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MN2020 - Preventing the Poor from Getting Poorer
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Preventing the Poor from Getting Poorer

August 14, 2013 By Lee Egerstrom, Economic Development Fellow

The rich will always get richer, but how can we change the other part of that saying to ensure the poor find economic prosperity?

Yolanda Cotterall, a program manager at the Latino Economic Development Center in Minneapolis has an idea. She believes more entrepreneurial opportunities are a key strategy, particularly for new Minnesotans. “We should focus on how to open pathways, remove barriers, use established economic development strategies and bring ownership opportunities via non-biased, non-penalizing of immigrants,” she said.

Business growth by ethnic communities along Lake Street in Minneapolis provides hope for these economic aspirations.

However, the debate in Washington over immigration reform “has turned ugly," according to Cotterall. The predictable trifecta of status quo ideology – racism, bigotry and xenophobia – combine to make even modest changes to immigration policy difficult in Congress.

Another barrier to moving Minnesotans up the economic ladder involves lingering policies that continue to hold back women. Diane Smith, in her current American Rural newsletter, writes about joining a nonprofit technology organization board because the founding board didn’t have women.

The founder “understood clearly that having a fair number of women on his board would 1) result in a better organization, and 2) send the right signals regarding gender diversity to the young men and women he intends to reach with his new organization,” she wrote (“Men, Women, Work – It’s not that complicated”).

Smith, based in rural Montana but grew up in Virginia suburbs of Washington, D.C., is a techie by education and was an executive of the company that became Sprint. While a rural affairs advocate, she can advocate for women’s opportunities and argue against barriers that are not geography specific in either American laws or business practices.

Here in Minnesota, we have an opportunity to fight poverty for all genders and cultural backgrounds by raising the minimum wage and fighting for community living wage standards. Getting the Minnesota Senate to pass the state House approved  $9.50 by 2015 wage standard would be a start to a much longer path toward community prosperity.   

The Guardian's Moira Herbst, in a column distributed widely by AlterNet, cited data from the Reuters news agency showing real median wages in America fell by about 2.8 percent between 2009 and 2012.

Topping declines were hairstylists and cosmetologists, who lost more than 9 percent in median wages – from $12 an hour to $10.91 – in those three years; and by restaurant cooks, who lost 7.1 percent in median wages in those “recovery” years.

Moreover, Herbst noted the middle class “is losing ground and getting hollowed out.” Citing other government statistics, she found median American income declined 8.9 percent from a 1999 peak through 2011, and down 8.1 percent from the start of the Great Recession in 2007.

It gets worse. Herbst spins out government statistics showing the cost of college educations have increased 50 percent in 30 years, and that only one in 10 American workers now have union contracts – paying a median wage of $49,000 to about $39,000 for non-union workers – when one in five workers were supported by union contracts 30 years ago.

The number of “involuntary part-timers” – people who want jobs but must work part-time – is now the highest in history and increasing, to more than 8.2 million people.

Part and parcel of these bleak economic facts are statistics on the growing – and glaring – inequality in the American economy. Among them, Herbst found the top 1 percent of earners received 93 percent of the income gains coming out of the Great Recession while the poorest 50 percent of Americans accounted for only 2.5 percent of American wealth in the first year of recovery.

The American and Minnesota economies need a course correction. Removing barriers to opportunities for entrepreneurs – immigrants, refugees, native born and especially women – and giving their customers more spending power through wage standards should be goals for policy makers and business leaders alike. 

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4 Comments:

  • Mike Downing says:

    August 19, 2013 at 8:53 am

    Sometimes we cannot see the forest through the trees.

    The primary difference between “the haves” and the “have nots” is their level of education and the type of education (STEM vs the arts). I wish that more people took their education seriously but in reality it is their choice. As my mother always said: “You can lead a horse to water but you can’t make them drink.”

  • TONY says:

    August 19, 2013 at 9:40 am

    Here we go again, STEM is the cure for all. Yes, STEM grads can earn a decent wage but some advisors are telling high schoolers not to go into some parts of STEM as their are few jobs available. I have several friends with IT backgrounds that are seeing their well paying jobs either go to India or were replaced by imported STEM grads from India who were willing to work for much less. This does not mean that a good mechanic or machine tool maker or janitor should not be paid a decent living wage. They work just as hard or harder than any STEM grad and our businesses are making record profits and pouring those profits into the management or stockholders with little regard for their employees. We must be like Germany, where the company is run in Germany(not China) with the profits returned to top mgmt. and the employees. In Australia the minimum wage is over $16/hour & they have a much lower unemployment rate than we do.

  • ChristeenStone says:

    August 19, 2013 at 1:15 pm

    I feel this years tax base is one step toward fairness,in leveling the playing field. I was very disappointed that our minimum wage was not raised to the point that it is a living wage. Until every employee is paid an income that covers their expense how can we expect to see improvement? As long as the big companies are able to suck up all the money for their CEO’s and to buy the votes of some legislators with big corporate campaign gifts, America will not change! We have college graduates , well trained waiting for jobs that do not exsist and deep in college loan debts. We need to do some of the things done in the NEW Deal days, as I just saw in Pioneer Press from the CCC days when they built things that lasted and benefited everyone. There are a lot of roads and bridges and parks ready for investment.

  • John says:

    August 20, 2013 at 10:27 am

    The top 1% are outliers who, often for reasons over which they had little control, were in the right place at the right time.  To identify those outliers as a problem (unless policy had a hand in making them outliers) makes as much sense as postulating that lottery winners are holding down wages.  Wage earners compete for jobs with wage earners and entrepreneurs, regardless of their race, sex, or cultural background compete with entrepreneurs on a global scale. Local policy can do little to change that dynamic unless it is targeted toward elevating our competitors so that they can play on a higher level where there is less competition.