Economy

How The Wealthy Are Demolishing The Bridge The Middle Class Need To Cross

CREDIT: AP Photo/Steve Ruark

The educational resources that are supposed to help lower- and middle-income families catch up to the rich are instead propping up economic inequality thanks to the spending habits of the wealthy, according to a new analysis from the Associated Press. The report is another reminder that income inequality is so heavily entrenched that even hard work and learning aren’t enough to reduce it.

The wealthiest tenth of the country increased their average spending on early childhood education by more than a third during the Great Recession while average spending on daycare and preschool stayed flat for the other 90 percent of American families. High demand for elite-quality preschool and daycare programs pushes the price of those programs up, freezing lower- and middle-income families out.

The differences crop up in different ways at later stages of the educational system, the wire service reports. Highly-rated public schools push up housing prices in their districts as the wealthy buy into those neighborhoods, pushing others into poorer K-12 public schools. Private tutors and SAT prep courses help the wealthy attend elite universities that are far more expensive than the options other families can reliably access, if their children go to college at all.

As income inequality has exploded over the past 35 years, the gap in standardized testing outcomes between rich and poor was also widened, the AP notes. Wealthy children outperformed the poorest kids by 90 points on the SAT in the 1980s, and by 125 points today.

Head Start, the venerable government-funded pre-kindergarten program for low-income children, is overwhelmed, underfunded, and unable to close the gap in school readiness between rich people’s children and everyone else. There is evidence that early childhood education is tied to future economic success, meaning that a two-tiered system for preschool and daycare is likely to perpetuate economic inequality for future generations. Research also shows that poverty has complicated negative effects on brain function and development, meaning that poor kids face a disadvantage in school even if the resources available in their classroom are of the same quality as those rich kids get.

One way to enhance the educational outcomes and future mobility of the economically disadvantaged is to make preschool designed to prepare children for kindergarten free for everyone. Universal pre-k would cost roughly $100 billion over a decade. By contrast, loopholes in the estate tax have cost America $100 billion since 2000 — money that’s gone exclusively to very wealthy people.

Improving lower-income families’ access to quality education would give their children a better shot of raising their economic fortunes above what their parents could achieve. But increased generational mobility and better education for individuals would not necessarily mean decreased economic inequality on the whole unless it comes with other, even more ambitious changes to how the economic system distributes wealth.

If poor children suddenly had identical educational credentials to rich children but everyone was still competing for the same opportunities, receiving the same wages, and facing the same costs of living, that leveling of educational achievement would do little to raise the median quality of life. If the goal is to combat inequality, as education policy expert Matt Bruenig writes, “you need distributive institutions that actually generate a specific distributive result.”

Over the same three-decade time frame where the income gap yawned and the SAT scores of rich and poor children diverged even further, there was a structural shift in how the American economy distributes rewards. The ratio of CEO pay to worker pay, after standing steady at 20-to-1 for decades, jumped to 30-to-1 in the late 1980s. It had more than tripled to 100-to-1 by the early 1990s. By the time President Clinton left office at the height of the dot-com bubble it was roughly 400-to-1. After dipping during the recession, the CEO-to-worker pay gap has bounced back to today’s level of around 300-to-1. (Americans think the ratio is 30-to-1 and want it to be about 7-to-1.)

Business executives haven’t captured an ever-greater share of the economic pie on their own. They have had significant help from both business consultants who preach a false linkage between CEO pay and company performance and lawmakers who created tax incentives for companies to pay exorbitant, stock-driven salaries.

It is no mistake that the same political system that deadlocks over universal preschool has successfully produced laws that help the rich get richer. Congress is far more responsive to rich people’s concerns than to those of the poor, as study after study has shown.

The newest of these studies, while limited by its methodology and geographic scope, adds an interesting detail to the argument that American government is for the wealthy. The positive relationship between political engagement and income persists all the way up the earnings ladder, according to new research from a trio of Northwestern University academics. “You might expect the effects of money on political participation to level off after a certain threshold,” Wonkblog’s Christopher Ingram writes in describing the new study, but the very wealthiest sliver of the economy is in fact twice as likely to pay attention to politics, make political donations, and attend political events as those making between $75,000 and $150,000 a year. Even among those who earn over $150,000 but not enough to be members of the top 1 percent of earners, political participation is significantly lower than it is among the upper crust.