A more progressive tax structure and expanding early childhood education opportunities could help address the income gap in Louisiana, according to LSU economist Jim Richardson.
After a period of growing income equality in the 1950s and 1960s, the nation’s wage gap has greatly accelerated since the late 1970s and is now at its highest, Richardson told the Rotary Club of Baton Rouge at its meeting today.
Company executives made about 20 times the amount of the average American worker in the post-World War II period. Today, that number has grown to a 350-to-1 ratio, Richardson said, adding the U.S. has the highest level of income inequality among developed nations. Louisiana has the fourth highest income inequality in the nation, according to the 2013 American Community Survey.
Richardson noted today that countries with the least income inequality, including a number of Scandinavian countries, tax incomes of the wealthy at a higher percentage than those of the poor. They also offer more social services and have higher overall employment rates, he says. But if policies in the U.S. were changed to reflect laws in those countries, they may not work as intended, Richardson acknowledges.
“It’s a part of tradition there, how they do things. If we do it here, it would be an enormous change all at once, and we can’t do it that fast.” Richardson said.
Another way to help close the wage gap, Richardson says, is to improve education in the lowest tax brackets with the goal to aid in upward mobility.
“The biggest bang for your buck is in those lower years” of early childhood, Richardson said.
One Rotarian challenged Richardson, saying the income gap is not on its own an accurate measure of whether the nation’s poorest are better or worse off today than they were five or six decades ago. Standard of living metrics should also be considered, which would show improvements for the poor. Richardson acknowledged that may be true, but he maintained the growing income gap is not sustainable and will eventually have a negative impact on the economy at large.
“As the pie gets bigger, the bigger share goes to one person, not everybody. How far can it go before it has negative implications?” Richardson said. —Kelly Connelly
