Two Problems in One
In the decadence of the Soviet system the saying was "they pretend to pay us and we pretend to work." Something like that may be happening in our country, though it's hard to quantify. I think the phenomenon is manifesting itself in the lousy morale of government workers and the corresponding mediocre performance by employees in the VA, IRS, and government labs. I've got to believe that the combination of years of wage freezes and non-stop public abuse of government workers—bureaucrats, teachers, scientists—is taking a toll. And why would you expect the people who clean houses and flip burgers to go on trying one iota more than they absolutely must if they have nothing whatsoever to look forward to and everybody keeps telling them that the only reason they haven't risen into prosperity is their own human worthlessness?
Positive reinforcement works, but it isn't just millionaires who need it. Part of the problem with great inequality is that paying so much to the very top of the distribution leaves little left to reward the efforts of those below.
There are two problems we've got to deal with:
1. The distribution of incomes between bottom and top is too great
2. There is insufficient social mobility.
These are distinct problems, and confusing 'em messes up the debate. It's a good thing if burger flippers can go back to school and rise in the world, but not everybody is going to rise and those burgers still need to be flipped. Not every body is going to be a Horatio Alger hero. After all, the boss has only so many daughters. Considerations of fairness or decency aside, what’s the upside of leaving so many people in a state of wretchedness?
Time was people spoke about the dignity of work, not the dignity of work as a steppingstone to becoming a manager and owning 168 pizza restaurants, but the dignity of doing the job itself. In any case, if you expect people to do their jobs well year after year, you better figure out some way of rewarding them for their efforts instead of treating them with non-stop disrespect. The meritocratic ideology implies that the losers are dreck. Those of us who are doing OK may not notice the implication, but I'm pretty sure that much of the population is very well aware of it—no Protestant ethic without a large and populous hell.