Many of Occupy Wall Street’s esteemed protesters believe that inequality of incomes is Wall Street’s fault, and they clearly think that attacking our financial system will somehow make the 1% of fat cats reflect on their good fortune and decided to share it with those in Zuccotti Park. To most people who possess a shred of common sense, this is clearly a pipe dream.
Let’s pose a more realistic and achievable route to equitable income distribution. But first we need to look at the reality of our present economic situation. In our modern economy the most successful companies are ones like Apple, Google, Intel and IBM. Looking at these companies, I think most would agree that the future will rely heavily on engineering, math, science and business management skills. Today people with these skills often find themselves in the 1% or on their way to joining this infamous club.
Now, let’s examine how well prepared we are to benefit in this modern economy. Despite the growth, advancement opportunities and income potential that exists in this evolving economy, there were fewer computer and information science majors in 2008-09 (37,994) than there were in 1985-86 (38,878). Today there are more students studying visual and performing arts than engineering. On www.payscale.com you can see the beginning salary for a graduate with a visual communications degree is $35,600, (midcareer salary is $59,000) yet the starting salary for a computing engineer is $61,800 (midcareer salary is $101,000). The income inequality starts to become pretty dramatic and Wall Street hasn’t entered the picture yet. BTW, a petroleum engineer’s starting salary is $97,000.
When comparing international students’ degrees to those of Americans, the picture becomes bleaker yet. From data compiled by the Institute of International Education, we see that 18% of international students got degrees in engineering, while only 5% of American students did. Grace Jean wrote in her article, “Keeping up with Retiring Engineers,” that, “…with a large percentage of Defense Department scientists poised to retire during the next few years, and a diminishing pool of younger talent from which to fill their ranks, the nation’s technological prowess appears to be in jeopardy of beginning a downward trend.”
As our young people protest against Wall Street for months now, young people in China, India and other countries continue to gain such a competitive edge that American companies are desperately trying to hire them. Bloomberg Businessweek, in an article titled, “Still Wanted: Foreign Talent – and Visas,”points out that despite our high unemployment many US companies are vying for visas to import talent from overseas “for job categories with a [domestic] skills shortage.”
With shortage of supply in certain skill, the price for those skills (a.k.a. salaries and income) increases with demand, further adding to the income inequality protesters complain about. Ironically they could easily remedy this without any action from Wall Street or Washington by improving upon their skills.
Those who are unemployed today and without a degree could close the income gap too if they were willing to get trained and work, at least in New York. It turns out that there are not enough auto mechanics, welders, plumbers, construction workers, diesel mechanics and other skilled laborers available to meet demand. Most of these are the types of jobs that allowed the middle-class to flourish. But as James Loriega, the director of the Mechanics Institute, points out, “the new generation is less enthused about working dirty or working with their hands.”
But back to the one percent that are blamed for the country’s woes at the moment, who are they exactly? In the first chapter of “The Millionaire Next Door: The Surprising Secrets of American’s Wealthy,” we are given the answer. Most of them are self-employed, which is interesting considering less than 20 percent of Americans are self-employed yet account for two-thirds of the millionaires. Of the self-employed, three-out-of-four are entrepreneurs such as welding contractors, pest controllers and paving contractors. One-in-four fall into the category of self-employed professionals, such as doctors and accountants.
None of this is to imply that some reform is not needed in our financial system, but inequality in wages is not a matter that can blamed on Wall Street. Many of those protesters have no one to blame but themselves.
Daniel Odescalchi is President of Strategic Advantage International, a consulting firm. He has worked throughout the U.S., in emerging democracies in Eastern Europe, Bosnia, Lebanon and Iraq and coauthored “The Handbook of Political Marketing.” email@example.com