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By: Nathaniel Greene, Community and Culture Reporter

In a rapidly evolving economic landscape, the question of whether the American Dream is still attainable for most people has become more pressing than ever. A recent briefing hosted by Ethnic Media Services on June 21 brought together experts to dissect the complex interplay of factors affecting economic mobility and income inequality in the United States.

Income inequality continues to rise in the U.S., with the top 10% earning above $150,000 annually and possessing over $1 million in assets, while low-income families earn an average of $31,000 per year with negligible assets. Key drivers of persistent wage gaps include gender and race, with gig economy workers—predominantly immigrants—earning as little as $7 per hour. Intergenerational mobility, crucial for wealth accumulation, has decreased over the past four decades, raising concerns that technological advancements might widen the wage gaps further.

The Triple Threat of Wage Gaps

Dr. Michelle Holder, Associate Professor of Economics at John Jay College, City University of New York, emphasized that wage gaps in the U.S. labor market are manifested in three primary ways: differential pay for workers of the same ability, unemployment rate disparities by demographic group, and occupational crowding.

“For every dollar men earn in this country, women on average at the median earn 84 cents,” she highlighted. According to Dr. Holder, women are often crowded into lower-wage occupations and face discrimination even when possessing comparable skills, education, and experience as their male counterparts.

Dr. Holder also pointed out the racial wage gap, noting, “For every dollar white workers working full-time earn in this country, Black workers earn 81 cents.” She also emphasized that Black workers are overrepresented in lower-wage occupations and face persistent discrimination, which contributes to the wage gap.

The Plight of Gig Workers

Dr. Michael Reich, Professor of Economics and Chair of the Center on Wage and Employment Dynamics at the University of California at Berkeley, delved into the gig economy’s impact on income inequality. He revealed that gig workers, predominantly drivers for companies like Uber and Lyft, face significant financial challenges.

“Drivers usually spend about 30% of their shift time waiting for the next ride or delivery request, time for which they are not paid,” Dr. Reich explained.

This unpaid time, combined with expenses for vehicle maintenance and lack of employee benefits, results in gig workers earning significantly less than the minimum wage in many areas.

The Role of Policy in Addressing Inequality

Dr. Heidi Shierholz, President of the Economic Policy Institute, stressed the importance of policy in addressing wage growth and inequality. She argued that fears about AI and automation should not distract from the fundamental issues plaguing the labor market.

“The key worry I have about the impact of AI on the labor market is honestly how much attention concerns about AI are diverting from efforts to tackle the underlying causes of the problems that have plagued working people for most of the past 45 years,” Dr. Shierholz stated.

She emphasized the need for strong unions, robust social insurance, and full employment policies to bolster workers’ leverage in the labor market. Dr. Shierholz highlighted that policies designed to ensure equitable benefits from technological advancements can help mitigate potential negative impacts on job quality and wages.

The Decline of Intergenerational Mobility

Dr. Austin Clemens, Senior Fellow at the Washington Center for Equitable Growth, discussed the decline of intergenerational mobility, a key driver of wealth accumulation. He noted that children born in the 1940s and 1950s had a 90% chance of earning more than their parents, while only 50% of children born in the 1980s can expect the same.

“The drop in absolute mobility is largely due to rising inequality,” Dr. Clemens explained. He pointed out that economic growth has been concentrated in high-wage professions, leaving blue-collar workers with stagnant wages.

Dr. Clemens also highlighted that immigrants often exhibit higher upward mobility compared to native-born citizens due to strategic choices in their migration destinations, which typically offer better job prospects and educational opportunities.

The American Dream as a Policy Choice

The panelists unanimously agreed that the American Dream is not entirely lost, but its attainment is increasingly a matter of policy choice. Dr. Holder, Dr. Reich, Dr. Shierholz, and Dr. Clemens all stressed the need for targeted policies to address income inequality, improve wage growth, and enhance intergenerational mobility. As Dr. Shierholz succinctly put it, “It’s a policy choice whether we do that or not.”