38 Ways To Get Filthy Rich During The Trump Presidency
You may not agree with his politics, but the swearing in of Donald J. Trump as President of the United States should have every entrepreneur salivating. Trump is not “draining the swamp” – au contraire, mon ami! The swamp is in fact being filled with billionaires who will put making money above all else. From schools to roads to energy and beyond, everything is up for sale. This is sure to be the friendliest administration to businesses of all sizes that you will see in your lifetime. While you may be upset about the politics of the Trump presidency, it is time to shift gears to get paid as an entrepreneur. Your own actions and results over the next four years will have a greater impact on your success or failure than any of the changes that might result from The Donald and his team.
Since the election, Trump has filled his cabinet and the positions close to him with people that have been termed “pro-business.” That is really an understatement considering most of the appointees are billionaires with the means and desire to drastically change entire industries and fundamentally reconstruct the way this country operates. And make no mistake, the changes will be for their profit and that of their close business associates. But there are still opportunities for everyone else as well. Rather than complaining about it, a more productive use of time and efforts will be to determine how you will profit as well, even if it is to lesser degree than the billionaires. As Paul C. Brunson says in his article “20 Successful Habits I Learned Working For Two Billionaires”, it is time to “Be Gritty” and “Be Patiently Impatient.” The time is now to create your business plan and get started!
After reviewing the Trump 100-day plan and digging into the backgrounds of some of his appointees, here are some business opportunities that will present themselves over the next few years in education, energy, infrastructure, prisons, housing, healthcare, politics, and more.
For Secretary of Education, Trump has selected Betsy DeVos. It only takes a few seconds of Googling DeVos to understand that her agenda will be to totally disrupt the public school system in favor of charter schools with public funds being used for private education. Here is a short background on the results that her efforts produced in the state of Michigan. Even though the results have not been very good, charter schools will be a plan that is pushed forward at a very rapid pace. The question for you should now be, “where are the opportunities?”
- Start a Charter School – This may seem far-fetched, but once you do some research you may be surprised. While this is not an easy business venture and will require some up-front capital, it can be tremendously profitable. That is the major reason for the push for charter schools: profits. It has little to do with providing a better education for students. It allows to schools to hire teachers at a lower wage than public schools can due to the absence of unions and then minimize what is provided to the students so that the owners and administrators of the schools can reap the profits. A quick Google search provides many guides and resources about how to start a charter school. Remember that you can start small and grow over time; the thought of opening a school with 1,000 students may be overwhelming, but opening a school starting with 50 to 100 students is much more reasonable and manageable.
- Meal Services for Charter Schools – If the idea of starting a school is more than you want to tackle, consider being a vendor for charter schools and providing some of the essential services that will be needed for their survival. One example is a meal service provider. Rather than hire the resources internally, there will be an opportunity to provide meal services to these schools through external vendors. The key to success will be providing quality lunches at a cost per student that is also a win-win for the charter school. If you can do that, this will be a partnership that will last and grow as most of the charter schools will likely be owned and managed by a small handful of companies. Forming and solidifying this partnership could lead to a lucrative business for many years to come.
- Bus Services – This will vary by state and by district, but most of these schools will need some type of transportation for their students. Some states still require the public school system to provide bus services for the charter schools, but in other areas it is up to the charter school itself. One thing to always keep in mind about charter schools is that their main priority is profit and providing a decent education is secondary. This means that if you can provide bus services at a rate that still allows the charter school to be profitable while still turning a profit for your own company then there is definitely an opportunity here.
- Student Recruiting Service – It might be more appropriately titled sales, marketing, or business development, but regardless of the name student recruitment is critical for the success of charter schools. Charter schools have a projected number of students needed to achieve profitability, and they need to reach this number typically very early in the school year before funds are allocated to each school based on student attendance. If you have any experience with marketing campaigns, student recruitment, or are very active in your local community with the ability to interact with a lot of people, then this could be a great opportunity for you. The key to success will be that your cost to acquire a new student is low enough to be worthwhile for the charter school. Your ability to recruit new students quickly and efficiently will determine your success or failure.
