Millions Can Hardly Get By In Full Employment America

By Paolo von Schirach –

WASHINGTON – Especially if compared to barely alive, anemic Europe, America’s GDP and employment growth rates look absolutely sensational. As always, even if there is little or no justification, the incumbent president (Donald Trump in this case) takes all the credit, witness his recent Davos speech.

Millions US workers make very little

However, if we look under the hood, the picture is far, far less attractive. In a recent Letter to the Editor, The Wall Street Journal, (January 23, 2020), Martha Ross, an economist who works at the prestigious Brookings Institution, a major Washington, DC think tank, pointed out that “53 million Americans –44% of workers aged 18-64– earn low wages, with median earnings of $ 10.22”. Got that? 44% of US workers make a little more than $ 10 an hour. And, Martha Ross adds, these are not just kids starting out in life using low wage jobs as entry points into the labor force. These are ordinary adults, folks trying to make a living.

Insignificant wages growth

Sure enough, it is a good thing to note real, inflation adjusted, wage growth. However, as Martha Ross points out in her letter, this growth means that for non supervisory retail workers the bump amounts to an increase from an average of $ 16.28 an hour to $ 16.81. Not exactly a sensational jump.

Here is the thing. A single adult, with no children or other dependents, may be able to get by with such meagre earnings. But a family cannot. As Ross concludes: “Despite a recent uptick in wages and a low unemployment rate, tens of millions of Americans earn barely enough to live on”.

Indeed. And this is a national tragedy; even though not talked about much because the overall picture looks rosy. The US economy is growing at more than 2% a year, the stock market jumps from record to record, there is hardly any inflation, and the unemployment rate is at 3.5%, a historic low.

Low wages tied to bad education

So, why is it that in the midst of a booming economy millions of Americans are paid so little? One of the reason must be that millions of Americans can compete only for low paying jobs because they have no marketable skills since they received a truly bad or mediocre education. Sadly, our American public schools system is a disaster. This has been proven time and again through countless domestic and international academic tests.

Sure enough, America can be proud of being home to many excellent private schools and most of the top ranked private universities. However, these prestigious institutions are accessible only to the wealthy and the super gifted who may receive merit scholarships. For sure, these young people, once they graduate, will have access to good or excellent jobs that will launch them into great careers.

All the others, however, the millions who could enroll only in mediocre to bad high schools, combined with all those who did not manage to finish school and obtain a high school degree, get only the scraps. Hence the sharp socio-economic divide and the sad, in fact dramatic, statistics cited by Martha Ross in her letter to the WSJ.

Two tier America

So, here is the thing. For all practical purposes, we have two separate countries here in America. In the upper tier, young people receive a good or excellent education. Armed with that, they can aspire to highly rewarding careers.

In the lower tier we find instead the unlucky ones who were stuck in inner cities and did not have access to a good or even decent education. In fact, many of them, even those who received a high school diploma, received almost no real education. And the unlucky ones in this lower tier tend to be mostly minorities and poor.

Which is to say that in our America, the country that used to be admired across the world as an “open access to all society” and for its “upward mobility”, nowadays “birth is destiny”, just like in Europe in the Middle Ages.

Indeed in today’s America, if you were born poor, in a bad neighborhood, your chances of getting the education you need to climb the socio-economic ladder are close to zero. Therefore, even in a growing economy with full employment, millions can only get dead-end jobs that pay a bit more than $ 10 an hour.

This is a national disgrace.

Paolo von Schirach is the Editor of the Schirach Report He is also the President of the Global Policy Institute, a Washington DC think tank, and Chair of Political Science and International Relations at Bay Atlantic University, also in Washington, DC.