Wednesday, August 13, 2014
By Derek Thomas
This week, the Indy Star reported
on the U.S. Conference of Mayors’ ‘Income and Wage Gaps Across the U.S.’ report. The story presented the group’s finding that
“wage inequality grew twice as rapidly in
the Indianapolis metro area as in the rest of the nation since the recession”,
largely due to the fact “that jobs
recovered in the U.S. since 2008 pay $14,000 less on average than the 8.7
million jobs lost since then.”
We at the Indiana Institute for
Working Families have spotlighted similar problems in our report,
‘Work
and Poverty in Marion County’: four out of five of the fastest growing
industries in Marion County pay at or below a self-sufficient wage for a family
of three ($798 per week); weekly wages declined over the past year, and; median
household income declined 11 percent from 2008 – 2012.
There are ways we can address
these problems. The mayors’ report proposed several solutions that were not
mentioned in the Star's story. Those include: increasing the minimum
wage, strengthening the Earned Income Tax
Credit, public programs to retrain displaced
workers, universal
pre-k and programs to build the nation’s infrastructure.
The Mayors’ report is among a
growing and diverse chorus of economists, policymakers and advocates warning
about the dangers of rising income inequality. Most notably, just days prior to
the Mayors’ report, Standard and Poor’s Rating Service (S&P) – “[t]ackling an unusual subject for a
credit-rating firm” – warned that inequality
was damaging the economy.
Policymakers in Indianapolis should take these warnings seriously. At last count in Marion County: following
an 82 percent
increase over the last decade, poverty is still rising; the minimum wage is
less than half of what it takes for a single-mother with an infant to be
economically self-sufficient;
47 percent of workers do not have access to a paid sick day from work, and; a
full 32 percent are at or below 150 percent of the federal poverty guidelines
($29,685 for a family of three).
To cite S&P: “Some degree of
rebalancing—along with spending…could take the form of reallocating
fiscal resources toward those with a greater propensity to spend, or toward
badly needed public resources like roads, ports, and transit.”
George W. Bush increased the minimum wage and Ronald Reagan strengthened the EITC because
they knew, as S&P knows, and as our mayors and so
many others know, that putting money into the hands of low-income families
is not only good for our families, but for entire communities.
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