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No simple solution for economic mobility

Recent political rhetoric, especially the kind surrounding President Obama’s 2014 State of the Union Address, has focused on the nation’s increasing income gap—“income inequality.” To many on the left and the right, but more strongly on among the left, who benefit from strong sentiment from the White House, the solution to income inequality has revolved around the minimum wage and whether or not it should be raised. The President and his Democratic allies in Congress and around the country believe that raising the federal minimum wage from $7.25 to $10.10 an hour will help reduce the vast discrepancies in income nationwide. But is the problem of income inequality, if it truly is a problem, to be solved so easily? It makes sense on the surface: more wage, more salary, narrower income gap. The problem of income inequality and upward mobility (the two are intimately connected) is not reducible to such simplicity, however. To think that such a basic solution exists is to give in to ideological fervor and deny the humanity inherent in poverty and low economic mobility, and the compassion and thoughtfulness its study thus deserves.

Income inequality, like many terms in politics, is difficult to precisely explain and quantify.

Furthermore, while it as a concept can be fodder for politicians looking to win big in the game of generic political rhetoric, income inequality is a fundamental oversimplification of a complex economic phenomenon: upward mobility. In a recent project involving Harvard economics professors Raj Chetty and Nathaniel Hendren entitled “Equality of Opportunity Project,” the authors attempt to explain the complexity of economic mobility in a short introduction on the project’s website. They write: “Upward income mobility varies substantially within the U.S. Areas with greater mobility tend to have five characteristics: less segregation, less income inequality, better schools, greater social capital and more stable families.” As this excerpt explains, attributing economic woes to income inequality—and making the solution an increase in the minimum wage—is naïve; levels of economic mobility involve a great number of social factors, only one of which is income inequality.

The United States espouses itself to being a country of economic opportunity, but this opportunity is not necessarily solely contingent on having near equal levels of income. In her recent NPR report called “The Income Gap: How Much is Too Much?,” Yuki Noguchi references the words of Scott Winship, a fellow at the Manhattan Institute, to define this point. Noguchi writes: “Winship says policies should aim to increase access to opportunities to those on the lower rungs of the social ladder.

But, he says, narrowing the income gap by…raising the minimum wage is unlikely to have much of an effect on mobility.” This is not to say that the minimum wage should not be raised or that the rich do not enjoy a tremendous social advantage because of their wealth (the certainly do), instead, it means that we should not get caught up in the soaring rhetoric of political pundits.

The way to improve economic mobility is not as easy as some make it sound: raise the minimum wage! A large pool of factors must be considered, like those outlined in the “Equality of Opportunity Project.”

We live in a world of, according to political academics, “complex global economic interdependence,” and we must not forget that the economic world is just that- complex.

To say that simply raising the minimum wage will help increase economic mobility is to deny people their humanity—we are beings of vast complexity whose problems cannot be amounted to being just monetary. Society demands that we look deeper into the problem of economic immobility and adjust for a long term solution.

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  1. Pingback: No simple solution for economic mobility | MemePosts

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