Government Policies Can Diminish Income Inequality

David R. Jones, The Urban Agenda

Economic inequality has gotten worse over the past several decades in the U.S. and especially in New York.  Workers’ wages are stagnating while CEOs rake in millions and get “golden parachutes” when they leave faltering corporations.  There are a number of reasons for the increase of income inequality, including the rise of technology and globalization.

But the major reason for the explosion of income inequality is government policies.  Therefore, it stands to reason that income inequality can be reversed to earlier levels by different government policies.

Here in New York, Mayor de Blasio is focusing on policies that lessen income inequality.  In office only four months, he has already achieved several milestones in accomplishing this task – expansion of paid sick leave, funding for universal pre-k, negotiating for an increase in the number of affordable rentals at the Domino Sugar site in Brooklyn, getting rid of public housing’s $75 million annual extraneous payment for police services.
 
Since the recent recession, we have seen a large expansion of low-wage jobs filled by those who lost good paying jobs and had to settle for low-wage work and those just entering the labor market.  Many of these workers are still living in poverty. 

There are two ways to close the income gap for low-wage workers: (1) by raising the floor of workers’ wages and benefits; and (2) by improving the springboards that accelerate upward mobility.  We need to concentrate on both of these channels for advancement.

Wages and Benefits

The mayor recently attempted to get approval from the state Legislature to increase the minimum wage for New York City.  There is a vast difference in the cost of living between the city and upstate. 

The minimum wage today in all of New York State is $8.00 an hour.  That translates to about $16,000 a year for a full time worker.  Yet the federal poverty level for a family of four is $23,850.  Over 1.7 million city residents live in poverty, many of them holding low-wage jobs. 

The lack of a living wage and the long battle for paid sick leave highlight the importance of unionization for low-wage workers.  Yet even in New York, considered a union town, unions have been losing clout and members steadily.

Education Policies

Instead of the focus on charter schools, the city should be expanding its career and technical education (CTE) courses.  Last year, over 800 high school students who wanted to enroll in CTE courses were turned away for lack of room.  And there should be a pipeline established for CTE graduates to apprenticeships and jobs in expanding local industries.

Our specialized public high schools should be judging their admissions on more than one unproven test.  Other top high schools around the country rely on a number of factors in deciding on admissions.  In addition, the widespread use of test preps skews admissions, since low-income households can hardly afford to pay $2,500 for prep courses for their children. 

The result is that while 70 percent of high school students are black and Latino, only a fraction of students at these high schools are students of color.  Last year, Stuyvesant High had 40 blacks out of a total of 3,300 students.

A somewhat similar situation is now occurring at CUNY’s top tier colleges because of changing admissions policies, where less than 30 percent of students are black and Latino.  As a result, Baruch and Harvard have about the same percentage of blacks in their latest freshman classes.
 
The city also needs to do a much better job in promoting its GED testing.  Almost one million New York City workers have neither a high school diploma nor a GED, making it difficult for them to move up to better paying employment.  Few workers take the GED exam – it is not well publicized. 

Governor Cuomo spoke of supporting college courses for prison inmates, thus helping them to succeed when released into society.  Unfortunately, he quickly backtracked on a good idea when he was attacked as “soft on crime.”

The mayor should be lobbying HUD to enforce Section 3 of the 1968 Housing Act to move the New York City Housing Authority to provide training and employment for low-income workers.  And he should be working in Albany to remove barriers to jobs, housing, and health care for people coming out of state prisons – this would help to reduce both crime and recidivism.

It may be politically impossible right now to increase the city’s minimum wage or institute educational courses for prison inmates.  But many of these proposals are not difficult to achieve.  Many would not even cost the city additional funding.

As for upward mobility, in our the latest Community Service Society survey of New Yorkers, a majority of respondents, across all income groups, felt that it is not possible for the poor to make it into the middle class.  For New York City to remain livable and competitive, this situation must be reversed.
 

Issues Covered

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