Rising cost of living fuels inequality

October 19, 2012 at 10:39 am

Today, Progressive Pulse posted about a new report by the Center for Housing Policy and Center for Neighborhood Technology about the rapidly rising cost of housing and transportation. The study found that nationally, these costs increased by $1.75 for every $1 increase in household income between 2000 and 2010. Simply put, incomes were not keeping up with expenses. It also found that moderate-income households (those earning 50 to 100 percent of the median income in their area) spent 59 percent of their incomes on housing and transportation.

Also this week, the New York Times Economix blog reported on a paper out of Harvard University suggesting that the high cost of living contributes to the persistent and growing inequality that we blogged about on Wednesday. Low-wage workers are pushed out of the areas with the greatest economic opportunities because they cannot afford to live there. Instead, they are forced to seek jobs in areas that offer inferior wages and opportunities.

This was not always the case.

“The best places for low- and high-skilled workers used to be the same places: California, Maryland, New York,” said Peter Ganong, a doctoral student in economics, who wrote the paper with Daniel Shoag, a professor of public policy. “Now low-skilled workers can no longer afford to move to the high-wage places.”

To summarize, what we are seeing is growing income inequality and rising costs of housing and transportation, which are effectively prohibiting low-wage workers and families from accessing economic opportunity. This is not the path to a broadly shared, sustainable economic recovery. As the Economix blog says, “It doesn’t have to be this way.” Public policy can and must play a role in leveling the playing field for all workers.

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