September 05, 2019
What do two stories, one about an award-winning economist and the other about spa workers, have in common? Quite a bit. The Atlantic recently published two disparate pieces that, collectively, shed light on the history and effects of wealth inequality in America.
The first piece, "The Economist Who Would Fix the American Dream," describes the work of a Harvard economist, Raj Chetty. Chetty is a key brain behind the Opportunity Atlas, an interactive online map of the United States that shows life outcomes for adults based on where they grew up as children, right down to the specific neighborhoods in which they grew up. The map shows that where children grow up is largely determinative of future income and other prospects.
The data seem to belie the story of the American Dream, that anyone from anywhere can make his or her own success. But Chetty is using the data to try to make that story more of a reality. He is identifying the affordable neighborhoods that provide opportunity boosts for those who grow up there; he calls them “opportunity bargains.” Right now, he is working with cities to target housing programs to these opportunity-bargain neighborhoods. In the future, he is hoping to better understand what features or social capital make neighborhoods opportunity bargains and how those features can be reproduced in more neighborhoods.
The second piece, "The New Servant Class," explores the rapid rise of work focused on tending to the needs and wants of the wealthy in urban areas. Termed “wealth work,” it involves services like spa work (manicures, pedicures, facials, massages), fitness training, driving people places, delivering and setting up things, and so forth. The author points out the similarities of this work to the live-in servant work of the late 1800s. Although there are now more rights and freedoms for the workers, the work is not without issues: it pays little, requires long commutes for workers who cannot afford housing anywhere near their clients, and inherently gives rise to questions of inequality between the worker and the client.
Taken together, these pieces may suggest that the more things change in American financial life, the more they stay the same. Wealth inequality has always been, and remains, a huge part of the American story, with data suggesting that wealth disparities are only getting worse. As financial educators, the question becomes how to teach students about these realities while also giving them the tools and autonomy to navigate the economy.
We have a few ideas:
- Talk openly about wealth inequality and its effects with your students, no matter your students’ personal backgrounds. Everyone needs to understand wealth inequality.
- Have students explore historical trends in wealth inequality and how those trends are related to local and national policies. Encourage students to suggest different approaches to changing those trends, allowing for a range of ideas.
- Discuss how wealth inequality manifests in your own community (such as in the kinds of financial institutions available in different neighborhoods or differences in school funding). Look for opportunities in your local community to do projects around tackling the roots and effects of wealth disparities.
- Acknowledge that, while financial literacy is important, financial success or failure is not a direct result of a person’s knowledge or actions. Have students explore scenarios where a person made a reasonable financial decision that turned out poorly because of external factors, and grapple with that reality.
- Encourage students not to equate wealth with a person’s success or value to society. Have students consider their own visions of financial well-being in light of their personal values, and share and discuss different visions.