Politics & Policy

How the Right Can Make Inequality a Winning Issue

Job seekers at a job fair in Uniondale, N.Y., in 2014 (Shannon Stapleton/Reuters)
Conservatives can and must focus on struggling Americans’ lack of upward mobility.

The progressive Left cites inequality as the central scourge of American society; per Bernie Sanders, it is “the great moral issue of our time.” With midterm elections around the corner, we can expect to hear Democrats hammer the issue in campaign ads, at rallies, and on talk shows, advocating proposals such as free college tuition and Medicare-for-all. In the political square, progressives claim to “own” the inequality issue. But what they miss — and what the Right must seize upon — is that inequality is indelibly linked to a bigger problem, the lack of upward mobility. The Left offers regulatory and redistributive measures that often hurt the very people they are designed to help the most. The Right can no longer cede the issue and must offer a better path forward. Focusing on the lack of upward mobility would allow conservatives a fresh chance to sell the public on the free-market principles that remain the best way of improving all American lives.

No one questions that inequality exists and threatens our social stability. America’s richest 1 percent holds 40 percent of its wealth, more than is held by its poorest 90 percent. Anyone who has spent time in America’s biggest cities does not need to read the statistics. To take just one example, using the Gini coefficient as a measure of inequality, New York City would rank among the ten most unequal countries in the world if it were independent.

But here’s the catch: Inequality is not a problem so long as economic mobility exists and people at the bottom can still work hard to get ahead. In a free society, people rise by producing things of value to others. Yet in today’s America, too many obstacles inhibit people’s ability to produce and ultimately achieve their dreams. Occupational licensing provides the most obvious example: The Institute for Justice’s landmark 2012 study finds that 35 of 102 lower-income occupations require more than a year of education, training, and exams. Is there any reason why a cosmetologist in Oregon needs 2,300 hours of training to receive a state license? Fishermen (41 states require licenses), massage therapists (39), door-repair contractors (35), and auctioneers (33) all find themselves subject to similarly ridiculous red tape, generally erected under the guise of “protecting the public.” Life-saving EMTs require on average 33 days of training and apprenticeship nationwide, while athletic trainers require 44 times as much experience — 1,460 days — in the 46 states where they are regulated.

Unreasonable requirements prevent self-starters from becoming job creators. This system disproportionately harms the mobility of disadvantaged minorities, anyone without a college degree, and ex-offenders trying to re-enter society — all groups for whom the Left purports to speak. What’s more, these regulations are promulgated with the consent of industry incumbents whose primary motivation is to keep out competitors. This is a rigged system.

Meanwhile, in inner cities, teachers unions and their progressive allies continue to demonize charter schools, even when those schools are proven to produce better or comparable outcomes for low-income and minority children. What could be more critical to one’s economic mobility than childhood education? Why can’t parents have an alternative to the local public school if they feel that their children aren’t being properly educated? The workplace protections and benefits packages of unionized teachers shouldn’t supersede the future prospects of the disadvantaged kids they’re charged with educating. This, too, is a rigged system, even more tragically so because children are the ones hurt by it.

Conservatives can and must rebrand themselves as champions of upward mobility and the working poor by removing existing regulations and supporting free-market policies that help people get ahead.

Another area where the Left inhibits mobility is in the constant push of lower-income Americans toward college. This sounds paradoxical, because college is widely assumed to be a stepping-stone to middle-class life. But progressive efforts to tackle college affordability through low-cost loans have served to grow the student-loan bubble to an insane $1.5 trillion, more than double what it was in 2007. The bubble has fueled the soaring tuition-growth rate, which is now more than double the inflation rate, guaranteeing the need for ever-larger loans going forward, and penalizing students of all income levels in the process. Worst of all, it has decreased the value of a college degree. Employers that used to require only a high-school diploma are now at liberty to demand a bachelor’s degree, to the point where a master’s degree has become the new bachelor’s. Mobility is stunted when lower-income students are burdened with large amounts of debt that they are unable to discharge in bankruptcy, all in the name of a degree that is not worth very much. While certainly some individuals’ chances of future success can improve with college, a broad pro-college policy will never produce sustainable long-term mobility for America’s poor. Alternative vocational training and a general deemphasis on college must be part of the solution.

The Left’s failed efforts to address inequality extend to labor and housing policy as well. Many cities and states have adopted a $15 (or thereabouts) minimum wage. This legislation, enacted expressly for the purpose of closing the inequality gap, puts the entire burden of imposing progressives’ social agenda on the backs of small businesses. Bodegas, dry cleaners, restaurants, and the other urban enterprises that employ most low-wage workers are acutely vulnerable to minimum-wage hikes. Such small, labor-intensive businesses tend to operate on the thinnest of margins and are often owned by minority or immigrant entrepreneurs and families trying to reach middle-class status. A study of the first-year impact of Seattle’s hike showed that minimum-wage workers were suffering, having their hours reduced or being replaced by higher-skilled folks who could produce more for less.

In New York City, policies of rent control and its more recent cousin rent stabilization, designed with the intention of helping the poor and reducing inequality, have had the opposite effect. Rent control has for decades incentivized New Yorkers to hold on to their apartments as long as possible, thereby removing the natural fluidity and downsizing found in the unregulated market. Rent stabilization, which today covers half of the city’s apartments, means that a public agency decides how much rents can rise. The effective removal of 1.1 million housing units from the free market has driven housing costs skyward for everyone else, directly contributing to New York’s famously high cost of living as the city’s once-thriving middle class heads for the exits. Without these restrictions, we would see lower average rents overall due to greater apartment supply, more fluidity — including incentives for the working poor to move to lower-cost satellite cities in the region (Newark, New Haven, etc.) where jobs are plentiful but their dollar would go farther — and higher private-sector wages. Frustrated landlords are then forced to cut corners by deferring maintenance, hurting low-income tenants. Everyone loses.

Occupational licensing, public education, college tuition, labor, and housing are just some of the areas in which short-sighted policies that purport to tackle income inequality actually serve to exacerbate it. It is high time that conservatives point out the folly of such policies, forcefully exposing the Left’s more-of-the-same solutions on inequality. Conservatives can and must rebrand themselves as champions of upward mobility and the working poor by removing existing regulations and supporting free-market policies that help people get ahead.

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Jay Hallen, CFA is a writer and banking-industry professional based in Washington, D.C.

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