Blog

By Paul Buchheit
Author, editor, expert on income inequality

The damage caused by the relentless corporate drive for profits has become more clear in recent years. In the most important areas of American life, devastating changes have occurred:

Health Care: Almost half of the working-age adults in America passed up doctor visits or other medical services because they couldn’t afford to pay. The system hasn’t supported kids, either. A UNICEF study places the U.S. 26th out of 29 OECD countries in the overall well-being of its children.

Education: Student loan balances increased by 75% between 2007 and 2012.

Household Wealth: Median wealth fell by 66% among Hispanic households and 53% among black households between 2005 and 2009, mainly because of the mortgage banking collapse. Almost half of Americans have ZEROwealth, with their assets surpassed by debt.

Water and Food: Life-giving seeds and drinking water have been increasingly treated as products to be bought and sold.

All these areas of life have been degraded by a free-market system that has thrived on publicly-funded research, infrastructure, and defense. Yet in a brazen show of hypocrisy, major corporations have ignored all the problems they’ve caused, choosing instead to cut their taxes in half despite doubling their profits, to hold 60% of its cash offshore, to eliminate workers rather than create jobs, and to reduce the pay of their remaining employees. (more…)

Sherry Linkon
Co-Director, Center for Working-Class Studies, Youngstown State University

One of the most common solutions offered to reverse America’ growing economic inequality is increased access to education.  President Obama may have started the trend with his call for universal, high-quality preschool, but others have joined the fray.  In March, Ronald Brownstein argued in National Journal that “Education remains critical to reversing the erosion in upward mobility that has made it harder for kids born near the bottom to reach the top in the United States than in many European nations.” On The Century Foundation’s website just last week, Benjamin Landy posted a blog entitled “To Battle Income Inequality, Focus on Educational Mobility.”   

According to Brownstein, colleges and  universities are failing to make those opportunities available, because higher education has become too expensive and doesn’t do enough to help lower-income students succeed. In their 2009 study of college completion rates, William G. Bowen, Matthew M. Chingos, and Michael S. McPherson, Crossing the Finish Line: Completing College at America’s Public Universities, showed that lower-income students were less likely to graduate than their wealthier counterparts regardless of where they went to school.

Their study also showed, however, that working-class students did better when they enrolled in more selective colleges, rather than choosing a more accessible public institution, but many working-class students choose less-selective schools.  Many don’t even apply to more elite colleges, for any number of reasons.  In a recent study, Caroline Hoxby and Sarah Turner suggest that working-class students believe, mistakenly, that it will cost less.  In fact, financial aid programs aimed at increasing economic diversity at elite schools often make such schools more affordable than public schools.  That may be increasingly true as state legislatures dramatically cut support for public higher education, making them even more expensive. (more…)

By Patrick J. Finn
Associate Professor Emeritus of Education, University at Buffalo, State University of New York

In her recent post Kathy Newman discusses the lengths to which schools go to improve students’ high-stakes test scores and reminds us that parents’ income is the best predictor of students’ performance on standardized tests.  Nevertheless, when working-class public school students perform poorly on high-stakes tests we say to the teachers, “It’s your fault.  Teach better!”  What we get is teachers who teach worse:  lessons become scripted and rote.  And we say to students, “It’s your fault.  Try harder!”  What we get are students who become even more alienated and less motivated.

Of course, lurking behind the whole issue of high-stakes testing is our faith in the concept of the concept of meritocracy.  Only when meritocracy is rigorously defined and the assumptions underlying it are stated explicitly, does it become problematic.

Meritocracy starts with the assumption that, by and large, all American children start kindergarten or first grade on a nearly equal footing and as they progress through the grades those who are smart and work hard earn good grades are placed in high-status school programs, enter high-status, high-paying professions, and end up with a lot of money, status, and political power regardless of the social status of their parents.  On the other hand, students who are not smart and/or do not work hard earn poor grades are placed in low status school programs, enter low-status, low-paying occupations, and end up with little money, status, and political power regardless of the social status of their parents.

But since most children of affluent parents become affluent adults and most children of working-class parents become working-class adults, meritocracy leaves us with the conclusion that most children of affluent parents are intelligent and hard-working (the logic of merit), while most children of working-class parents are lazy and lack intelligence (the logic of deficit).

