David Brooks debunks a lot of the mythology about our supposed crisis in income inequality in a recent NYT column. It isn’t available except to subscribers, but here is a synopsis provided by NCPA:
Populists argue that rising income inequality is the result of a broken
market. The rules are rigged. The reigning ideology in
Washington must be upended. Unions must be revived.
Globalization needs to be reorganized. The problem with this
narrative is that it doesn’t really fit the facts, says columnist David
Brooks.
For example:
o Workers over all are not getting a smaller slice of the pie;
wages and benefits have made up roughly the same share of
gross domestic product (GDP) for 50 years.
o Offshore outsourcing is not decimating employment; according
to the Bureau of Labor Statistics, outsourcing is responsible
for 1.9 percent of layoffs, and the efficiencies it produces
create more jobs at better wages than the ones destroyed.
o Jobs are not more insecure; workers are just as likely to
hold a job for 20 years as they were in 1969.
o Workers are not stuck in dead-end jobs; social mobility is
roughly where it was a generation ago.
Lastly, says Brooks, declining unionization has not been the driving
force behind inequality:
o David Card of the University of California, Berkeley, has
estimated that de-unionization explains between 10 and 20
percent of the rise in inequality, and that effect was
probably strongest decades ago.
o These days the working class is not falling behind the middle
or upper-middle class, instead, the big rise in inequality is
within the office parks, among people who were never
unionized; middle managers are falling behind top executives.
A much more persuasive school of thought on inequality holds that the
key issue is skills. Lawrence Katz, formerly of the Clinton
administration, now of Harvard, puts it this way: Across many nations,
the market increasingly rewards people with high social and
customer-service skills.
Source: David Brooks, “The Populist Myths on Income
Inequality,” New York Times, September 7, 2006.
Note that final point about marketable skills. It undercuts the notion that in the “information economy,” just about everybody needs a college degree. If you don’t have good people skills by the time you’re 18, the stuff you might learn in college won’t be of much help.