- Curriculum Development – Where some of the charter schools will need help is with a well-developed curriculum. Although many may already have a rough idea of how the school will operate, almost all of them will need someone to evaluate their existing curriculums against the new standards that will be introduced, while some will require full curriculum development. One key to success will be the ability to move quickly and develop a curriculum that meets all of the standards required by each state and the federal government while identifying all supporting resources and materials that are needed to implement the plan. This includes book selection, as well as electronic resources like promethean boards, computers, tablets, etc. Developing a detailed curriculum for charter schools will be a profitable business in the very near future.
- Staffing Services – As the charter schools are being established, they will have a need for teachers, administrators, and other school support staff. Someone who can efficiently vet applicants and provide the best and most qualified candidates will be in high demand for charter schools. This will include background checks, reference checks, and skills evaluation. Reducing the risk of a new hire for a charter school should lead to repeat business each year and a sustainable business for years to come. If you have any doubt that staffing services can be very lucrative, learn how Janice Bryant Howroyd Built the first black-owned billion dollar staffing agency.
- Security Services – In most cases, charter schools are opened in lower income neighborhoods because these are the areas where public schools are not meeting the required minimum passing levels on standardized tests. Today, particularly in major cities, there is a police presence at the schools in the inner cities. Charter schools that are also located in the inner cities will need to duplicate that police and security presence. This includes monitoring and securing the facilities, but also working on-site to help manage students. Charter schools will need the equivalent of what city police provide to many schools today.
- Lobbyist – There is a skill set and a background required for this opportunity, but don’t think that the public school system and its associated unions will go away without a fight. One of the reasons that charter schools can profit from education with the same allocation per student as public schools is because they typically pay their teachers much less than the wage at a public school. It also gives charter schools much more flexibility with their workforce than unionized staff at public schools. To prevent a total takeover by charter schools, public school supporters will fight to the end to prevent the expansion of charter schools. This will require a lot of lobbying of state legislatures and elected officials. The ability to influence state legislatures will help to determine how quickly and aggressively charter schools expand. This is an opportunity that is best suited for people with a legal background, but there are also creative opportunities for phone calling to constituents to help influence legislatures as well as targeted marketing campaigns to reach voters and legislatures in ways that are not typically used by lobbyists.
- Online Universities – You can almost guarantee that the rules for online universities will be eased after Donald Trump had to pay $25 million to settle three fraud cases against Trump University. The extremely high cost of traditional universities has made online universities more attractive, as evidenced by University of Phoenix being one of the largest universities in the country. While it is very capital-intensive to start an online university from scratch and build the brand needed for success, partnering with existing traditional universities that do not yet offer online classes could dramatically shrink the learning curve and shorten the path to success. This opportunity is suited to a very technical person or company with the resources to build a secure platform and manage a complex backend. This could be challenging to start, but could be very lucrative for years to come.
Trump has stated that he will roll back many of the energy industry regulations and work hard to make America energy-independent. The two areas that he mentioned specifically are oil drilling and coal mining. Obviously, these are mature industries and while there are opportunities to begin drilling, it is unlikely that most entrepreneurs have the resources to tap into these industries. The opportunities for the entrepreneur with less experience or less capital are in the support services around these efforts, such as restaurants, hotels, housing, and entertainment. Using Watford City, North Dakota as an example, there are many millions to be made where oil drilling is taking place. When oil was discovered in North Dakota, the area saw an immediate boom in population and wages. Jobs that formerly paid $12 were now paying $25-$30 and there was a lack of people to hire. With that understanding, here are the potential opportunities:
- Food Trucks – Not as lucrative, but owning a food truck near the oil drilling and coal mines could be very profitable, and not the fancy food trucks that are featured on the Food Network that offer specialty cupcakes and decorated waffles. The kind of food truck that will be most successful is the kind that offers cold sandwiches, possibly with a microwave, and a hot cup of coffee. The type of food trucks that are common around construction sites. The trucks that offer a little bit of everything and caters to a more rugged clientele. Those cups of coffee and cold sandwiches will add up quickly to be quite profitable.
- Property Managers – When the drilling and coal mining begins to happen, it will happen fast. This will cause an influx of people in a very short period with a very high demand for housing. In most locations where drilling and coal mining take place, these are not big towns with a large selection of available housing. The ability to learn the local town quickly and serve as a resource to local property owners can be very lucrative. This includes preparing properties for rent or purchase, as well as matching interested and qualified tenants with suitable properties.
