7/24/2012 6:36 PM ET|
What no one's telling US workers
While policy wonks argue about how to address income inequality in this country, plenty of hardworking Americans need to hear a more practical message.
The simmering debate over income inequality got a jolt of energy recently with the publication of Edward Conard's book "Unintended Consequences: Why Everything You've Been Told About the Economy Is Wrong." Conard is a former partner of Mitt Romney's at Bain Capital, so his book can be interpreted (rightly or wrongly) as the Bain View of the Universe.
Romney's critics have been gleefully attacking Conard's book and its elitist, trickle-down view of the economy -- which plays right into President Barack Obama's call for more fairness and higher taxes on the wealthy. But this predictable argument over the diverging living standards for rich and poor -- with liberals insisting that the rich have gotten too rich and conservatives arguing that more spending by the rich would make everybody better off -- basically misses the point. In fact, it does a disservice to hard-working people who need pragmatic guidance on how to plan for their financial future.
Conard mounts an unapologetic defense of the 1% and the economic activity they generate, arguing that spending and investment by the wealthy is the main thing that keeps the economy humming and creates jobs. The New York Times Magazine summarized his argument this way: "If we had a little more (income inequality), then everyone, particularly the 99%, would be better off."
That type of reasoning drives liberals bananas, and they do have data on their side. Since about 1980, for example, incomes for top earners have risen sharply, while they've risen much more slowly for everybody else. Over the past decade, the median income has been stagnant, producing a bulging gap between the rich and everybody else.
The big question is what to do about it, and here's where the policy wonks arguing about income inequality break ties with real Americans. Experts on both sides typically call for new policies in Washington to fix whatever they feel is wrong with unequal incomes. But policy changes won't solve most of the problems ordinary people face, and even if they did, it would take years.
Relying on solutions from Washington, in fact, may be the very thing that generates dangerous unintended consequences. If you think politicians will help you get ahead then you'll be less likely to take action on your own to make yourself better off.
What politicians and policymakers really ought to be telling struggling Americans is this: You're on your own. The government is running out of money and is borderline dysfunctional besides. Instead of new policies that will make the economy more fair, we need more self-sufficient workers who aren't looking to government for answers.
The trick is figuring out what ordinary people can do to make themselves better off. To do that, it helps to understand the real problem, which isn't income inequality in itself. It's a decline in economic mobility, which means it's getting harder for people to boost their earnings, move up the socioeconomic ladder and improve their living standards.
The economy is changing rapidly, and it's not completely clear why it's gotten so much harder to get ahead. But there are certainly clues. Education has a lot to do with it: There are very limited opportunities these days for people who don't have a college degree or whose training is outdated. Technology is another factor. People whose careers are tied to the digital revolution enjoy the good fortune of working in a burgeoning field, while many others work in shrinking fields being decimated by new technology. Workers able to ride the wave of globalization, at companies that do business around the world, have an edge.
Attitude is another factor. Too many American workers rely on somebody else for their livelihood, without the grit that it takes to adapt and recover when something goes wrong. This is the natural byproduct of a long era of prosperity in which living standards rose for nearly everybody, just because the economy was booming. It didn't take extraordinary fortitude to get ahead. Often, all you had to do was show up.
Things are different now, and the bar for success is higher. Instead of arguing over the abstract causes of income inequality or hoping for miracles from Washington, national leaders ought to be sending this message to America's workers: Get smarter. Work harder. Go where the opportunity is. Prosperity isn't going to trickle down from the wealthy, or arrive in the form of a government check. The only person looking out for you is you.
More from U.S. News & World Report:
VIDEO ON MSN MONEY
It's the people at the top AND the bottom of the economic scale that are making things much harder on those of us in the stagnant middle.
I agree the top 1% are grossly overpaid (and have a chunk of the Gov't in their pockets), but I also agree with the author's idea of "You're on your own" when it comes to the folks who are just sitting on the sidelines (besides their 'under-the-table' jobs) and receiving taxpayer money for housing, medical care and food; while they watch the middle work.
In my position, in just one city in this vast country, I see hundreds (and my co-worker the same) of people who are collecting Social Security Disability for conditions that can not be proven, like depression, or anxiety. When I ask how long it will be before they think they will return to work, they look at me like I'm insane...they've found the golden egg. I must say here, I've known folks who have issues with depression and anxiety, but they are properly medicated and are productive workers. Once one is approved for SSDI, then the free housing, food, etc, starts flowing; and these ‘disabled’ individuals (and sometimes family groups) will collect for the next 30, 40, 50 years, costing us Billions, Trillions. It’s absolutely shameful, as much so as the CEO who earns 27 million a year for a so-so performance.
When I was a young man I received a letter from a Republican president that said, " Greetings from the president of the United States. You have been selected by your friends and neighbors to serve your country ......" I was taken from my home and trained to kill in many ways. Then they sent me to a far away country to put my training to use while Romney, Limbaugh, Cheney, Hannity and many others were getting deferment after deferment . Six years later I was sent home and got a job in a factory at an entry level position. Over the next 35 years I took many night school courses and as the policy of the company was to promote from within I moved from job to job being poromoted each time and eventually ended up as a corporate executive. I am now retired, however, all the jobs in that company that used to only require a high school diploma, are now filled by people with masters degrees, most of them on the night shift in the factory and are now paid less than they used to pay 20 years ago, but the executives are paid many times more than they used to get.My grandchildren cannot go to college because of the exhorbitant cost so their future is doomed.
