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"Breaking The Low-Wage Syndrome,"

by S. M. Miller July/August 2014 issue of Poverty & Race

To the Editor:

The Justin Steil summary of what might be done to decrease income inequalities (see March/April 2014 issue) is exemplary, covering the wide field of what is currently on the liberal-progressive agenda. As is the practice now, the proposals do not deal with the underlying causes of low wages but only with measures that would augment the wages if—a big if—Congress voted favorably.

But they are a welcome shift from the heavy but largely unsuccessful effort to tax the 1%, the Leveling Down strategy. Increasing tax rates on the 1% would yield some federal revenue but ineffectively combat the continuing production of wide-ranging poverties and inequalities.

The more significant approach is that of Leveling Up, improving the situation of many of the 99%.

While it is certainly very important to  press for the Steil measures, is it not time to bring into political debate and begin to act on the underlying causes of our continuing high degree of poverty and inequality?  The measures on the legislative board would make an important dent in them but not undermine their continuing production.

A startling fact raises questions about the shaping of the economy and the structural basis of the sad income-wealth scene. In a recent year, financial industries captured 40% of all business profits! And they certainly did not provide 40% of all jobs while making a substantial contribution to income and wealth disparities.

The American economy is shaping up as a low-wage economy producing the poverties that current proposals seek to alleviate but not to displace. The enormous contraction of manufacturing industries decreased the percentage of jobs that provided a decent level of living and benefits, particularly in firms that once had strong unions.

The majority of jobs are now in the low-wage “service sector”—even if the federal government had a more useful and less broad definition of that sector. (Should “construction,” for example, be included in the “service” category?) Yes, we should definitely seek to improve wages in that sector with the proposals that Steil provides, but long-time production of these low-wage jobs is a great obstacle to substantial and continuing contraction of poverties and inequalities.

Those concerned about the sad story of low wages have to pay more attention to their production.  If low-wage industries characterize too much of the American economy, legislative efforts to reduce poverties and inequalities are very likely to be too little and too late to make a significant difference—even if political support is great enough to somewhat overcome opposition to such measures.

In addition to promoting these measures, those concerned about poverty and inequalities, particularly the low-wage situations of people of color and women, should be opening up issues of what kind of economy would make a positive difference in the well-being of more Americans.

Current proposals are worthy and important, hence they experience strong opposition to their legislative enactment. But the neglected need is to go beyond improving low-wage jobs to produce more good jobs. Too many Americans are stuck in a labor market ghetto of low-wage, dead-end jobs.

Increasing the rate of growth in Gross Domestic Product is an inadequate though important objective if the majority of additional jobs contribute to that labor market ghetto or worsen the quality of the environment.

S. M. Miller is member of PRRAC’s Board of Directors.

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