USA: Have and have not's: There's a large group of Americans missing out on the American dream

There’s a growing tendency for mainstream economists, including several of those at the Federal Reserve, to dismiss all income disparities as the product of a skills- or education gap, a misleading explanation given weak wage growth that points to ongoing weakness in the job market. 
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So it was relieving to see, tucked in the US central bank’s latest semi-annual report to Congress on monetary policy, an analysis of recent inequality research that refutes the idea that education is the only factor behind income inequality. Race, unsurprisingly, also plays a major role, as do social and economic measures, including taxation, interest rates, and labor policies. The Fed states:

“The persistent gaps in economic outcomes by race and ethnicity in the United States raise important questions about how people ascend the economic ladder. Education, particularly a college degree, is often seen as a path to improved economic opportunities.

“However, while education continues to be an important determinant of whether one can climb the economic ladder, sizable differences in economic outcomes across race and ethnicity remain even after controlling for educational attainment. Data on earnings for two cohorts of young adult workers (aged 25 to 34) approximately a generation apart confirm both the gaps in economic outcomes and the lack of substantial upward progress for disadvantaged groups over the past quarter-century.”

Foto: source Federal Reserve 

“Overall, the representation of black and Hispanic workers in the top earnings quartile continues to lag in the later period,” the report adds.

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