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Turning to Banks and Businesses to Raise Incomes

November 7, 2014
Plain English Version

childrens-bank-accountsIncome inequality is the difference between those who earn the most money and those who earn the least money. The gap has been slowly growing in the United States.

New studies are looking at what is happening and why.

The safety nets of food stamps, unemployment benefits, health care and housing programs are working to keep things from getting worse. That is a good thing. Reformers will always think more can and should be done.

Most studies say a raise in the minimum wage will help. A fairer tax system would be a big help. But where will the big and doable changes come from?

Analysts are saying they must come from the private sector.

For example, in programs around the country, banks are and local governments are working together.

One idea is to open bank accounts for the education of children when they start school. Children’s Saving Accounts may start with $50 or $100 from the government. Another initiative matches deposits made by families with funds from the private sector. More than 100 cities are trying these new ways to promote education.

Studies show there is broad support for these kinds of programs in red and blue states. More importantly, they show that children in the programs do better in school. Families become more invested in schooling for their young.

Turning back to the big picture. If wages are too low to support a family, what is to be done? Most people are against the government spending more to raise incomes. And most people do not believe low-wage workers can raise their salaries by themselves. Stronger trade unions would help.

Experts point out that trying to redistribute income has not made much of a difference. An economist said, “We have a better shot at doing something with changes in corporate governance than with direct redistribution.”

What is the answer? The answer is that the business sector must do more.

Sources: The New York Times October 7, 2014 and The New York Times November 5, 2014

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