The rich-poor divide and what to do about it

[HuskyFreeNorthwest]

My company, which is growing very rapidly, is having to hire numerous foreigners. Why? Because there aren't enough Americans with the necessary skills to do the work. These are high-paying jobs well in excess of the national median salary.

These jobs were open for several months before my employer had to resort to the drastic measures of importing workers. And given the cost and bureaucratic difficulties of bringing in foreign workers it was definitely a measure of last resort.

Indy is alive! Glad to know it.

[HauteCoug]

The rich are getting richer and the poor and getting richer. It just so happens that we have disproportionately more rich than poor countries, which makes the "divide" large. But, at the end of the day, the poor are still significantly better off than even the middle class in third world countries.

What is the problem again?

But not everyone has DVR!

[woot]

Even the most maggoty bescrotumed homeless bastards of our day are better off than were the richest kings in all the seven kingdoms of Westeros! Get a job, poors!

[All-American]

Even the most maggoty bescrotumed homeless bastards of our day are better off than were the richest kings in all the seven kingdoms of Westeros! Get a job, poors!

That's my position, anyway. I don't understand why we're so big on taxing the rich just because they're the ones who actually have money. If anything, we should tax the poor so as to disincentivize poverty.

[Uncle Ted]

The poor are actually getting richer at a faster rate than the rich are getting richer...

[YOUTUBE]vDhcqua3_W8[/YOUTUBE]

If you want to get rich at a faster rate the thing to do is to start your own business. When you see how hard work work changes the bottom line then you want to work even harder.

[Uncle Ted]

My company, which is growing very rapidly, is having to hire numerous foreigners. Why? Because there aren't enough Americans with the necessary skills to do the work. These are high-paying jobs well in excess of the national median salary.

These jobs were open for several months before my employer had to resort to the drastic measures of importing workers. And given the cost and bureaucratic difficulties of bringing in foreign workers it was definitely a measure of last resort.

I have been seeing the same thing in my field of work. The company I have been working with in my particular group and other related groups has been importing workers with the right skills as well.

[Maximus]

My company, which is growing very rapidly, is having to hire numerous foreigners. Why? Because there aren't enough Americans with the necessary skills to do the work. These are high-paying jobs well in excess of the national median salary.

These jobs were open for several months before my employer had to resort to the drastic measures of importing workers. And given the cost and bureaucratic difficulties of bringing in foreign workers it was definitely a measure of last resort.

are you hiring any new stat grads?

[Maximus]

First, the gap between the rich and the poor in the United States is greater now than it has been in decades...and? The poor are also richer that they ever have been before.

Second, people say the gap in distribution has social consequences..Consequences occur when one envies that of another. Envy, not disparity is the evil. And yes, as a country we have an obligation to take care of the geniune sole that cannot do for himself. That is not what is happening at Wall Street.

What the CEO of Coke makes does not affect in any way shape of form, what I can make. Equal opportunity, not equal results.

[EuropeanFootballMale]

A chance for me to plug Planet Money

Would you rather be rich in 1900 or middle class now

Fat cats too fat

No need to thank tax payers This one makes my blood boil

[RobinFinderson]

The material gap and the socioeconomic gap are different things, and I would argue that it is the socioeconomic gap that really matters.

Here are some case studies from South Central to illustrate my point:

My neighbors on one side are extremely poor. The mother and father died in a double homicide, and the orphaned children are being raised by their oldest orphaned sister. There are three child siblings, the one adult sibling, a boyfriend, and a couple of cousins living in 900 sqft. They collect all of the different kinds of welfare. They are US citizens. The adult sister doesn't have a real job, but makes ends meet by hosting massive house parties with tons of alcohol, whippits, and weed (we've had many sleepless Friday nights). She manages to take the children to school, most of the time, but they also miss a ton of school when the oldest sister fails to drive them, and the schools are too far away to walk. All of the children's teeth look like sugar cubes that have been briefly dipped into coffee and then removed before fully melting. The children eat a ton of fast food. They don't have a problem with childhood obesity, but the oldest sister is slightly obese, and I think it is pretty clear that the children will be too, if they continue to live off of fast food, and their childhood metabolism slows down. I help the kids with homework, when I can, and their abilities fall far below grade level.

