To Fight Inequality, Blue States Need To Shift Focus To Blue-Collar Jobs

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In the coming election, we will hear much, particularly from progressives, about inequality, poverty and racism. We already can see this in the pages of mainstream media, with increased calls for reparations for African-Americans, legalizing undocumented immigrants and a higher minimum wage.

There’s no question that minorities’ economic wellbeing has deteriorated since the economy cratered in 2007. African-America youth unemployment is now twice that of whites, while the black middle class, once rapidly expanding, has essentially lost the gains made over the past 30 years,  says the Urban League.

Conservatives may not have the answers but it’s clear that a progressive regime has not worked either.

The net worth of blacks and Hispanics has declined relative to whites. The black poverty rate stood at 27.2% in 2012, and for Hispanics, 25.6%. At the same time as poor kids are flocking here from Central America, child poverty among Latinos has risen sharply, from 27.5% in 2007 to 33.7% percent in 2012.

One would think these statistics would make someone question at least somewhat boilerplate progressive polices, which certainly have not worked better than standard brand conservatism. But often the common answer to these trends has been a call for more “progressive” social policies that would seek to redistribute wealth and to enforce racial equity in everything from housing to university admission. Given Republican control of the House, these racial and class politics are increasingly most keenly felt in the states and cities.

There are numerous signs of this, including Seattle’s $15 an hour minimum wage and similar proposals in other cities. The thrust of New York Mayor Bill De Blasio’s administration seems to be to provide ever more succor to the city’s large, heavily minority, poor and working-class population through early childhood education and more subsidized housing.

As an old Democrat, I am sympathetic to the concerns. But it’s dubious the deep blue cities have found a solution. Let’s start with the gap between rich and poor. For the most part the regions and states with the widest gap between the classes are overwhelmingly dominated by modern progressivism.

The capital of blue America, New York City, has easily the worst levels of inequality in the country, with an income distribution that approaches that of South Africa under apartheid, notes demographer Wendell Cox.

But New York is hardly the only progressive stronghold  with searing inequality. A recent Brookings report  found that of the regions with the greatest income disparity only one, Atlanta, is located in a red-leaning state. These include San Francisco, Miami, Boston, Washington, D.C., New York, Oakland, Chicago and Los Angeles. The lowest degree of inequality was found generally historically more conservative cities like Ft. Worth, Texas; Oklahoma City; Raleigh, N.C.; and Mesa, Ariz. Income inequality has risen most rapidly in the probably the most left-leaning big American city of luxury progressivism, San Francisco, where the wages of the poorest 20% of all households have actually declined amid the dot-com billions.

 Since most of the urban poor are minorities, these disparities are also reflected in racial terms. Among the nation’s 15 largest metropolitan statistical areas, according to an analysis by Praxis Strategy Group’s Mark Schill, the biggest gap between black and white incomes as of 2012 was also in San Francisco, where African-Americans made 49% of whites’ income. Chicago, Detroit and Philadelphia are a shade behind at 50% to 51%.

In contrast, African-Americans score better in comparison with whites in less expensive, more suburban areas. In Riverside, Calif., black incomes are over 81% of whites, highest among the nation’s 15 largest metro areas; in the Phoenix region, black income is 73% of whites; in Houston, 65%. This is not a case of Democratic rule being the problem; the real issue is what kind of  Democrat. In cities like Phoenix, Riverside and Houston, Democratic mayors are usually very pro-business, and rarely engage in the kind of rhetoric one hears in places like New York or Seattle.

A somewhat similar pattern can be seen among Latinos. The worst disparities – 50% to 54% of white income – are in greater Boston, Philadelphia and New York. Again, the lowest disparity was in Riverside, where Hispanic incomes were 84% of whites, followed at 81% by Miami – a city that is neither cheap nor sprawling, but has a population of generally more prosperous Cuban-Americans. In third place is Phoenix, at 73%, a city, that ironically, has been castigated as a capital of anti-Latino sentiment.

