Home > Global Shifts Raising Issues of Income Equality
By Robert Gavin
BREWER, Maine — In a fast-moving global economy, driven by
technology and fierce competition, there was no longer a
place for Eastern Fine Paper, a century-old mill on the
Penobscot River here. The same might be said for Jim Bracy.
Bracy, 47, is a high school dropout who, after losing his job
at bankrupt Eastern, quickly learned that 27 years in a paper
mill qualified him only for service jobs that paid a fraction
of his old paycheck. Today, he works at a local Home Depot,
earning just over half what he made at the mill, but enough,
he said, ’’to at least get by."
It’s a different story for Joel Graber and Lindsay Shopland
in nearby Bar Harbor, where the worldwide boom in
biotechnology has meant expansion at The Jackson Laboratory,
a nonprofit genetics research institute. Not long before
Bracy lost his job, the married couple, both scientists with
PhDs, took positions at Jackson at a substantial boost to
their income as postdoctoral researchers. Shopland’s salary
alone jumped 50 percent.
This tale of the scientists and the millworker illustrates
how globalization and technology are not only reshaping the
US economy but also widening income inequality among workers.
With traditional middle-class jobs vanishing along with
factories, some economists worry that the nation’s labor
force is stratifying into a skilled, well-paid elite and a
mass of lesser-skilled workers struggling to hold on to their
standard of living.
The underlying cause: supply and demand. In a global market,
said Mark Zandi, chief economist at Economy.com in West
Chester, Pa., those with specialized skills benefit from the
larger pool of bidders for their services. Those without must
compete with low-cost workers around the world.
’’We have people who are doing very well and people who
aren’t, and that polarization is intensifying," Zandi said.
’’The distribution of income and wealth is more unequal than
ever. The prospects are that it will become even more
unequal."
While economic fairness is always a concern in the United
States’ egalitarian culture, the issue has taken on a new
urgency in the wake of a recession that led to the loss of
nearly 3 million jobs, concentrated not only in traditional
middle-class occupations such as manufacturing, but also
newer ones in technology sectors. Many of these job losses
are permanent.
Not all economists agree that a growing income gap is cause
for worry. David R. Henderson, a research fellow at the
Hoover Institution, a conservative California think tank,
said that the focus on income distribution tends to neglect a
key characteristic of the US labor market: workers who start
in lower-income groups can, and typically do, move up the
ladder as they gain skills, education, and experience.
Ultimately, what matters is not how one group compares to
another, but that their economic conditions improve,
Henderson said. Over the long run, the standard of living in
the United States has risen for all groups — rich, poor, and
the middle.
Meanwhile, this debate over economic fairness is front and
center in a presidential campaign being fought, at least in
part, along class lines. Democrats, including the party’s
presumptive nominee, Senator John F. Kerry, have ripped Bush
administration policies, such as the sharp cut in taxes on
earnings from stock dividends, as favoring the wealthy at the
expense of the middle class and the poor.
President Bush argues that such tax cuts spur economic
growth, and that provides jobs and opportunities for all
Americans to prosper.
Still, the benefits of economic growth are increasingly
concentrating in the upper reaches of the income scale,
according to Northeastern University’s Center for Labor
Market Studies. Over the last decade, in both the United
States and New England, only the best paid workers expanded
their share of total earnings, and much of that gain came at
the expense of middle-income workers. Northeastern’s analysis
was based on Census Bureau data on full-time employed people,
20 to 64 years old.
By the end the 1990s, the highest-paid 20 percent of workers
had increased its share of the nation’s earnings to 48
percent from 44 percent at the end of the ’80s. The middle 40
percent, meanwhile, saw its share fall to 30 percent from 32
percent. In New England, the shift was more pronounced: The
earnings share of the highest-paid workers grew to 48 percent
from 42 percent, while the middle’s share fell to 30 percent
from 33 percent.
This erosion of what Andrew Sum, the Northeastern center’s
director, calls the ’’rich middle" is largely caused by the
loss of manufacturing jobs, which, for more than a half
century, boosted workers, like Bracy, to the middle class.
Since 1990, when income inequality began to accelerate, the
US has lost one-fifth of its manufacturing jobs. New England
has lost a third.
The Eastern Fine Paper mill is just one of those casualties,
shut down because its outdated plant and equipment could no
longer keep up with more modern and productive competitors in
the United States, or lower-cost ones abroad.
Bracy, who dropped out of Bangor High School after a year,
began working at Eastern in 1975, at the age of 18, making
just under $3 an hour ’’hustling broke," collecting scrap
paper to be remixed with pulp. Before he lost his job as a
millwright in May 2003, he was making just over $18 an hour,
which, with overtime, put him at more than $40,000 a year.
In between, he was able to buy a home, 28 acres of adjacent
land, new cars, and a pop-up camper. He took vacations and
played golf regularly.
’’I had a good job," said Bracy. ’’I knew I couldn’t replace
the wages."
He was right. He first looked into janitorial jobs, which
paid just $8 an hour, and then applied at lumber mills, where
the hourly wage was no more than $9. He eventually found his
job at Home Depot, which paid a somewhat better hourly wage,
enough that allows him to earn just under $25,000 a year.
But he spent the first several months there working part
time, pleading for more hours and plowing through his
savings. Adding to the financial predicament: Melissa
Spencer, his partner of 15 years, lost her job at the mill,
too. With a high school diploma, Spencer, 40, is training to
become a child-care worker, which pays about half what she
made at Eastern.
’’The shoe shops are all gone. The mills are gone," she said.
’’There are no jobs, unless you’re a waiter or a gas
attendant."
Or a genetics scientist.
The same forces putting Maine paper workers out of jobs —
advancing technology and fierce competition — are helping
boost the demand for and earnings of the highly educated and
skilled, widening the income gap, economists say.
In Maine, for example, only men with a master’s degree or
higher made significant economic gains in last decade,
according to the Center for Labor Market Studies. Their
inflation-adjusted earnings rose 6 percent in the 1990s.
Inflation-adjusted earnings for men without college degrees
fell at least 2 percent in that decade. For men without a
high school diplomas, inflation-adjusted earnings plunged 6
percent.
Graber, the Jackson Laboratory scientist, specializes in
computational biology, also known as bioinformatics, an
emerging field that uses information technology to
investigate the exponentially increasing amount of biological
data. About two years ago, as he was finishing a postdoctoral
project at Boston University, he sent out 15 job inquiries
and ended up with two job offers. He chose Jackson, where
scientists at his level average about $80,000 a year.
Shopland, his wife, a cell biologist, was hired as a
scientist at a University of Maine biophysics program based
at Jackson. After spending more than a decade as either
financially struggling graduate students, or somewhat less
struggling postdoctoral researchers, Graber, 40, and
Shopland, 38, are enjoying some of the material rewards they
put off during their studies, including buying their first
home, a three-bedroom, 2-bath on nearly two acres.
As globalization and technology continue to restructure the
labor force, the government is trying to help workers made
the transition from old- to new-economy jobs. Maine, for
example, has recently revamped its technical college system,
which primarily provided vocational training, into community
colleges that are steppingstones to four-year schools.
Such transitions won’t be easy. About one-third of the more
than 300 workers laid off from the Brewer mill have yet to
find a job or enter a retraining program, according to local
union officials.
Bracy feels lucky to be working, particularly for an employer
that provides health insurance.