So that is their socioeconomic portrait. Here is their material portrait:

They have a reliable car. The kids have clean clothing (lots of poor kids don't). The sister deals in cash from her party business and has been able to buy a huge television, a PS3, and they manage to keep up with new games and toys for the kids.

You get the picture. I don't think that the material profile of people in poverty is all that useful. I've got lots of other case studies. There are a lot of big screen televisions in South Central, but that really isn't very relevant when discussing the problem/liability of American poverty.

[Katy Lied]

Hi Robin, here is a tale of two friends:

Friend 1 is in a two income family and makes decent money. She is a very poor money manager and can’t save any money. Her family has lots of luxuries like a cold water dispenser (cost: $150/month), a bunch of stuff from Brookstone, tons of electronics, all 3 major video game consoles, big screen tv, and drives expensive new cars. Her family eats fast food at least 3 times a week. She has really bad credit and lives paycheck to paycheck despite earning almost 6 figures. It is not a priority to pay her bills and rent on time. Her rent is $2600/month. She is paying the tuition of 1 child who goes to college. She has no assets other than clothes, some jewelry, and cars. She has a good husband who loves her.

Friend 2 decided to stay at home when her kids were born. Her family brings in half of what Friend 1 brings in. Friend 2 scrapes along by eating at home almost exclusively, buying used items, and doing a lot of free activities like hiking and biking and swimming. She manages her money well and doesn’t have any debt. She applied for a low income mortgage assistance program that very few people qualified for, cause you have to have extremely low income yet extremely good credit. She got in a small house, and then traded in for a big house later when the market was good. She raised her kids to participate in lots of leadership and extracurricular activity in high school, and they all got scholarships. They are all college educated and have good jobs. Since she’s never borrowed against her home equity, she now owns a house worth half a mil with very little left to pay off. She has a good husband who loves her.

By your standards, Robin, Friend 1 is at a socioeconomic disadvantage to Friend 2. Yet Friend 2 has made half of what Friend 1 has made in her lifetime. I don’t think it is about money, I think it is about choices.

[Goatnapper'96]

The material gap and the socioeconomic gap are different things, and I would argue that it is the socioeconomic gap that really matters.

Here are some case studies from South Central to illustrate my point:

My neighbors on one side are extremely poor. The mother and father died in a double homicide, and the orphaned children are being raised by their oldest orphaned sister. There are three child siblings, the one adult sibling, a boyfriend, and a couple of cousins living in 900 sqft. They collect all of the different kinds of welfare. They are US citizens. The adult sister doesn't have a real job, but makes ends meet by hosting massive house parties with tons of alcohol, whippits, and weed (we've had many sleepless Friday nights). She manages to take the children to school, most of the time, but they also miss a ton of school when the oldest sister fails to drive them, and the schools are too far away to walk. All of the children's teeth look like sugar cubes that have been briefly dipped into coffee and then removed before fully melting. The children eat a ton of fast food. They don't have a problem with childhood obesity, but the oldest sister is slightly obese, and I think it is pretty clear that the children will be too, if they continue to live off of fast food, and their childhood metabolism slows down. I help the kids with homework, when I can, and their abilities fall far below grade level.

So that is their socioeconomic portrait. Here is their material portrait:

They have a reliable car. The kids have clean clothing (lots of poor kids don't). The sister deals in cash from her party business and has been able to buy a huge television, a PS3, and they manage to keep up with new games and toys for the kids.

You get the picture. I don't think that the material profile of people in poverty is all that useful. I've got lots of other case studies. There are a lot of big screen televisions in South Central, but that really isn't very relevant when discussing the problem/liability of American poverty.

