Category: Equitablog

This is a post we publish each Friday with links to articles that touch on economic inequality and growth. The first section is a round-up of what Equitable Growth published this week and the second is relevant and interesting articles we’re highlighting from elsewhere. We won’t be the first to share these articles, but we hope by taking a look back at the whole week, we can put them in context.

Equitable Growth round-up

Equitable Growth’s incoming President and CEO Michelle Holder penned a note this week, sharing her thoughts on joining the organization at this critical moment.

Kate Bahn, Alix Gould-Werth, and Carmen Sanchez Cumming write that the current state of the U.S. economy is strong, but as it moves toward recovery, the policy actions taken over the next several months will be vital to ensure growth is sustainable and broadly shared. They explain why investments in social infrastructure and boosting workers’ bargaining power are essential tools in policymakers’ belts to keep the economic and labor market recovery on its current trajectory. They also delve into why current disruptions in the labor market are the prime reason to boost worker power and productivity, ensure the labor market is competitive, and enhance social supports for workers. Some proposals they urge policymakers to act upon are increasing the minimum wage, making it easier for workers to form and join unions, improving and updating income support programs such as Unemployment Insurance and permanently expanding the Child Tax Credit, and implementing paid family and medical leave for all workers in the United States.

Inflation is certainly a hot topic these days among observers of U.S. economic activity and among consumers. This is important because consumer expectations of future inflation can spur behavior that further increases inflationary pressure. Carola Binder writes about average inflation targeting at the Federal Reserve, recent trends in inflation expectations and uncertainty among consumers and investors, and what actions the Fed can take to stabilize those expectations. Binder details her new methodology to estimate consumer uncertainty about inflation both in the short term and long term, and explains how the methodology can help researchers studying these trends. Her study finds that not only has short-run inflation uncertainty grown amid the coronavirus recession, but long-run inflationary expectations have also risen. While this isn’t necessarily cause for panic yet, Binder explains that it could have important implications if long-run uncertainty remains elevated and restricts consumers’ activities, such as taking out mortgages or loans. She then recommends actions the Fed can take to alleviate some of these concerns.

Two congressional hearings this week focusing on market concentration and competition policy featured testimony from Equitable Growth staff. On Tuesday, Director of Markets and Competition Policy Michael Kades testified before the Senate Subcommittee on Competition Policy, Antitrust, and Consumer Rights on anticompetitive behavior in pharmaceutical markets. His statement centered on specific actions that brand-name drug manufacturers take to limit competition from generics and biosimilars, as well as the failures of U.S. antitrust laws to prevent this behavior and how congressional action could increase competition and benefit consumers. And on Wednesday, Director of Labor Market Policy and interim chief economist Kate Bahn testified before the Joint Economic Committee on how rising concentration increases economic inequality and decreases U.S. economic efficiency. Bahn’s statement detailed the causes and impact of monopsony, how it exacerbates economic disparities, and what Congress can include in a robust, procompetitive policy agenda that would reduce corporate power.

The Western Economic Association International held its annual conference virtually this year at the end of June. Equitable Growth organized and participated in sessions for the first time, and our network of scholars was well-represented in the program. Highlights included grantee Emi Nakamura of the University of California, Berkeley giving the keynote address; Director of Academic Programs Korin Davis participating on a panel on best practices for submitting grant proposals; and Macroeconomic Policy Analyst Michael Garvey organizing and chairing a paper session on climate change and the macroeconomy. We look forward to future opportunities for engagement both with WEAI and other regional and economics and social sciences conferences in the future.

Links from around the web

Financial markets are signaling a potential reversal of the current economic narrative, away from inflation and toward potentially slower growth. The New York Times’ Neil Irwin looks at the bond market trends and details what that might mean for economic growth in the coming months. He writes that the new topline numbers are nothing to worry about, but they signal an economy in flux. In fact, Irwin continues, the trends indicate that the U.S. economy has reached peak growth and will likely be more measured going forward. Irwin also writes about the potential positive sides of the bond market adjustments, including making borrowing money cheaper for Americans and relaxing fears of sustained long-term inflation.

Last week, President Joe Biden signed an executive order aimed at promoting competition across the U.S. economy and limiting corporate dominance in markets. The Wall Street Journal’s Brent Kendall and Ryan Tracy explain what is actually included in the order: “a road map that encourages U.S. agencies to adopt policies that push back against corporate consolidation and business practices that might stifle competition and lead to higher prices and fewer product choices.” They detail the implications and potential consequences of the order, what executive agencies will have newfound power to do, and how the order encourages a procompetitive outlook across the federal government. They also credit Tim Wu as the architect of the order, who is currently President Biden’s special assistant for technology and competition policy and who last year co-authored an Equitable Growth report that proposed many of the mandates that are included in the order, including a White House council for competition policy and a whole government approach.

This week, the expanded Child Tax Credit payments started being distributed to families across the United States as part of the American Rescue Plan enacted earlier this year. The expansion makes the tax credit available to the lowest-income families, increases the amount families can receive, and changes the structure of payments from a once-a-year lump sum to monthly deposits. The 19th’s Chabeli Carrazana interviewed several families to see how this funding, which will go out to 88 percent of U.S. families, will affect their lives and well-being. For some families, it will enable access to high-quality child care or extracurricular activities for their kids, or allow them to pay off outstanding loans or bills that accumulated over the pandemic months. For others, it could be what they need to get out of poverty—it’s estimated, Carrazana explains, that the expansion could cut the child poverty rate in the United States almost in half. The impact that these payments will have are life-changing for both mothers and their children, and the stories Carrazana relays are incredibly moving examples of why this program should be expanded permanently rather than allowed to expire next year.

Will the pandemic be the beginning of the end of the 5-day work week in the United States? Vox’s Anna North seeks to answer this question. North first explores how entrenched the 5-day work week is in the U.S. economy and society, and how it first came about as a victory for labor organizers in the early 20th century. She then describes how the pandemic has thrown a wrench in these standards, as salaried workers have increased their hours dramatically with the transition to working from home and hourly workers have noticed an increase in unstable and last-minute scheduling practices by their employers. As workers have quit their jobs and begun demanding better working conditions in recent months, some companies (and even countries, such as Iceland) are testing 4-day work weeks. These experiments have already produced positive results for both companies and workers, with a study showing the same or even increased worker productivity alongside improved well-being and work-life balance. North concludes with the changes that would be necessary in the U.S. labor market and economy to be able to achieve a 4-day work week.

