Will Inequality Ever Stop Growing?

Experts on the economy and the labor market offer their reasons for optimism and pessimism going into 2016.

Max Whittaker / Reuters / Zak Bickel / The Atlantic

For nearly half a century now, inequality in America has been on the rise. The result is an alarming concentration of wealth among the country’s very well-off: The 400 richest Americans own more than the poorest 61 percent—194 million people. Unsurprisingly, this stratification follows the country’s racial cleavages: Just two of the richest 400 people are black, and the 100 richest households own as much as the nation’s entire African American population combined.

Some argue that inequality per se is not inherently problematic. It is possible, after all, to imagine a society in which everyone is doing very well and lives comfortably, while those at the very top are in the stratosphere. Unfortunately, that is not what is going on. Some 47 million people in America are living in poverty.

We reached out to some of the leading scholars of and experts on the economy and labor markets, and asked them what, as the year comes to an end, is giving them cause for hope and despair. Below are their answers, lightly edited for length and clarity.

Shamus Khan, associate professor of sociology at Columbia University

Reason for despair: In 1968 the sociologist Robert Merton coined the phrase “The Matthew Effect,” drawing on a verse in the Gospel of Matthew: “For to all those who have, more will be given, and they will have an abundance; but from those who have nothing, even what they have will be taken away.” What makes me despair is how accurate this seems to be: Those who have a lot are getting more and more, and those without much are struggling, and perhaps even losing ground. The great promises of the 20th century—those of racial, gender, and class equality—have been ephemeral. Our schools are more segregated than they were in the ‘80s, the black-white wealth gap is growing, the black-white unemployment gap is what it was in 1963, and the incarceration rate of black men is historically unprecedented. If we look to women we see that they are closing the gender wage gap at a slower and slower rate; in fact, women’s wages have been largely stagnant for over a decade. What economic gains women are making are largely because men’s wages are declining. And finally, while for years worker productivity and wages ran in parallel, we today see that while Americans are more and more productive, they enjoy little to none of the benefits. Their wages are locked in place. The profit of this productivity is going somewhere, of course: to the very rich. The Matthew Effect is in full swing.

Reason for hope: A society without vigorous engagement is dead. There are people who are breathing life into our nation. They are in Ferguson, Baltimore, Minneapolis, Chicago, and other cities across the country, fighting for racial justice. They are students at Mizzou, Yale, and beyond, holding their own colleges accountable. Social activists everywhere are advocating for themselves, for their beliefs, and for the less powerful. This activism is not just about fighting for rights, dignity, and respect. It’s about building solidarity, engaging as a community, and asking critical questions of our institutions and our democracy. Some activism I passionately disagree with, but that such disagreement is possible and that people feel sufficiently empowered to advocate for themselves and others is a great reason for us to all hope.

Kathy Edin, professor of sociology at Johns Hopkins

Reason for despair: I think the most depressing thing that I've thought about this year is about the worsening plight of people at the very bottom of the income distribution across so many domains. A shredded safety net, increasingly perilous work, and the affordable-housing crisis have created a depth of poverty we didn't even think existed in America. And it's likely to have consequences for children both in the near-term and as they move into adolescence and adulthood. A disadvantage this deep is likely to cast a long shadow.

Reason for hope: The most optimistic thing I've been thinking about this year is something that is not new at all. Over 25 years ago, William Julius Wilson famously observed that it is far worse to grow up in a poor neighborhood than it is to grow poor among mixed-income neighbors. Raj Chetty and his colleagues’ recent research with young adults whose parents participated in a housing mobility program called Moving to Opportunity shows this powerfully. If we simply change neighborhood context—moving families with young children from neighborhoods that are about 60 percent poor to neighborhoods that are even only somewhat less poor on average—you can change lives.

Michael Posner, professor at NYU's Stern School of Business

Reason for despair: The greatest despair today is the abandonment of compassion for 60 million refugees and internally displaced people on our planet. These are among the most vulnerable people in our world; a majority are women and young children who are the victims of war and tyranny, violence, and persecution. And yet we are allowing the politics of fear to trump our historic sense of compassion, ignoring both our own personal roots and national traditions.

Reason for hope: In the last 35 years we have made huge strides in reducing extreme poverty, progress that is ongoing. In 1980, half the world's population was living below the extreme poverty line; that number has now fallen to 25 percent and continues to decline. A globalized economy has been the main driver, creating millions of new jobs in less developed countries.

Ed Goetz, director of the Center for Urban and Regional Affairs

Reason for despair: I despair for the growing levels of inequality in American cities, and the growing problems of affordability. We risk seeing our cities become the exclusive redoubt of the economic elite as rents and land prices push housing beyond the means of middle-class and working-class people, to say nothing of people of more limited means. Our greatest cities are already fantastically unaffordable to the majority of Americans. This is certainly a problem for the people who are increasingly excluded from living comfortably within cities, but it is also a problem for the cities themselves. Cities are great cultural achievements in their own right, the location of our greatest architectural statements, and home to most of our landmark civic and historical artifacts. They have been, historically, home to the full array of social, political, and cultural practices and ideas.