- Hotels and Motels – If you ever had the desire to own a hotel, then building close to newly-found oil drilling and coal mines might be the time to move forward. Since the drilling is typically found in smaller towns, the existing hotel rooms are usually booked up very quickly and often leaves people driving long distances to neighboring towns in search of a place to stay. Now would be a good time to start talking to hotel chains and understanding how franchising works so that you are prepared when the opportunity arises. A conversation with a local Small Business Association lender might reveal that it will take less of your own money to open a hotel than you may think. And based on the demand, it should pay for itself very quickly.
Trump has stated that there will be massive infrastructure spending with private-public partnerships that reduce that amount of investment required from the government. The number that was stated in Trump’s 100-day plan was $1 trillion. If the spending is anywhere close to that level, there will be opportunities for profit.
One important aspect of these opportunities is that for most major road and infrastructure projects, there are mandates on what percentage of the bids should be awarded to minority-owned and women-owned businesses. This does not require your company to win the main bid, but to partner with a larger company that has already won the bid. It is more than worthwhile to pursue MBE or WBE certified status as it opens opportunities to work with companies that are looking for people to partner with.
- Subcontractor for Roads and Highways – While you may not have the resources and experience to rebuild a 20-mile stretch of highway, you could serve as a subcontractor for these companies and offer the services that they typically outsource. The contractors in your area will vary, but a good place to start is to look at the companies that are currently handling road construction in your area as they are typically the major players. In Chicago, it is very common to see Walsh Construction on road projects and their website lists several subcontractor opportunities. Another option would be Kokosing Construction who do not list their bidding opportunities on their website, but would be a good company to contact for details. There will be many other companies as the projects roll out and there is increased chance of success by contacting these companies and establishing a relationship as soon as possible.
- Site Cleaning – Often overlooked in construction project is the cleanup that is needed when the project is complete. This is a service that is very often subcontracted out and has a fairly low cost of entry which should make it attractive. A quick search of findRFP.com reveals 53 open opportunities, but this will increase as the plan rolls out.
- Environmental Services – Like site cleaning, but at a higher level, are environmental services. This includes waste removal and disposal, on-site safety, remediation, and assessments. This requires a higher-level skill set, but hiring an experienced team would be the jumpstart required for this opportunity.
- Portable Bathroom Rental – Needed at all construction sites are portable bathrooms. It is not as simple as dropping off a portable bathroom at the start of the project and picking it up at the end, but it is a business that can be understood quickly and implemented. Several people who have found success with portable bathroom rentals are Eliza Kendall and the Gordon family.
- Wall at the Mexican Border – If this happens, in addition to subcontractor services and the opportunities listed in the energy section, there will also be the need for security services, equipment transportation, and contracted labor.
Since Trump won the election and appointed Jeff Sessions as attorney general, stocks of prison companies have soared. Add to that Trump’s statement in his inauguration speech that this will be a country of “law and order” and his support of “Stop and Frisk” while campaigning, it is not unreasonable to believe that there will be an increase in the prison population. Here are a few opportunities that might be worth pursuing:
- Stocks – Not entrepreneurial and you have missed the initial boom since election day, but this may be an easy opportunity. Stocks are risky, but the new president and his attorney general could possibly remove much of the risk of these stocks with their decisions in the next few months.
- Food Services – Much the same as with charter schools above, these prisons are for profit so their goal is to feed the prisoners for as little as possible to reap the benefits. The upside for you as an entrepreneur is that while there may only be a small profit in each meal, there should be a large enough volume of meals to make it worthwhile. While some of the major catering companies are already serving these prisons, it is likely more prisons will be opened which will present an opportunity.
- Prison Guard Staffing – With the increase in prisoners will be the increase in demand for prison guards. The process of finding, vetting, and training prison guards is time consuming and can be expensive. Developing a streamlined process for finding employees and preparing them to be prison guards could be beneficial to the prisons and profitable to you as an entrepreneur. The increase in prisoners, prisons, and workload will leave officials looking to outsource lengthy processes such as recruitment and staffing and that is the service you would be providing to the prison system.
