SAN FRANCISCO—Wouldn't it be convenient if someone had clear, intelligent answers to most of your CRE-related questions? Problem solved. Nina J. Gruen, a.k.a. Ms. Real Estate, a.k.a. the principal sociologist overseeing market research and analysis at Gruen Gruen + Associates, is here to answer readers' questions.

Dear Ms. Real Estate:

Income inequality may well have been the most significant domestic issue in 2014. The numerous reviews of Thomas Piketty's Capital in the Twenty-First Century, the multitude of newspaper editorials, articles in magazines like The Economist and non-profit organizations like the Center for Continuing Study of the California Economy all tell us that growing income inequality is a major problem for our country. My question is whether this inequality is likely to stabilize, improve or worsen. As an investor in real estate, the degree to which my present and future income stream is likely to be impacted is directly related to the answer to this question.

—Hedging Against Have-Not Heartache

Dear Heartache,

Globalization has caused the loss of well-paying jobs in manufacturing, as lower transport costs enable goods producers to move their facilities to locations with the lowest labor costs. At an ever increasing rate, automation decreases middle level jobs in other sectors, while decreasing communication costs. This decrease in communication costs makes it possible for service jobs to move where labor costs are low. The result is the hollowing out of mid-level, well-paying jobs in developed countries.

Ms. Real Estate's expertise is analyzing the ways in which changes in demography, technology and cultural values influence all real estate markets. The one advantage demography has in predicting the future is that tomorrow's working age population will be made up of youths that are already here and immigration patterns that are currently observable. Canada's immigration policies encourage highly skilled immigrants. The U.S. has immigration rules that cap the number of skilled immigrants that can legally enter the country, while low skilled, undocumented immigrants continue to enter the country from Mexico and Central America. These undocumented immigrants have played a significant role in filling the still needed, lower wage jobs in agricultural, construction and some services. Unless minimum wage levels are raised, they will continue to put a lid on the wages in these industries.

Immigration patterns differ significantly by coastal areas. Western states attract the greatest proportion of Hispanic immigrants, the East Coast the least. Twenty-six percent of California children 15 years of age and younger are Caucasian, while 60 percent are Hispanic. This compares to Vermont's Caucasian population of approximately 90%. For the U.S. as a whole, 52% of the under-15 are Caucasian. But the differential in Caucasian and Hispanic birth rates can be expected to create a significant increase in this trend by 2020.

The proportion of the population in the low/moderate income category is affected by the aforementioned immigration patterns. Steve Levy, the President of the Center for Continuing Study of the California Economy, reports, “There are 1.1 million low and moderate range workers in the region and only at most 300,000 to 400,000 total middle-wage job openings over the next decade.”

As you have noted by now, Ms. Real Estate has not directly answered your question as to what we can expect in this income inequality trend. That is because the answer is dependent upon what actions and investments the U.S. will take in the future. America needs to invest far more dollars in preschool through middle school, particularly for first and second generation Hispanic immigrants in order to enable the workers in these households to compete for 21st century middle and higher income jobs. Many first generation Hispanic immigrants are working in multiple jobs, with their economic mobility limited by low levels of English and reading skills. While helping working age immigrants with language and related skills is important, the path for younger members of their households must include provision of apprenticeship programs beginning in the freshman year of high school, like Germany and other European countries now provide. The Affordable Care Act has exposed and exacerbated a significant shortage of not only doctors and nurses, but other hospital workers like radiologists and phlebotomists. Most large hospitals have 200 or more jobs other than those filled by doctors and nurses. Training for most of these jobs does not require enrollment in a college or similar academic organization, but can lift people out of the “unequal income” category if they receive the training.

If America begins to now invest heavily in providing the skills needed by the growing proportion of our Mexican and Central American Hispanic population, income inequality will improve. To the extent it does not invest in this badly needed social infrastructure, you will want to limit your real estate investments to those products that primarily serve the wealthy.