An American Solution to Income Inequality

Townhall.com ^ | May 4, 2014 | Bruce Bialosky

[Kaslin]

Our President has attempted to make a major issue of the difference between the very successful in our country and the rest of us as a focus of his party’s campaign for the 2014 elections. He does have a point that some people’s income levels have really soared while others have languished. He just has a wrong-headed solution to the problem.

Not surprisingly, Mr. Obama has chosen to resolve the issue through government intervention. He has a two-pronged effort. First, he has greatly increased welfare payments which have been dissected ad nauseum by this column. Otherwise, he has consistently thought of himself as Robin Hood -- robbing from the Rich and giving to the Poor. The second aspect is artificially inflating the wages of entry level employees (raising the minimum wage). Others on the left have been driving this issue for years; Obama has just nationalized the issue, providing cover for people at the state and local level.

I studied his policies and came to a different conclusion as to how to solve this problem. It is a simple solution, but as Ronald Reagan said “Simple is not necessary simplistic.” The solution is that we need to get these people jobs. What a concept! But let me explain.

Madame Pelosi is still blaming the Bush economy (she will probably be doing that on her death bed), but our president has been in office over five years and it is his economy. The Administration likes to tout that the unemployment rate has dropped during his term from over 10% to the current 6.7%. We all know that is because the rate of participation in the workforce has plunged. It is now 58.9%, down from 62.2% in 2007. That is a decrease of 3.3% of our population with wage earning jobs. That is about 10 million less Americans working and paying taxes.

The Administration speaks of how people are retiring and it is true our population is aging, but not that much and not in seven years. In addition, many 65-year-old citizens are vibrant and anxious to continue working in some capacity, but the job market is so meager it is hard for them to stay in the workforce. But that is where Obama misleads on the issue because the participation of people in the prime of their working years has plummeted. In the age group between 25 and 54 years of age, the current participation rate in the workforce is 76.7%. That is down almost five points from 1999. That is a lot of people in their prime earnings years losing time and earnings that they can never replace.

Our citizens who are suffering the worst are the college graduates. Barely half of college graduates since 2006 had full-time jobs as discovered by a recent Rutgers University study. And it's not getting better: Graduates since 2009 are getting the worst of it. They are three times more likely not to have found a full-time job than those from the classes of 2006-08. The percentage of underemployed college graduates has soared from roughly 10 percent to more than 35 percent since 1967 another study showed. While our President hops from college campus to college campus lecturing students on the benefit of a college education, the market tells them that a large portion of them are either wasting their time or seriously overpaying. 16% of bartenders and the same percentage of parking attendants have a college degree. Someone should tell them they could be unemployed or get a job in hospitality without incurring huge debt.

Despite that fact, you might now expect a rant on how Obama’s policies have harmed the job market: there is no need. If it is not self-evident to you that something is wrong with the job market from the information above, there remains nothing else to say.

But what our president and his team do not understand is that if the job market were healthy, the income inequality issue would largely self-resolve. In a competitive job market wages are driven up naturally. People move from job to job advancing their careers and others get a chance to move up as positions need to be filled. If you don’t believe this because you have not seen it for a while -- move to North Dakota. You will see a living example of the remedy for what Obama pleads needs a government solution. We don’t need government intervention; we need more jobs.

Currently, employers dither and delay. They can pay lower wages because there are so many people clamoring for each position that is available. It is really a basic concept called supply and demand.

Mr. President, you would really help your citizens by getting out of the way and letting the capitalists take over to get the job market humming. Stop putting roadblocks in front of them. I know that is a pipe dream because he is a committed statist, but one can still dream in Obamaland.

[Puppage]

How about we talk about the real reason people make more than “others”, hmm? How about, Effort Inequality? Or, Ambition Inequality? Drive Inequality?

[Enterprise]

After people have been out of work for a certain time, they get dropped from the roles of people seeking work, and they are no longer counted among the unemployed. I think we can do the same with people with unequal incomes. After someone is in poverty for a certain amount of time, they should be dropped from being counted as being in poverty. Thus the problem of unequal incomes is solved!

The guiding principle here is time. Time spent being unemployed translates to not being counted as unemployed anymore. Time spent in poverty translates to not being counted as being in poverty anymore.

[RWGinger]

This point from the article has been overlooked by 0dumbo and his minions
“The solution is that we need to get these people jobs.”

Plus the hard fact is people living off welfare do not want to work. Dems have made it easy to live a pretty good life and never work.

Which btw leads to the gap widening. People living off welfare bring down the ‘ average’ wage even though the intangibles let them live pretty good lives.
I hope we aren’t too late to stop this

[americanbychoice3]

Are the Administration and Unions trying to shift subsidies onto the private sector?

The constant push for higher minimum wages, as high as $15, would shift the burden of subsidizing low income and low information people to the private sector.

Government will be praised as heroes while (un) intended consequences would make life worse for those poor subjects who will follow like lemmings down the proverbial cliff.

What they will encounter is to lose eligibility for welfare, food stamps, Medicaid and other State and federal programs, leaving them worse off than before. Because of their newly found “wealth”, they would be classified as the “new middle class” courtesies of their compassionate Administration. All the while the federal coffers would increase because of cost savings. Many of those enjoying a minimum wage job would actually be taking an income decrease, when you deduct the lost federal subsidies.

The evil Corporations would be blamed for causing this problem for not paying for extra subsistence.

I don’t believe that that calculation has not already been made by the Agencies?

This is only my personal opinion and I could be wrong.

[A_perfect_lady]

Our citizens who are suffering the worst are the college graduates. Barely half of college graduates since 2006 had full-time jobs as discovered by a recent Rutgers University study.

What?? Going into debt thousands of dollars for a sociology or women's studies degree isn't paying off? Who knew!?!

