A New Direction for American Economic Policy

Americans with a college degree are generally okay. Their unemployment rate is 4.3% and average incomes are above $60,000 per year. There are many help-wanted signs for talented computer programmers, engineers, and other high-skilled workers. Americans with a high-school diploma or less are falling into poverty, with unemployment of 10% and incomes averaging less than $30,000 per year. For these workers, the only help-wanted signs are for dead-end jobs that lead to poverty.

What is surprising and distressing is how few young people are finishing a four-year degree or an equivalent path to high job skills. The proportion of young people achieving a bachelor’s degree has peaked at around 40%. Many more try college, but ended up dropping out because they can’t meet tuitions and can’t afford to be out of the labor market for the period of college study.

With America at the brink of financial collapse and class war, it is time for all sides to follow a new direction: a long-term effort to invest in skills and twenty-first-century infrastructure, paid for by increased taxes paid by cash-rich multinational companies, high net-worth individuals, and polluting industries. Rather than creating low-skilled and temporary jobs for our kids, we should be helping kids to stay in school until they have the skills to compete effectively in the new global economy.

The money to pay for this expanded effort can come largely from the top of the income distribution. The top 1% of households took home 10% of household income in 1980 but now take home roughly 23%. Along with this remarkable surge in income after 1980 came tax cuts and increasingly easy access of the rich to offshore tax havens.

It’s time we insist that the rich do their part to help rescue America from decline. The tradeoff for America comes to this: fewer mega-yachts and other luxuries for the rich, and millions better educated children and young workers for society as a whole. America will recover when all Americans, especially those at the top of the heap, pay the price of civilization.

The entire article by Jeffrey Sachs