Good Essay On ST Prompt

There has been growing debate among members of the public on the reason for the growing disparity in income and wages in the U.S. While some say that Americans have just generally become lazier, hence earn less, others have blamed the policies enforced by successive regimes. The proposition that the increase in inequality is because of an increased dependency culture and a general increase in laziness of Americans is inconsistent with Autor’s argument. Autor feels that most of the present inequality is because of disparities in education. Poverty is not a result of absence of work ethic among the disadvantaged. On the other hand, the opposing argument that it is the result of policy decisions implemented by the government aligns with Autor’s argument.
Autor’s assertions that issues like affordable care and college ills are to blame, all point towards policy issues. In a nutshell, Autor contends that above all, disparities in education are to blame for the income inequalities being experienced at present. He states “the earnings gap between the median college-educated and median high school–educated among U.S males working full-time in year-round jobs was $17,411 in 1979, measured in constant 2012 dollars. Thirty-three years later, in 2012, this risen to $34,969, almost exactly double its1979 level . Autor argues that the growth of the skill disparities among the 99%. has far greater importance to the welfare of the average American.
Thus, the single most important factor is the rise in the return on tertiary education. The market forces of demand and supply can explain most of the disparity. Autor found that from the 1980’s onwards, colleges were churning out fewer graduates. “From1963 through 1982, the fraction of all U.S. hours worked that were supplied by college graduates rose by almost1 percentage point per year, a remarkably rapid gain. After 1982, however, the rate of intercohort increase fell by almost half” . Hence, there was a gap in supply for people with this skill set. This led to there being a premium on these skills and subsequently higher wages. “The counterpart to this deceleration in the growth of supply of college-educated workers is the steep rise in the college premium commencing in the early 1980 s and continuing for 25 years” . Fast-forward to 2005, and there were an increased number of college graduates. The forces of demand and supply responded and the skill differential has started to hit a plateau. However, simply getting an education at a good school is not a panacea. There are other factors influencing the distribution of wages such as the reduction in the minimum wage, changes in technology, and the onset of international trade.
Despite this plateau on skill level premium, college education remains an attractive proposition. This is because the difference in the relative lifetime earnings between a college educated person and a high school graduate is still very high. “Between 1980 and 2012, real hourly earnings of full-time collegeeducated U.S. males rose anywhere from 20% to 56%, with the greatest gains among those with a postbaccalaureate degree. During the same period, real earnings of males with high school or lower educational levels declined substantially, falling by 22% among high school dropouts and 11% among high school graduates” . What Autor is trying to do is to debunk the myth that going to college is a waste of money and that everything is about the 1%. Autor, however, does not feel inequality is an entirely bad thing. In fact, he opines that some level of inequality is important since it creates incentives. Autor goes on to insist that the best policies to combat this inequality are those that make an investment in the people, such as improving health care and provision of good schooling.
The second proposition, mirror the sentiments of Autor in many ways. Firstly, it postulates to shift the focus of measures to contain the rising inequality from the 1% to the 99%. This mirrors Autor, who feels that emphasis should not be too much on what can be done to the 1%, but what can be done for the 99%.This is because the impact of measures on the 1% would not really go a long way to redressing the balance. The second proposition suggests a possible solution is to improve the public education system. This ties in well with Autor’s findings that skills are of critical importance in the labor market. Autor held that an increase in the premium placed on skills in the market is largely responsible for the increase in earning disparities. Studies established that increase in the wage premium is responsible for most of the increase in the discrepancy in wages in the last two decades leading up to 2005.
It is also an established fact that workers cognitive ability is rewarded at a premium of 28% in the United States. This clearly shows that having skills is of major importance as it enables one to draw greater returns. In a market economy, earnings are dependent on output. Output, on the other hand, is reliant upon the skills present and the scarcity of those skills. The fewer the number of people capable of doing a certain task, and the more that task needs to be completed, the higher the returns. Technological development has brought with it a change in the economy from labor skills, to more of technical skills or cognitive ability. The determining factor for the level of skills available in a country is the country’s education system. Simply speaking, to have skills, you must have a good education system. Hence, Autor proposes that one way of redressing the gap is to improve the education system, to enable the 99% to go to college and obtain these cognitive skills.
The second proposal also suggests the use of healthcare as one of the policies to help in improving this gap between the rich and the poor. One way is by implementing a universal health care program. Hence, people from disadvantaged backgrounds will essentially be able to access necessities such as good care. This in turn improves their productivity and hence ensures that they can be able to earn. These earnings can then help them afford a college education and thus gain skills required. Alternatively, it will reduce their spending on health, thus helping to reduce the inequality. Another point put forward is that of putting in place fair tax policies. The present tax policies impose a greater financial obligation on the poor than on the rich.
This has the effect of widening the gap between the rich and the poor. A good tax system should be equitable and progressive. A slight tweak of the tax policies would go a long way in redressing the imbalance. The extra funds netted could improve the welfare of the poor by providing greater healthcare and better schooling. This ties in with Autor’s thinking. The other element is that of minimum wages. Because of globalization, cheap labor, especially from China is now available. This reduction in the minimum wage has led to a reduction in the participation of high school educated workers in the labor force. This coupled with “the decline in the penetration and bargaining power of labor unions in the United States” has seen minimum wage plummet leading to lower living standards and a widened gap. Increasing the minimum wage may help people attain reasonable standards of living and hence even afford to pay to gain skills

Works Cited

Autor, David H. "Skills, Education, and the Rise of Earnings Inequality Among the ‘Other 99 Percent." Science (2014): 843-851.