Reason for hope: Well, to be truthful, not much. The only hope lies with the energy and resilience of people fighting the fight for equitable urbanization, the development and preservation of affordable housing, and perhaps the potential recognition by decision-makers that cities should reflect our democratic principles (inclusion, participation, and self-determination) more so than our economic principles (accumulation, privatization, and profit).

Elizabeth Kneebone, fellow at the Brookings Institution

Reason for despair: Even after years of economic recovery, the number of people living below the poverty line in the United States (46.7 million as of 2014) remains stuck at recession-era record levels. Yet, by and large, resources have not grown to meet the scale of today’s need, nor have they kept up with its changing geography. While poverty rates remain higher in big cities and rural communities, the 2000s saw suburbs become home to the largest and fastest-growing poor population in the nation. Today the number of poor residents in suburbs outstrips the number in big cities by 3.4 million, and is double the size of the rural poor population. It is not that poverty has left inner cities or rural America. Instead it has spread to touch more people and places. However, programs and policies traditionally designed to alleviate poverty in distressed urban or rural neighborhoods (already stretched thin) often have not mapped easily onto the suburban landscape. And many suburban communities lack the scale, capacity, and resources necessary to effectively address growing poverty and concentrated disadvantage on their own.

Reason for hope: In the face of such a daunting and persistent challenge, what gives me hope are the innovative responses emerging in metropolitan areas across the country. Local and regional leaders are increasingly finding ways to work across jurisdictions and use limited resources to help more people in more places. One example of this kind of effort is Chicago’s Regional Housing Initiative (RHI), a collaboration among 10 housing authorities, including the city of Chicago, Cook County, and several suburban jurisdictions. Through RHI, partners are pooling resources to build affordable-housing options in areas of opportunity (neighborhoods with low poverty rates and access to good jobs and schools), and making it easier for housing-voucher holders to move across jurisdictions to take advantage of those options. As the need for affordable housing has grown in the suburbs, RHI has made it possible for suburban developments to receive subsidies even if the local housing authority lacks resources. At the same time, waiting-list families from every participating jurisdiction, including Chicago, benefit from a wider array of regional housing options. Collaborative models like RHI provide a roadmap for ways in which policy and practice can adapt to the broader reach of today’s need to help poor residents connect to opportunity in cities and suburbs alike.

Richard Kahlenberg, senior fellow at The Century Foundation and author of The Remedy: Class, Race, and Affirmative Action

Reason for despair: In K-12 and higher education, the biggest cause for despair is that while education is supposed to be the great equalizer, growing economic stratification is upending that aspiration. Low-income students attending middle-class schools are as much as two years ahead of low-income students in high-poverty schools, yet concentrations of school poverty are growing. The same phenomenon is occurring in higher education, where economically disadvantaged students are increasingly found in underfunded community colleges and students from the richest quarter of the population are overrepresented at selective four-year colleges by 45 percentage points.

Reason for hope: There is some reason for hope that new policies in 2016 will address increasing economic segregation in primary, secondary, and tertiary education. John King, the incoming U.S. Education Secretary, appears quite committed to addressing K-12 school segregation. And in higher education, a conservative U.S. Supreme Court decision curtailing the use of racial preferences could, paradoxically, lead to a liberal result: affirmative action based on economic status. In states where racial affirmative action has been banned by voters, new and better programs that focus on economically disadvantaged students have jumpstarted social mobility. In The New York Times’ College Access Index of universities doing the most for low-income students, nine of 10 leading public institutions are in states that banned the use of race in admissions, which spurred colleges to seek racial diversity through programs for economically disadvantaged students of all races.

Joseph M. Carbone, president and chief executive officer of The WorkPlace

Reason for despair: The most vexing of the many changes that remain from the Great Recession is a structural force that has diminished the American middle class in size, strength, and dreams. I worry that this force is so structural that it’s unstoppable and we may be powerless to control it. I’m sleepless thinking that our future may be one of sharply divided societies where the egocentric flourish and our brother’s keeper is simply an ancient platitude.

Reason for hope: My reason for hope is based upon my fundamental belief that most Americans want to do the right thing. In my effort to help the long-term unemployed find justice, I was always encouraged by the goodwill and the sense of duty that Americans demonstrated in support of their fellow citizens. I discovered that far more folks understand and appreciate the responsibilities of their citizenship than I ever imagined. Americans historically rise when our honor is threatened and we generally prevail. I’m hopeful we will do so again.