Systemic Changes To Address Racial Inequality – Part 3 Education and Employment

Education and Employment go hand in hand.  The best way to make gains in equality is to start at the beginning.  Literacy rates and high school graduation rates are strong indicators of future success.  What’s more is we know how to solve a good chunk of these problems and the cost is very little.  When it comes to employment there are a lot of problems that we can fix simply by changing laws that will cost us as a country nothing to do.  We should take these actions immediately.

Education Reform:

Literacy: In 2020 we should not have to talk about literacy rate in America being a problem. Our schools are failing us, and failing Black children in particular. In Washington DC only 30% of 4th grade students read at grade level, in Baltimore it’s only 13%.  Nationwide 56% of white 4th graders read below grade level while 86% of Black 4th graders read below grade level.  Another study of 4th grade boys found an even worse rate, 42% of white students and 14% of black students read at or above their grade level.  Our school system and our society are failing us.  Two major factors that affect literacy rate are fatherless homes and living in economic poverty.  If both of those issues are greatly improved, then literacy will follow.  We need our schools and our parents to be focused on not just having kids reading, but finding books that are engaging and identifiable for the students. Bringing fathers back into Black homes will make a major improvement in this gap.

One of the largest factors in long term reading level is kids having books in the home and being exposed to reading books prior to the start of school.  A great program that helps with this is the Dolly Parton Imagination Library.  My Sister in Law signed her kids up for this program and every month they were sent a new book in the mail until they started Kindergarten.  The average middle income home has 13 books per child, the average poor income neighborhood has 1 book per 300 children.  This statistic floored me. The Dolly Parton Imagination Library is a great source of age appropriate books for these kids at no cost. For community support organizations that facilitate her program on the local level the wholesale cost per book is $2.10 each.  $25 a year to make a major impact in the literacy of a child is a great investment.  I encourage anyone reading this to consider donating to their local organization that facilities these book deliveries.  I grew up in a middle income house with literally thousands of books.  I had over a hundred books in my room (and so do my children today).  We also went to the library every week and participated in the library reading programs.

Growing up in a home with 500 books would propel a child 3.2 years further in education, on average, than would growing up in a similar home with few or no books… A child from a family rich in books is 19 percentage points more likely to complete university than a comparable child growing up without a home library.” – Evans, M.D.R., J. Kelley, J. Sikora, and D. J. Treiman. 2010. “Family Scholarly Culture and Educational Success: Evidence From 27 Nations.” Research in Social Stratification and Mobility 28(2):171-197.

School of Choice And Charter School: Part of the education and achievement gap is that students are trapped by where they live into a monopoly for schooling.  If your school system is garbage, oh well.  The school districts that perform poorly are also school districts that are in lower priced (red lined) areas with higher Black populations.  When the schools are not able to function due to a variety of factors, children and parents should have options.  That’s what’s great about America, capitalism and competition, if a product or service is delivered poorly, competition will increase the options and ultimately improve the quality and costs of the product.  Charter schools and school of choice are important as well as state intervention to overhaul failing school systems.

Graduation Rate: Having a high school diploma is a major stepping stone to steady employment and building wealth.  Many entry level jobs require a high school diploma, even though someone without a high school diploma would most likely have no problems executing the job.

88% of Whites graduate high school while 80% of Black Americans graduate high school. This isn’t as stark of a difference as some of the other statistics we have covered, but that 8% difference represents tens of thousands of kids each year entering a world where their earning power is substantially reduced.

Financial Education: The vast majority of the wealth gap between White and Black Americans is due to system problems in this country.  Over the past 4 decades person finance has become more and more complex and its a travesty that our schools do not teach personal finance at every grade level. Many schools don’t teach personal finance at all.  How can we really expect our kids to go into this world and thrive if they haven’t been taught the rules of the game? Our kids are in school for 14,300 hours from K-12 and in most schools NOT A SINGLE HOUR is spent teaching them personal finance. A couple great books for kids on basic financial education that are fun to read are Danny Dollar Millionaire Extraordinaire – The Lemonade Escapade and How to Turn $100 into $1,000,000: Earn! Save! Invest!

