Solution To Poverty

Reduce Income Inequality

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The middle class is being hollowed out, as more Americans find themselves in either upper- or lower-income households.  The extremes grow at the expense of the center.                                                                                                                                                                                                                                                                                                                                          –Pew Research Center

In 1971, about 61 percent of American adults lived in middle-income households (defined as three-person households with incomes from $41,869 to $125,608 in today’s dollars).  By 2014, middle-income homes had dropped to a questionable majority.

Meanwhile, the share of low-income households (households with incomes of $41,869 or less) grew from 25 to 29 percent, and the share of upper-income households (incomes above $125,608) increased from 14 to 21 percent.

U.S. households, be they low-, middle-, or high-income,  typically experienced double-digit gains in each of the three decades before 2000, according to Pew.  What happened since, of course, is that the Great Recession erased some of these gains.  Unemployment rose, labor participation declined, overtime pay declined and many of the unemployed have had to accept lower wages to get new jobs.  Pew calculates that household incomes in 2014 dropped to levels of the late 1990s.

In 2014, according to Pew, typical middle-income households had incomes 34 percent higher than in 1970.  But 14 years earlier they had advanced 40 percent.  The Recession took six percent in real terms plus the historically expected annual increase.

The Pew study relies on pretax cash incomes.  It ignores taxes and non-cash government transfer programs and employer-provided fringe benefits for workers, all of which arguably help the poor. In any case, greater economic inequity threatens the future.  Class conflict is intensifying.  The hollowing of the middle class is simply not in America’s best interest.

At Horizonte, Salt Lake City School District’s alternative high school and adult education center, educational advancement is viewed as the great equalizer.  With education comes opportunity.  Those youth and adult graduates who desire and qualify for applied tech and college also qualify for privately funded scholarships that are renewable with a 2.0 GPA every semester to an associate degree or completion of their applied tech certificate program.