The income equality gap in the U.S. is growing: Whites have 20 times the net worth of blacks and 18 times that of Hispanics. Over the past several decades, the wealthy have prospered while lower socio-economic groups have struggled severely. The disparities between the classes are frequently cited during the ongoing debate about taxes, the debt ceiling, and entitlements.
Populists say the rich are getting richer off the backs of the working classes, and they aren’t lying: CEOs earn 183.5 times more than the average worker. But, the money a CEO receives does not necessarily come from the pockets of the common worker; it comes from union contracts and the like that prescribe the earnings of many laborers.
Frequently, liberal lawmakers and talking heads say that decreasing aid to the less fortunate enhances the wealth of the top 1%. The two are unrelated. Increased wealth accumulation by the rich does not come from the poor; it comes from compensation and asset appreciation; although, it is true that favorable tax treatment (such as capital gains taxation) enables the affluent to keep more of their pretax dollars, which could have been used for social programs.
In the long run, increased education and/or training will enable the unemployed and the underemployed to increase their earning capacity. But, this aspect of the effort to decrease the income gap will take much longer to implement, and it would be wiser to take on this challenge when economic conditions improve.
As a solution to the short-term need for jobs, state and local entities, subsidized by the federal government, should end welfare as we know it today, except for the infirmed, children, and anyone who cannot work for physical or mental reasons. In its place, local governments should hire the unemployed and pay them a wage equal to or greater than typical welfare support. The jobs would include new opportunities that arise for manual labor positions currently being filled by union workers. The savings generated by using non-union workers would be substantial.
Also, clean-up jobs in cities across America could keep legions of workers busy. Since unemployment is most acute in population centers, the number of workers and odd jobs would be plentiful. This proposal is not unlike the public works efforts made during the Great Depression in the 1930's.
In essence, everyone would then have to work for a check. If an able-bodied person does not care to work, no check from the government will be forthcoming.
Other opportunities for employment might be found in national parks and at government properties that need to be rehabilitated. The key is to not fill the jobs with high-paid, union workers.
Surely, union officials will object to this plan. Unfortunately, federal and local budgets can no longer accommodate higher union compensation. This new tactic would enable governments to increase headcount without substantially increasing total wage expenditures. Moreover, the empowerment of thousands of people who would now be earning their way, rather than receiving government aid, would greatly enhance their future prospects.
The payment of welfare does not improve the income gap; only salaries earned by the lower classes will decrease the disparity.
Photo Credit: Wikimedia Commons