There is, however, a better explanation: school success is tied to systematic inequalities that persist from generation to generation.  Working-class children are not as well prepared for primary school as more affluent children, and they often attend different schools or are assigned different classes.  And those who have high SAT scores do not have the same access to higher education as more affluent students with similar or lower test scores.

These are fairly apparent instances of structural inequality, but there are less obvious structural phenomena at work.  Many working-class students see high-status knowledge and cultural capital as useless and even antithetical to their working-class identity.  They develop oppositional identity, defining themselves different from schoolteachers or people like them.  At the same time, the schools generally ignore any sense of importance or entitlement students may have as working-class people. So the students resist teachers’ attempts to teach, and unlike most other students, they often find affirmation for their resistance in their homes and communities.

A modified teaching paradigm ensues.  Teachers give easy assignments and provide step-by-step directions.  Classroom control becomes a paramount concern;  teachers refuse to negotiate with students in fear of losing authority.   Many teachers of working-class students see their mission as producing border crossers—students who believe in meritocracy, are academically inclined, and willingly adopt middle-class values, tastes, and interests. But many working-class students who have these qualities are defeated by structural barriers, while those who succeed are held up as proof that meritocracy works. (more…)

By Jared Bernstein
Senior Fellow, Center on Budget and Policy Priorities

You want my advice, you should pour a tall cup-a-Joe and settle in to read this essay by Sean Reardon in Sunday’s New York Times on education and wealth. He covers a lot of ground, but the theme that resonated most with me is one I’ve stressed often in these parts regarding the growing evidence of linkages between increased income inequality and diminished opportunities. A prominent channel through which this occurs is, of course, education.

It’s not just that rich kids do better in school than poor kids. That’s an old problem.

What is news is that in the United States over the last few decades these differences in educational success between high- and lower-income students have grown substantially.

Moreover, these growing differences show up in college access and completion.

…the proportion of students from upper-income families who earn a bachelor’s degree has increased by 18 percentage points over a 20-year period, while the completion rate of poor students has grown by only 4 points.
…15 percent of high-income students from the high school class of 2004 enrolled in a highly selective college or university, while fewer than 5 percent of middle-income and 2 percent of low-income students did.

How, though, do these developments link up with inequality? As Reardon sees it “the academic gap is widening because rich students are increasingly entering kindergarten much better prepared to succeed in school than middle-class students. This difference in preparation persists through elementary and high school.” (more…)

By Paul Buchheit
Author, editor, expert on income inequality

Multinational corporations have built their businesses on the backs of American taxpayers. They’ve depended on government research, national defense, the legal and educational systems, and our infrastructure.

Yet they’ve turned around and mocked us with declining tax payments. They’ve cut workers. They’ve refused to invest their massive profits in job-producing research and development. And they’ve insulted existing employees with low wages and dwindling retirement support.

As a final disdainful act, many of them have tried to convince us that they LOSE money in the U.S. while only making profits overseas.

Here are the facts.

Business Built on Our Backs

(a) Research

The most essential aspect of business growth is the long-term basic research that is largely conducted with government money. Starting in the 1950s, taxpayer-funded research at the Defense Advanced Research Projects Agency (the Internet), the National Institute of Health (pharmaceuticals), and the National Science Foundation (the Digital Library Initiative) has laid a half-century foundation for corporate product development. Even today 60% of university research is government-supported.

The tech industry is a special case, with many computer and communications companies coming of age in the 1990s, when industry funding for computer research declined dramatically and government research funding continued to climb. As of 2009 universities were still receiving ten times more science & engineering funding from government than from industry.

(b) Infrastructure

Thanks to the taxpayer-funded National Highway System, corporations have acquired access to markets across the country for over 60 years. Along with road construction came the water, electric, and telephone facilities needed to sustain their businesses.

