What we can do about income inequality

A new Brookings Institution study points to a 'permanent' inequality of income in the US, mainly because workers haven't adapted to rapid technological change. Reducing this underclass starts with workers themselves.

The Monitor's View

One of the most head-scratching questions among American economists these days is this: With unprecedented opportunities to expand one’s skills, knowledge, and even character, why has inequality in income gone up?

Why aren’t the many new pathways for self-improvement – online education, for example – liberating almost all workers?

A new study from the Brookings Institution begins to crack this hard nut. It not only suggests that a decades-long rise in inequality has become “permanent” for many workers but that the rapid change in technologies is probably the main driver. A lasting underclass of workers simply isn’t keeping up with the new types of jobs.

The study is unusual for its hard data. It relied on the tax returns of thousands of male workers between 1987 and 2009. Men were the focus because they accounted for 54 percent of household income compared with 26 percent from women. And today’s strong workplace bias toward higher levels of skills has hit men harder than women, in both factory jobs and, increasingly, desk jobs.

The study’s results point to the need to motivate people toward broadening their view of their own potential to advance in new careers. A more dynamic marketplace that destroys and creates jobs at a faster clip requires a more dynamic development of individuals in reinventing themselves.

The usual supports for such change – family upbringing, government programs, teachers, and mentors – can only do so much to reduce barriers, calm fears of insecurity, and open opportunities. Given the pace of change, the burden lies increasingly on individuals themselves to align to new types – and styles – of work.

A common mistake for many laid-off workers is to simply seek knowledge in a new field. That certainly helps, for a while. But adapting to ever-changing technologies requires a mental agility to see new ideas and detect patterns.

It also requires character traits for being successful in a collaborative workplace, such as self-discipline and social skills for teamwork. Qualities of thought matter more than quantities of information.

Workers who especially embrace creativity will be able to keep up with the new products and services created by science and technology. Richard Florida, who writes books on this new “creative class” and works at the University of Toronto’s Rotman School of Management, says we can’t blame technology for the class divide between low-skilled and high-skilled workers. He offers this advice in a Chronicle of Higher Education article:

“Unlike the services we produce, the technologies we create, or the knowledge and information that is poured into our heads, creativity is an attribute we all share. It is innate in every human being. But it is also social, it lives among us: We make each other creative....

“Instead of looking at technology as a simple artifact that imposes its will on us, we should look at how it affects our social and economic arrangements – and how we have failed to adapt them to our circumstances.”

So, yes, let’s invest more in two-parent families that eat meals together, more pre-K schooling, less discrimination in hiring, more Internet education, and so on. But altering the circumstances for individuals to keep up with the new jobs should not diminish the need for individuals to find their own bootstraps.

Everyone can use a lift but the lifting starts for those who are willing to gain a new view of themselves.