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What we can do about income inequality

A new Brookings Institution study points to a 'permanent' inequality of income in the US, mainly because workers haven't adapted to rapid technological change. Reducing this underclass starts with workers themselves.

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Justin Bredeau tries out a Sony 3-D personal viewer at the Consumer Electronics Show in Las Vegas last January. As mid-skill, mid-pay jobs disappear, a growing number of technologists and economists wonder if middle-class jobs will return when the economy recovers, or are they lost forever because of the advance of technology.

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One of the most head-scratching questions among American economists these days is this: With unprecedented opportunities to expand one’s skills, knowledge, and even character, why has inequality in income gone up?

Why aren’t the many new pathways for self-improvement – online education, for example – liberating almost all workers?

A new study from the Brookings Institution begins to crack this hard nut. It not only suggests that a decades-long rise in inequality has become “permanent” for many workers but that the rapid change in technologies is probably the main driver. A lasting underclass of workers simply isn’t keeping up with the new types of jobs.

The study is unusual for its hard data. It relied on the tax returns of thousands of male workers between 1987 and 2009. Men were the focus because they accounted for 54 percent of household income compared with 26 percent from women. And today’s strong workplace bias toward higher levels of skills has hit men harder than women, in both factory jobs and, increasingly, desk jobs.

The study’s results point to the need to motivate people toward broadening their view of their own potential to advance in new careers. A more dynamic marketplace that destroys and creates jobs at a faster clip requires a more dynamic development of individuals in reinventing themselves.

The usual supports for such change – family upbringing, government programs, teachers, and mentors – can only do so much to reduce barriers, calm fears of insecurity, and open opportunities. Given the pace of change, the burden lies increasingly on individuals themselves to align to new types – and styles – of work.

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