Friday figure

Figure is from Equitable Growth’s “Policymakers should ensure that the U.S. labor market recovery lasts by boosting workers’ bargaining power and strengthening social infrastructure,” by Kate Bahn, Alix Gould-Werth, and Carmen Sanchez Cumming.

This is a post we publish each Friday with links to articles that touch on economic inequality and growth. The first section is a round-up of what Equitable Growth published this week and the second is relevant and interesting articles we’re highlighting from elsewhere. We won’t be the first to share these articles, but we hope by taking a look back at the whole week, we can put them in context.

Equitable Growth round-up

Earlier this year, the U.S. Consumer Price Index registered inflation at 5 percent, leading some observers to panic about prolonged inflation and stagflation. Yet, write Francesco D’Acunto and Michael Weber, while long periods of inflation do have direct and immediate impacts on the economy and can exacerbate inequality, policymakers must assess whether the threat of inflation is real or if this is a short-term adjustment that will recalibrate as the economy begins to reopen. D’Acunto and Weber discuss four potential drivers of inflation in the medium to long term: demand pressures, supply chain disruptions, labor market pressures, and inflationary expectations. They detail what each of these drivers is, how it can affect inflation, and how it is relevant to the particular situation in which the U.S. economy currently finds itself. They conclude that while these factors may influence short-term inflation, they do not appear to imply that there will be sustained inflationary pressure in the coming 2–5 years. This means, they explain, that the Federal Reserve probably does not need to take any action to address inflation and that the Biden administration should continue to pursue its current policy agenda.

There has long been a gap in political participation along income lines in the United States, with wealthier Americans turning out to vote in higher numbers than their middle- and low-income peers. But in 2020, many states enacted new voting laws to ease access to the polls amid the coronavirus pandemic, such as expanding vote by mail and increasing the number of ballot drop boxes available, and new data released by the U.S. Census Bureau reveals the impact these laws had on election turnout. In a follow-up column to their February 2021 report on the relationship between voter suppression and economic inequality, Austin Clemens, Shanteal Lake, and David Mitchell analyze the new Census data to determine whether the income divide in voter turnout narrowed law year. They find that in states that made it easier to vote by mail, turnout was higher in the 2020 election across income groups, but that the effect was larger for lower-income individuals. The co-authors explain why the rash of new state laws restricting voting access, as well as the recent U.S. Supreme Court ruling that further defangs the Voting Rights Act, will have a disproportionate impact on low-income voters and voters of color—and what that means for U.S. economic policy. They conclude by urging the federal government to intervene with legislation that protects the right to vote and access to the polls for all Americans.

This week, the U.S. Bureau of Labor Statistics released data on hiring, firing, and other labor market flows from the Job Openings and Labor Turnover Survey, better known as JOLTS, for the month of May 2021. This report contains useful information about the state of the U.S. labor market, such as the rate at which workers are quitting their jobs and the ratio of unemployed workers-to-job openings. Kathryn Zickuhr and Clemens put together a series of graphics highlighting the trends in the data.

Check out Brad DeLong’s latest Worthy Reads column, where he provides summaries and his analysis of recent must-read content from Equitable Growth and around the web.

Links from around the web

Wondering what inflation means for you and how it is impacting the broader U.S. economy? Vox’s Rani Molla and Emily Stewart explain the inflation debate in the United States, what the recent increase in prices means, and the industries most affected right now and why. They detail the impact the coronavirus pandemic and the resulting recession have had on global supply chains and look at some specific examples of goods and services that have become more expensive as a result. Molla and Stewart then provide an update on what is happening in the lumber industry after perhaps the most talked-about price surge in the U.S. economy in the past year. They conclude by discussing how experts are evaluating these higher prices and what to look for in terms of how long this will last.

Last week’s Employment Situation Report from the U.S. Bureau of Labor statistics shows a healthy 850,000 jobs were added in June. Julia Coronado compiles seven charts that explain what is going on with the U.S. economy and recovery in The New York Times. She looks at how the “go early and go big” policy response to the coronavirus recession made a huge impact on the speed with which the economy is recovering. She also examines the impact of this recession and the responding policy on wealth in the United States, consumer confidence and loan delinquency, labor market trends such as job openings, the racial unemployment divide, and inflationary pressures both now and in the future. She concludes that while the policies enacted to counteract the coronavirus recession were not perfect, the bold action is paying off and will allow us to emerge from this downturn into a stronger, healthier economy.

As the West Coast prepares for another heat wave this weekend, Robinson Meyer explains in The Atlantic how unprepared U.S. infrastructure is to handle extreme weather. He details the rise in climate change-related weather events, including heat waves, and how the Biden administration’s plans to include climate policy in its infrastructure plan will bolster U.S. preparedness for the increasing prevalence of these events. Meyer also writes that engineering standards and new physical infrastructure construction have not incorporated the changing climate quickly enough to be innovative and well-equipped to handle the future—and that making these big shifts in resilience standards is more challenging and time-consuming than it may seem.

Friday figure

Figure is from Equitable Growth’s “JOLTS Day Graphs: May 2021 Edition,” by Kathryn Zickuhr and Austin Clemens.

This is a post we publish each Friday with links to articles that touch on economic inequality and growth. The first section is a round-up of what Equitable Growth published this week and the second is relevant and interesting articles we’re highlighting from elsewhere. We won’t be the first to share these articles, but we hope by taking a look back at the whole week, we can put them in context.

Equitable Growth round-up

A new issue brief measures the economic costs of racial, ethnic, and gender inequities in the United States, providing estimates of the benefits of eliminating these disparities and achieving equal opportunity for all. In the brief, author Robert Lynch quantifies the significant economic costs of failing to address not only overt racism and sexism, but also discrimination in such areas as access to jobs, education, credit and loans, high-quality pre-Kindergarten, and healthcare, disparities in the justice system, disproportionate exposure to pollutants, and uneven access to quality physical infrastructure. These disparities, he continues, place heavier burdens on women and people of color. Lynch calculates the impact that equal opportunity would have had in 2019 in terms of total average earnings, Gross Domestic Product, tax revenues, the poverty rate, and Social Security solvency. While he finds significant benefits for people of color and women in eliminating U.S. racial and gender disparities, Lynch also details the gains for the economy overall, which, he notes, are even conservative estimates considering that he did not assess the benefits for non-Hispanic White males in his calculations. It might be difficult to actually realize a society that is free from disparities, he concludes, but the results would be “well worth the effort.”

