The Politics of Poverty

Ideas and analysis from Oxfam America's policy experts

President Obama says inequality is “the defining challenge of our time”

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“A deficit of opportunity” is a greater threat than budget deficits, he says.

A month shy of the 50th anniversary of Lyndon Johnson’s declaration of “war on poverty,” President Obama today declared war on inequality, a subject long avoided in US political discourse. Calling growing socioeconomic inequality and declining social mobility “the defining challenge of our time,” the President minced no words in denouncing “an economy that is profoundly unequal” and a polity in which “people get the bad taste that the system is rigged” against all but the richest Americans. Inequality is not only immoral, but is bad for economic growth, bad for business, bad for families, and bad for social cohesion and trust, Obama said.

A waiter clears a table at Lafayette Coney Island restaurant in Detroit, Michigan, February 24, 2013. Photo: J.D. Pooley / Getty Images
A waiter clears a table at Lafayette Coney Island restaurant in Detroit, Michigan, February 24, 2013. Photo: J.D. Pooley / Getty Images

In an hour-long speech that was at once rhetorically rousing and buttressed by a host of grim economic statistics, Obama called for an increase in the minimum wage and other measures to help the tens of millions of Americans who “work their tails off and live at or barely above poverty.” With the federal minimum wage at $7.25 per hour and nearly a quarter of US workers earning less than $10 an hour, the President noted that pay and wealth disparities have soared since the 1970s; CEO pay is now 273 times that of the average worker, and the richest 1 percent now have 288 times the wealth of the median household.

Appealing to the 90 percent of Americans who have seen their real incomes fall since 2000, the President denounced the “myth” that inequality is a racial problem. Breaking the American taboo of talking about class, Obama squarely said that inequality and blocked social mobility are “now as much about class as about race.” He noted that disparities in social indicators ranging from educational outcomes to obesity are more pronounced between the rich and poor than between whites and minorities.

Obama said that inequality would be less of a problem if social mobility had not also decreased since the 1970s. “A deficit of opportunity” is a greater threat than budget deficits, he said, citing data that poor children are less likely to climb the economic ladder than their counterparts either in mid-20th-century America or present-day Western Europe. Saying that such trends “should offend all of us,” he declared.

We’re a better country than that.”

Obama also took aim at the conservative shibboleth that government is the enemy, saying that government is “us” and “should reflect our deepest values and commitments.” He cited Lincoln’s establishing land-grant colleges, Teddy Roosevelt’s trust-busting and support for the eight-hour day, the creation of Social Security and passage of strong labor laws under FDR, and Lyndon Johnson’s Medicare and Medicaid as examples that “government action time and again can create enormous opportunity.”

“Growth alone does not guarantee higher wages or incomes,” he said. Rather, concerted government action and “empowering our workers” are essential to reverse “decades-long shifts in the economy that have hurt all groups.”

Increasing the minimum wage to $10.10 per hour, as proposed in legislation introduced by Sen. Tom Harkin (D-IA) and Rep. George Miller (D-CA), would mean a raise for some 30 million working Americans. The President’s other policy prescriptions were also likely to energize the Democratic base. He called for universal preschool, greater investments in education and infrastructure, plugging corporate tax loopholes, a revamped retirement system, strengthening collective bargaining, and establishing “promise zones” to invigorate poor communities so that a child’s future is “not determined by the zip code he lives in.” Acknowledging that some anti-poverty policies have failed, he defended the Affordable Care Act as a policy that, over the long term, will reduce inequities in health care.

From Oxfam America’s report, “Hard Work, Hard Lives.”
From Oxfam America’s report, “Hard Work, Hard Lives.”

Just as government action can foster more equitably shared prosperity, Obama made it clear that growing inequality and stalled mobility haven’t just happened, the result of inexorable market forces. Much of the change has been due to deliberate policy choices that have hurt most Americans; Industries have been deregulated. Taxes on the wealthy have been slashed and tax loopholes have enabled many Fortune 500 companies to avoid paying any taxes whatsoever. The minimum wage has not been raised to keep pace with inflation and is now worth about 40 percent less than it was at its peak in 1968. Laws have made it harder for unions to organize.

It’s hard to see a frontal attack on inequality succeeding with a Republican-controlled House of Representatives and big-money lobbyists and political donors staunchly aligned against it. Yet, perhaps Obama’s speech will shift the ground at least a bit. Playing to public frustration with government, the President challenged Republicans to “tell us what you are for, not just what you are against.” Recent remarks by Paul Ryan (R-IL) and other Republicans suggest that the GOP recognizes a need to put forth some kind of opportunity agenda.

Whatever does or does not happen in Washington, inequality cannot be put back in the closet. As the President said, it affects all of us, Republicans and Democrats, and none of its effects are good.

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  1.  avatarSean Meaney

    Actually US citizens got about the equivalent of hundred pounds in minimum wage in 1945 convert that to its silver value in currency in florins and you could buy a sack of potatoes for three florins. Then they ripped the silver out of the currency and in doing so devalued Labour to less than twenty five percent of where it was. You can still buy that sack of potatoes for three florins of 95% coin silver but the four hundred pounds minimum wage is equal in silver to about ninety two thousand dollars $US. That would require a minimum wage raise to $45/ hour just to reach 1945 conditions.

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