A couple of recent headlines that led to debates about income inequality obscure the roots of the problem and make it harder to consider potential solutions.
Stephen Curry recently signed a $201 million contract. Though he is considered one of the best basketball players on the planet – and a genuinely good person – many wondered if anyone is worth that much. At about the time he was signing his contract, University of Washington researchers were reporting that the minimum wage increase in Seattle, which began going up in 2014 and will reach $15 for large businesses next year, may be hurting low-income workers.
The Curry news generated talk about haves and have-nots, while the Seattle news led to more superficial debate about the minimum wage. Neither is productive. Some Americans will always make more than others. And the minimum wage is supposed to be a tool to provide more income to those on the bottom rungs of the economic ladder. If increasing the minimum wage makes things better for those most economically vulnerable, without unintended consequences, it should be embraced. If it displaces workers and harms business, it shouldn’t. That question hasn’t been settled.
Real drivers of economic inequality are a lot more complex and commonplace. We shouldn’t be determining how much Curry or any athlete should make. A question only arises when public dollars are used to underwrite professional leagues in which billionaires are employing millionaires. According to Fox Sports, taxpayers have provided nearly half the funds – more than $7 billion – used by NFL teams the past two decades to build or renovate stadiums. At least some of that money might be used to bridge the income divide with investments in things such as better-funded schools and more re-entry programs.
The federal government has tried to provide the working poor with adequate, affordable housing but frequently runs into opposition from Americans in the middle- and upper-middle class who balk at such housing being built near their neighborhoods. That has led to a retrenchment of inequality-inducing segregation and makes it harder for the poorest to attend the best schools and live on the safest streets. The mortgage interest deduction does something similar by pushing home prices artificially high, shutting out those on the margins, even though most of the benefit goes to the top.
Even the popular 529 college savings plan might contribute to the divide. Although surveys show that up to 70 percent of people participating in the plans make less than $150,000, about 90 percent of the benefits flows to the richest Americans. But when President Obama proposed swapping 529s out for tax credits that might be more evenly distributed, he relented in the face of backlash from progressives and conservatives of all income levels.
If we are really committed to solving inequality, we shouldn’t focus just on eye-popping NBA contracts or the minimum wage. We must be willing to scrutinize policies and practices that benefit the better-off while unintentionally hurting those less capable of fending for themselves.