Brink Lindsey throws cold water on the heated issue of economic and wage inequality in today’s Wall Street Journal. It’s an important piece well worth reading.
The main point is that wage inequality is a function of people not staying in school. This is a point I keep making—that if you earn a college degree or better, the unemployment rate is 2 percent, whereas if you don’t graduate from high school it’s closer to 7 percent. Moreover, the wage gap between these groups is very significant and continues to grow.
Simply put, it pays to stay in school.
Lindsey also points to demographic changes as the source of much of the increase in measured inequality. He cites the rising number of single parent households, the influx of low skilled Hispanic immigrants, and an older, better educated population as skewing the numbers. People over 55 years old have the most money by far. People under 25 don’t have nearly as much. Finally, dual earner couples in the top 5–10 percent of the income scale obviously make a lot more than low-end families with only one earner.
He concludes with the vital notion of schooling and blames the current school system for getting the job done. According to Lindsey, “Real improvements will come from challenging the moribund state-school monopoly with greater competition.” Of course, poor parenting and family breakup play a big role in all of this.
The doom and gloomers have it all wrong according to Mr. Lindsey. He's right. In fact, the U.S. economy today is vastly better than it was thirty years ago—in terms of median income as well as the expansion of comforts, conveniences and opportunities.