The only thing we make in this country any more is WAR and the young uneducated are doomed to go into the military to serve as fodder for the Republican war machine. God help us if Romney gets elected. We'll be at war with Iran before Easter 2013.
I'm not sure we should completely ignore inequality. I never thought guys like Bill Gates or Steven Jobs should be compared to those Harvard MBAs that often run corporations, and give themselves the lion's share of rewards when other under them created all the wealth (it's often way beyond their own contributions). Yahoos new CEO just got the GNP of a 3d world nation and she just started. Hell, many get bonuses when the company loses money, or when the get fired.
Yes, the tax code should be simplified and made more fair, but don't hold yiour breath. There are just as many rich liberals as there are conservatives, and they are just as insufferable.
The real issue is the growing us vs. them attitude. Thats going to trash our economy. And it not just the right to blame, the left has done its share to trash our future. Too bad for us.
Dear God in heaven...really? Work harder? Please! If wages had kept up with productivity, the avg.middle class wage now would be $70k+ right now. It's not. But the wealthy have seen their incomes rise exponentially. Their wages kept up with OUR productivity.
There was a time when employers used to have annual raise revue's, 401k matching, profit sharing, and benefits that were mostly paid for by the employer. This was a way for the middle class to increase their wealth as well. But those days are gone. Where did all that money go? Well, I'll give you a hint....the wealthy corporate elite got a raise on your back.
There was a time when employers understood it took the contributions of all to make a successful company. Now they selfishly think it's only about them.
I don't give a rat's patooty if they think a janitor should only make minimum wage. The reality is that we live in 2012. Not 1985. If they expect that we should pay more for even the basics, i.e. utilties, food, gas, rent, auto insurance, health insurance, home insurance, etal then by god pay us enough money that we can cover these expenses!
Good grief.....work harder? OMG! Seriously!!
Companies need to take care of their workers and not just the "special talent" that runs them. Verizon is still negotiating with their union workers. They want to reduce benefits to people making $50K while paying their CEO $27 million. The thing that amazes me is there are working class people that will side with the company, like somehow taking away a benefit these workers have will make it easier on them since they don't have it.
When companies eliminated pensions and told their employees to fund their own 401K's, that was a pay cut(also, a redistribution of wealth, since that money went to execs and shareholders). When companies pass healthcare costs on to their employees, that's a pay cut. Also another redistribution of wealth, since execs don't pay for their healthcare and either have the company fund their pension or get enough in compensation to last through multiple lifetimes.
The government can't turn the economy around. It's on Americans to buy American, support their fellow working Americans, and get unionized so their demands have some clout. Companies won't give you anything they don't have to and now they're taking everything they can. And if you don't like it, they'll tell you to look for another job in the worst economy we've had since the Great Depression.
I totally agree, companies used to train people, have a pipeline to advance, and put some resources into their workforce. I have a cousin who started out of HS at AT&T ans was able to advance to an executive position. they no longer invest in their workforce and you must somehow get the education AND eperience before they will even consider you for a low wage job. Instead of hiring people with intelligence and potential they look for only those who come "with the batteries included".
they don't even want to hire americans anymore as there are alot of people on work visas doing our jobs. Let's not forget the ridiculous hoops people have to jump through just to get an interview. it's come to the point of why even bother anymore.
The top 1% do very little in supporting the economy other than buying luxury goods and making money off the poor and middle class. The wealthy invest to make money off the average person, while the average person spends most of their income supporting the economy. Which group do you think is buying more cars, food, cloths, houses, merchandise and entertainment?
If the government isn't looking out for the average person, maybe the average person shouldn't look out for the government and the wealthy. How many wealthy people join the military, police force, or become fire fighters? Switch from banks to credit unions and commercial farms to Co-ops, along with other industries being by workers for workers, than we can tell the government and wealthy it is time they look out for themselves because the little guy isn't going to give them any more piggy bank rides.
It is not just individuals without an education that are suffering. I am in debt like crazy for graduate school and I can barely pay my rent and food, much less pay off my school loans. How am I EVER supposed to pay off these debts when I can only get secretarial positions with no benefits?
My partner, who was working as an UNPAID intern, also has a masters degree. What a joke. His office put up an ad for a secretary position and had Ph.D-holding applicants. They ended up hiring a girl just out of undergrad with no experience. What the hell are normal, hard-working Americans supposed to do?
Our parents taught us that we can do anything we set our minds to, and that is just NOT TRUE in this economy. The only young people I know with satisfying or well-paid jobs have rich, connected parents that handed them the positions. I have officially lost faith in you, America.
Get smarter.....work harder? People ARE committing themselves to higher education and graduating from these "for profit" schools. They're trying to get smarter, they want to work harder, they're promised jobs making an unrealistic amount of money, and they join the workforce owing $100,000 of student loan debt.
And they're not even taught the basic skills in their job field.
This isn't sour grapes on my part. I went through an apprenticeship on my job, learned the skills to do my job, and work hard every day. And I'm not $100,000 in debt for school.
Copyright © 2013 Microsoft. All rights reserved.
RECENT ARTICLES ON PERSONAL FINANCE
Joe Cantrell says he faces charges after trying to take advantage of the retailer's policy.