Income Inequality Tears the Social Fabric and Undermines School Achievement

Inequality, Unbelievably, Gets Worse,” declared Steven Rattner two weeks ago on the op ed pages of the NY Times.  He points to data released by the Federal Reserve documenting that, “Inflation-adjusted earnings of the bottom 90 percent of Americans fell between 2010 and 2013, with those near the bottom dropping the most.  Meanwhile, incomes in the top decile rose.”  Rattner attributes much of the problem to our tax laws: “And income taxes for the highest-earning Americans have fallen sharply, contributing meaningfully to the income inequality problem.  In 1995, the 400 taxpayers with the biggest incomes paid an average of 30 percent in taxes; by 2009, the tax rate of those Americans had dropped to 20 percent.

Rattner worries that dropping tax rates on the citizens with the greatest capacity to pay are tearing the fabric of our society: “Lower taxes means less for government to spend on programs to help those near the bottom… The United States, which is the only developed country without a national paid parental leave policy, also has no mandated paid holidays or annual vacation; in Europe, workers are guaranteed at least 20 days and as many as 35 days of paid leave.”  Rattner notes that even the International Monetary Fund has “suggested that a more equal distribution of income could… raise the growth rate because of the added access to education, health care and other opportunities.”

When people with the means to pay taxes are excused from that civic responsibility it does mean less spent on public education.  As the Center on Budget and Policy Priorities continues to remind us, 30 states are, in inflation-adjusted dollars, still spending less on public schools than before the 2008 recession.  There is also substantial evidence that the growing divide between families with means and those in dire need is affecting public school achievement in other ways.

For one thing residential housing patterns track the growing income divide.  Stanford University sociologist Sean Reardon, who studies housing segregation, has documented that by 2009 the proportion of families in major metropolitan areas living in either very poor or very affluent neighborhoods had increased—to 33 percent (from 15 percent in 1970) and the proportion of families living in middle income neighborhoods had declined to 42 percent in 2009 (from 65 percent in 1970), with increased segregation at both ends of the income distribution.  Both high-and low-income families became increasingly residentially isolated in the 2000s, resulting in greater polarization of neighborhoods by income.  The strongest trend is the increasing residential isolation of the rich.

Reardon has also demonstrated  that along with growing residential inequality is a rapidly growing income-inequality school achievement gap between the children in richest ten percent and the children in the poorest ten percent, a gap that is 30-40 percent wider among children born in 2001 than those born in 1975.  Today the income inequality achievement gap is twice as large as the black-white achievement gap.  Greg Duncan and Richard Murnane, who have studied the educational consequences of income inequality add that, “Among children growing up in relatively affluent families, the four-year college graduation rate of those who were teenagers in the mid-1990s was 18 percentage points higher than the rate for those who were teenagers in the late 1970s.  In contrast, among children from low-income families, the graduation rate was only 4 percentage points higher for the later cohort than for the earlier one.”  Duncan and Murnane conclude: “By widening the gap in educational opportunities between children from low-and higher-income families, increasing income inequality jeopardizes the upward socioeconomic mobility that has long held our pluralistic democracy together.  Improving educational outcomes for children growing up in low-income families is therefore critical to the national’s future and requires a combination of policies that support low-income families and measures to improve the quality of schools that low-income children attend.”

In a Thanksgiving message on his blog at Chicago Theological Seminary the Rev. John Thomas, retired general minister and president of the United Church of Christ, lists some of the economic policies that have contributed to growing inequality and that could be adjusted to help those struggling at the bottom of our economy:  “The list of sins is long: Trade policy that moved jobs out of the U.S., refusal to raise the minimum wage to a living wage, deregulation of financial institutions that led, in significant measure, to the Great Recession, stripping rights from public employee unions and scaling back benefits of retirees to pay for the misdeeds of politicians who grossly underfunded pensions, the refusal of policy makers to provide adequate job stimulus or address the housing foreclosure crisis while bailing out large financial institutions, the explosive growth of the influence of money in politics…, the radical inequality of public school funding, tax codes that benefit investors over wage earners, corporations over individuals, the refusal of many states to expand Medicaid, and the continuing assault on the Affordable Care Act…  The descent of the working class into near or complete poverty is no accident.  It is willful policy and willful indifference—private and governmental—and as its corrosive effects creep across our economy the health of our democratic society is increasingly challenged.”