- Rental Properties – It is likely that public welfare will expand under Trump and not shrink as many might hope or believe. This is due to a combination of technology changes like automation that will reduce the number of jobs in this country in the next few years, as well as an increase in the number of underemployed people receiving wages that are not enough to support themselves and their families. While there are many individual investors that own between one to five properties, the bulk of the money from the Housing Choice Voucher program (Section 8) goes to large corporations that own thousands of homes. For that reason, the program will continue to exist and expand which is great for you as an entrepreneur.
- Real Estate – The uncertainty of the next four years coupled with several years of increases in home values will cause many to look to sell their homes in 2017 at what may be a peak. The increase in demand coupled with the reduced number of real estate agents opens the door for a strong business. Since peaking in 2007, the number of real estate agents are still down almost 40% and many that remain are not active. All good signs that a business could be developed quickly and profitably.
- Appraiser – Real estate agents are not the only profession that has seen a major decrease since 2007 as real estate appraisers have declined by 22% in the same time period. While some of the requirements for becoming an appraiser have changed and become more difficult, it is still a reasonable process and very attainable. Check out this site to learn how to become an appraiser.
- Healthcare Insurance Broker – While the details of how the Affordable Care Act (commonly known as Obamacare) will change, it is almost certain that it will There is a good chance that this will affect at least the 20 million people currently covered by the Affordable Care Act and possibly many more. The key to success will be partnering with small businesses that do not offer insurance for employees and whose employees purchase through the exchange. The best way to find these companies is by visiting local Chambers of Commerce, attending networking events, and conducting a Google search for small businesses in your area. There will also be a need to understand the new options available and explain them in way that can be easily understood by the general population. This will lead to referrals and continued business growth as happy customers will send other people in need your way.
- Medical Transportation Services – This has more to do with an aging population than it does the Trump presidency. As the need for services such as dialysis and doctor visits increase, the need for patient transportation also increases. A quick search of FindRFP.com reveals 195 bidding opportunities for medical transportation services. The key here would be to start with used equipment, such as vans, cars, wheelchairs, etc. As the business grows it is easy to upgrade the equipment, but it is very difficult to be successful if your monthly overhead is too high due to the purchase of brand-new equipment. Start small and grow.
- Hospice Services – An unfortunate reality of the change to the Affordable Care Act is that it will leave many without insurance. This will cause people to visit the doctor less and only when an illness that could have been cared for earlier has progressed to life-threatening. It is estimated that more than 130,000 Americans died between 2005 and 2010 because of their lack of health insurance. The change to the law will leave many without insurance and likely in need of hospice services. To get started and better understand the opportunity, look through the 63 active RFP’s on FindRFP.com.
There are many people that are upset with the results of the elections and there is a good chance that the first two years of the Trump presidency will give people many more reasons to be disappointed. That should lead to a very high voter turnout for the 2018 elections where 33 Senate seats, all 435 seats in the House of Representatives, and 39 Gubernatorial seats are up for grabs. Therein lies the opportunity as most of the candidates will need support in a variety of ways. This number becomes even larger when you consider state and local governments. There are several ways that you can build a profitable business from the current political environment.
- Digital Marketing Agencies – It is estimated that more than $1 billion was spent in the last election cycle on digital marketing, and that number will only increase in the coming years. Arguably, in the last 10 years the candidates with the most effective digital marketing teams are the candidates that have won their campaigns. The cost of digital marketing in most cases is much less than traditional methods, and digital marketing typically results in higher engagement from targeted audiences. The results of digital marketing can also be measured in ways that traditional marketing can’t. As new politicians enter the spectrum and prepare for battles with incumbents, they are all in need of effective digital marketing management. This involves much more than simply posting on social media sites. To achieve success, agencies will need to have strong social media marketing managers as well as the skills to build audiences quickly, develop editorial campaigns to provide consistent coverage with engaging information, and measure results quickly for continuous campaign improvements. Additional skill sets that are needed are graphic designers, e-mail marketing managers, and content writers.