Economists and economic policymakers have long debated the relationship between taxation and economic growth. These arguments sometimes rely on abstract theoretical models to prove the value of a free market economy, but empirical studies using real world data typically don’t find that increasing taxes is bad for economic growth. In an issue brief, Corey Husak examines whether recent U.S. economic history can provide evidence linking economic growth and fluctuations in the tax code—namely, in top individual income tax rates, corporate tax rates, and capital taxation. He finds that tax changes can have large effects on the U.S. economy, but these effects do not include impacts on overall economic growth or corporate investment. Husak also finds a clear correlation between lower top marginal tax rates and growing income and wealth inequality in the United States. He concludes by recommending that policymakers focus on the real, meaningful, and measurable effects of tax policy—using revenue analysis and distribution tables—rather than on economic growth as an outcome.

As policymakers in Congress debate the merits of reforming or eliminating the filibuster, new research looks into the economic and policy consequences of retaining the Senate rule as it currently stands. Nathan J. Kelly explains that by making any kind of policy change more difficult, the filibuster contributes to growing income and wealth inequality in the United States and leads to a highly unequal economy. This, he continues, is because the filibuster enhances status quo bias, which entrenches divides between the haves and have-nots in the U.S. economy by making government intervention to reduce these divides less likely. Kelly details several recent economic policies that have run up against the filibuster, from increasing the minimum wage and indexing it to inflation to implementing financial market regulations and policies centered on worker power. He then dives into a recent study he and his co-authors released that examines the distributional effects of both partisan polarization and legislative inaction, finding that the latter has a bigger impact on distributional economic outcomes. This means, Kelly concludes, that the longer the filibuster remains part of the U.S. policymaking process, the longer it will take to close income and wealth divides in the United States.

Today, the Bureau of Labor Statistics released its monthly employment report, providing data on the labor market and unemployment in the U.S. economy in June 2021. The data show that, among other things, the economy added 850,000 jobs last month, a higher-than-expected amount. Kathryn Zickuhr and Austin Clemens put together five graphs that highlight the trends in the data, while Zickuhr and Carmen Sanchez Cumming go into more detail in a column about what this Jobs Day report means for foreign-born workers in the United States. These workers already face disparities in job losses, compared to U.S.-born workers, as well as disparities in access to important income support and worker protection programs such as Unemployment Insurance and the Supplemental Nutrition Assistance Program. This, coupled with the fact that foreign-born workers are more likely to be employed in hard-hit industries during the coronavirus pandemic and recession, means foreign-born workers are disproportionately vulnerable in this economic downturn amid the ongoing public health crisis. Zickuhr and Sanchez Cumming urge policymakers to bolster and expand safety net programs rather than cut them, and to ramp up labor standards enforcement to protect workers.

Links from around the web

While racial gaps in educational attainment have narrowed over the past four decades, the Black-White wage divide hasn’t changed. In 2020, average full-time Black workers earned approximately 20 percent less than their White peers and are far less likely to have a job. The New York Times’ Eduardo Porter asks if the underlying cause of these ongoing divides is either racial bias or a changing economy. After Black Americans made strong gains in closing racial gaps at work between the 1940s and 1970s, these gains have stagnated over the past 40 years—and scholars are looking into why. Considering that Black workers today earn less than their White counterparts even relative to educational attainment, many scholars argue that race is the decisive factor in why disparities in wages and work persist. Others say industrial change, globalization, and automation have affected the economy in ways that disproportionately impacted Black workers. These questions are important because the most urgent task at hand, Porter writes, is to find a way to close the divides—and what’s causing them is key to knowing how to address them.

This summer will likely be one of the strangest ever for the U.S. labor market, writes Bloomberg’s Katia Dmitrieva. As the economy overall seems to be growing at a steady pace, millions of workers remain unwilling or unable to return to their pre-pandemic jobs, particularly in hard-hit sectors such as the retail and food-service industries. There are a number of reasons why that’s the case, whether because they want to pursue higher-paying, more stable opportunities, because they are fearful of catching COVID-19, or because they don’t have good, affordable child care options available to them. Likewise, pauses in immigration and international travel have left many seasonal jobs unfilled. Dmitrieva dives into the responses of many corporations and businesses to these trends and explains why the recovery will likely continue to look very different from previous recoveries in the coming months.

In a recent interview with The Washington Post’s Joe Heim, Mark Rank discusses poverty and the safety net in the United States. Rank explains his research on the myths of poverty in the United States, and the denial that is rampant about how much poverty actually exists in the richest country in the world. Rank also specifically calls out the need for a stronger social safety net, citing the fact that, according to his analysis, 60 percent of Americans will spend at least a year of their life in poverty. He also touches on the media’s role in portraying and reporting on poverty in the United States and how the American mindset and the myth of the American Dream play into how the general public views poverty and how much income support goes to people who are struggling. The conversation closes with his insight into how the coronavirus pandemic and recovery may parallel the Depression and resulting New Deal effort to address poverty in the United States.

Friday figure

Figure is from Equitable Growth’s “The economic benefits of equal opportunity in the United States by ending racial, ethnic, and gender disparities,” by Robert Lynch.

This is a post we publish each Friday with links to articles that touch on economic inequality and growth. The first section is a round-up of what Equitable Growth published this week and the second is relevant and interesting articles we’re highlighting from elsewhere. We won’t be the first to share these articles, but we hope by taking a look back at the whole week, we can put them in context.

Equitable Growth round-up

In long-awaited and very exciting news, Equitable Growth this week announced that Michelle Holder will be our next president and CEO. Holder is currently an assistant professor of economics at John Jay College, City University of New York, whose research focuses on the Black community and women of color in the U.S. labor market. Named one of 19 Black economists to watch by Fortune magazine in June 2020, Holder has authored two books, including African American Men and the Labor Market during the Great Recession in 2017 and most recently, Afro-Latinos in the U.S. Economy, published in May 2021. Earlier this month, Holder testified before the U.S. Congress Joint Economic Committee for a hearing titled “The Gender Wage Gap: Breaking Through Stalled Progress,” and she was a featured speaker at the Black Women’s Economic Liberation Summit. Holder will officially start as Equitable Growth’s president and CEO in September.

A new working paper examines the role of slavery in U.S. economic growth and development in the two decades prior to the Civil War. In a column summarizing the research, Kathryn Zickuhr writes that this study provides the first in-depth estimate of the contributions of enslaved Americans to economic growth, not only in the South but for the national economy as well. Zickhur details the study’s methodology, which creates more direct measures of enslaved workers’ output than have previously been used in order to accurately account for their contributions to economic growth. She then discusses the researchers’ findings: Enslaved workers were responsible for roughly one-fifth of the growth in commodity output per capita in the United States between 1839 and 1859 despite only making up 12 percent of the population in 1859. Zickhur concludes with the implications and importance of these findings, not only to better understand the role of slavery in U.S. economic history but also to contribute to discussions of reparations for the descendants of enslaved Americans and for reckoning with the legacy of the institution of slavery today.

