum wage increases and living wage legislation: “We think wage decisions are best left to business owners."
Republican officials and business organization representatives wined that living wage legislation would undermine business growth, cause small firms to go under and increase the state’s deficit. Marc Donohue, a spokesman for the NFIB argued:"There is a downside to mandated wage levels. If you do it to an extreme, you're going to damage your business climate, you're going to damage your small employers and you're going to hurt many of the people you're trying to help.
Living wage critics ignore the reality that when workers are paid more, demand increases stimulating economic growth and profits, government revenues increase as higher wages generate increased income, business and sales taxes and state expenditures on transfer payments to the poor decrease.
Gloom and doom predictions might be politically effective. But they rarely materialize.
The historic pattern is that Republicans and business representatives vigorously oppose proposed legislation. They claim, like chicken little, that if it passes, the sky will fall. Then, once the legislation is enacted, they adapt to the new environment, the rules of the marketplace, and go about their business.
Living wage legislation recognizes that this nation's growing inequality is not simply the result of market forces and globalization. Over the last 30 odd years, a series of political decisions — on taxes, trade, labor rights, monetary policy and regulations — have tilted income and wealth to the top. Living wage laws are an attempt to level the playing field and address the nation’s growing inequality.
Gov. Martin O’Malley of Maryland signed the nation’s first statewide living wage bill on WEdsnesday, giving new momentum to the movement to raise wages through legislation and putting Maryland in the forefront of a national debate over government's role in fighting poverty and ineqiality.
"What this bill simply says is, 'If you're working on a contract funded by the people of Maryland, we are going to treat you in a fair and just way so you can put food on the table for your family after a day's work,'" O'Malley said.
Under the law, employers with state contracts will generally have to pay workers a minimum amount — $11.30 an hour in the Baltimore-Washington corridor and $8.50 an hour in the rural counties, where wages and prices are usually lower.
The Maryland state minimum wage is $6.15 an hour, one dollar above the federal minimum.
“This law lifts tens of thousands of families out of poverty and into the middle class,” said Tom Hucker, a first-term Democratic delegate to the Maryland House and before that the executive director of Progressive Maryland, the main group backing the bill. “Today Maryland shows the rest of the country a good way to honor work and fight poverty.”
Nationwide, 145 cities and counties have enacted living-wage bills, which generally require businesses that receive government contracts — and sometimes those that receive subsidies — to pay an amount above the federal or state minimum wage. The highest living wage in the nation is $14.75 an hour in Fairfax, Calif.
Republican bitterly opposed the bill just as they have opposed any legislation (minimum wage increases, social security legislation, affirmative action, business taxes, mandating seat belts and clean air regs. to name just a few) that increase their costs.
Ellen Valentino, the state director of the National Federation of Independent Business (NFIB) in Maryland, said her group strongly opposed the both minimum wage increases and living wage legislation: “We think wage decisions are best left to business owners."
Republican officials and business organization representatives wined that living wage legislation would undermine business growth, cause small firms to go under and increase the state’s deficit. Marc Donohue, a spokesman for the NFIB argued:"There is a downside to mandated wage levels. If you do it to an extreme, you're going to damage your business climate, you're going to damage your small employers and you're going to hurt many of the people you're trying to help.
Living wage critics ignore the reality that when workers are paid more, demand increases stimulating economic growth and profits, government revenues increase as higher wages generate increased income, business and sales taxes and state expenditures on transfer payments to the poor decrease.
Gloom and doom predictions might be politically effective. But they rarely materialize.
The historic pattern is that Republicans and business representatives vigorously oppose proposed legislation. They claim, like chicken little, that if it passes, the sky will fall. Then, once the legislation is enacted, they adapt to the new environment, the rules of the marketplace, and go about their business.
Living wage legislation recognizes that this nation's growing inequality is not simply the result of market forces and globalization. Over the last 30 odd years, a series of political decisions — on taxes, trade, labor rights, monetary policy and regulations — have tilted income and wealth to the top. Living wage laws are an attempt to level the playing field and address the nation’s growing inequality.
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