Today, the publicly supported communications infrastructure allows the richest 10% of Americans to readily manipulate their 80% share of the stock market. CEOs rely onroads and seaports and airports to ship their products, the FAA and TSA and Coast Guard and Department of Transportation to safeguard them, a nationwide energy grid to power their factories, and communications towers and satellites to conduct online business. Private jets use 16 percent of air traffic control resources while paying only 3% of the bill. (more…)

Kathy Newman
Professor of English, Carnegie Mellon University

I just returned from a rousing three-day street corner teach-in called “Occupy the Department of Education,” held in Washington DC. I wanted to occupy the DOE because, for me, what started as a fairly straightforward involvement in a movement against massive education cuts in Pennsylavnia has evolved into a sense of urgency that we must reverse the damage that No Child Left Behind (NCLB) and corporate education reforms are doing to public education.

This week my nine-year old son will be “opting out” of the high stakes test given in the Pittsburgh Public Schools (the PSSA).  The test is used to grade my son’s school on its annual progress (Adequate Yearly Progress as defined by NCLB). I wrote an editorial about my decision to have my son opt out of the test, which has been seen and/or shared by at least 50,000 people in the last week. A companion piece at a lively blog called The Answer Sheet at The Washington Post is also generating considerable traffic. Apparently, I’m not the only parent who’s concerned about high stakes testing.

Many of those parents are, like me, middle class.  But the emerging movement against school reform might be even more important for the working class.

My son’s school, Pittsburgh Linden, is a magnet school in Pittsburgh’s East End, one of the wealthier parts of the city—near the universities and the hospitals. Because it’s a magnet Linden students come from at least six different zip codes and from a variety of racial, ethnic and economic backgrounds. 70% of the students are African American, Asian, Hispanic, or two or more races, while the remaining third are white. About 35% qualify for the federally funded lunch program, suggesting that despite the tony neighborhood, many of the students come from poor and working-class homes.

When NCLB was enacted the rhetoric was about fixing schools that served the poorest and most disadvantaged students. But a decade into NCLB, it is clear that high stakes testing is not improving our schools. These standardized tests are being used to assess the student, the teacher and the school, and depending on the outcome, they may be punished or rewarded.

But even before any formal punishments, these tests are forcing a narrowing of the curriculum. At Linden and at thousands of public schools across the country, much of the school day is devoted to pre-tests, practice tests, test prep, and test taking strategies. State budgets cuts have made the situation even worse, and the combination has left my son and many others without band this year (he was going to start the clarinet), and with many fewer hours of library and music each week. Middle-class kids (including my own son, who is learning piano) might get music lessons outside of school, but for working-class students, the narrowed curriculum cuts off their opportunities. (more…)

By Jared Bernstein
Senior Fellow, Center on Budget and Policy Priorities

You will recall that in his last State of the Union address, President Obama announced a policy idea that makes a whole lot of sense for our times: universal preschool. It’s easy to describe why this is a good idea, and I’ll do so in a moment, but in recent debates, I’ve noticed some opposition talking points creeping in that — surprise — don’t have much at all to do with what the White House appears to be proposing. So let’s clarify a few things and raise a very big question that will shortly be answered (how to pay for it).

Why do this? Easy: because so much research shows how important it is, especially for kids from less-advantaged households, to get the cognitive boost that quality early-learning programs provide. For a readable review of a broad literature in support of that claim, see here. But I can assure you that experts from left, right, and middle agree on this.

The president noted the oft-cited statistic that “every dollar we invest in high-quality early childhood education can save more than seven dollars later on” and the link above shows that might actually be low-balling the net benefits a bit. The $7/$1 estimate comes from a highly regarded study that “…assumed there is no value to preventing what they call “victimless” crimes-selling drugs to children or heroin use.” It also left out benefits like reductions in abortions.

I’ve argued the case for quality preschool for all on equity grounds. The revealed preferences of higher income parents show they know how important this is. But forget that — put on the green eye shade and explain to me why it’s better for society to leave positive net benefits of this magnitude on the table.

Why make it universal? I was recently on a panel with a conservative scholar who very much supports preK for kids from families with less means but objects to a new, big, fat universal program run by the government. He’s got a point but in fact, what the White House seems to be proposing is targeted at precisely those families of modest means — below 200 percent of poverty (about $45,000 for married couple with two kids).