Unemployment Insurance is a vital lifeline for many U.S. workers who have lost their jobs through no fault of their own, particularly amid the coronavirus recession, which saw mass layoffs and widespread business closures. Yet many governors now faced with labor shortages are cutting off federal pandemic emergency unemployment benefits due to unproven claims about UI benefits hampering the recovery. The UI system has long been plagued with serious issues, writes Alix Gould-Werth, but rather than abruptly ending this important worker support program, policymakers should focus on fixing it. A new report co-authored by UI policy experts offers a road map to strengthening and stabilizing Unemployment Insurance in the United States, Gould-Werth explains. The report offers ideas for developing a nationally uniform UI program with benefit levels and durations that are responsive to economic conditions and that is accessible to all members of the modern workforce who lose their jobs through no fault of their own. It also proposes a blueprint to fix the financing issues that underlie many of the problems with the UI system. These solutions would go a long way toward bolstering a program that millions of workers rely on and would help bolster the macroeconomy by maintaining demand for goods and services, keeping businesses afloat.

The U.S. economy is increasingly characterized by dominant firms controlling digital platforms, writes Steven C. Salop in a contribution to Equitable Growth’s Competitive Edge blog series covering antitrust enforcement and competition issues. Salop discusses the legislation currently before Congress that would rein in mergers and acquisitions that tamp down competition for these monopolies and restore competition and innovation to the digital marketplace. He explains why current U.S. antitrust law makes it hard to for the antitrust enforcement agencies to successfully prevent these types of acquisitions. Salop then details why the threat of underdeterrence is more concerning than overdeterrence and why the law should mandate a strong anticompetitive presumption for acquisitions of nascent or potential competitors by dominant firms. He concludes with an explanation of how the bills before Congress would address these issues.

Geographic inequality between regions of the United States has soared over the past four decades, with a handful of metropolitan areas becoming some of the richest economic regions in world history while large swaths of the country remain trapped in economic decline. This rising interregional inequality has long been seen as an issue for local and state policymakers alone. Recently, however, there has been increasing interest in federal-level policy responses to reduce inequality between regions. Many of the ideas that have been proposed to deal with this growing inequality are place-based policies that target specific cities or neighborhoods for federal investment or subsidies. But an upcoming Equitable Growth virtual event will discuss why place-conscious policies would be more effective because they deliver support to all communities simultaneously, making them agile in the face of future changes to economic geography. Place-conscious policies also remove politically fraught questions about which areas qualify for aid and can enable the necessary structural changes to the U.S. economy that will meaningfully and sustainably address the issue of inequality in the United States. Learn more about next week’s event here.

Links from around the web

The coronavirus pandemic disrupted every part of the U.S. economy, writes Heather Long in The Washington Post, and in such a way that it’s practically impossible for us to go back to the way things were in February 2020. While there’s still major uncertainty about what changes will be temporary or permanent, several of the shifts are likely to stick around, from online grocery ordering and delivery to working from home and telecommuting for a sizeable part of the workforce. There are also new dynamics to consider around soaring home prices and inflation, Long continues, as well as enhanced worker power to demand higher pay, better working conditions, and more flexibility and opportunity from employers. It’s hard to predict how all these trends will play out both in the short term and long term, Long explains, discussing each with experts and those working in the industries affected. But one thing is pretty certain, she concludes: “the economy coming out of the pandemic is going to look much different than it did before.”

Speaking of more flexibility, companies are now beginning to question the age-old idea that working in person boosts innovation because of spontaneous collaborations that occur when workers share a physical space. The pandemic has changed how many employers view telework and working remotely and has led employees to find new, better ways to work together, Claire Cain Miller writes in The New York Times’ The Upshot blog. As vaccination rates increase and the pandemic winds down, many companies that implemented work-from-home policies are now reversing these policies in the name of innovation, but the people who study this issue find no evidence that in-person environments are essential for creativity and collaboration, Cain Miller explains. In fact, she continues, there is even some evidence that this can hurt innovation by leading to burnout, long hours, and lack of diversity and representation among the workforce.

Next month, millions of families in the United States will begin receiving monthly checks of up to $300 per child as President Joe Biden’s child tax credit expansion goes into effect. Vox’s Dylan Matthews explains why this could be one of the most important days in U.S. history for anti-poverty policy, as this benefit is expected to cut child poverty by 40 percent in the United States. Yet despite its expected impact, it is currently a temporary expansion enacted to help working families amid the coronavirus recession and set to end in January. The Biden administration and some policymakers in Congress want to make this expansion permanent, which would also effectively make this program the most important anti-poverty measure in decades, writes Matthews. He details how the program could be improved and why policymakers should make it permanent—and why they must act quickly and efficiently.

June 19 became a new federal holiday this year to commemorate Juneteenth—the day in 1865, more than 2 years after the Emancipation Proclamation was signed by President Abraham Lincoln, when a group of enslaved workers in Galveston, Texas found out they were free Americans. This year, Daina Ramey Berry writes in The Atlantic, we should take a deeper look at the history of Black self-liberation in the United States to understand what emancipation really means and how far the country still has to go. Berry dives into the long history of what freedom and liberty means and how it was achieved. She looks at how Juneteenth has been celebrated and the meaning behind the holiday. And she details the constant and continuing struggle Black people in the United States have fought and are fighting to secure their freedom and rights.

Friday figure

Figure is from Equitable Growth’s “New research shows slavery’s central role in U.S. economic growth leading up to the Civil War,” by Kathryn Zickuhr.

This is a post we publish each Friday with links to articles that touch on economic inequality and growth. The first section is a round-up of what Equitable Growth published this week and the second is relevant and interesting articles we’re highlighting from elsewhere. We won’t be the first to share these articles, but we hope by taking a look back at the whole week, we can put them in context.