[mountainlion]

It seems that everything the government does for equality has unintended consequences that undo and hurt the effort. Higher minimum wage makes much unfordable and costs the low earners their job. Affordable health care is not. Clean the air and energy becomes unfordable...

Is government really that dumb or is it the real plan in the first place to make the poor poorer?

[csmusaret]

The Obama/Pelosi/Reid Cartel has a simple solution: No income—No inequality.

[Gluteus Maximus]

We need to stop buying into the whole notion that there is anything wrong with "income inequality." Relative equality of outcomes is a fact of every biological system, including human economies. is written in the stars. It's called Pareto's Law. Relative inequality - usually with the top 20% getting 80% of the results - is just the way every biological system of necessity organizes itself, from the peas in your garden to the relative wealth in you locality. It proceeds from the simple biological fact that systems maximize energy efficiency with something approaching an 80/20 split. Ultimately, human economic inequality is as unavoidable as the laws of thermodynamics, because, when all is said and done, Pareto's Law is a corollary of them.

Thus, there is nothing, absolutely nothing, that can be done to equalize relative incomes, at least over time. The 80/20 split is like a gyroscope. You can push it one way or the other, but ultimately there must be a correction.

So, if we can't have relative equality, then what can we do? Well, what we can do is concentrate on economic growth. Imagine a world where, all other things being equal, the total World Product of goods and services is ten times what it is now. In that world, even the poorest of the poor in the poorest third world country would have plenty to eat, decent clothes to wear, decent shelter, access to basic services like primary education and healthcare. If we grow enough and everybody has more than enough, who cares if the top 1% have gotten so rich that they're spending their money on vacations to the Rings of Saturn?

Liberals! Stop caring about who has more than you and start caring about making everybody's cup run over via strong and sustained economic growth.

So, the question arises, how do we achieve economic growth. Simple. Let the people who produce wealth KEEP IT, at least the lion's share of it. End the personal income tax. Stop the war on coal. Facilitate trade. Strengthen property rights throughout the world. Make it easy for anybody to start a business, hire and fire employees. Et cetera. In short, allow the natural economic aristocracy to emerge and maintain control of the economy.

Get things moving!!!

Under the rule of 72, if we could just achieve like we did in the 1990s 6% growth and keep it there for 24 years, the today's bottom 80% would be living like today's top 20%. Wouldn't that be great?

But liberals say no, that wouldn't be nice at all. Because for liberals it's not about people have full rice bowls and decent clothes, it's about liberals using the political process to thrust down the natural economic aristocracy of real producers and replace their mediocre selves in their place, thus destroying growth potential and impoverishing the world.

And that's why I despise all Democrats.

[RWGinger]

AH
excellent question
and the adjunct question to that is how many of the ones currently on welfare will take jobs, even at $10.10?
These people have gamed the system well enough they know they can live a decent life and not have to do minimum wage jobs even if the min wage is over $10.00/ hr

Did you know BTW that not being able to speak English is considered a ‘ disability: and qualifies you for SSDI ( over $700 a month TAX free)
Add in some TANF, SNAP free medical, free school breakfast lunch and snack for your kids and a phone and you are living ok

What me work/ No habla

[IronJack]

How about just plain ability inequality?

[Puppage]

Perfect!

[Yardstick]

Agree.

[A_perfect_lady]

Is government really that dumb or is it the real plan in the first place to make the poor poorer?

I suspect neither. It's probably just about being seen "trying to make a difference" and getting re-elected. Whether it works or not is of marginal interest. Being seen as caring and getting re-elected is what matters to them.

[upchuck]

Excellent, fair solution.

[dragnet2]

How about we talk about the real reason people make more than “others”, hmm? How about, Effort Inequality?

Bull sh*t!!

How about you wake up out of your como?

Most all of this is caused the those in government choking the life out of the American private sector middle class...

Government has become the largest employer, with more government unionized workers then *entire* private sector America.

I personally know of these unionized government employees, including cops, fire, city council people, school board frauds, state and county parasites and millions of others who are WAY over paid and benefited, all on the backs of the tax payers.

I know cops and others who retired at 50 years old, with $80,000 per year for life, this does not include their gold plated medical and benefits..

Try doing this in the private sector America today Mr. pup.

We're being economically gang banged by the government sector.

Anyone disputing this is clearly in on the con-job.

[dragnet2]

Coma too!

[upchuck]

This is totally nuts! It’s like trying to command the sun to rise in the west and set in the east.

There have ALWAYS been three segments to society: the rich, the middle class and the lower class. It was like that during the days of the Pharaohs and it’s like that today. And it always will be. Because it’s human nature.

Although I will admit that today upward mobility is much easier than in the past. Consider India’s caste system.

nobama is tilting at windmills again. Sorta like globull warming.

[dragnet2]

Bull sh*t!!

Most all of this economic unbalance tax payer looting is being caused the those in government choking the life out of the American private sector middle class...

Government has become the largest employer, with more government unionized workers than *entire* private sector America.

I personally know of unionized government employees, including cops, fire, city council people, school board frauds, state and county parasites and millions of others who are WAY over paid and over benefited, all on the backs of the tax payers.

I know cops and others who retired at 50 years old, with $80,000 per year for life, this does not include their gold plated medical and benefits..

Try doing this in private sector America today.

We're being economically gang banged by those in the government sector.

Anyone disputing this is clearly in on the con-job.

[Political Junkie Too]

I remember the days when what we used to call "civil service jobs" acknowledged that they paid lower wages, but they were compensated with guaranteed employment for life.

Today, civil service jobs pay more than the private sector, suck the private sector workforce dry by growing the public ranks, and overpay the government workers with crazy union pensions and benefits, all with no performance accountability that we usually find in the private sector.

-PJ