Here’s the White House fact sheet, but Jon Cohn thinks the proposal will ultimately look like one from CAP:

That proposal actually has several components, including financial assistance to help parents pay for infant and toddler care as well as additional investment in the Early Head Start program. But the biggest component is a proposal to partner with states, matching their investments dollar-for-dollar, with a goal of subsidizing preschool based on income. For children in families with household income below twice the poverty line, or about $46,000 for a family of four, preschool would be free, just like public education. (more…)

By Richard (RJ) Eskow
Senior Fellow, Campaign for America’s Future

The pro-corporate, anti-majority political class is sustaining itself with a lot of self-serving myths these days. Guess you need to do that when you’re dismantling the social contract. In the closed society that is Insider Washington, rites and mythologies are used to promote the otherwise-indefensible: the cruel irrationality of Austerity Economics.

Dean Baker, for example, points out that Democrats must “prove their manhood” by cutting a treasured and valuable program like Social Security. (Funny: Republicans are never asked to do the same.) This initiatory rite is something like a Mafioso’s “earning his bones” as a “made man” by “whacking” somebody — in this case, his own grandmother.

Here’s another myth: Government must “act more like a business” through spending cuts. Is that really what a smart business person would do? What savvy executive would tell his managers to cut spending by a certain percentage over the next ten years when she or he doesn’t even know what the sales figures will look like?

From investment to “thinking outside the box,” here are six ways Washington’s austerity madness is un-businesslike:

1.  Smart executives invest.

The first error our leaders make is in thinking about government spending in a zero-sum way. In their minds, money goes out and is lost forever. The concept they’re missing is investment.  Business leaders, on the other hand, know all about investment. They know that sometimes you have to spend a dollar to get back two. They reject wasteful spending, but they embrace investment.

A government’s smartest investment is its people. Investment in education pays off: A more educated workforce earns more money, which means more revenue for our government “business.” And a well-paid middle class buys more goods and services, which means more jobs.

Government spending can also be an investment in jobs, especially in times like these. And since money spent on construction projects or education will create more jobs per dollar than money spent on defense, business-like political leaders would promote that kind of spending.

When it comes to borrowing, business executives are rarely in the prized position our government now enjoys: Investors are essentially paying the US government to let them lend it money, because it seems like the safest place to put it these days. If our government was really run like a business, it would be borrowing and investing in future economic growth. The returns would be excellent, and it would even make money on the loans.

2. Smart executives don’t cheat their customers.

Both sides of the negotiating table are offering the “chained CPI” as a technique for cutting Social Security. This would reduce benefits for people who have paid into the Social Security system their entire lives.

Successful businesses don’t cheat their customers like that. It’s a strategy that may lead to short-term gain, but it will pollute the brand so badly that the enterprise will soon go out of business.

Now, most today’s extremist Republicans have essentially joined government in order to destroy it, so this is presumably fine with them. But why would a Democrat like the President insist on proposing these cuts? It pollutes Brand Democrat as well as Brand Government.

The lack of stronger pushback from his own party is equally baffling.  No business executive would stand for it. (more…)

By Robert Reich
Former U.S. Secretary of Labor, Professor at Berkeley

As President Obama said in his inaugural address last week, America “cannot succeed when a shrinking few do very well and a growing many barely make it.”

Yet that continues to be the direction we’re heading in.

A newly-released analysis by the Economic Policy Institute shows that the super-rich have done well in the economic recovery while almost everyone else has done badly. The top 1 percent of earners’ real wages grew 8.2 percent from 2009 to 2011, yet the real annual wages of Americans in the bottom 90 percent have continued to decline in the recovery, eroding by 1.2 percent between 2009 and 2011.

In other words, we’re back to the widening inequality we had before the debt bubble burst in 2008 and the economy crashed.

But the President is exactly right. Not even the very wealthy can continue to succeed without a broader-based prosperity. That’s because 70 percent of economic activity in America is consumer spending. If the bottom 90 percent of Americans are becoming poorer, they’re less able to spend. Without their spending, the economy can’t get out of first gear.

That’s a big reason why the recovery continues to be anemic, and why the International Monetary Fund just lowered its estimate for U.S. growth in 2013 to just 2 percent.

Almost a quarter of all jobs in America now pay wages below the poverty line for a family of four. The Bureau of Labor Statistics estimates 7 out of 10 growth occupations over the next decade will be low-wage — like serving customers at big-box retailers and fast-food chains.

At this rate, who’s going to buy all the goods and services America is capable of producing? We can’t return to the kind of debt-financed consumption that caused the bubble in the first place.

