^ Governor Baker chairing a policy working group early in his term. He will need to chair a lot more of these if he’s to take on income inequality in Massachusetts
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On Sunday I participated in a podcast whose topic was : income inequality, and what, if anything, should Governor Baker propose about it ? As the hosts, Jeffrey Semon and Ed Lyons, are both active Massachusetts Republicans, the appeal to Governor Baker was understandable. I am afraid that I set it back, a bit, by reminding Ed and Jeff that income spreads are a macro problem, that there is little that ANY Governor can do about it. Which does not mean that Baker cannot make a difference.
I’ll suggest later initiatives that I think Baker can commit to, if he likes. But first, let’s examine the inequality situation generally:
1.It does not exist everywhere. As I pointed out during the podcast, there’s isn’t much inequality in old-line, low cost cities like Fall River. There’s no hi-tech, very little of the gig economy; rents are one-fourth of Boston’s rate; food doesn’t cost much. Most workers earn enough to afford Fall River, and work of the physically demanding kind that Fall River people are used to keeps on coming : Amazon just opened a huge warehouse on the City’s northern border; at least 500 people will be hired, and Amazon pays well. You can’t outsource warehouse work, or delivery; Amazon’s Fall River jobs thus seem quite secure. And so it goes in a city where life is lived as if 50 to 100 years ago.
2.Income equality looms largest in the big cities becoming huge hubs of technology innovation. Boston is one such, maybe the prime example. The proximity to major post graduate education and research brings all manner of innovation enterprises into Boston; and innovation jobs pay extraordinarily well. How can they not ? Those who have the skills are few, compared to the demand; and the demand for advanced programming and engineering is growing fast. Meanwhile, Boston’s $ 150,000 to $ 500,000 technology earners — and the lawyers and financial people who work with them at equally high salaries — are peopling Downtown and neighborhoods close to Downtown, for a variety of irresistible reasons; and they are doing so amid service workers — including delivery people, janitors, backroom facilitators, data clerks, and call center support teams — who earn not much more than their predecessors earned 20, 30 years ago.
Every wants to “keep up with the Joneses,” and the service workers who easily socialize with the high earners — they’re of the same age group — are under huge pressure to live in the trendy neighborhoods, despite having scant income to pay the rent; to max out their credit cards on high-end clothes and shoes that the high earners can pay cash for; to buy $ 12 drinks at trendy bars; to flaunt the latest smartphone with an unlimited data plan; and to do all of this while paying, or deferring, huge student debt burdens. Service workers earning $ 12 to $ 17 an hour can’t really keep pace with geeks earning $ 150 k, but how can they not strive to do so ? Who wants to take oneself out of the social whirl ? Once you do that, you’re out forever, because, first, you’re not missed and second, those on the whirl dare not reach down to rescue you: social whirls don’t work that way. They’re ruthless at winnowing out, just like the television’s versions : think Project Runway or RuPaul’s Drag Race.
3.Eventually, however, most $ 12 to $ 17 an hour service workers do get winnowed out: by marriage if by nothing else, or by single motherhood, or simply by coming to the limits of one’s credit cards. (as recently as 2007, total consumer credit card debt comprised 20 percent of the ENTIRE national economy. It’s quite a bit less now, which is one reason why we have had slow economic growth.) And once a $ 12 to $ 17 an hour worker is winnowed out, life becomes a series of barriers, every one a payday crisis : paying parking tickets, or not being able to renew your car registration; paying the credit card or having it cancelled and your credit rating fouled; paying the electric bill, the cable TV bill, the cell phone bill (miss a payment, and, unlike with electricity, it gets shut off, no mercy), the car insurance, and on and on.
All of these, a $ 150,000 to $ 500,000 earner has no trouble paying; and lest you the low-income worker be cast out utterly, you pay for them too; because to lose communication with those living the prosperous life is to become almost irretrievably isolated. And powerless. As you find out when the first emergency hits — car repair, a tax lien, trip to the emergency room, the plumbing breaks — and there’s no money to pay for it, which means you have to borrow, if you can.
4.These are the social facts that make income inequality almost unbearable in 2016 America. Worse exists, too. Not every city is a huge innovation hub like Boston. Smaller, old industrial cities, especially in the “Rust Belt,” have seen jobs disappear even as rents and house prices remain high from when they were more or less prosperous. Or else house prices have fallen so low that a renovator can’t get his money back — and in any case, there are no new jobs coming, because the new jobs — and the service jobs that flock to them like bees to a hive — are all going to the innovation hubs.