Equitable Growth round-up

The United States has a long history of disproportionately high rates of violence and mistreatment by police against Black communities. But the role of race in police use of force can be difficult to document, explains guest columnist CarlyWill Sloan at Claremont Graduate University, due in part to the assumptions researchers must make about unobserved interactions between officers and civilians. In a recent working paper, Sloan and co-author Mark Hoekstra at Texas A&M University design a natural experiment to measure the effect of race on police interactions with civilians. They examine 911 calls in two cities where neither dispatchers nor police officers have any discretion about which officer is dispatched to respond to a call, meaning officers are randomly assigned to respond. They also observe all police-civilian interactions, even those that do not end in use of force or use of a gun by police. The co-authors find that Black officers use less force than White officers in Black communities, and that White officers are five times more likely to fire their weapons than their Black counterparts when responding to calls in predominantly Black neighborhoods. Sloan writes that the only reasonable interpretation of these findings are that race matters in a systemic way with regard to use of force by police in the United States.

This Sunday is Father’s Day, a day to celebrate and remember the relationships we have with fathers, grandfathers, father figures, and others who helped raise us. But in the United States, the only developed economy without a nationwide paid leave program, many new fathers and mothers are not offered paid time off after the birth or adoption of a child. There are many studies showing the benefits of offering paid parental leave to workers, and President Joe Biden has made paid leave a cornerstone of his proposed American Families Plan, an investment package that will boost spending on worker supports and care infrastructure in the United States. Many countries around the world have successful paid family leave programs and are now shifting their focus to the role of dads in caretaking and childrearing. Many studies in recent years highlight the benefits to fathers, mothers, and children alike—as well as the economy—of paid paternity leave guarantees. Equitable Growth looks at several of these studies and urges policymakers implement a national paid family leave program that includes specific paternity leave options. 

Each month, Equitable Growth highlights a group of scholars working at the frontier of social science research in a particular area in a series called Expert Focus. This month, Aixa Alemán-Díaz, Christian Edlagan, and Maria Monroe showcase the work of speakers from this week’s Equitable Growth and Groundwork Collaborative co-hosted event, titled “Data Infrastructure for the 21st Century: A Focus on Racial Equity.” The researchers, all of whom are interested in racial equity and data disaggregation, call for a focus on racial and gender equity and the use of categories such as race, gender, and ethnicity, along with other social and demographic factors, to be central goals in disaggregating data to provide a better picture of how our economy is doing. Considering the importance of data in addressing both research and policy needs, the areas these scholars are working in, as well as the discussion they had virtually earlier this week, is ever more essential.

Last week, the Labor and Employment Relations Association, or LERA, held its 73rd annual conference, focused on workers, worker power, and the workplace in a time of division and disruption. The virtual event highlighted research from representatives across labor, management, government, advocacy, and academia, offering Equitable Growth an opportunity to deepen and broaden our network of scholars and raise awareness about our work. Equitable Growth organized four sessions for attendees, featuring speakers both well-established and at early stages of their careers, across disciplines and demographic groups, tied together by the goal of creating an equitable economy that works for all U.S. workers. Equitable Growth staff, grantees, and members of our broader academic community were also featured in a number of different plenaries, panels, and paper sessions. Read more about Equitable Growth’s participation and experience at this year’s LERA conference.

Links from around the web

This Saturday, June 19 is Juneteenth, a holiday that marks the day in 1865 that a group of enslaved people in Galveston, Texas learned—more than 2 years after President Abraham Lincoln had signed the Emancipation Proclamation—that they were free from slavery. Vox’s Fabiola Cineas details the significance of the holiday and its increasing recognition in the United States as we approach its 156th anniversary. (On Wednesday, Congress passed a bill proclaiming Juneteenth a national holiday, and today President Biden signed it into law.) Cineas runs through the devastating history of Juneteenth, including the years that preceded it and the backlash that followed it through the Reconstruction era and well into the 20th century, as well as the many ways that communities have commemorated the day over the years. As the United States continues to reckon with its racist and violent history against enslaved people and their descendants, this holiday is an ever more important reminder of the legacy of structural racism that continues to permeate U.S. institutions, society, and the economy.

In the wake of labor shortages amid the ongoing pandemic, particularly in low-wage industries and occupations, workers now have some leverage over employers to demand higher wages or better working conditions. Some employers have responded by increasing their minimum starting wages to appeal to more applicants to their establishments. The Washington Post’s Eli Rosenberg looks at 12 such businesses that raised their minimum wage to $15 per hour either earlier this year or last year to determine the role that pay plays in attracting workers. Rosenberg interviews the employers to detail the impact that offering higher wages or more flexibility can have on business outcomes and on lower-wage workers in industries from restaurants to grocery stores to retail. A few business owners mentioned having to either increase prices for consumers or reduce seasonal staffing or hours to pay for the higher labor costs. Many said their decisions to increase wages did not necessarily arise from a sense of responsibility to do the right thing by their employees, and rather were purely from a business perspective: They had open positions and no strong candidates to fill them. But in making these changes, they were able to improve the lives and financial security of their employees and make their work environments less hostile after a difficult year—and many businesses even reported increases in profits.

This week, the U.S. Senate confirmed Lina Khan to the Federal Trade Commission with a bipartisan vote. Khan, who will serve as chair of the FTC, is a vocal critic of Big Tech’s expanding power and an antitrust law expert. Recode’s Rebecca Heilweil explains what this confirmation signals: “under President Biden, the FTC is likely to become more critical and aggressive in regulating the digital markets that have been created by the tech giants.” Heilweil also writes that her bipartisan approval to the FTC indicates growing consensus among both political parties that Big Tech companies have gotten too powerful and too anticompetitive in recent years, and a shift in approach and policy around regulating digital companies and online markets may be on the way.

Friday figure

Figure is from Equitable Growth’s “Race and the use of force by police matters to build a more equitable U.S. society and economy,” by CarlyWill Sloan.

This is a post we publish each Friday with links to articles that touch on economic inequality and growth. The first section is a round-up of what Equitable Growth published this week and the second is relevant and interesting articles we’re highlighting from elsewhere. We won’t be the first to share these articles, but we hope by taking a look back at the whole week, we can put them in context.

Equitable Growth round-up

After approving $5.3 trillion in coronavirus relief legislation since March 2020, policymakers in Congress are now debating whether to pass two additional medium- and long-term investment packages: President Joe Biden’s $2 trillion American Jobs Plan and $1.8 trillion American Families Plan. Many are wary of increasing spending and want to make sure the new legislation will result in sustained economic growth that is equitable. Michael Garvey explains why the impact of previous coronavirus aid can provide helpful insights into the future economic impact of these two new investment proposals. Garvey looks at expanded Unemployment Insurance, the Paycheck Protection Program, and direct aid to specific sectors of the U.S. economy such as aviation and restaurants to discern whether investments these and others were effective. He then describes the relationship between these programs and others within President Biden’s two proposed investment packages, urging Congress to act to address the medium- and long-term challenges facing the United States with the same resolve with which it passed short-term emergency relief against the coronavirus pandemic and recession.

