By Tyler Norris
Editor’s Note: The Well Being in the Nation (WIN) Network is a collaborative effort to help create the conditions for intergenerational well-being. At the heart of its mission are seven “vital conditions” that are essential for the sustained well-being of people and place. Having meaningful work and wealth is one of those vital conditions. The National Civic Review is working with the WIN Network to make our readers aware of the challenges and opportunities associated with addressing those seven conditions.
There’s a reason we talk about health and wealth in one breath. Access to stable incomes and fulfilling careers is a primary pillar of well-being. People do best when they have productive and rewarding work, enough income to fulfill basic needs and support their families, and the ability to afford important assets like a home, as well as to invest in education. Meaningful work lifts up entire families and communities and creates a vibrant and interdependent commonwealth. And when people are able to build wealth, and experience good living standards for their families and communities now, it pays forward for generations to come.
Unfortunately, too many Americans don’t have the benefit of job security or fair pay. The rise of the U.S. “gig economy”—marked by layoffs, underemployment, unpaid internships and temporary jobs—and global trends like offshoring, teleworking, and automation have indelibly changed our labor market. These forces will continue for the foreseeable future; for example, automation could eliminate as many as 73 million jobs in the U.S. between 2018 and 2030.
Even as the national economy and job market rebounded from the Great Recession of 2008, for most people, wages have remained stagnant for decades, burdening those most historically disadvantaged. Approximately 7.4 million people in the U.S. hold multiple jobs, including military families and employees in some of the largest, most profitable companies in the world.
These structural impediments have had the greatest impact on low-income communities and communities of color. Some of these legacies of inequality include:
- Segregation and discrimination. Harmful practices like “redlining” — refusing loans to people because of the racial demographics where they live — once prevented many African American families from owning homes, building wealth, and accessing family-wage jobs and resources. Although the practice was banned by the Fair Housing Act of 1968, its impact persists systemically. For example, today white family wealth is seven times greater than that of black families and five times greater than that of Hispanic families, largely because white families are much more likely to own their homes.
- Retirement security. Many Americans are not saving enough for retirement, if they are saving anything at all. In fact, nearly half of all Americans (47 percent) are not able to cover a $400 unexpected expense. A major shift from defined-benefit plans to defined-contribution plans has contributed to growing disparities, with high-income earners and those in union jobs experiencing greater retirement security than others.
- Myth of mobility. The American Dream insists that hard work is the key to success, but the reality is much more complicated. America is in the midst of an unprecedented shift of wealth from its once-booming middle class to the top 0.1 percent of the population, driven by political and economic structures that favor and protect those with higher incomes. These divides are further limiting opportunities for mobility, leading to greater intergenerational disparities.
These causes of inequity are often hidden behind misleading numbers. For example, while the unemployment rate currently hovers at 3.5 percent across the country, joblessness is actually higher among certain groups, such as African Americans and American Indians. Lack of wage growth and rising costs of living nationwide have meant living conditions in low-income communities and communities of color are actually getting worse — not better.
For everyone to have a chance to participate in the American Dream — the chance to build financial stability and improve living standards for themselves and their children — we need to break down disparities that exist across work and wealth. Solutions include:
Catalyze inclusive economic development for women and in struggling communities.
Significant advances are needed to address the structural issues that limit and devalue women and people of color in the U.S., beginning with the wealth gap. On average, women own 32 cents to every dollar a man owns. This number is even more disparate across racial groups. In 2016, a white single woman had an average of $11,117 in retirement savings, whereas a black single woman had only $1,677.
Promoting wealth building for women, particularly women of color, and closing the wealth gap will require us to bridge gaps in home ownership and business opportunities. We must address inequities in the mortgage system — which make it more difficult for first-time or low-income homebuyers to receive assistance based on their lower credit scores — and ensure entrepreneurs of color have access to business networks and capital.
Reduce student debt through free or subsidized college tuition.
Whether someone has gotten a higher education strongly predicts their ability to build wealth later in life. But the cost of college has become increasingly inaccessible, which means millions of Americans are forced to opt out or take on crippling student loans. Today, 61 percent of the price of attending a four-year public college is non-tuition costs. These growing price tags are excluding students of color, who are now underrepresented at public colleges.
Rising tuition and the burden of student loan debt has led to lower home ownership rates, fewer people starting businesses, and students dropping out before graduation. The solution is simple: by offering free or subsidized college tuition to students, the U.S. could open doors to students of color and provide more people with the chance for higher education. The nation could further stimulate economic growth by giving graduates the opportunity to invest in assets like homes, new businesses, and their futures.
Provide a federal guarantee.
In the U.S., 27.9 million full-time workers and 15.9 million part-time workers earn less than $15 per hour. According to one analysis, a job guarantee offering $15 per hour could improve employment rates by 2 to 4 percent and impact up to 44 million employed workers, 5.9 million unemployed workers and millions more who are outside the labor force.
By establishing a public standard for a living wage, employment benefits and working conditions, a federal job guarantee would create competition within private industry for employers to offer more.
Create opportunities for cooperative and employee ownership.
In response to stagnant wages and economic inequity, employers are increasingly turning workers into owners through employee stock ownership plans (ESOP) and worker cooperatives. An ESOP offers employees the opportunity to have an ownership interest in the company, meaning they benefit from the company’s success as well.
Publix Super Markets is the largest employee-owned company in the U.S., with more than 200,000 workers across the country. Employees in all positions within the company receive 8.5 percent of their annual salary in company stock. In 2018, Publix brought in more than $36 billion in retail sales and $2.4 billion in net profit.
Providing every person in the U.S. with the chance to participate in meaningful work and build wealth that opens doors to greater opportunities is vital to breaking long-lasting cycles of poverty and inequality. The result will be a healthier, more productive America and a richer nation for all.
Tyler Norris is CEO of Well Being Trust. From 1990-1995, he led Civic Assistance at the National Civic League.