We all know the stats. We live in a nation with millions of millionaires and millions of working poor people. In recent years, the benefits of economic growth have been entirely siphoned off by those at the top --especially those at the tippy top (the top .01 percent of income earners). Pay in corporate America has gone through the roof while pay in the public and non-profit sectors has stagnated.
But why should you care if you're not stuck at the bottom? Why does rising economic inequality matter (even if you don't work at Wal-Mart)? Because rising economic inequality is what's pushing us all into a narrower and narrower set of career paths and pushing our work/life balances ever more out of whack. As I ask in my new book, The Trap: Selling Out to Stay Afloat in Winner-Take-All America asks the question: "Why has it gotten so hard to do work that is meaningful and support yourself and your family? And what can we do about it?"
When the rich get richer and more numerous, those at the top bid up the prices of things we all need. Consider higher education --something which, through the peculiarities of the American economic model is financed privately through tuition rather than publicly through taxes. The more one can make with a university degree should one go corporate, the more the university can charge for the degree. And that's exactly what universities are doing in response to the corporate pay boom; private college tuition has tripled in real dollars in the past generation. But the higher the tuition goes, the greater the penalty becomes for those who don't sell out. Thus rising economic inequality pushes educated people in certain career directions, regardless of where their interests lie, regardless of their values.
Consider this hypothetical: an idealistic University of Chicago graduate from the class of 1980 who opted to stay on the South Side and teach in an inner-city public school would have earned $13,770, more than two and a half times her $5,100 senior year tuition. Today, such a student would earn $38,851, only 23 percent more than her senior year tuition of $31,500. This might explain why rather than pursue teaching as a career, more and more idealistic college graduates do a stint with Teach for America and then head to business or law school. It's not that business and law are considered desirable fields these days. The 80s are over. Greed is not good. And the secret of hundred hour weeks and demeaning bosses is out. Surveys show that today's graduates are most eager to work in government. But what you want to do with your life matters less and less as the financial facts on the ground get stacked against you.
So out-of-control higher education costs are one reason why inequality matters even if you don't work at Wal-Mart. And it's a multi-generational problem. Once you graduate you have to start saving for your own children. A baby born today can expect to pay $150,000 for a public university education and $300,000 for a private one.
But this is also a problem that is fixable if we can just get our act together to fix it. Every other developed country already has by using public financing for fund higher education. In Canada, the top university McGill, charges only USD $4,200 a year and only $1,400 for in-province students. As countries develop, becoming wealthier and transitioning to a knowledge-based economy, free college is no-brainer. Ireland, the "Celtic Tiger," just instituted such a policy a few years back.
We could do it, too. Based on the total private dollars spent on higher education, it would cost $100 billion a year. Does that number sound familiar? It's the amount of the Iraq supplemental. This is not pie in the sky. It's an issue of priorities.