Financial News

Escaping Poverty Requires Almost Two Decades Of Nothing Going Wrong

Escaping Poverty Requires Almost Two Decades Of Nothing Going Wrong

By Andre Jones

The factors that contribute to economic inequality in America are numerous, ranging from slavery to harmful economic policy. While most of us understand at least a little something about these seemingly myriad factors, MIT economist Peter Temin acutely examines them – and comes to a few uncomfortable conclusions.

Temin argues, in his book “The Vanishing Middle Class: Prejudice and Power in a Dual Economy” that after decades of growing economic inequality, America is now left with a two-class system. One is a small, mostly white upper class that holds a highly disproportionate share of money, social power, and political influence. The second class is the rest of us: much larger, minority-heavy (though found to be still predominantly white), and almost completely at the mercy of the whims of the upper class.

Temin identifies two types of workers in this “dual economy.” He spoke of skilled, tech-savvy workers and managers with advanced degrees and high annual incomes who are concentrated quite heavily in fields such as finance, technology, and electronics – what Temin labels the “FTE Sector.” Temin found that out of the 320 million people living in America, this “FTE Sector” makes up about 20 percent. The rest of us comprise the “low-wage sector.”

Temin further divides these workers into groups that can trace their families back to pre-1970 (when productivity began outpacing wage growth). He notes that race plays a major role in how these groups fare economically in the U.S. He points out that African Americans and Latino immigrants were located almost entirely in the low-wage sector, while white Americans and Asians dominated the FTE sector.

While some may argue that Temin errs on the side of over-simplicity, his book explains how the divisions are no accident. His book focuses on how the construction of race, class, and prejudice have created a system that is designed to keep members of the “lower classes” exactly where they are. He explains how various policies have been strategically – and aggressively – pushed to create and maintain wealth among some groups while they impede economic growth in others.

“The choices made in the United States include keeping the low-wage sector quiet by mass incarceration, housing segregation and disenfranchisement,” Temin wrote. He noted that although education is key to transcending the lower class trap, it translates into a minimum 16-year plan that has to be executed almost flawlessly, even with the aforementioned factors playing their part.

Though Temin shows this “stacked deck” to be by design, he offers a series of proposals that he believes will put the country on a more equal footing, among them improving public education, repairing infrastructure, and significantly less investment in prisons.

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