I think it is relevent because IMO it highlights one of the principle reasons of cyclical poverty. In my experience of dealing with poor folks, I have noticed that poor people generally have poor habits. Poor habits are best demonstrated by an inability to distinguish between needs and wants and wasting a disproportionate amount of income on consumer products that really do them no benefit other than bringing some level of instant gratification. The case you describe is really sad and the story is likely to repeat itself. It seems to me that both government safety nets and even LDS Church welfare programs are likely to act to reinforce this. I know what the LDS welfare program is designed to do and I have no doubt that government programs are designed for the same purpose: to teach a fellar to fish so to speak. The issue is it is a quaint concept and real easy for those not in positions to administer the concept to spend inordinate amounts of their time evaluating to what level it is suceeding or failing, but it requires significant resources to attempt to really fix problems of cyclical poverty. Government programs will never be able to do it, they cannot replace parenting. I have noticed that even in my various church welfare endeavors that I find myself strongly tempted to just givie folks something to get them to leave me alone and I imagine the government programs tend in the same direction. My opinion is that government, with a completely different incentive structure than myself, is significantly inneffecient and woeful in using its resources to really solve this problem.

It is my opinion that the government has the obligation to provide a basic safety net level of subsistence to the poor. I think that is done. The question is whether or not our current system provides opportunity for those who wish to leave such squalor. Progressives argue that the opportunity does not exist because they believe equality of opportunity is only proven through equality of endstate. I am not convinced by that argument. I think there are plenty of oppotunities out there for poor folks to improve their circumstances and reach the middle class, but many of them for many reasons do not have the ability to overcome the poor habits that surround them. I don't believe government is equipped to fix that.

[RobinFinderson]

By your standards, Robin, Friend 1 is at a socioeconomic disadvantage to Friend 2. Yet Friend 2 has made half of what Friend 1 has made in her lifetime. I don’t think it is about money, I think it is about choices.

It does not appear to be the case that your firend 2 is at a socioeconomic disadvantage. The socio part of socioeconomic status refers to access to social capital, and it would appear that your Friend 2 has access to plenty of social capital. Social capital includes education, the education of your parents, your parents knowledge of how to thrive in our social system and their ability to impart an understanding of how to do so, social organization like churches that have the means to supplement lack of social capital in the home, access to extended family that can help in both material and social matters, etc.

Another example of socioeconomic vs material prosperity: A recent college grad with a solid work ethic may be more materially poor than a newly arrived undocumented immigrant, but her socioeconomic status is very high. A good portion of our 'equity training' in my education program focuses on understanding how to help students understand how to access as much of the social capital that is available to them.

[RobinFinderson]

I think it is relevent because IMO it highlights one of the principle reasons of cyclical poverty. In my experience of dealing with poor folks, I have noticed that poor people generally have poor habits.

This is exactly the problem. Unfortunately, it is extremely difficult to fix. The middle class habits that most of us developed setting in from our infancy. By the time we were in kindergarten, we already had five+ years of those habits reinforced into us, where the poorest children had had five+ years of poverty-cultural habits reinforced into them. By middle school, some of those poor children begin to realized that their parents' lifestyle and habits are not setting them on a trajectory to develop skills to thrive in a modern work force, but this realization comes with a huge socioeconomic deficit compared to the middle class students at the same school. The children don't have academic role models at home, and they now have 11+ years of reinforced poverty-culture habits. Most of these poor kids either don't realize the situation they are in, or find it to be so overwhelming that it stifles their self-efficacy.

The parents would like to support their children, but have no idea how. Here is the highly depressing kicker -- studies on the effect of parental involvement in children's academic success indicate that the effectiveness of involvement is well correlated to the socioeconomic status of the parents. The educational input of high socioeconomic status parents simply goes much farther than that of poor parents. But that isn't even the worst part. At the bottom of the socioeconomic ladder, parental input actually HARMS childhood academic success. It is sad to say, but the research indicates that it is actually better, from an educational vantage, if some parents don't try to help their children at all.

Government programs will never be able to do it, they cannot replace parenting... my opinion is that government, with a completely different incentive structure than myself, is significantly inneffecient and woeful in using its resources to really solve this problem.

