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29 January
2014

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Mr. President: To Reduce Inequality, Good Job Creation Is a Must


Sabina Dewan and Greg Randolph

This piece was originally published by Huffington Post.


President Obama’s primary objective for the sixth year of his presidency was laid bare on Tuesday night: Fight the insidious scourge of inequality in the United States, which has now reached levels unseen since the Gilded Age.

Obama’s goal is the right one. Inequality endangers democratic institutions, limits economic mobility, and — as recent research has shown — can be damaging to economic growth. The most sustainable and reliable approach to stemming high levels of inequality is promoting the creation of high-quality jobs.

Why? Because unemployment, especially the shortage of high-quality jobs, is a main driver of inequality. Long-term unemployment leads to an erosion of skills, diminishing wage prospects and economic mobility, fueling inequality.

As Jared Bernstein and Dean Baker note in their new book: “When more people get hired it disproportionately benefits those in the bottom half and especially the bottom fifth of the income distribution.” A study on income inequality in the world’s industrialized nations by the Organization of Economic Co-operation and Development confirms: “Growing employment may contribute to sustainable cuts in income inequality, provided the employment gains occur in jobs that offer career prospects. Policies for more and better jobs are more important than ever.”

We must put policymaking and legislative muscle behind good job creation. As the president himself noted in the State of the Union address, “The cold, hard fact is that even in the midst of recovery, too many Americans are working more than ever just to get by; let alone to get ahead. And too many still aren’t working at all.”

Job creation hinges on policies that provide the right hiring incentives, create public jobs through investing in the nation’s crumbling infrastructure, support the growth of small and medium enterprises, and tap into consumption outside our borders. Further, we must explore innovative approaches to stemming long-term unemployment by examining the merits of a relocation subsidy.

Other proposed measures, like extending unemployment benefits and raising the minimum wage, are also important and viable measures to reduce inequality. But they won’t have the same long-term impact as stimulating the creation of good jobs. One must first have a job to benefit from a minimum wage. And raising the minimum wage will primarily impact workers in low-paying service sector jobs — where the lack of skill development impedes upward mobility. Unemployment benefits aren’t the preferred long-term solution according to anyone — not to those on the right or the left, and not to the unemployed workers who need them.

In fact, creating high-paying jobs is one of the few policy objectives that can unite the right and left. It will inarguably address one of the left’s rallying cries — income inequality — but also speak to the right’s concern with waning economic growth. Putting more people in good jobs will increase aggregate demand for goods and services, boost the housing market, and generate more dynamic and sustainable economic growth.

President Obama’s long-term impact on economic inequality will be measured not by the increase in minimum wage or the extension of unemployment benefits. Instead, future generations will judge whether Obama’s agenda renewed the promise of just jobs for all hard-working Americans.

About the Authors

Greg Randolph is Deputy Director and Sabina Dewan is President and Executive Director of JustJobs Network.


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