Join Equitable Growth and the Groundwork Collaborative next Tuesday, June 15 from 2:00 p.m. – 3:30 p.m. for a virtual event on improving data infrastructure to address racial disparities in U.S. society and the economy. Shaun Harrison previews the event, explaining why data disaggregation is so important for economic and public health data amid the coronavirus pandemic and recession. Harrison shows how seemingly race-neutral or “colorblind” policies are a myth and how data disaggregation can effectively ensure that our nation’s collective statistics provide accurate views of the lived experiences of all Americans, thus guiding policy to be more effective and targeted as well.

Last week, the U.S. Bureau of Labor Statistics’ highly anticipated Employment Situation Report for May 2021 revealed gains of 559,000 jobs, with the overall unemployment rate declining to 5.8 percent. Kate Bahn and Carmen Sanchez Cumming break down the data in a column and a series of graphics. They write that the job gains have been especially strong in service-providing industries, which is good news for these hard-hit sectors, and economists predict that this trend will continue as vaccination rates keep rising and there is more public demand for entertainment, dining out, and other in-person services. While the May Jobs Day report was a welcome improvement from April’s report, which was unexpectedly low, it nevertheless reveals some troubling trends. The share of U.S. working-age adults with a job is still 3.3. percent below its pre-coronavirus recession level, the labor force participation rate remains at roughly the same level it was in June 2020, and workers of color still have significantly higher rates of unemployment compared to their White peers.

Earlier this week, the  U.S. Bureau of Labor Statistics released its monthly data on hiring, firing, and other labor market flows from the Job Openings and Labor Turnover Survey, better known as JOLTS, for April 2021. This report doesn’t get as much attention as the monthly Employment Situation Report, but it contains useful information about the state of the U.S. labor market. Bahn and Sanchez Cumming put together four graphs highlighting key trends, including that the quits rate reached a series high of 2.7 percent with nearly 4 million workers quit their jobs in April, signaling higher worker confidence about the labor market.

Links from around the web

Though some companies in specific sectors—mainly those that frequently don’t pay very well or ensure good working conditions—are complaining about not having enough job applicants for the number of openings they’re posting, cutting expanded Unemployment Insurance benefits or requiring proof of job searches is not the appropriate response, says Marketplace’s Kimberly Adams. She argues this just attempting to return the labor market to the way it was operating pre-pandemic. The problem is, many people don’t want to return to their previous employment situations. And requiring them to do so may fill short-term openings but won’t necessarily lead to sustainable, high-quality job matches. Adams looks at the long-term economic benefits of letting workers stay on unemployment a bit longer in order to make sure they’re able to get a better job that pays more and is well-suited to their skillset. These kinds of job matches are good for the economy and recovery because workers ultimately are more likely to stay in these positions, leading to prolonged employment, improved well-being, and positive overall economic growth.

The coronavirus pandemic is not the first one to create a shift in labor market dynamics in which workers make new demands of their employers. Those who argue that labor shortages are being driven by higher Unemployment Insurance checks are ignoring the likelihood that other factors, including caregiving responsibilities and health concerns, are keeping workers out of the labor force, in addition to a desire to be paid more. In fact, writes Spencer Strub in The Washington Post, labor shortages are well-documented occurrences in post-pandemic economies, dating back to the 14th century Black Death plague. Pandemics provide workers with so-called powers of exit, or the ability to quit their jobs, and worker voice, or the ability to assert demands for anything from better conditions to higher pay. Strub details the history of repression and strikes that followed the Black Death in which workers demanded more from their governments, employers, and leaders and were punished for doing so—but which also led to higher wages. Strub cautions against policymakers reacting harshly against the labor shortages of the post-pandemic economy, arguing that this is an opportunity to rebuild the structural deficiencies of the labor market.

A recent opinion essay in The New York Times by Paul Krugman looks at President Biden’s almost $5 trillion budget proposal and the $3.6 trillion of it that will come from new revenues. The Biden administration has promised repeatedly to not raise taxes on households making less than $400,000 per year, which means this revenue will have to come from higher taxes on corporations and high-income Americans. Krugman asks whether it’s possible, wise, and effective to pay for a better America by taxing the rich. To the first two questions—possible and wise—he says yes, but regarding effectiveness, Krugman replies that it’s complicated. He details the three main critiques of President Biden’s approach, rebutting them where appropriate, and concludes that the administration’s proposals are likely to accomplish their goals, while cautioning against watering them down to appease more moderate policymakers in Congress.

Friday figure

Figure is from Equitable Growth’s “U.S. jobs report: Amid robust employment gains in May policymakers need to consider the future direction of demand-driven employment growth across industries,” by Kate Bahn and Carmen Sanchez Cumming.

This is a post we publish each Friday with links to articles that touch on economic inequality and growth. The first section is a round-up of what Equitable Growth published this week and the second is relevant and interesting articles we’re highlighting from elsewhere. We won’t be the first to share these articles, but we hope by taking a look back at the whole week, we can put them in context.

Equitable Growth round-up

May is AANHPI Heritage Month in the United States, a period of time to commemorate the achievements and contributions of Asian Americans, Native Hawaiians, and Pacific Islanders. Kate Bahn and Carmen Sanchez Cumming look into the intersectional wage divides facing AANHPI women in the U.S. labor market, broadening the research in this area, which often obscures the difficulties this group of workers face in terms of employment, career advancement, and earnings. They examine racial, gender, and intersectional penalties that AANHPI women run up against in the workforce, and study what percent of these divides is due to explained or unexplained factors, the latter of which is typically assumed to be the result of discrimination. Bahn and Sanchez Cumming also note the importance of disaggregating data among subgroups of the AANHPI population, as there are many variations in the lived experience of, for instance, Asian American women of Indian and Chinese descent and those of Vietnamese descent or Native Hawaiians and Pacific Islanders. The co-authors close out their issue brief with actions policymakers can take to address these wage differentials and promote economic security for AANHPI women workers, their families, and their communities.

Every month, Equitable Growth highlights a group of scholars at the frontier of social science research in a series called Expert Focus. This month, Christian Edlagan, Maria Monroe, and I showcase the work and backgrounds of researchers across disciplines doing economic research on AANHPI populations and their lived experiences in the United States. Asian Americans are the fastest-growing racial or ethnic group in the country and face distinct challenges. They also have experienced a troubling surge in anti-Asian violence and discrimination during the coronavirus pandemic and recession. The scholars we write about this month are studying intergenerational mobility, wage equality, labor market participation, health and well-being outcomes, and the disparate impact of the coronavirus on AANHPI populations—while also highlighting the need for disaggregated data to more accurately capture the diversity of the many distinct Asian American subgroups in the United States.

