Many policy ideas on how to reduce income inequality and improve the upward mobility of low-income Americans are gaining popularity, on both sides of the political aisle. As usual, Republicans suggest that tax cuts heavily tilted towards the rich can address these problems, though many of their proposals would actually worsen inequality and mobility. Populist Democrats’ proposals include minimum wage increases, gender pay equity and the like—which deserve support but would have very modest effects on overall inequality and mobility into the middle class. If we want to have large impacts on these problems, and create systemic rather than mostly symbolic effects, there is only one place to go: postsecondary education or other skills by low-income workers, and whether they get the kinds of jobs that reward these skills in the job market.
Most job training in the United States now occurs in community and for-profit colleges, as well as the lower-tier of four-year colleges. We send many young people to college, even among the disadvantaged, but completion rates are very low and earnings are uneven for graduates. The public colleges that the poor attend lack not only resources but also incentives to respond to the job market. Approaches like sectoral training and career pathways, which combine classroom and work experience, show promise but need to be scaled, while employers need greater incentives to create middle-paying jobs.
This report proposes a three-part strategy for equipping more Americans with new tools for economic mobility and success: 1) A “Race to the Top” program in higher education, where the federal government would help states provide more resources to their community (and perhaps four-year) colleges but also require them to provide incentives and accountability for the colleges based on their student completion rates and earnings of graduates; 2) Expanding high-quality career and technical education along with work-based learning models like apprenticeship; and, 3) Giving employers incentives to create more good jobs.