Part of the difference is the strong growth of higher-paid, blue-collar jobs in places like Houston, Oklahoma City, Salt Lake and Dallas compared to rapidly de-industrializing locales such as New York, San Francisco, Chicago and Los Angeles. Even Richard Florida the guru of the “creative class,” has admitted that the strongest growth in mid-income jobs has been concentrated in red-state metros such as Salt Lake City, Houston, Dallas, Austin and Nashville. Some of this reflects a history of later industrialization but other policies — often mandated by the state — encourage mid-income growth, for example, by not imposing high energy prices with subsidies for renewables, or restricting housing growth in the periphery. Cities like Houston may seem blue in many ways but follow local policies largely indistinguishable from mainsteam Republicans elsewhere.

Nowhere is this relationship between job growth and racial disparities clearer than in California, where regulations have slowed construction and industrial growth even as Silicon Valley has enjoyed a giddy boom. In Silicon Valley, Hispanic and African-American incomes have sagged, as manufacturing and many middle management positions have been reduced. But the real problems for poorer and minority residents can be seen in the state’s interior regions, where many communities still suffer close to double digit unemployment or worse.

Part of the problem also lies with costs, particularly for housing. Simply put most working Americans, and most minorities, cannot earn enough to maintain a decent quality of life in most of America’s biggest cities. This is particularly true of big, diverse blue cities like New York and Los Angeles, where the average paycheck, adjusted for cost, ranks worst among the major metropolitan regions.

High housing prices, notes economist Jed Kolko, are a key reason why even with a boom, population growth remains slow in the Bay Area. In contrast, Houston, which also is booming, has seen rapid population growth and in-migration. Since 2000, Houston’s population has grown 30%, three times as rapid as the Bay Area.

One boomtown epitomizes opportunity while in the other growth has largely benefited the well-educated and well-placed. Between 2000 and 2012 income growth in Houston has been 53% while in San Francisco — despite the tech boom — it has been 35%.

Minorities and, particularly, immigrants have been drawn to these sprawling, growing regions as the best places to improve their life. Over the past decade, the foreign-born populations of Houston and Dallas expanded roughly 50%; Atlanta saw nearly 70% growth. In contrast, immigration growth in New York, Chicago and San Francisco was under 20%.

Immigrants are coming to these areas, in many cases, in order to buy a house. In Houston, according an analysis by demographer Wendell Cox, 52% of African Americans and 42% of Hispanics own their own homes. In Los Angeles, this percentage is in the 30s, and in New York and Boston, minority ownership is even smaller. The Atlantic may say the Sun Belt is where the “American dream goes to die” but an examination of the statistics suggests, these critics may need their compasses readjusted.

Much the same can be said about progressive policies. Unlike some on the party-line right, I do not think that concerns about inequality and stunted upward mobility are fabrications by left-wing academics.

The question is how to address the issue. We should consider that last time African-Americans made big strides in income were when the economy was booming under Presidents Reagan and Clinton, both of whom have been criticized for “trickle down” policies. They have done far worse under the present more conventionally progressive region.

If they are honest, it’s time for progressives to deal with these trends with some sense of realism; you don’t have to be a conservative to favor good blue-collar growth. All too often progressive mouthpieces like the New Republic, while admitting black inequality is at the highest level in decades, emphasize such symbolic (and political unlikely) steps, as reparations and and expansion of means-tested subsidies that would help minorities and poor but leave out the middle class, and mostly white, majority.

Such approaches will do little effectively, except to make some progressives feel even more self-righteous. But real progress on race and poverty requires a growing economy that provides opportunities for the broadest part of population. Clearly the regulatory and tax regimes that stunt middle- and working-class opportunities does not help. Blue-state progressive can whine about race, inequality and poverty with the best of them, but they would contribute far more if they started to address these issues with something other than well-rehearsed indignation and rhetoric.

This story originally appeared at Forbes.

Joel Kotkin is executive editor of and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

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Economic inequality is

Economic inequality is commanding attention from policymakers, the media, and everyday citizens. It is just exemplifying this growing inequality, is actually contributing to The debt level of young American adults -- those under the age of 35 -- has taken a steep dive during the last ten years or so, according to a brand new study. Usually, that would sound like good news for the economy. In reality, however, it suggests a very unpleasant pattern. The reason that debt has fallen so sharply is because today's young adults have too few resources to consider taking on new loans. pay for your debt payments this month with a payday loan.