Employment Reform To Address Racial Inequality:

End Employment Discrimination: Get rid of the box, and eliminate the need to report if you have been convicted of a crime.  People who have served their time and made right with society should not be punished again when looking for a job.

Minimum Wage: We need a one time increase followed by tie to inflation. I am so sick of the debate on increasing the minimum wage.  We need to set it up so that it is not a constant fight. We also can’t have long periods of it not changing followed by a large jump. Those against the minimum wage increasing often argue that the labor being provided is not worth more than the current minimum wage and that increasing it will cause massive job losses, even though the inflation adjusted value of the minimum wage has greatly decreased.

 

 

 

 

 

 

 

 

 

The problem with never increasing the minimum wage is that our government, through the Federal Reserve, continues to print money out of thin air and those with fewer assets and lower income are squeezed the most, with the minimum wage being one of these pressures.  If we keep making the dollar worth less and less we have to increase the minimum wage!

I propose we reset the federal minimum wage to be in line with the purchasing power it had in the 1960s and 1970s, which would be around $10 to $11 per hour, then tying to inflation through CPI-W. By tying it to inflation we increase the minimum wage in lock step with the economy and employers don’t get a massive sticker shock every 10 years or so when congress decides to get around to changing the law. It is extremely important to tie the minimum wage to inflation.  In addition to making it easier for employers to adjust, it also keeps wage squeezing where the newest, lowest skilled employers get a large raise, while those who were paid $1 or $2 more per hour are now also getting paid minimum wage or barely above it.  With a constant small increase every year in the minimum wage wage increases as a whole will naturally flow for all employees.

Reduced Occupational License Requirements:

Many occupational licenses are created by large corporations in industries that they control a large market share in and they lobby state governments to impose them. Today 1 in 3 occupations requires a license, in 1950 only 1 in 20 did.  These licences rarely are to actually train people to competently perform the task, they exist to create a barrier of entry to the field and to reduce competition. They also tend to stop at the state line, meaning if you relocate, you must start all over.  University of Minnesota analysts estimate that 2.85 MILLION JOBS don’t exist due to these barriers.

I know women who are great at braiding hair and want to run their own business, but to be licensed they have to go through an entire year long cosmetology program, even though the majority of what is taught has nothing to do with the service they will be providing. This goes for specializing in virtually any facet of cosmetology. From the Hoover Institution:

“Take hair braiding, which came to the United States from West Africa and is particularly popular among black women in the United States. The process involves zero use of chemicals. Yet in 16 states of the union, hair braiders must get a cosmetology license if they want to legally do hair braiding for pay. And what do you think is one of the main things one learns to get a cosmetology license? If you guessed “the proper use of chemicals,” you win. Angela C. Erickson, in Barriers to Braiding, a 2016 study for the Institute for Justice, notes that hair braiders in these 16 states must train for between 1,000 and 2,100 hours and must spend thousands of dollars on tuition. To put those hours in perspective, a standard 40-hour-a-week work year with two weeks vacation adds up to 2,000 hours a year. The good news is that the Institute for Justice has won some big victories against these licensing requirements.  In California, for example, the organization sued against the state’s cosmetology laws for hair braiding in 1997, and a federal court struck down the requirements in 1999. The Institute for Justice has had similar victories in other states since then.”

Another example is the artificial limit on cars sold per year before you must get a dealers licence. If you sell more than 5 cars a year you need a dealers license in my state. This is crazy.  Anyone should be able to sell a car.

These occupational licenses then circle back to criminal justice.  To obtain many of these licenses there are “good character clauses” that will stop someone from getting a license if they had previously been convicted of any crime, even drug possession. Locking people out of careers entirely based on a “crime” that the individual has already served time, paid fines, etc. for is not right.

Increased Funding for Skills Training:  This can be paid for by using existing funding methods for college.  A friend of mine was looking into increasing her skill set and becoming a CNA.  The closest course requires a fee of $1,500 and 4 weeks of solid full time courses.  She could get a Pell grant worth $6,000 and go to college, where she may or may not finish a degree and would most likely have to take on a lot of debt.  Alternatively, this program in 4 weeks could double her earning power and provide another worker in a highly in demand profession, but the $1,500 and 4 weeks off of work (equivalent to around $1,200) is a barrier.  If a Pell grant would cover these types of courses we could increase opportunity greatly in this country.

