President Obama said on Dec. 4 that the growing difference in income between the rich and the poor is “the defining challenge of our time” and that it will be the driving force behind “everything I do in this office.” While this is a clever political ploy to shift attention from his failed policies on job creation, immigration and spying on our own citizens, it does serve to highlight the seriousness of the “income gap.”
There has always been a disparity in wealth but it has grown worse since the early 1970s, and while this problem can be seen in all the industrialized countries, it is most pronounced in the United States. Between 1979 and 2007, the CBO found the top 1 percent of U.S. households had a 275 percent increase in their after-tax income compared to only a 40 percent increase for America’s middle class. This difference accounts for most of the income gap between the top wage earners and the 60 percent of Americans who make up the middle class.
This widening gap between the rich and the middle class not only has negative implications for America’s social structure but will also have a detrimental effect on our economy. A shrinking middle class means lower consumer buying power, which will result in a slowing domestic economy and fewer jobs.
After World War II, the income gap narrowed for about 30 years as well-paying manufacturing jobs flourished due to strong post-war demand and the absence of foreign manufacturing capability. However, the gap widened when foreign competition intensified and prices dropped. Companies in the United States either lowered their prices to meet foreign competition or went out of business. Increased efficiency could not produce all the required cost reductions, and manufacturing wages suffered as a result.
President Obama believes this problem can be solved by taxing the rich more severely and sending the money to Washington, but historically this has never fixed the problem. The real cause of the problem is a lack of relevant, focused education that meets the demands for skilled labor in the 21st century. It is education that will inevitably restore the vitality of the middle class.
Statistics show that education results in higher incomes. More than 40 percent of America’s population lacks a post-high school education. The latest census data available show that a high school graduate earns a median income of $21,569 compared to someone with an associate’s degree who earns $32,602 and a person with a college degree earning $42,783, almost double the amount of a person with only a high school degree.
Some people want to decrease or eliminate student loans and grants, but I believe this is terribly short-sighted. Our country’s future is closely tied to the success of our children and we need to do everything we can to promote their education. However, a college degree is not the only answer. Education in all its forms for more people is needed to develop the depth of skills required by today’s society.
We need engineers but we also need machinists who can transform their designs into reality, and an architect’s design is worthless without a carpenter to build it. Utah is blessed not only with fine research universities and colleges but also with community colleges and the Utah College of Applied Technology, which specializes in licensing, certification and training for a number of skilled occupations.
Taxing the upper class to bring them down will not solve the income gap. It is only by educating our children in the skills needed in the 21st century that we can rebuild the earnings capability of the middle class, build a more balanced society and close the elusive earnings gap.
Bob Fuehr is a retired telecommunications executive and former director of the Utah Division of Economic Development and is a candidate for the Republican 4th District congressional nomination.
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