Obama puts spotlight on growing income inequality

Martin Desmarais | 2/5/2014, 10:55 a.m.
President Obama called on the country’s leaders to make 2014 "a year of action" to address the growing wage gap ...
President Obama delivers his State of the Union address last week. The president called for policies to narrow the income gap between the wealthy and the poor. courtesy of the White House

“We not only have growing inequality but the cost of being in the bottom has grown dramatically because the gap between the low end and the high end is so far apart,” Bluestone comments. “Being stuck in the bottom is worse than ever.”

Bluestone points out that recent studies have shown that only 8 percent of people at the lowest income bracket ever make it to the top — which means 92 percent will not.

The most important way to combat income inequality and income immobility is improving on the earned income tax credit at both the state and federal level, according to Bluestone. He singled out EITC, as it is referred to, as the “best program for combating poverty” because it can be an income subsidy for many people. EITC functions when workers file taxes, and if their income is low enough, they will get money back.

“For low income families this will raise your income,” Bluestone says. While both Massachusetts and federal taxes both currently have some level of EITC, Bluestone wants to see it made better.

Bluestone says another important way government can help break the deepening income inequality in the long run is to invest substantial resources in children and in early childhood education, in particular. He calls for a new emphasis on providing all children — no matter what their socioeconomic status — with better development at a young age, and most importantly from birth until age 5, when the most critical development of a child’s brain takes place. The thinking is that this early development will lead to stronger success in education, career and economic success.

“We need to invest a huge amount of money in our kids,” he comments. “To break the income immobility cycle we need those investments in our children.”

Increased investment in early education could directly lead to less spending on infrastructure such as prisons and programs that support social well-being, such as homelessness and drug addiction, Bluestone says.

“I would argue that investment in this kind of human capital will pay off such great dividends in the future that we should not be saying we can’t afford it out of current tax dollars,” Bluestone comments. “I can almost guarantee you that we will make a return on this investment.”

Brian Miller, executive director of the Boston-based United for a Fair Economy, which is a national organization that advocates for improving the uneven wealth distribution in the United States, puts a very strong emphasis on raising the minimum wage in the income inequality fight.

“A minimum wage increase will make a significant impact. That said, we should make sure it is a substantial minimum wage,” Miller says. “We need to be pushing for big bold increases.”

While Massachusetts has legislation in the works that would improve the minimum wage and federal discussion is around numbers between $10 and $11, Miller would like to see a higher minimum wage and says his organization supports the fight for a $15 minimum wage.