New research looks into COVID-19 lockdown policies in the United States and their impact on consumer spending. Jacob Robbins summarizes the findings of his and co-author Raissa Dantas’ working paper on the decline and rise of retail and personal consumption amid the coronavirus pandemic and recession. They find that in the early weeks of the pandemic, fear of catching the coronavirus was the main factor driving consumer spending declines, rather than state- or city-imposed restrictions on behavior, such as stay-at-home orders. When fear of COVID-19 declined but these restrictions were still in place, spending on services directly affected—such as retail and restaurants or other in-person services—remained depressed. This indicates, Robbins writes, that the public health restrictions had their intended deterrence effect and worked to reduce the spread of the virus. The Biden administration should therefore continue its long-term focus on fighting the pandemic rather than putting policies in place that may harm workers and consumers in exchange for short-term Gross Domestic Product gains.

Anticompetitive behavior in the pharmaceutical industry often leads to higher prices for consumers and fewer options in the form of generic competitors to brand-name drugs. But in 2019, Congress passed the bipartisan CREATES Act, which has thus far worked to stop two of these anticompetitive practices and pave the way for generic manufacturers to open up the marketplace. Michael Kades explains the two behaviors—sample blockades and safety protocol filibusters—that the CREATES Act addresses and how they have been used in the past to hamper efforts to create generics and biosimilars. He also discusses how the CREATES Act deters these actions, and other bipartisan measures Congress can take again to prevent other anticompetitive pharmaceutical industry practices such as pay-for-delay settlements and citizen petition abuse.

Links from around the web

Aggregate economic data are misleading and often do not tell the whole story of how most people are experiencing the economy or economic growth. This is true of Gross Domestic Product and of many other economic indicators that are commonly used in the United States. Marketplace’s Kai Ryssdal and Richard Cunningham explain why breaking down the data works to create equitable policy and target those policy interventions to the populations that really need the support. Ryssdal talks to Rhonda Vonshay Sharpe about how breaking down these data can achieve these goals, particularly amid the coronavirus recession and recovery, which has disproportionately affected women and people of color in the United States. Equitable Growth’s Austin Clemens and Michael Garvey recently explained why disaggregated data is needed as a result of structural racism’s enduring legacy and the disproportionate impacts of the coronavirus recession on people of color. Christian Edlagan and Raksha Kopparam also recently discussed the importance of disaggregating data on AANHPI workers amid the coronavirus pandemic.

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Supply-side economics alone has been proven ineffective at growing the U.S. economy and creating jobs. It must be accompanied by government investment in infrastructure—and, as Alan Blinder writes in an op-ed for The Wall Street Journal, that includes the care economy. Areas such as pre-Kindergarten, child care, and paid leave would all but guarantee high returns for the government’s investment in the form of increased human capital and improved economic and health outcomes for workers and their families. The Biden administration understands that these areas are badly in need of investment, Blinder continues, and has included them in the American Jobs Plan and American Families Plan proposals to Congress. “Opponents of programs like these often denigrate them as ‘socialism’,” Blinder concludes. “I like to praise them as real supply-side economics.”

Some employers are complaining these days about the difficulties of hiring workers, yet at the same time they are offering too-low wages, removing hazard pay, or not taking action to protect workers’ safety amid the public health crisis. Vox’s Anna North looks at how work has transformed in the past year, for both those in-person occupations deemed essential and for the workers who transitioned to clocking in remotely. North examines the various practices that were implemented to navigate the coronavirus and how they are slowly being withdrawn by employers—perhaps prematurely, as coronavirus cases continue to spread and deaths from COVID-19 still are a daily occurrence, albeit at a lower rate than for most of the pandemic. This has led some workers to hesitate to go back to work and sometimes even to strike or protest to demand more protections and higher wages.

Friday figure

Figure is from Equitable Growth’s “The intersectional wage divides faced by Asian American, Native Hawaiian, and Pacific Islander women in the United States,” by Kate Bahn and Carmen Sanchez Cumming.

This is a post we publish each Friday with links to articles that touch on economic inequality and growth. The first section is a round-up of what Equitable Growth published this week and the second is relevant and interesting articles we’re highlighting from elsewhere. We won’t be the first to share these articles, but we hope by taking a look back at the whole week, we can put them in context.

Equitable Growth round-up

Amid increased government spending to combat the coronavirus and the ensuing recession alongside overblown fears of inflation, some policymakers are pushing for austerity and against additional public investments. But U.S. history shows that anti-austerity policies are proven to bolster and grow the U.S. economy equitably. Nic Johnson, Robert Manduca, and Chris Hong look back at three widely held anti-austerity perspectives from the early 20th century—underconsumption theory, channeling finance, and secular stagnation—that laid the groundwork for the New Deal and the post-World War II economic boom. Underconsumption theory is the idea that when workers can’t afford to buy everything they produce, it creates imbalances in the economy that are obscured by unsustainable credit and debt levels. The proponents of this idea at the time suggested channeling finance and steadying financial institutions to break the resulting vicious cycle and open wealth-building opportunities for more Americans. Lastly, secular stagnation is the theory that describes the economic condition where the number of profitable investment opportunities is not sufficient to absorb the savings in the economy. The co-authors explain how each of these three perspectives can teach us a great deal these days about growing the economy sustainably and broadly, and provide a path forward that doesn’t embrace austerity or financialization. Adhering to these perspectives, they conclude, would also work to address the rampant inequality evident across the U.S. economy and society since the 1980s.

This week, Director of Markets and Competition Policy Michael Kades submitted a statement for the record with the U.S. House Oversight and Reform Committee for a hearing on anticompetitive behaviors in the U.S. pharmaceutical industry and soaring prescription drug prices. Kades provided a summary of the anticompetitive behavior in which pharmaceutical company AbbVie (whose CEO was testifying in the hearing) has long engaged—namely, pay-for-delay patent settlements, frivolous patent litigation, and product hopping—and how Congress can act to change these market dynamics that lead to concentration and soaring profits for drug companies, and rising costs and fewer options for consumers. He recommends that Congress stop pay-for-delay settlements, which allow a company to pay its generic competitors to not release or defer the release of their product; restore the Federal Trade Commission’s disgorgement authority, depriving companies of illegal profits earned as a result of anticompetitive behavior; and deter strategic behavior that protects monopolies, such as product hopping, or the release of “new and improved” products that are not significantly different from their predecessors in order to quash generic competition. These actions would help lower prescription drug costs for consumers in the United States and protect competition in the pharmaceutical industry.

