Opinion

Concrete Steps Can Reduce Inequality

A minimum-wage hike, better preschools, apprenticeships, paid family leave, and a low-cost retirement savings plan can change the course for those Latinos overrepresented in low-wage occupations.

Ben Olinsky, a senior fellow at the Center for American Progress, focuses on economic issues. He holds a political science degree from Yale University.
National Journal
Ben Olinsky
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Ben Olinsky
Feb. 25, 2014, 11:55 p.m.

Let’s face it: Most of us dream of a world where in­equal­ity would be a for­eign concept. Un­for­tu­nately for us, in­equal­ity is our real­ity. We can see in­equal­ity every­where, while walk­ing down the street or go­ing to the mall. For Lati­nos in the United States, eco­nom­ic in­equal­ity can be seen in the His­pan­ic poverty rate, which re­mains stub­bornly high at 25.6 per­cent com­pared with the 9.7 per­cent poverty rate for whites.

While these num­bers may seem quite dis­cour­aging, it is im­port­ant to keep in mind that we can take con­crete steps to de­crease in­equal­ity and re­store an eco­nomy that works for every­one, not just the wealthy.

As Pres­id­ent Obama men­tioned in his State of the Uni­on ad­dress, fo­cus­ing on in­creas­ing eco­nom­ic op­por­tun­ity in the United States, both in the short and long term, will be a pri­or­ity in 2014. This past Decem­ber, Pres­id­ent Obama ex­plained his views on in­equal­ity in a speech presen­ted by the Cen­ter for Amer­ic­an Pro­gress, ar­guing that re­du­cing in­equal­ity goes hand in hand with work­ing to im­prove the coun­try’s eco­nomy. In fact, the pres­id­ent re­minded us that there is good evid­ence that the eco­nomy grows best when the en­tire pop­u­la­tion be­ne­fits, not just some parts of our so­ci­ety.

There are sev­er­al key policies that the U.S. could ad­opt that would put this goal with­in reach, start­ing with pro­pos­als to in­crease the min­im­um wage from $7.25 to $10.10 and set­ting it to auto­mat­ic­ally in­crease over time. Do­ing so would dir­ectly ad­dress in­equal­ity and would dis­pro­por­tion­ately be­ne­fit Lati­nos, who are overrep­res­en­ted in low-wage oc­cu­pa­tions. Al­though CEOs’ salar­ies have gone up dra­mat­ic­ally, earn­ing 273 times more today than av­er­age work­ers, the wages of av­er­age work­ers have been stag­nant. In­creas­ing the min­im­um wage will help de­crease this gap.

The math is simple: When em­ploy­ees are paid more, they spend more, thus in­creas­ing the de­mand for goods. This, in turn, leads com­pan­ies and busi­nesses to do bet­ter, al­low­ing them to hire more work­ers and to pay high­er wages.

As the pres­id­ent also men­tioned in the State of the Uni­on, mak­ing sure that all chil­dren can at­tend high-qual­ity preschool is in­cred­ibly im­port­ant to their lifelong suc­cess. Ac­cord­ing to re­search, about half of the dif­fer­ence in high school achieve­ment can be ex­plained by a child’s ex­per­i­ences be­fore the age of 5. Ac­cess to high-qual­ity preschool is es­pe­cially im­port­ant for low-in­come chil­dren of col­or, who of­ten be­gin kinder­garten be­hind their peers. By provid­ing ac­cess to high-qual­ity preschools, we can give all chil­dren the ne­ces­sary skills to suc­ceed in school, gradu­ate from high school and col­lege, and have bet­ter op­por­tun­it­ies to find and keep jobs that pay well as adults.

We also must cre­ate more op­por­tun­it­ies for all stu­dents to learn and gain mar­ket­able skills after high school. One way to do this is by cre­at­ing more ap­pren­tice­ships op­por­tun­it­ies, where young adults and stu­dents can earn an in­come, gain work ex­per­i­ence, get train­ing, even earn col­lege cred­it. Re­search has shown that com­pared to work­ers who have not done ap­pren­tice­ships, those who com­plete an ap­pren­tice­ship earn an av­er­age of $300,000 more in wages and oth­er be­ne­fits over their life­times.

Ap­pren­tice­ships also help com­pan­ies by provid­ing skilled and ex­per­i­enced work­ers to fill pro­jec­ted job open­ings. And the time has come for us to give stu­dents the op­por­tun­ity to re­fin­ance stu­dent loans, which will in­crease re­pay­ment, free­ing up that money to be spent in oth­er ways that could boost the eco­nomy.

One of the most im­port­ant ways we can be­gin fight­ing in­equal­ity is to con­cen­trate on people’s lives at home and of­fer­ing paid fam­ily leave for every­one. Today, only 12 per­cent of work­ers have paid fam­ily leave through their em­ploy­ers, and low-wage work­ers are par­tic­u­larly un­likely to have it. We can start to level the play­ing field by giv­ing all par­ents — not just the lucky few — bet­ter op­por­tun­it­ies to care for their chil­dren, which can res­ult in bet­ter suc­cess in school.

Fi­nally, with only half of all Amer­ic­ans hav­ing a re­tire­ment plan at work, we have to com­bat in­come in­equal­ity in re­tire­ment. To do so, we should give all work­ers a new low-cost op­tion to save for re­tire­ment that would en­joy low fees, pooled risk, and pro­fes­sion­al fund man­age­ment. We should also change how the tax code works so the wealthy do not get bet­ter tax breaks than low-in­come fam­il­ies to save for re­tire­ment.

It won’t be easy to turn back in­equal­ity, but there are steps we can take now to move in the right dir­ec­tion. If we can cre­ate an eco­nomy that works for all Amer­ic­ans, we can un­leash our full eco­nom­ic po­ten­tial. Let’s give work­ing Amer­ic­ans a raise, chil­dren the sup­port and edu­ca­tion they need, young adults the skills that can help them land a good middle class job, and work­ers the chance to save for re­tire­ment. As Pres­id­ent Obama ex­plained, if we work to­geth­er, we won’t just cre­ate a more equal so­ci­ety, we’ll cre­ate a more pros­per­ous one as well.

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