Byron Schlomach

More Government Spending Doesn't Solve Income Inequality

Posted on May 28, 2008 | Author: Byron Schlomach
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The Arizona Republic reports that a recent study shows Arizona has a relatively high share of "bad" jobs. These are jobs that pay less than $34,000 per year and have no health or retirement benefits.

This study complements another study concerned with income inequality that points out how income in Arizona has become more unequal in recent years than in the 1980s. The Center on Budget and Policy Priorities recommends higher minimum wages and more spending on unemployment insurance as ways to reduce inequality. The facts don't support that assumption, however.

Income inequality has generally increased in Arizona, and the rest of the nation, since 1980. From 1980 to 1983-when Arizona's state spending as a percentage of personal income plummeted-income inequality increased. From 1984 to 1995-when state spending as a percentage of personal income generally trended upward-income inequality increased. There is no relationship between the relative size of government and income inequality.

Additionally, when Arizona's minimum wage has increased, income inequality has generally increased as well.

Income equality seems immune to efforts to grow the size and scope of government or mandate wages in order to achieve equality. So, if Arizona wants to tackle this challenge, policies that encourage a vibrant economy based on a level playing field for all business might be a better path.

Dr. Byron Schlomach is the Director of the Center for Economic Prosperity at the Goldwater Institute.

Learn more:

Goldwater Institute: How to Win the War on Poverty: An Analysis of State Poverty Trends

Goldwater Institute: Miracle on Kildare Street: What Ireland's Economic Revival Means for Arizona

Goldwater Institute: The 1990s: The Golden Age of Arizona Poverty Reduction?

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