Get it? It’s not a zero-sum game. Wealthy Americans would do better with smaller shares of a rapidly-growing economy than with the large shares they now possess of an economy that’s barely moving.

If they were rational, the wealthy would support public investments in education and job-training, a world-class infrastructure (transportation, water and sewage, energy, internet), and basic research — all of which would make the American workforce more productive.

If they were rational they’d even support labor unions — which have proven the best means of giving working people a fair share in the nation’s prosperity.

But labor unions are almost extinct.

The decline of labor unions in America tracks exactly the decline in the bottom 90 percent’s share of total earnings, and shrinkage of the middle class.

In the 1950s, when the U.S. economy was growing faster than 3 percent a year, more than a third of all working people belonged to a union. That gave them enough bargaining clout to get wages that allowed them to buy what the economy was capable of producing. (more…)

By Sherry Linkon
Co-Director, Center for Working Class Studies

In the old progressive narrative of American culture, everyone would do better over time. The son of a miner with an 8^th grade education would graduate from high school, and even if he got an industrial job, stronger unions and general prosperity would mean that he worked fewer hours than his father and earned enough to buy a small house.  His daughter would go to college and get a job as a nurse or a teacher, and her kids might keep moving up by attending a better college and getting a better  job. And surrounding the generations of this one imaginary family would be most other families, so that over time, the whole country would experience increasing prosperity and higher social status.  Maybe everyone wasn’t going to make it to the middle class, but most people would get there.  (Of course, there’s a troubling counterpart to this narrative that blames those who didn’t become middle class for failing, but that’s another story.)

But something, actually many things, went wrong over the past few decades.  I’ve written before about the growth of income inequality, citing Timothy Noah’s analysis that describes it as a long-term trend with multiple contributing factors.  Perhaps because of income inequality, surveys suggest that Americans no longer expect their families to keep moving on up.  So despite the expectation that we would all become middle class, the working-class is not simply a majority, it is a growing majority.   That’s true according to the analyses of academics like Michael Zweig, who describes most Americans as working class on the basis of the limited power they have in the workplace. In the 2011 edition of his book America’s Working Class Majority, Zweig finds  that 63% of Americans are working class, up from 62% in the original 2000 book.  It’s also true in terms of how people identify themselves.  While the General Social Survey for decades has  shown that over 40% of Americans identify themselves as working class, the 2010 version of the survey, which the GSS reruns every few years, show that 46.8% now identify as working class, the highest percentage since the early 80s.

The working class is also changing.  The term used to call to mind blue-collar unionized workers with no college education, but today’s working class not only works in a wide range of jobs, but many have at least some college.  These days, many people with college degrees settle for jobs that don’t require the credential, and others whose jobs do require degrees have lost the professional autonomy that, according to Zweig, defines middle-class jobs.  Indeed, one of the reasons Zweig sees the working class growing is because so many teachers and nurses are now, on the basis of the limited control they have over their own labor, working class.  Many people go to college because it seems like the most promising path to economic security, but that promise fades when they can’t find jobs and are burdened by loans.  Combine that with an economic crisis and long-term shifts in employment that leave increasing numbers with precarious work, as John Russo noted recently, and it’s clear not only that more people belong to the working class but that the working class itself is becoming more educated and less-steadily-employed.

There’s another likely change in the American working class, one that reflects the broader shift in racial demographics.  The Congressional Research Service documents a slight decline in the percentage of Americans who self-identify as white, a slight increase in those who self-identify as Black, and more significant increases in those who identify themselves as Asian or Hispanic, and its study projects these trends to continue over time. Even if we looked only at population numbers, the working class – which was never really “all white” — is almost certainly becoming even more diverse.

The racial diversity of the working class is also likely increasing because of patterns in education and income.  While Blacks are more likely to get some college than are whites, whites earn more bachelor and advanced degrees, and whites with BAs earn about $10,000 a year more than Blacks with similar degrees.  Hispanics are less likely to either go to college or earn a degree than either Blacks or Whites, though when they do, they earn more than Blacks.  Beyond reminding us that racial differences still matter in education and earnings, these figures suggest that Hispanics and Blacks may be more likely than whites to remain in the working class even if they go to college. (more…)