- Fundraisers – For the 2018 & 2020 election cycles, fundraising will be more important that it has ever been. The number of donations that will be required to win a political campaign in the future will continue to rise and it will take increased engagement with donors to get them to open their wallets. Fundraising is an art and a science. You need to determine the right people to ask, where to find them, and how to ask them. If you have the experience or ability, or are willing to develop the skills very quickly, then there is opportunity. I would recommend attempting to work at the municipal level in a large city at a minimum, but preferably you want people running for Congress, governors, or high state-level positions. These campaigns are going to generate enough donations to provide you with reasonable payments. The campaigns of lower-level politicians will be harder to raise donations and a campaign may be successful for the politician, but may not be successful for you as a fundraiser and your personal bottom line.
- Community Organizers – One of the major issues with the 2016 presidential election was low voter turnout. This impacted not only the presidency, but all levels of government because people won races that they may not have won if voter turnout was higher overall. The ability to fundraise and win a campaign needs to be coupled with strong community involvement and support. This includes producing large crowds at rallies that generate support for candidates.
- Anti-Trump Websites & Paraphernalia – There are so many possibilities here. Funny t-shirts, cups, bumper stickers, signs for rallies, you name it. An easy website to start today is a site that aggregates all the funny memes about Trump into one site or a more substantive site that brings together relevant stories from around the web on the topic. Website traffic is going to continue to spike as more and more articles are shared on social media and discussion forums. Becoming a resource for all things anti-Trump could be very lucrative. Start now and your site could be the resource that commands a large amount of the advertising dollars in the 2018 cycle.
- Pro-Trump Websites & Paraphernalia – The idea also applies if you are in support of Trump. He did receive 48 million votes and the Presidency of the United States has global interest with everyone looking for more news on the topic. This may be more lucrative as there is likely less competition.
- Conceal Carry Handgun Instructor – There will undoubtedly be an increase in gun sales as Trump attempts to carry out his campaign slogan to “Make America Great Again.” There will also be an increase in the number of people seeking their Conceal Carry license. Today, most of the certification facilities are clustered together and not geographically feasible for everyone to attend based on distance. Fill the gaps where certification facilities are not conveniently located and build a profitable business. Here is one resource for how to become a Conceal Carry Instructor.
- Expat Relocation Services – More people are deciding to leave the country and live abroad. One of the main reasons is because it is cheaper to live abroad in some cases, especially for people that are retired and may not have enough income or wealth to sustain their quality of living in the United States. The number of people should increase as the baby boomers continue to age and as the cost of living in the United States increases. This phenomenon presents a great opportunity to assist those people that are moving to other countries. This could be helping them to find housing, understanding local customs, determining the safest and best places to live, etc. For an example of how the business would work, look at Panama Relocation Tours which was able to sell out two 30-person tours for $2,000 per person within three days of the election in November. The number of expats will continue to grow and South America will be the most likely destination.
- Import/Export Expert – On Trump’s first day in the Oval Office, he abandoned former President Obama’s TPP trade deal. Additionally, one of Trump’s plans during his campaign was to increase the tariffs on goods from other countries, specifically China. If this happens, it would cause a very dramatic shift to imports, exports, and pricing all around the world. There would likely be a reduction in the price of goods from China which would open the door to those goods being affordable in less developed countries than the United States. It is unlikely that the 35% tariff would be imposed, but if it is then companies will be left scrambling trying to figure out where they can send their products and how to get their products into the United States for the lowest cost possible. The opportunity here is massive as those who are first to figure out the new rules and the red tape can write their own checks. Hundreds of billions of dollars are at stake each year and to get even a very small percentage of that could be life changing.
- Immigration Services – Much of the talk during the campaign was about closing our borders and reducing illegal immigration. This has caused a lot of fear in the many illegal immigrants, who are trying to figure out if there is a quick way to become legal. There are also many with families still in their home countries that are attempting to get those family members to the United States before there are massive change to the laws. Assisting both legal and illegal immigrants will be big business over the next four years and could be much bigger if there is an attempt to deport the estimated 1 million illegal immigrants currently in the United States.
- Job Training Services – As Trump’s plan rolls out coupled with major changes that are coming due to automation, there will be high demand for job training services as the workforce changes. If the infrastructure build goes as planned, then there will be the need for many skilled construction laborers across the country. Additionally, as driverless cars and trucks are increasingly used across the country, there will be a need for many of the taxi drivers and truck drivers to seek other employment. While a four-year college degree is not the answer for most, the need for vocational training services is a better solution. Starting a business offering job training services should see an increase in demand in the next four years.
