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
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.


The Next Amer­ica wel­comes op-ed pieces that ex­plore the polit­ic­al, eco­nom­ic and so­cial im­pacts of the pro­found ra­cial and cul­tur­al changes fa­cing our na­tion, par­tic­u­larly rel­ev­ant to edu­ca­tion, eco­nomy, the work­force and health. Email us. Please fol­low us on Twit­ter and Face­book.

What We're Following See More »
After Wikileaks Hack, DNC Staffers Stared Using ‘Snowden-Approved’ App
5 hours ago

The Signal app is fast becoming the new favorite among those who are obsessed with the security and untraceabilty of their messaging. Just ask the Democratic National Committee. Or Edward Snowden. As Vanity Fair reports, before news ever broke that the DNC's servers had been hacked, word went out among the organization that the word "Trump" should never be used in their emails, lest it attract hackers' attention. Not long after, all Trump-related messages, especially disparaging ones, would need to be encrypted via the Snowden-approved Signal.

Freedom Caucus Members May Bolt the RSC
8 hours ago

The Republican Study Committee may lose several members of the House Freedom Caucus next year, "potentially creating a split between two influential groups of House conservatives." The Freedom Caucus was founded at the inception of the current Congress by members who felt that the conservative RSC had gotten too cozy with leadership, "and its roughly 40 members have long clashed with the RSC over what tactics to use when pushing for conservative legislation." As many as 20 members may not join the RSC for the new Congress next year.

FDA Approves Emergency Zika Test
9 hours ago

"The U.S. Food and Drug Administration on Monday issued emergency authorization for a Zika diagnostics test from Swiss drugmaker Roche, skirting normal approval channels as the regulator moves to fight the disease's spread." Meanwhile, the Wall Street Journal reports that a new study in Nature identifies "about a dozen substances" that could "suppress the pathogen's replication." Some of them are already in clinical trials.

Medicare Advantage Plans Overcharged Government
10 hours ago

According to 37 newly released audits, "some private Medicare plans overcharged the government for the majority of elderly patients they treated." A number of Medicare Advantage plans overstated "the severity of medical conditions like diabetes and depression." The money has since been paid back, though some plans are appealing the federal audits.

Omnibus Spending Bill Likely Getting a Lame-Duck Vote
10 hours ago

"GOP leaders and House Democrats are already laying the groundwork for a short-term continuing resolution" on the budget this fall "that will set up a vote on a catch-all spending bill right before the holidays." As usual, however, the House Freedom Caucus may throw a wrench in Speaker Paul Ryan's gears. The conservative bloc doesn't appear willing to accept any CR that doesn't fund the government into 2017.