Improve Mobility to Address Inequality

Discussions about poverty and inequality are in the news these days. I have been asked about inequality especially in the Bay Area by several reporters recently. I tell them that I think the while it is true that income inequality is increasing; the problems we should be focusing on are wage stagnation and lack of upward mobility for many workers.

The wage gains for workers with high skills, such as many Bay Area tech workers, does not make other workers poor or prevent them from acquiring skills and moving up. Poverty and lack of upward career paths are real problems but they are not caused by the success of others nor would it help workers at McDonald’s if tech workers made less money.

While graduating from a four-year college is not the best career pathway to good jobs for everyone, getting a good high school education and some additional training, for example, an apprenticeship or community college certificate program is increasingly necessary. High school dropout rates and the shortage of career technical training programs is not caused by the success of high wage workers and will not be improved if they earned less.

With one exception (the cost of housing) a strong economy such as the Bay Area tech led economy, provides more opportunity for upward mobility than an economy that is struggling even though the hot economy may have more income inequality. Unemployment rates in the Bay Area are below those in other parts of California. Wage levels are among the highest in the nation, which creates the spending to support job growth in service sector occupations. The same is true in North Dakota where the strong job and wage growth in the oil and gas sector is creating low unemployment, job and wage growth AND rising home prices and rents.

I am part of a larger team that has been working for the past year on developing strategies to help low and moderate wage workers move up. We have three major conclusions. One is what I argued for above—that a strong economy is helpful and, as a result, policies to make the Bay Area more competitive such as good schools, better transportation infrastructure, more housing and consistent permitting and regulation, are part of an upward mobility agenda.

But the heavy lifting has to be done in education and training programs that prepare students and workers for good jobs and excite them about the connection between learning and good jobs. And in making sure that everyone who needs it has access to basic math, English and digital literacy and that they understand what employers expect from workers. And none of these efforts are improved by disparaging or attempting to change the success or pay of highly skilled workers.

Success may or may not reduce inequality much but it will certainly improve the opportunities and standard of living for many who are not stuck near the bottom of the wage ladder.

Our third conclusion, which I will discuss in a future blog, is that the number of relatively low wage jobs will increase and improving prospects for these workers (if that is a goal) will require improving wages and working conditions in these jobs as well as providing additional support such as through an expanded Earned Income Tax Credit.