- War – There have been military offensives under the last three Republican presidents so it not far-fetched to assume that this will continue. It is estimated that contractors made $138 billion during the Iraq War and many believe that estimate is low. Much the same as infrastructure section, look for subcontractor opportunities with the large companies that are most likely to secure the government contracts during way. Haliburton would be a good place to start and then work your way through this list.
- Life Coaching – While some will prosper during the Trump presidency, many will struggle and need help to figure out their next steps. Due to job losses, inability to afford basic needs, or the overall increased pressure that every family will experience, there will be a need to aid people trying to figure out solutions to their problems. If you have a genuine desire to help people, then life coaching is a business that you should consider. By providing tremendous value to your clients, it is possible to build a thriving business relatively quickly. Four excellent examples are Stephan Labossiere of Stephanspeaks.com, Bershan Shaw of Bershan.com, Tonya of Tonya TKO, and Cheyenne Bostock of Askcheyb.com who have been able to build huge social media followings of hundreds of thousands of followers and thriving businesses by providing extremely high value to their clients and becoming thought leaders in the industry. There are many certifications available for life coaches, but it is best to start by studying the people who have had success like the four mentioned above. Focus on how they built their audiences, what their audience is saying on social media, where are the gaps in the products and services that they currently provide, and how can you fill those gaps. Study and use their success to shorten your learning curve and achieve success more quickly.
One thing for certain is that the next four years will be very pro-business. Besides the politics, the Trump presidency should provide a great opportunity to build a business or to grow an existing business. The ideas listed above are just the tip of the iceberg of where money will be flowing over the next four years. Figure out which business you want to pursue and apply laser focus to make it successful. The Trump presidency can be as good or as bad as you make it.
Are there any other business ideas that will present themselves throughout the Trump presidency?
Middle class incomes had their fastest growth on record last year
By Jim Tankersley September 13 at 10:13 AM
The incomes of typical Americans rose in 2015 by 5.2 percent, the first significant boost to middle-class pay since the end of the Great Recession and the fastest increase ever recorded by the federal government, the Census Bureau reported on Tuesday morning.
In addition, the poverty rate fell by 1.2 percentage points, the steepest decline since 1968. There were 43.1 million Americans in poverty on the year, 3.5 million fewer than in 2014.
The share of Americans who lack health insurance continued a years-long decline, falling 1.3 percentage points, to 9.1 percent.
The numbers, from the government’s annual report on income, poverty and health insurance, suggest the recovery from recession is finally beginning to lift the fortunes of large swaths of American workers and families.
Real median household income was $$56,500 in 2015, the bureau said, up from $53,700 in 2014. The gain was a combination of rising wages in the economy – spurred by a labor market where unemployment is falling and employers are being forced to compete more for workers – and low inflation.
Your daily policy cheat sheet from Wonkblog.
The gains brought median incomes nearly back to their levels before the recession, after adjusting for inflation, though they remain below 1999 levels.
The gains outpaced even the most optimistic expectations from many economists.
Several measures of wage growth had suggested that 2015 was strong for wage growth. Other indicators had pointed to an improvement for the Americans who are the worst off. The unemployment rate had declined to 4.9 percent as of last month. Since 2014, increases in wages have accelerated for the one in five workers earning the least, according to new research by Bank of America. In this group, wages are now increasing at roughly 4 percent year over year.
Last week, the Agriculture Department released its annual data on hunger in the United States, showing that food insecurity declined substantially last year for the first time since the recession. The share of food-insecure households was 12.7 percent last year, down from 14 percent in 2014. Before 2014, food insecurity had remained stubbornly persistent, improving only modestly from an apex of 14.9 percent in 2011. The Agriculture Department defines food security as having access to “enough food for an active, healthy life.”
70% of Rich Families Lose Their Wealth by the Second Generation
Better Than Raising the Minimum Wage
Help Americans who need it with a major, carefully crafted expansion of the Earned Income Tax Credit.
