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Inequitable Arguments About Income Inequality

Written By : Hughey Newsome
December 24, 2013

Once again, liberals demand an increase in the minimum wage.

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President Obama said raising the minimum wage — the lowest amount, by law, most employers can pay — is a step in addressing rising income inequality, something he called “the defining challenge of our time.”

Data on income inequality does not lie… when the goal is to make an oversimplified argument about the rich getting richer and the poor not catching up.

The top quintile of wage earners, for example, are not always the same people. Consider the riches to rags stories of rapper M.C. Hammer, football star Ryan Leaf and businessman John DeLorean. Success and wealth can be a chutes-and-ladders affair.

Also, one-percenters pay a disproportionately large amount of actual tax revenue. They are also likely subject to income taxes in addition to double taxation through capital gains taxes and dividend taxes (both increased by Obama’s Affordable Care Act).

These facts, however, are usually missing from the left’s income inequality talking points.

These inconvenient truths notwithstanding, there is definitely a divergence between what the “haves” and the “have-nots” earn. The left wants a top-down approach, forcing higher wages for low-income wage earners rather than addressing what’s driving this divergence in the first place.

Constant demagoguery against business owners and the rich makes little sense. The implication is that greed drives income inequality. If that’s the case, then why wasn’t there such a divergence back in the 1960s and 1970s? People didn’t just learn how to be greedy.

Ironically, Obama highlighted a critical driver of this divergence just after taking office.

In his February 2009 address to Congress, Obama stated, “In a global economy where the most valuable skill you can sell is your knowledge, a good education is no longer just a pathway to opportunity — it is a pre-requisite.” He was absolutely correct. Globalization and technology changed the requirements for advancement in America. Oft-quoted studies show income inequality increasing since the 1970s, and the U.S. Census Bureau reports American has not had a trade surplus since 1975.

Consuming more than they produce, Americans have less actual wealth to enjoy here at home. The rich can adapt as they have more resources to invest in growth abroad. The rest of American wage earners need to adapt, as Obama suggested, by offering more skills and knowledge in the 21st century marketplace.

So why was the New York Times, in a 2012 article, asking, “How can so many jobs remain unfilled with unemployment so high?” “One explanation,” the article concluded, “is that many would-be workers lack the necessary skills to fill those positions.”

The mainstream media generally fails to connect income inequality to the inability of our nation to prepare qualified workers for high-skill, high-paying jobs. So politicians fill the vacuum, demagoguing the successful and affluent.

That’s why Obama demands both skills training to succeed and a bump for those willing to stay in place. It rewards treading water, even though one is not supposed to make a career out working for the minimum wage.

It is somewhat fitting that the same week Obama spoke about “the defining challenge of our times,” test scores released by the Organization for Economic Cooperation and Development (OECD) showed 15-year-old American students lag behind many foreign competitors in reading, science and math.

Obama Administration programs such as Race to the Top, as well as the President’s inattentiveness to addressing the nation’s education problems, help drive the inequality his supporters detest. Yet neither Obama nor his boosters seem willing to admit his faults and address the true problem.

Then again, why do the hard things to fix society’s problems? Why not sell society on the idea that paying fast-food workers a few extra dollars an hour will fix our nation’s income inequality problems?

Shame on society for buying the lie.

Hughey Newsome, a business consultant in the D.C. area, is a member of
the national advisory council of the black leadership network Project
21.  Comments may be sent to Project21@nationalcenter.org.

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