The grand jury decision announced in Ferguson resulted in protests and looting that has the nation on edge this morning. While the initial media focus will be on racial aspects of the decision and reactions, there’s an underlying issue that will expand into a national narrative that’s already got a full wind in its sails. The spread of wealth or income inequality dominates the political scene around the world (see Hong Kong or ask Mitt Romney) and Ferguson will be a major part the conversation during the 2016 election.
Beyond the politics, however, is real life. In the greatest country in the world, there are opportunities to change the arc of one’s life. The problem is it doesn’t happen overnight. People have consumed too many Hallmark movies or think getting rich quick with or without talent is a birthright. In some cases, the game plan has to be to live a life that makes our children’s lives better. Sacrifices in a time of largess where everyone aspires to wear the latest fashion, even if it’s out of their income reach, is a key component of America that’s fading (more so than religion, marriage and forming families).
On that note, there are several trends dating back to 1984 that underscore why the rich stay rich and the poor must make sacrifices to get out of their condition.
Since 1984, income for the bottom 20% of earners has actually grown the fastest versus other quintiles and layer in all the assortments of goodies like earned income tax credits, federal and state benefits and the “poor” aren’t the same as they were in the past.
Yet homeownership has actually declined in this income bracket.
The family home has been a source of economic freedom for generations. It’s how parents got their children into college, and later, it helped them start a business. Instead, the poor are renting more, getting sucked into a trap of plowing more hard earned cash into shelter without any gains of equity.
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| How the Poor Stay Poor Income & Rent 1984 to 2012 | |
| Income | +215% |
| Rent | +295% |
Then there’s the ultimate investment- education. Gone are the days of heading to the big city for a factory job that pays big money. There are still great blue collar jobs, but even those require special skillsets. But the longer term is all about knowledge- the kind gained in college. The kind gained in good schools before going to college. Since 1984, the highest quintile has seen its spending (investment) in education surge by 526%. Nepotism, cronyism and Fed policy are great if you’re rich, but to keep the family fortune in the family, it has to be handed over to prepared heirs.
| How the Poor Stay Poor Spending on Education 1984 to 2012 | |
| Bottom Quintile | $628 +86% |
| Highest Quintile | $3,399 +526% |
Sadly, the folks that are going to stoke the flames of anger and beat the drums of income inequality are the same folks that have given us horrendous public school systems, and run cities and states where despair has actually gotten worse, not better.
After the looting is over and the ashes of former buildings are swept away, Ferguson will stand as a microcosm of an America that’s becoming more of a reality for too many. The thing is all the things that made the nation great are there to allow any person to change their own fortunes or that of their children. If you’re poor and tired of this stuff, don’t buy yourself a LV bag or your children Nike sneakers… put that money in the bank, and later even the market, and read to your children every night.
There are paths out of poverty, and hopelessness isn’t the only choice for many Americans, even if it’s advertised as the only choice.
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