Poverty, Income Equality and a Legislative Roadmap

One of the persistent and pertinent questions of modern economic theory in our society these days is confronting income inequality. Many hold the prevailing view that income for people at the bottom and midlevel earning range has decreased, while income for the upper 20 percent of earners has increased. This is true but there is also some nuance to this issue. While some demographic subgroups have seen average incomes rise, what is occurring and has contributed to the income gap is that the rate of increase favors those with higher incomes. This leaves us with a dreadful wage disparity that exacerbates the gap between the haves and have nots in our country.

Proof? Households at the bottom four quintiles averaged a 16 percent increase in income from 1979 to 2011, according to the nonpartisan Congressional Budget Office. “The significant income increases occurred at the top, especially the top 1 percent, where labor and business income grew by more than 200 percent and 450 percent, respectively,” according to Aparna Mathur, a resident scholar in economic policy studies at the American Enterprise Institute, who writes about income inequality, mobility, labor markets and taxes.

Fixing this issue has to combine a policy framework that affords those who have the desire to move themselves forward with the skills and opportunities to do such. This framework, when aligned and adequately supervised, can create a path to higher earning potential through greater employment opportunities. It is also a surer path — and I say this frequently — to realizing our individual versions of the American Dream.

In that vein, the policy framework that I have proposed is geared towards enhancing our workforce development programs to close that income inequality gap. Here are some ideas for example:

  • Senate Bill 973 would establish a Talent Network Program in the Department of Labor and Workforce Development. This program would develop centralized sources of intelligence about workforce needs of the state’s key industries by building employer-driven partnerships. It would award a minimum of $2 million to develop a consortium of organizations (nonprofit, industry and post-secondary education) that would identify common skill gaps and workforce needs and commit to other actions that promote job opportunities and growth.

  • Senate Bill No. 1143 would utilize our tax code to incentivize small-business manufacturers, to make it easier for them to invest in manufacturing, equipment and workforce development. Only businesses with fewer than 50 employees and that are in good tax standing would be eligible for this incentive that helps both businesses and potential employees.

  • Senate Bill 1887 is especially important because it would give future employees a path to the crown jewel of education: completion and certification. This alone can often lift a job seeker from the pile of applicants when they can demonstrate a degree or certificate, signifying a specific skill set for New Jersey employers. It also shows completion and determination on the part of the student. To ensure that no one uses this approach for being a “permanent” student, eligible candidates would have to complete a career or technical education program within 12 months.

  • Senate Bill 3337 recognizes that technology and automation are reshaping our workforce and the skills necessary to secure and retain a job. As these factors play an ever increasing role in our society, our workforce and their skill sets will need to evolve with those changes. Therefore, investing in worker skills is an economic imperative as data tells us that employers are decreasing their investment in their workers. This initiative provides credits against the corporation business and gross income taxes for qualified employers that invest in human capital by providing certain job training or work education programs to their employees. The amount of the credit is 10 percent of the amount paid by the taxpayer for human capital investment in a privilege period or taxable year, up to a maximum credit of $2,000 per employee. “Human capital investment” is designed as amounts paid by a qualified employer for job training or work education programs offered in the State, and provided to an employee to improve the employee’s job skills or knowledge, and which results in the award of an industry-recognized credential to the employee upon successful completion.

All of these initiatives provide structure and programs for workforce development and enhancement. To put it more simply, it helps to increase their chances of finding a well-paying job. I believe that many less skilled individuals, given the opportunity and a roadmap for self-improvement, would welcome these proposals. While each initiative is somewhat different, their alignment is clear:  a realistic, workable and low-cost approach to providing our workforce with a pathway to more educational opportunity, greater job prospects and a chance to partake in the American dream.

That’s my take, what’s yours?


Showing 3 reactions

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  • Frank Friedman
    commented 2019-03-21 22:12:19 -0400
    An interesting set of bills, each coming at the issue of unfilled jobs and out-of-work Americans. Of course, matching is a key issue, but incentives are critical. I agree it is time for industry to put more skin in the game, but the free market will not solve our labor problems. We should have learned this lesson now, five or six times over.

    For the most part, corporations are just looking to make a profit and not so much to do good, and help others, while helping themselves. They would rather help themselves. The taxpayer alone does not have to foot the bill, but supporting training and education is a long-term proposition. We have to recognize that the requirements of job market are changing at an accelerated rate. Industry, from large to small, knows the education and skill it needs and larger companies do offer continual in-house training. But by itself these programs are not enough, and the proposed incentive bills could help.

    One more issue — it is very hard to train people who have poor basic skills — readin’, writin’, and ‘rithmetic. We can’t just throw money at our job market problems. We need to change our culture so that more folks will really believe that education and training are important as the building blocks for a robust economy, and citizens who understand that becoming productive members of society requires learning and re-learning.

    I suppose I could put it another way — while each of these ideas have merit, we can’t wait until high school or beyond to solve our workforce problems. We have to start at the beginning with our children. Kids who by the age of 4 or 5 are already lacking in the basic skills, and by-and-large doomed.

  • Marty
    commented 2019-03-21 18:38:29 -0400
    As usual government thinks they can fix all the worlds problems. I think you would benefit by reading some of Thomas Sowell’s books. How bout you figure out a way to make this God forsaken state more affordable and let the free market do it’s thing.
  • Paul Bryant
    commented 2019-03-21 15:51:36 -0400
    S-973 on its face appears to be redundant. Why is it that the taxpayer has to create a the labor force for industry. Why doesn’t industry invest in creating its own labor force. Here’s a thought ,the State and Industry can share the cost of this consortium. It’s time industry put some skin in the game.