Giving Low-Income Students Money Will Reduce Inequality

Moneybox
A blog about business and economics.
March 8 2012 9:58 AM

Giving Low-Income Students Money Will Reduce Inequality

Charles Murray has an extremely strange column in which he proposes a series of inequality-curbing measures that he admits won't actually work. Under the circumstances, noting as a counterargument that his ideas won't work seems inadequate. His point, it seems, is to try to say that nothing will curb inequality.

But consider this. Murray wants to ban unpaid internships, imposing the principle that "If you are not a religious organization and have more than 10 employees, the minimum wage law should apply to anyone who shows up for work every day." These unpaid internships, he thinks, are "career assistance for rich, smart children" that exacerbate inequality because "Those from the middle and working class, struggling to pay for college, can’t afford to work for free." At the same time, he happily concedes that "internships that pay the minimum wage are still much more feasible for affluent students than for students paying their own way through college" so this proposal won't really make a difference. The whole thing is bizarre. Murray's observation amounts to the fact that kids from high-income and low-income families end up with unequal chances in life because they have different amounts of money. This is an accurate observation, but the policy conclusion it supports is clearly the idea that if you want to promote equal opportunities in life you need to redistribute money from high-income families to low-income ones. If low-income students had more money, they would have the same opportunities to invest in their own career development that are available to high-income ones.

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Murray is so deeply committed to the view that giving poor people money only boosts indolence that he's blinded to this possibility. But what he's identified in the interneship sphere is a counterexample. Affluent parents subsidize their 18-22 year-old children not in order to promote indolence but in order to allow them to prioritize long-term human capital investments over short-term earnings maximization. Having the government do the same for lower-income students (perhaps with some appropriate conditionality attached) might produce the same beneficial result. We have lots of problems in America that can't be solved by having the government mail checks to people. That's too bad, because the government is really good at mailing checks and has a harder time doing some other kinds of things. But this is a problem that can easily be solved with cash money.

A separate issue, explored by Katy Waldmann last month, is that many unpaid internships are probably illegal under existing law.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.