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Reich Asks Business to Help Close Income Gap : Labor: Disparity, he said, poses 'an enormous problem for this country. . . . If unaddressed, this can rip our society apart.'

April 23, 1995| from Associated Press

WASHINGTON — Labor Secretary Robert B. Reich is urging private business to help correct the widening income gap between rich and poor, saying the disparity threatens to "rip our society apart."

Reich said Friday that most Americans shared equally in income growth from 1950 to 1978. Since then, however, "almost all the increase in average family income . . . has gone to the top fifth" of the U.S. population, he said.

At the same time, "the bottom 20% has lost 15% of real family income," Reich told a meeting of the Financial Women's Assn. of New York.

The resulting disparity, he said, poses "an enormous problem for this country. . . . If unaddressed, this can rip our society apart."

Contributing to the disparity is the fundamental change in the U.S. economy--a shift from factory production lines and concentration on domestic targets to high-tech occupations and global competition, Reich maintained.

In order for Americans to get the education and training necessary to compete in the world economy and raise their standards of living, the government already has begun school-to-work apprenticeship programs and offers low-cost student loans, he said.

The Clinton Administration also proposes streamlining federal job-training programs, vouchers to be used at community colleges to gain skills and tax deductions to pay for education and training.

But, Reich said, "the government cannot do it alone. The private sector has got to take the lead."

He suggested that businesses train their workers, share profits with employees, rely on attrition when downsizing and work with community schools to develop skills.

Reich also urged business not to conduct bidding wars for state and local tax breaks, which he said means less money for public schools and community colleges.

"Don't hit up the federal government for unwarranted subsidies and tax breaks," he said. "If we're committed to ending welfare as we know it--and we should be--let's get rid of corporate welfare as well."

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