Talking about income inequality can be uncomfortable. Political discourse focuses on reducing financial risk for business owners, closing tax loopholes, and protecting social security. However, without a thriving consumer base, there will be no businesses. In my opinion, one of the riskiest aspects of our economy is the increasing poverty in America.
We have to create better jobs and raise wages for the lower class. I propose two parallel routes: more effective and high-achieving schools and a broader and stronger labor movement. However, we can debate our strategies later. Right now, we need our candidates to just articulate one poverty-reduction philosophy.
Across the country, 66 million are expected to be in poverty by the end of 2012. The more Americans who fall into poverty means a sharper disparity in income inequality. The more Americans who fall into poverty, with weaker safety nets, the less of a chance for an “American Comeback.”
The presidential candidates came close to addressing the issue when Mitt Romney stated that the number of Americans using food stamps rose to 46.68 million. It could have been a pivotal moment for Jim Lehrer to press former Governor Romney and President Obama on their plans to raise wages.
Here are seven reasons we need our candidates to articulate one now, and Candy Crowley, you can make this happen on Tuesday night.
1. If no one can afford to buy what budding start-ups have to sell, business will fail and jobs will evaporate. To not acknowledge the consumer is to not acknowledge our economy’s circle of life. As venture capitalist Nick Hanauer says, working people are job creators. Before a company can create revenue growth predictions, utilize credit, and hire workers, they need to make two major calculations: the cost of acquiring a customer and the lifetime value of a customer. Business owners, like David Siegel know this best: hiring workers is never the first priority. Without a reliable customer base, no business can realistically plan long-term. We are planning for a long-term revival, right?
2. There are glimmers of hope. Investment in slightly over-priced stocks is growing, showing a speck of Wall Street confidence that they will match expectations. However, if this is going to happen, consumers have to continue spending. We will not continue spending as long as the fear of poverty weighs over our heads. If the number of Americans falling into poverty grows, this positive trend will fade. Businesses will not hire, and investment will decrease. Politicians play a role in strengthening consumer confidence, but they need to realize our confidence doesn’t just come from a job; it comes from actually being able to survive with that job.
3. According to the National Employment Law Project, the highest rate of job growth is coming from the retail sector, like Wal-Mart. While 21% of the jobs lost were in the recession were low-wage occupations, 58% of the jobs being created since then are in the low-wage occupations. Low-wage occupations in the service industry are making up a larger share of our work force. As Americans listen to the debate, they are not asking how they will hold on to these jobs for their lives. They want to know how their quality of life can improve. The labor movement is getting it, but our media is not.
4. Quality manufacturing jobs are still being shipped abroad. A trend for decades, outsourcing high skilled jobs hurts our economy and only benefits business executives. Follow the Sensata workers protesting in Freeport, Illinois. Their story is similar plants all across the country. As you read this, 170 jobs are being shipped overseas.
5. In every major city, income inequality is apparent on every block. Since 1980, the share of income for the richest Americans has more than tripled while effective tax rates have declined by close to 50%. From the streets of Manhattan to the aisles of a rural Wal-Mart, the poor are feeling the squeeze in their checkbooks.
6. About half the population receiving food stamps are children. Approximately 23 million children are receiving assistance from the Supplemental Nutrition Assistance Programs. The more young students in poverty means the harder it will be for them to make it to and through college. We will not be a country with high-quality jobs if more children do not succeed in school.
7. Even Rupert Murdoch, one of Obama’s biggest critics, wants to close the income gap. He tweeted on Sunday, “Extreme inequality bad...close tax rackets (eg carried interest), improve opportunity with all schools.”
Clearly, I am among many when I plead Candy Crowley to ask our presidential candidates about their poverty reduction philosophy. I hope these reasons suffice, and make sure to tweet #TalkPoverty, and lets get the conversation trending.