Pell grant funding should cover skills training in a variety of sectors.  These programs have a much quicker return on investment and build careers much faster than a 4 year college degree.  Graduation rates and job placement rates are also substantially higher. We also push our kids into going to college which results is massive amounts of student loan debt, often for unfinished degrees or for degrees that their cost greatly outweighs the increase in income they provide.

Go to a Standard 24 Hour Work Week: I wrote about this earlier in the year.  With a shorter work week we will be more productive, there will be more jobs and people who want to get ahead will be able to work multiple jobs and will have more time freed up to start their own businesses.  The 40 hour work week is highly arbitrary and was the result of over 100 years of continued reductions in the American work week, followed by over 80 years of NOT changing at all, despite massive increases in productivity and national wealth. The fact that the work week has become stagnant despite the 1830-1940 stark downward trend and the velocity at which the nature of work has shifted in the last 80 years, heck even the last 25 years, is disheartening. It took 60 years to drop from 70 hours to 60 hours a week. Then it took 40 years to drop to 50 hours a week, and only 10 years to drop to 40 hours a week, then we stopped in our tracks.

Scale Back Ordinance Requirements Against Running a Home Business:  People should be able to run a business out of their homes, provided that doing so does not violate other laws, such as noise pollution after 10 pm and blocking fire hydrants or neighbors driveways with customers vehicles. I have friends who have been hassled by government officials, fined, and even shut down for running small home businesses ranging from wrenching on cars, to hair cutting, to chainsaw carving. Running a home business should be encouraged by our government, not penalized. Heck some of these power drunk local governments go around shutting down little kids lemonade stands!

Reform Child Labor Laws: This is a pet peeve of mine.  These laws were put in place to protect children from exploitation, like working in the coal mines and sweat shops for 70 hours a week, as well as to lower the official unemployment rate during the Great Depression by labeling everyone under 18 as not part of the workforce.  The pendulum has swung hard the other way, with most places of employment unable to hire anyone under 16.  For those between 16 and 18 it varies by state, but in Michigan these workers are required to take extra breaks, can operate less equipment, and are greatly limited on total hours they can work.  Employers are greatly discouraged from hiring minors.  This may be a slight inconvenience for teenagers who are working a few hours for some weekend spending money, but what about for teens contributing substantially to their household bills?

Being economically limited to a total of only 48 hours between school and work is ludicrous, holds back an economic engine of our country, prohibits teenagers from learning workplace skills, and harms lower income families the most. The workaround for this for all parents is to encourage your children to start their own businesses.  There are no laws against them working for themselves.  Check out the books Kid Start-Up: How YOU Can Become an Entrepreneur as well as The Kid’s ROTH IRA Handbook: Securing Tax-Free Wealth From a Child’s First Paycheck or Money Answers for Employed Children, Their Parents, the Self-Employed and Entrepreneurs.

Actions You Can Take:

  • Spend time becoming financially educated and sharing what you learn with others
  • Demand that your local school teaches financial education.  Contact your state legislature about making this a statewide requirement.
  • Donate to your local facilitator (or to any area you want to help) of the Dolly Parton Imagination Library.  $25 a year can change the trajectory of a child’s life.
  • If you are in charge of hiring don’t automatically disqualify someone who has a criminal record.
  • If you are an employer consider experimenting with a shorter work week.
  • Contact your state representatives about eliminating job licencing requirements.
  • Encourage your children to start their own businesses. While at it, look into starting your own business!

 

Continue to Part 4: Government Assistance

 

John C. started Action Economics in 2013 as a way to gain more knowledge on personal financial planning and to share that knowledge with others. Action Economics focuses on paying off the house, reducing taxes, and building wealth. John uses the free tool Personal Capital to track his net worth and posts quarterly updates on his finances. Check out the Action Economics archives section for all past posts.

Leave a Reply

Your email address will not be published. Required fields are marked *