...Progressives argue that the opportunity does not exist because they believe equality of opportunity is only proven through equality of endstate. I am not convinced by that argument. I think there are plenty of oppotunities out there for poor folks to improve their circumstances and reach the middle class, but many of them for many reasons do not have the ability to overcome the poor habits that surround them. I don't believe government is equipped to fix that.

I consider myself to be a progressive. I'm also currently up to my neck studying research on the impact of public education on socioeconomic mobility. From my vantage, I never see the argument that 'equality of opportunity is only proven through equality of endstate.' That is a conservative bugaboo that has no roots in the reality of the progressive circles where I operate. But researchers do look at endstates as an indicator of some kinds of progress.

Also, while you may not believe that government is equipped to fix the problem, public education has, historically, made HUGE improvements in socioeconomic mobility. The government has helped, a lot. Education is a bit stalled out right now, but not for a lack of research into how to improve things. The problem, imo, is that the research is failing to inform policy. Our education policy is politicized to the point that the research gets drowned out by the political interests.

[Goatnapper'96]

This is exactly the problem. Unfortunately, it is extremely difficult to fix. The middle class habits that most of us developed setting in from our infancy. By the time we were in kindergarten, we already had five+ years of those habits reinforced into us, where the poorest children had had five+ years of poverty-cultural habits reinforced into them. By middle school, some of those poor children begin to realized that their parents' lifestyle and habits are not setting them on a trajectory to develop skills to thrive in a modern work force, but this realization comes with a huge socioeconomic deficit compared to the middle class students at the same school. The children don't have academic role models at home, and they now have 11+ years of reinforced poverty-culture habits. Most of these poor kids either don't realize the situation they are in, or find it to be so overwhelming that it stifles their self-efficacy.

The parents would like to support their children, but have no idea how. Here is the highly depressing kicker -- studies on the effect of parental involvement in children's academic success indicate that the effectiveness of involvement is well correlated to the socioeconomic status of the parents. The educational input of high socioeconomic status parents simply goes much farther than that of poor parents. But that isn't even the worst part. At the bottom of the socioeconomic ladder, parental input actually HARMS childhood academic success. It is sad to say, but the research indicates that it is actually better, from an educational vantage, if some parents don't try to help their children at all.

I really cannot fathom how one fixes these types of problems. Forced sterilization? I really believe the opportunity exists in America to improve one's status but I accept there are huge challenges overcoming poor habits. I will say that part of me really believes that a big part of the issue is the buying off of poor by providing a basic level of government provided subsistence. Ever since LBJ there have been two generations of pretty intense government programs/resources thrown at the problem with limited statitistical success.

I consider myself to be a progressive. I'm also currently up to my neck studying research on the impact of public education on socioeconomic mobility. From my vantage, I never see the argument that 'equality of opportunity is only proven through equality of endstate.' That is a conservative bugaboo that has no roots in the reality of the progressive circles where I operate. But researchers do look at endstates as an indicator of some kinds of progress.

Also, while you may not believe that government is equipped to fix the problem, public education has, historically, made HUGE improvements in socioeconomic mobility. The government has helped, a lot. Education is a bit stalled out right now, but not for a lack of research into how to improve things. The problem, imo, is that the research is failing to inform policy. Our education policy is politicized to the point that the research gets drowned out by the political interests.

Robin, this entire thread was started based upon a premise that it is statistically true that the gap between the rich and poor is widening and that we should be concerned about it. The original poster shows little interest in talking about the state of the poor as much as he is interested in the gap between the rich and the poor. If that is not a symptom of rabid egalitarianism, perhaps you could enlighten me as to what is. From a public policy perspective that is where I think this redistribution of wealth argument goes awry. I don't believe the majority of the American's buy the argument that the current system does not allow for folks to improve their circumstances. I think many want higher taxes for the rich but I think their real concern is government deficits and not increased social spending. I think the majority support Liberal tax structures but also support Conservative social spending attitudes.