The recent opinion piece, "Language inequality" from Kathleen Parker seemed designed to incite a reaction while offering few facts to back up her premise. There is an inescapable feeling that she pretends to know less about these subjects than she really does in order to generate debate. Since facts do matter, I want to highlight some quotes from her column and probe them with a pesky fact or two.
"What, after all, is the opposite of income inequality? Income equality."
Is the current level of inequality (curiously not cited by Parker) acceptable or ideal? The fact: U.S. income inequality is now the highest since 1928, according to Pew Research. UC Berkeley research showed that the top one percent captured 95 percent of the income gains in the three years after the recovery. This research also found that between 2009 and 2012, incomes of the top one percent grew by 31.4 percent while the bottom 99 percent crawled along with just a 0.4 percent increase.
"The poor are not poor because Warren Buffett and Bill Gates are rich."
What if the rich being so tremendously rich is making us all poorer? There has been an economic realignment with an increasing share of rewards to the top and little to the rest. The fact: Since 1980, the GDP share going to worker wages declined from 49 percent to 44 percent while the portion to corporate profits doubled. Our economy is at the point where the negative effects of inequality outweigh positive outcomes. Nobel laureate Joseph Stiglitz projected the potential benefits of a small reduction in inequality. In our $17 trillion economy, current inequality has about a $300 billion annual price tag.
"We value merit, talent and hard work, and all people aspire to be commensurately rewarded."
While correct in theory, we can't discount that poverty and contributing factors put some at a disadvantage from the very start. The fact: Pew's Economic Mobility Project delved into the cross generational trends over the decades. More than 40 percent of people raised in the bottom 20 percent of national income remain stuck there as adults, while forty percent of those from the top income brackets stay at the top rung. Would we see such results in a true meritocracy?
"The apparent inability of (low skilled workers), for whatever reason, to become more skilled."
Laying the blame at the feet of the workers doesn't recognize the real barriers and limited opportunities available to them. According to behavioral science research noted in the book Scarcity: Why Having So Little Means So Much, the authors noted that "being poor reduces a person's cognitive capacity more than going one full night without sleep." The researchers "emphatically are not saying that poor people have less bandwidth. Quite the opposite. (They) are saying that all people, if they were poor, would have less effective bandwidth."
Let's close with an area for possible agreement with Ms. Parker. Policy and politics on their own aren't likely to give us the best possible solutions to these challenges. Others must also step up and invest. The fact: employers commit about $156 billion annually to training and talent development. That is far more than the $3.2 billion in the U.S. Employment and Training Administration or the $1.2 billion from the Department of Education for Adult and Career Education.
But the business budget is mostly committed to those with a higher education and pay level, not the lower skilled workers. There are some exceptions. Take the case of Pridgeon and Clay (P&C), a Grand Rapids, Mich. auto supplier. P&C was hit hard in the auto meltdown. But their focus on research and development, product innovation and training positioned them for recovery. Rather than replace workers, they prepared and trained their existing workforce. They even instituted an in-house training program, which provided wage increases of more than 50 percent for entering the training and additional wage incentives for those that graduated. As a result P&C rebounded far better than many, adding millions in revenues and growing their employee base from 400 to 650.
The Hitachi Foundation study, "Doing Well and Doing Good", found that businesses that make a strategic commitment to increase training budgets directed to frontline workers results in a triple win - a more skilled and better paid workforce, a stronger business bottom line, and economic vitality in the community. This will take some investment, both from the public and private sectors, but the chance to create a more equal and skilled workforce should be language that Ms. Parker can understand.
Blog posts reflect the views or opinions of the author, and not necessarily the Hitachi Foundation Board, Hitachi, Ltd., Hitachi America, Ltd., or any Hitachi company affiliate.