In my latest column for AIER I offer a few thoughts on income inequality. A slice:
Also bear in mind that people are economically mobile. Many of today’s low-income workers will be tomorrow’s middle-income workers; and many of these workers will be among the country’s highest-income earners sometime in the future.
My own case isn’t unusual. When I was in graduate school in the 1980s, I lived for all 12 months of each year completely independently of my parents and, thus, was counted as my own household. My annual income was paltry. I survived by taking out student loans. Mine was definitely among America’s lowest-income households – likely literally below the official poverty line. Forty years later, my household income is now well into the top ten percent.
One lesson is that people who today are “poor” according to economic statistics are not necessarily poor in any meaningful sense.
I wasn’t really poor 40 years ago, even though a snapshot taken of my income and financial position then made it seem as if I were. But I never felt poor nor doubted what proved to be true: If you get a good education and work hard, your lifetime economic prospects in America are bright. And surely our prospects over the course of years and decades are more important than is the particular economic position we happen to be in at any one moment.
In fact, the greater is the dispersion of after-tax incomes, the greater is the gain awaiting those who are poor today but who will move, as they acquire experience and skills, into higher-income categories. In this way, today’s income “inequality” serves the best interest of today’s lower-income workers as it, by inciting workers to improve their skills, promotes economic growth generally.
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