The Most Dangerous Myth About the New Inequality

One can easily make the mistake of assuming that if everyone had more education, everyone would make more money. But that's just not true.
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In my post on Sunday, I took on one section of the lead article in this week's New York Times Magazine, "The Inequality Conundrum." But before it becomes last week's news, I need to get something off my chest. The piece repeats what is probably the most dangerous and widespread myth about the new inequality -- that education is the answer to the problems of the working poor. As the Times sums it up:


"Hamburger flippers simply don't command a high wage. We can pass laws to change that -- a minimum price for cheeseburgers, maybe -- or we can, finally, invest in teaching the flippers to do something else."

It's easy to see why this trap is so easy to fall into if you don't have an economics Ph.D. If you look at a chart of the average incomes of people by education level, you see it rises with each degree. Those with a high school diploma earn more on average than those without. Those with college degrees do better than those with high school diplomas and so on. The same trend continues for graduate and professional school. So you can see how one can easily make the mistake of assuming that if everyone had more education, everyone would make more money. But that's just not true.

There are lots of jobs for burger flippers not because there are lots of uneducated people who can't do other jobs. People don't flip burgers for a living because we have compassion on them and give them spatulas. There are lots of jobs for burger flippers because there's a high demand for burgers and because running a chain of restaurants that serve burgers is very profitable. (McDonald's stock recently hit an all-time high.)

In a world where everyone had a college degree, there would still be burger flippers -- they would just have college degrees too. The issue is not whether there will be burger flippers -- there will be as long as there is demand for burgers -- the issue is what burger flippers will get paid. And here we have a political question more than an economic question.

Burger flipping is a job that falls towards the bottom of the wage scale everywhere. The actual wage is determined largely by the minimum wage and whether or not burger flippers are able to effectively organize. The post-war U.S. economy was based on the principle that, with unions, working-class jobs could pay middle-class wages. And judging from McDonald's profit margins, that's still true. But to make that the reality in the U.S., we'd have to raise the minimum wage and reform our ineffectual labor laws.

In the U.K., the minimum wage is roughly twice ours -- about USD $10 an hour -- so their burger flippers get paid about twice what they do here (to say nothing of the fact that every British burger flipper and her children has health insurance). In many other European countries the minimum wage is even higher. And yet, those countries are still filled with burger flippers and McDonald's restaurants. And contrary to the Times' insinuation, their prices are not dramatically higher than our own. The American translation of Sweden's "8 Kronor Menu" would be the "$1.13 Menu" according to the latest exchange rate.

So let's have an honest debate. If you think burger flippers ought live in poverty, just say it. Be a proud conservative, a Social Darwinist, a libertarian. But don't pretend to care deeply about giving the working poor more education while being unwilling to give them a raise because, God forbid, it would tack 13 cents onto the Dollar Menu at McDonald's.

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