Couldn't even TRY to be objective?

"Conservatives may not have the answers but it’s clear that a progressive regime has not worked either ...
One would think these statistics would make someone question at least somewhat boilerplate progressive polices, which certainly have not worked better than standard brand conservatism."
We KNOW conservatism doesn't work, but isn't it surprising that progressive ideas don't work, either?
We're in our sixth year of the most Progressive government the US has ever seen, definitely knocking LBJ out of second place, and some may argue that he has knocked FDR out of first place. After all, both of those Presidents worked with Congress, even - boo, hiss! - the Republicans. Since Reagan left office in 1988, we have had a Republican conned into raising taxes, a Democrat for eight years, who was forced to compromise with a Republican Congress, but still managed to almost balance one budget by pushing through the the largest single tax increase in the history of the world. He was followed by a Republican who tried to convince us that "compassionate conservativism" was not moderate liberalism. He failed, because ne never vetoed a spending bill, and signed deficit budgets for eight fiscal years.
If "standard brand conservatism" doesn't work, my question to you is, "How would you know?" We've had no conservatives in the White House since 1988 - over two decades of tax and spend. Now you're admitting progressivism doesn't work. How about giving conservatism a try - no. not "tax breaks for the wealthy" or (the nonexistent) "trickle down economics". Let's start simply: Reduce the regulatory burden. Since the price of gasoline affects the price of almost everything, how about approving some permits in the Gulf, opening up the Canadian pipeline, and exapnding on fracking. The reduction in gasoline prices alone would stimulate the economy more dramatically, than a small minimum wage increase.

A program

1. An immigration moratorium (until we can integrate the ones we already have)
2. Protective tariffs on manufactured goods from low-wage countries (the only tried and true answer)
3. A six-hour day with triple pay for overtime (the logical answer to labor-saving technology)
4. A graduated expenditure tax in place of the graduated income tax (make savings tax exempt)
5. An expansion of the earned-income tax credit to cover all hourly wage earners

Luke Lea

This lowers our standard of living

1. Economic growth and repaying our incredible debts depends on population growth. Without immigrants we have no chance. Further, the economy scales disproportionately with population--double the population, more than double the economy.

2. This just lowers our living standard. Are you going to reimburse American consumers for the higher prices and lower quality? Consumers benefit from trade--and everybody is a consumer.

3. This is silly. Raising the cost of labor will just reduce the amount of labor needed, either by pricing products out of the market, or by speeding up the pace of automation.

4. I agree with this. The income tax is dumb.

5. If you eliminate the income tax, then this isn't necessary. If you don't, then this doesn't make any difference.

The economy is all about consumers. If consumers benefit, it's good. If consumers don't benefit, it's bad. It is wrong to think of the economy as being about employees. Consumers benefit from cheap, high-quality products, whoever it is that makes them.

Then I suppose you are also

Then I suppose you are also opposed to the eight-hour day on the same grounds?

Immigration and trade with China both "grow" the economy (hate that phrase). However the gains in GDP are swamped by the redistribution of income (and consumption) from labor to capital (capital including those whose income is derived primarily from education and brains -- so-called human capital -- as well as possession of financial capital, ownership of physical capital, etc. This is all standard textbook economics by the way. See World Trade and Payments by Caves and Jones, the classic teaching text. On the redistributional effects of immigration see Harvard labor economiist Borges' work on this subject. The tried and true answer to labor saving technology in the 19th century took the form of statutory limitations on the longth of the working day -- which is how we got the five day week and weekends.

Luke Lea

A six-hour day?

A six hour day? Why stop there? Why not a three-hour day, or even a 10-minute day? I mean, if you're giving away free money I don't understand why you are so chintzy.

It baffles me that otherwise intelligent people think that completely arbitrary, bureaucratic restrictions on human endeavor are somehow going to make us richer.