5.Lastly, there’s the situation of immigrants, those with documents and those without. Immigrants are ready and willing to work the vilest jobs for the lowest, minimum wage pay, and they can survive in the big cities by doubling, tripling up in apartments which although overcrowded, are less so than the shacks and hovels they left behind. Still, though immigrants survive, they wield almost zero political clout. many officials, don;’t even know they exist. Theirs is almost entirely an aspirational life : but at least t.hey do, most of them, have firm aspirations. There is scant aspiration in the backwaters of formerly industrial places.
We also need to rethink the value of work. Service jobs are not going away, nor are the people who work them. Pay service workers enough so they’re not merely living paycheck to paycheck — enough to spend into the discretionary economy — and they will feel prouder of their job, and even elicit respect from those they serve. The health care cost of living a life of the margins cannot be a good thing for our economy or our social cohesion. Nor can the stress itself. Many low-wage workers have to work two jobs; how can that be any good for their families if they have one, or their health, or their work performance ? Pay workers enough so that they can do one job rather than two jobs less well. Besides : if a worker only has to work one job in order to live a decent life, the other job becomes available for somebody else who perhaps doesn’t have even one!
What to do about these matters ? It’s time now to propose stuff that Governor Baker might want to commit to. It isn’t much, because a Governor cannot create an entire economy. All that Baker can do is to tweak the momentum. Here’s a possible list :
1.commit capital funds to building as many units of rental and ownership housing as the state budget has money for. Baker has already begun to do this. If we cannot guarantee hourly age workers higher incomes, we can at least trim the demand over supply imbalance in this most basic of markets. This initiative assumes, of course, that NIMBYs do not nix the nearby construction of such housing.
2.He can sign onto the “Raise Up” campaign for a $ 15/hour minimum wage. (My own preference is for a two-zone minimum : $ 12 outside greater Boston, $ 18 within it) Not only would this move, teamed with big new housing construction, render low-wage workers’ lives economically freer, it would also transform many from recipients of an EITC (earned income tax credit) into taxpayers, thereby giving the State the additional revenue it needs to complete the MBTA’s $ 8 billion worth of”state of good repair” infrastructure obligations.
3.Baker understands the importance of education excellence in getting city graduates to the high-earning jobs. Lifting the charter school cap, which he supports, is a first step in assuring this. Closing the achievement gap between Caucasian and Asian students on the one hand and students of color on the other will at least assure an equal opportunity for high-salary employment. That said, assuring inner City students of an education escape route does nothing to boost the incomes of those who have to take service jobs. To this end, Baker’s Workforce Development department can ( 1 ) encourage employers to locate facioliti9es close by to where potential employees lived ( 2 ) support unionization of service industries such as home health aides, retail clerks, wait staff, and farm workers; and ( 3 ) join with Senators Warren and Markey as they seek legislation to reduce student debt burdens, even forgive them (as John Kasich made this an issue priority in his recent Presidential campaign, Baker need not be limited in this work by partisan considerations).
4.He can think outside the box when attracting business to locate in Massachusetts. Wooing and winning GE was a terrific coup, but GE fits the high-tech assumptions that rule us.What about crafts ? We already host a vast number of craft brewers — and have enacted legislation to make their distribution easier — and these provide quite a few highly skilled, well paid jobs. I would add high fashion to our craft portfolio. For example : right now, $ 1000 shoes (Louboutins cost that much, most of them bought with credit cards) are made in Northern Italy, by craftsmen who have inherited the craft from tens of generations past. Why can’t an entrepreneur from Boston, seeing the vast and growing market here for high-end luxury, go to Northern Italy and learn the craft ? That is what Francis Cabot Lowell did, in 1810, bringing back what he learned in English textile mills to build his revolutionary new factory in the city they soon named after him. Where is 2016’s Francis Cabot Lowell ?
^ $ 1000 Louboutins : you see them everywhere. Why not make them here ? At least why not a high end fashion craft industry here in Boston ? Extremely well paying jobs serving the even better paid folks who are driving everything’s prices
We do have Joseph Abboud, and his enormous factory in New Bedford. And we do have a large and growing “Fashion Week.” Why not a local Louboutin ? (we were once the world’s major shoe manufacturing region, after all.) After all : given how many high earners Boston now houses, does it not make sense to manufacture what they want right here, saving transportation and import costs ? Not to mention that craft jobs pay very, very well, as the income figures for Northern Italy attest. This is an initiative that Baker can get to without the slightest political cost.
Will Baker commit to any of these ? Has he his own income fairness agenda with perhaps other options to advocate ? I do no0t know. But I do know that his re-election campaign will benefit by getting out front on these difficult matters.
—- Mike Freedberg / Here and Sphere