Chapel Hill: Opinion

Ted Vaden: Income mobility myth

Ted Vaden
Ted Vaden

Is income inequality sinful?

Income inequality is the defining issue of our time, right?

The perception driving political and economic debate is that since the Great Recession, the richest 1 percent in America have enjoyed the greatest income gains, while the middle and lowest economic levels have stagnated.

Actually, it’s more complicated than that. Recent research shows that incomes of the wealthiest have fallen 21 percent since before the recession, while incomes of the middle class fell only 2 percent and those of the poorest actually rose slightly.

All that doesn’t negate the reality of a growing gap between rich and poor over the last half century. But the anomaly suggests a need to look closer at the facts of income inequality and at ways to address the problem.

Inequality was the topic of a recent two-day conference at Trinity Wall Street Episcopal Church in New York, viewed via closed circuit by about 50 North Carolinians at Chapel of the Cross in Chapel Hill. Among the questions raised: Is inequality sinful?

Yes, says the Anglican Church’s highest ecclesiastical authority. Inequality is wrong, said Justin Welby, Archbishop of Canterbury, because “it plays on the corruption of the human person, our sinfulness, to create power grabs, patrimonialism by the powerful, self-serving not foot-washing.”

Welby enjoined his audience “to get involved, to get our hands dirty,” to right the imbalance of economic distribution.

The bottom-up

The group in Chapel Hill talked about ways they could help. Among the suggestions, don’t participate in a capitalist economy dedicated to accumulation of wealth. Instead, join the bottom-up, sharing economy of small producers who hire people and buy goods locally. Patronize local farmers’ markets and food co-ops even if it costs more and is less convenient than going to Wal-Mart. (Easy for us to say, harder for the poor to do.)

One of the most startling presentations came from David Dodson, head of MDC, the Durham-based think tank that addresses labor market economics.

Dodson displayed a map of the United States showing the chances of a child rising from the bottom 20 percent of family income to the top 20 percent. States with the lowest rate of upward mobility were displayed in red, those with the highest in green. A great blotch of red stretched over the Southeastern United States.

“It is hardest if you are a child born to a family at the bottom to rise to a place of economic security if you are born in the South,” Dodson said. The reason, he said: housing segregation, low-performing schools, and lack of social capital – networks that move children from low-wealth families to living-wage employment.

Even worse, the places with the fastest economic growth have the worst income inequality. Cities deemed “Best for Business,” as ranked by Forbes magazine, had the lowest rates of children being able to rise from the lowest economic rung to the highest. Raleigh, ranked number 1 for business climate and Charlotte, ranked seventh, had among the worst mobility rates in the United States

As Dodson said, “maybe the rising tide doesn’t lift all boats.”

Low-income ladders

Dodson calls immobility the “twin sister of inequality,” and his solution is to create an “infrastructure of opportunity” that provides ladders for children of low-income families to climb the economic scale.

One model is a program called Made in Durham, a public-private partnership that seeks to create pathways from the education system into good local jobs. Led by MDC, the program connects employers with schools and brings students into workplaces, where they progress from job-shadowing to internships, summer work, apprenticeships and, ultimately, local jobs that pay a living wage. The stated mission: “All Durham youth and young adults will have completed a postsecondary credential and begin a rewarding career by age 25.”

There is another model for correcting inequality. It’s called government help.

Go back to the seemingly contradictory research on wealth and inequality. The reason that the top 1 percent have lost more income is that so much of their wealth comes from the stock market. Even though they have enjoyed big gains in the recent booming market, they still aren’t back to their income level before the recession.

But the recession’s blow to the middle and lower income levels was cushioned somewhat by government policy – President Obama’s stimulus plan and tax cuts, as well as the safety net of unemployment insurance, food stamps and other benefits.

As New York Times economics columnist David Leonhardt put it, “the numbers make clear that inequality isn’t destined to rise. Not only can economic forces, like a recession, reduce it, but government policy can too. And Washington’s recent efforts to fight inequality – as imperfect and restrained as they have been – have made a bigger difference than many people realize.”

Which makes it all the more shame that Raleigh – in reducing unemployment benefits, refusing Medicaid funding and cutting education – is contributing to income inequality. That, as the Archbishop says, is a sin.

Ted Vaden is former editor and publisher of The Chapel Hill News.