Study of Los Angeles: Prosperity increases income inequality

Coverage of income inequality is shockingly slanted and inept. Lazy, populist demonization of the 1 percent is the standard default starting position for explaining why poor people make a small fraction of what the very wealthy do. But as I’ve written for CalWatchdog before, there are a lot of much more solid reasons for what we’re seeing. They’re obvious and easily documented:

“When you set aside the class-warfare rhetoric that Democrats so enjoy, the drivers of income inequality are plain. The first is rarely acknowledged. It’s the increasing tendency of highly educated professionals to marry each other. Doctors used to marry nurses. Now they marry other doctors, concentrating family wealth.

“The second is that the modern economy places an ever-higher premium on job skills, and yet we don’t have a public education system that responds to this fact. In 2013, how is it possible that a year or more of computer science isn’t a universal high school graduation requirement?

“It’s not just information-technology jobs going unfilled because of a mismatch between what schools teach and what employers need. In many skilled-job categories — welders, critical-care nurses, electrical linemen, special-education teachers, geotechnical engineers, respiratory therapists — unemployment is practically zero.

“So long as we have an absurdly complex tax code in which the amount that the very wealthy pay depends on the skill of their tax attorneys, the Occupy argument that the U.S. is rigged to help the rich will resonate with some. But this doesn’t address the disconnect between what our schools teach and what our economy needs.”

Liberal think tank: Higher job skills more rewarded than ever

Now the most venerable liberal think tank of all — the Brookings Institution, the one a Nixon aide wanted to firebomb — has released a study of big-city income inequality that makes some of the same points. This is from the L.A. Times’ write-up of the study:

“Los Angeles has one of the highest levels of income inequality in the nation, but that’s due in part to a relatively strong local economy that’s stoking the fortunes of higher-income people, according to a new study.

“Of the 50 largest U.S. cities, L.A. has the ninth-highest level of income disparity, according to the analysis by Brookings Institution, a Washington think tank. …

“Inequality has become a flash point nationwide as the wealth of top earners surges while the middle and lower classes grapple with stubborn income stagnation. Politicians have clashed loudly on what’s driving the dichotomy, and what steps, if any, should be taken to reverse it.

“The study found, however, that rising inequality may simply be an unavoidable byproduct of robust local economies that plump the incomes of coveted workers.

“Fast-growing industries with highly paid employees — such as technology, finance and entertainment — tend to cluster in large metropolitan areas, said Alan Berube, a Brookings researcher who specializes in inequality. And the ongoing gentrification of many cities, such as in downtown Los Angeles, is drawing wealthier people.

“At the same time, big cities also draw large numbers of low-income people seeking lower-skilled jobs.”

Needed: a much smarter and more focused education system

Joel Kotkin, the shrewd Los Angeles Democratic futurist, points to the best approach to income inequality in his piece last week in New Geography:

“A pro-growth program today could take several forms that defy the narrow logic of both left and right. We can encourage the growth of high-wage, blue-collar industries such as construction, energy and manufacturing. We can also reform taxes so that the burdens fall less on employers and employees, as opposed to those who simply profit from asset inflation. And rather than impose huge tuitions on students who might not  finish with a degree that offers employment opportunities, let’s place new emphasis on practical skills training for both the new generation and those being left behind in this ‘recovery.'”

The problem facing this approach in California, alas, is that the state’s education status quo has fierce guardians. They don’t want sweeping change because it would cost many CTA and CFT members their jobs.

And given that the CTA and CFT are by far the most powerful forces in the state, this is an immense problem for those who want to do something more constructive about income inequality than tampering at the margins with pseudo-solutions like raising the minimum wage.