Nonresident Senior Fellow - Economic Studies, Center on Regulation and Markets McMurrer and Sawhill point to the growing inequality in wages over the past 25 years (with the modest interruption since 1993 discussed shortly). If it does not, the gap in Americans’ lifetime incomes will grow ever wider in the years ahead, as Daniel McMurrer and Isabel Sawhill warn in their excellent new book, Getting Ahead. America must find a way to help more people avoid this fate. Otherwise, they may well fall down the economic escalator-taking a lower-paying job after months of traumatic unemployment-if they become victims of the next downsizing, re-engineering, or merger. Americans know that they must rely on their own wits and drive to constantly upgrade their skills so that they can survive and prosper in today’s high-tech, global economy. The stable workplace of the golden age, when many could count on a job with one company throughout their working lives, has long since vanished. Stock 2017Īs we enter the 21st century, policymakers’ central challenge will be to keep the opportunities that undergird the ethic strong. But Americans see enough success stories-the immigrants who come to this country with literally nothing and whose kids soon are excelling at school and getting good jobs-to remain committed to the ethic, as they should be.Įdited by Janice C. ![]() Children of privileged parents get on the escalator at much higher places than do those from broken homes and rough neighborhoods. But a defining ethic of America has long been that, no matter which step you first land on or how great the distance to the higher steps, you have a good shot at moving up if, as President Clinton has frequently said, “you work hard and play by the rules.” The distance between the various steps measures how unequal society may be. The dynamic nature of the economy suggests that an escalator is a more useful metaphor. In the real world, however, the economy is constantly in flux, with people moving in and out of the workforce and up and down the income scale. Since then, the economic pie has grown far more slowly, at little more than 1 percent annually, while the slices have grown far more unequal, bigger for those at the top income levels and actually smaller for those at the bottom.īut the pie metaphor doesn’t distinguish who gets the slices of the pie-the young or the old, for example-but instead simply measures how slices are divided among those who happen to be in different parts of the income distribution at any given time. ![]() Incomes for Americans in all parts of the income distribution increased faster than 2 percent a year – the pie was growing smartly while the ever larger slices were handed out fairly evenly. By this criterion, the American economy was highly successful in its “golden age” from after World War II until 1973. Economic policy, it is often said, is about expanding the size of the pie and ensuring that its slices are not handed out too unevenly.
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