By WARREN BUFFETT
May 21, 2015 7:12 p.m. ET
The American Dream promises that a combination of education, hard work and good behavior can move any citizen from humble beginnings to at least reasonable success. And for many, that promise has been fulfilled. At the extreme, we have the Forbes 400, most of whom did not come from privileged backgrounds.
Recently, however, the economic rewards flowing to people with specialized talents have grown dramatically faster than those going to equally decent men and women possessing more commonplace skills. In 1982, the first year the Forbes 400 was compiled, those listed had a combined net worth of $93 billion. Today, the 400 possess $2.3 trillion, up 2,400% in slightly more than three decades, a period in which the median household income rose only about 180%.
Meanwhile, a huge number of their fellow citizens have been living the American Nightmare—behaving well and working hard but barely getting by. In 1982, 15% of Americans were living below the poverty level; in 2013 the proportion was nearly the same, a dismaying 14.5%. In recent decades, our country’s rising tide has not lifted the boats of the poor.
No conspiracy lies behind this depressing fact: The poor are most definitely not poor because the rich are rich. Nor are the rich undeserving. Most of them have contributed brilliant innovations or managerial expertise to America’s well-being. We all live far better because of Henry Ford, Steve Jobs, Sam Walton and the like.
Instead, this widening gap is an inevitable consequence of an advanced market-based economy. Think back to the agrarian America of only 200 years ago. Most jobs could then be ably performed by most people. In a world where only primitive machinery and animals were available to aid farmers, the difference in productivity between the most talented among them and those with ordinary skills was modest.
Many other jobs of that time could also be carried out by almost any willing worker. True, some laborers would outdo others in intelligence or hustle, but the market value of their output would not differ much from that of the less talented.
Visualize an overlay graphic that positioned the job requirements of that day atop the skills of the early American labor force. Those two elements of employment would have lined up reasonably well. Not today. A comparable overlay would leave much of the labor force unmatched to the universe of attractive jobs.
That mismatch is neither the fault of the market system nor the fault of the disadvantaged individuals. It is simply a consequence of an economic engine that constantly requires more high-order talents while reducing the need for commodity-like tasks.
The remedy usually proposed for this mismatch is education. Indeed, a top-notch school system available to all is hugely important. But even with the finest educational system in the world, a significant portion of the population will continue, in a nation of great abundance, to earn no more than a bare subsistence.
To see why that is true, imagine we lived in a sports-based economy. In such a marketplace, I would be a flop. You could supply me with the world’s best instruction, and I could endlessly strive to improve my skills. But, alas, on the gridiron or basketball court I would never command even a minimum wage. The brutal truth is that an advanced economic system, whether it be geared to physical or mental skills, will leave a great many people behind.
In my mind, the country’s economic policies should have two main objectives. First, we should wish, in our rich society, for every person who is willing to work to receive income that will provide him or her a decent lifestyle. Second, any plan to do that should not distort our market system, the key element required for growth and prosperity.
That second goal crumbles in the face of any plan to sizably increase the minimum wage. I may wish to have all jobs pay at least $15 an hour. But that minimum would almost certainly reduce employment in a major way, crushing many workers possessing only basic skills. Smaller increases, though obviously welcome, will still leave many hardworking Americans mired in poverty.
The better answer is a major and carefully crafted expansion of the Earned Income Tax Credit (EITC), which currently goes to millions of low-income workers. Payments to eligible workers diminish as their earnings increase. But there is no disincentive effect: A gain in wages always produces a gain in overall income. The process is simple: You file a tax return, and the government sends you a check.
In essence, the EITC rewards work and provides an incentive for workers to improve their skills. Equally important, it does not distort market forces, thereby maximizing employment.
The existing EITC needs much improvement. Fraud is a big problem; penalties for it should be stiffened. There should be widespread publicity that workers can receive free and convenient filing help. An annual payment is now the rule; monthly installments would make more sense, since they would discourage people from taking out loans while waiting for their refunds to come through. Dollar amounts should be increased, particularly for those earning the least.
There is no perfect system, and some people, of course, are unable or unwilling to work. But the goal of the EITC—a livable income for everyone who works—is both appropriate and achievable for a great and prosperous nation. Let’s replace the American Nightmare with an American Promise: America will deliver a decent life for anyone willing to work.