The great divide of income inequality

April 17, 2014

By Marc H. Morial

“Income inequality” has become the political buzzword of 2014. Most recently, in his State of the Union address, President Obama made it a central theme of his second term.
Both progressive Democrats and conservative Republicans in Congress are making the issue a focus of this year’s mid-term elections, and leading voices for human rights have called on government and business leaders to take immediate action to close the income gap for the sake of long-term economic and social stability.
As leaders from government, business and NGO sectors around the world gathered in Davos for the World Economic Forum’s annual meeting, the issue of inequality was atop the agenda. The organization’s “Global Risks 2014” report recently revealed that the “chronic gap between the incomes of the richest and poorest citizens is seen as the risk that is most likely to cause serious damage globally in the coming decade.”
Another voice was added to the chorus when the British-based anti-poverty organization Oxfam International released a report in advance of the Davos gathering revealing that the richest 85 people in the world control as much wealth as the bottom half of the global population, or about 3.5 billion people.
“It is staggering that in the 21st century, half of the world’s population own no more than a tiny elite whose numbers could all sit comfortably in a single train carriage,” Oxfam Executive Director Winnie Byanyima said. “Widening inequality is creating a vicious circle where wealth and power are increasingly concentrated in the hands of a few, leaving the rest of us to fight over crumbs from the top table.”
According to the same report, the gap between rich and poor in the U.S. has grown at a faster rate than any other developed country; the richest 1 percent of Americans have received 95 percent of the wealth created following the economic crisis in 2009, while the bottom 90 percent of Americans have become poorer.
While both sides of the political ping-pong table in the United States are focused on the domestic crisis and implications of this global problem, there are disturbing signs that the issue may fall prey to the same kind of ideological posturing that has stymied recent efforts to create jobs, reduce unemployment, raise the minimum wage and help the long-term unemployed.
In fact, as reported by CNNMoney, almost two-thirds of the delegates surveyed during a debate in Davos said that the widening gap, or what I call “The Great Divide,” between rich and poor is having a corrosive effect on U.S. politics.
For example, Sen. Marco Rubio (R-Fla.) saw the problem not as one of income inequality but of “opportunity inequality” and continues to resist efforts to raise the minimum wage. To be clear, opportunity inequality is alive and thriving in America; but any attempts to separate it from income inequality are derivative and lacking recognition of the correlation between the two.

During a recent visit to Detroit, where unemployment has been above 15 percent for more than a year, Sen. Rand Paul (R-Ky.) said that it would be a “disservice” to the jobless to extend their unemployment benefits beyond the current limit.
Further, Paul Ryan, another potential presidential candidate, has traveled the country declaring how the government safety net—programs such as Social Security, Medicare and Head Start—has “failed miserably.”
In contrast, President Obama has warned that “The combined trends of increased inequality and decreasing mobility pose a fundamental threat to the American dream, our way of life and what we stand for around the globe.” He has called for an increase in the minimum wage—a move the National Urban League has been pushing since 2006—and an extension of unemployment benefits as first steps in addressing the problem. On Jan. 9, he announced the creation of five “Promise Zones,” in San Antonio, Philadelphia, Los Angeles, southeastern Kentucky and the Choctaw Nation of Oklahoma that will receive targeted government tax incentives to create jobs and reduce unemployment.
In a message to the Davos attendees, Pope Francis said that “the growth of equality demands something more than economic growth, even though it presupposes it… It also calls for decisions, mechanisms and processes directed to a better distribution of wealth, the creation of sources of employment and an integral promotion of the poor which goes beyond a simple welfare mentality.
“I am convinced that, from such an openness to the transcendent, a new political and business mentality can take shape, one capable of guiding all economic and financial activity within the horizon of an ethical approach which is truly humane,” the pope said.
The need is clear. The Urban League has raised this issue constantly over the last several years, and people are finally listening. We must not let the seriousness and urgency of this problem get caught in the crossfire of ideological warfare. Americans need policy solutions developed in partnership with corporate, government and non-profit leaders—now. Awareness is good, but action is better.

Marc H. Morial, former mayor of New Orleans, is president and CEO of the National Urban League.