Head to Brad DeLong’s latest Worthy Reads column, where he provides summaries and analysis of recent must-read content from Equitable Growth and elsewhere.

Links from around the web

For those anxiously reading headlines about inflation, The New York Times’ Neil Irwin provides some reassuring advice in The Upshot blog. He proposes asking five essential questions whose answers shine some light on the mechanisms through which the value of a dollar changes over time. He first suggests looking at whether the increases in prices for goods and services are relative or dispersed across industries and sectors and then whether the prices that are rising are likely to continue going up, to plateau, or to go back down. He then asks whether wages are also rising and whether inflation is rapid and erratic or steady. Finally, he asks whether we are actually, in fact, experiencing inflation or if it’s simply a price shift for assets and investments. Irwin breaks down the aspects of each of these areas that could be concerning, as well as those that are not, finding ultimately that the inflation alarm bells are currently ringing prematurely (while advising readers to keep a close eye out for several warning signs).

The U.S. government should tax rich people in order to pay for its investment priorities. It’s simply the right thing to do, argues Vox’s Emily Stewart. The well-off have disproportionately benefitted from economic growth and stock market booms, particularly over the past 40-plus years as economic inequality has become pervasive in the United States. And it’s well-documented that the rich have gotten a lot richer during the coronavirus pandemic and resulting recession—and that they know how to evade taxes better than the rest of us. Stewart cautions that changes to tax law must be robust enough to close loopholes and prevent tax avoidance from savvy filers, while also urging Congress to act. As President Joe Biden angles to get his American Jobs Plan and American Families Plan passed, taxing the rich is a fair way to pay for a lot of these important public investment policies—and they can afford it, Stewart writes. While it won’t pay for everything the Biden administration has proposed, it will work to redistribute the tax burden and reduce the inequality that has come to define the U.S. economy.

Friday figure

Figure is from Equitable Growth’s “The American anti-austerity tradition,” by Nic Johnson, Robert Manduca, and Chris Hong.

This is a post we publish each Friday with links to articles that touch on economic inequality and growth. The first section is a round-up of what Equitable Growth published this week and the second is relevant and interesting articles we’re highlighting from elsewhere. We won’t be the first to share these articles, but we hope by taking a look back at the whole week, we can put them in context.

Equitable Growth round-up

Tax Day 2021 is Monday, May 17. As many Americans prepare to file their tax returns and await their refunds, Corey Husak writes that some of the wealthiest Americans will engage in complicated tax evasion techniques to avoid paying their fair share—costing the U.S. government up to $700 billion this year, according to Treasury Secretary Janet Yellen. This tax evasion trend has gotten so severe, Husak continues, that the Biden administration is proposing several measures to crack down on it and try to close the so-called tax gap. Husak looks at the ways tax evasion contributes to U.S. economic inequality, the various extralegal methods these rich tax cheats use to evade taxation and hide their income from the IRS, and the impact of declining resources for the IRS to investigate tax evasion and enforce the tax code. Policymakers must understand these sources of tax evasion, he explains, in order to enact strategies and proposals that will close the tax gap.

If the state of the U.S. economy were to be measured solely based on stock prices and Wall Street’s performance, then it would appear to be booming. But this standard does not provide an accurate view of what’s really going on, particularly amid the K-shaped economic recovery from the coronavirus recession, in which the wealthy are becoming ever wealthier while the nonrich continue to struggle. The financial sector’s tightening grip on the economy leads to expanding inequality and wealth divides—and policy enables this trend. Amanda Fischer explores a recent hearing before the U.S. Senate Committee on Banking, Housing, and Urban Affairs, which looked at the financialization of the U.S. economy, its effect on workers and inequality, and its contribution to racial economic disparities in the United States. She also provides some policy proposals for addressing this financialization, including investing in physical and care infrastructure, boosting worker power, strengthening financial-sector regulations, and making the tax code fairer.

Earlier this week, the U.S. Bureau of Labor Statistics released data on hiring, firing, and other labor market flows from the Job Openings and Labor Turnover Survey, better known as JOLTS, for March 2021. The report contains useful information about the state of the U.S. labor market, including the quits and job openings rates. Kate Bahn and Carmen Sanchez Cumming put together a few key graphs using data from the report, highlighting the major trends in the release.

Brad DeLong provides his takes on the latest must-read content from Equitable Growth and around the web.

Links from around the web

A number of states are planning to end the expanded Unemployment Insurance of $300 extra per week related to COVID-19 emergency benefits, arguing these benefits—a lifeline for millions of U.S. workers amid this economic crisis—discourages people from going back to work. As the U.S. economy reopens and vaccination rates jump, some sectors are still experiencing challenges to rehiring their workforce, but there is nothing in the data to suggest that expanded UI benefits are behind that trend. NBC News’ Dartunorro Clark reports on several governors’ reasoning behind the decision to end emergency UI benefits, which critics call “ill-informed and cruel.” For more details on what’s really at stake as states cancel this federally funded UI expansion, check out this factsheet by The Century Foundation’s Andrew Stettner. He details what will happen to workers in need as these programs are cut, how cuts will disproportionately impact workers of color, and why this policy choice is short-sighted. Stettner also explains the Biden administration’s alternative approach to the issue of getting workers back into jobs.

The stock market is booming, and while this is great news for anyone with investment or retirement accounts, it also signals a deeper issue within the U.S. economy. NPR’s Greg Rosalsky delves into why soaring profits and stock prices are eating into the incomes of U.S. workers and exacerbating inequality, hurting the overall economy. It’s part of why wages have stagnated, why fewer people are in the workforce, and why startups haven’t been growing as much in recent decades, he continues. Rosalsky looks at the rise of market power in the United States since the 1980s, why this rise has occurred, how it has affected the broader economy, and what policymakers can do to address it.

Friday figure

Figure is from Equitable Growth’s “The sources and size of tax evasion in the United States,” by Corey Husak.

This is a post we publish each Friday with links to articles that touch on economic inequality and growth. The first section is a round-up of what Equitable Growth published this week and the second is relevant and interesting articles we’re highlighting from elsewhere. We won’t be the first to share these articles, but we hope by taking a look back at the whole week, we can put them in context.

Equitable Growth round-up

As the U.S. economy begins to show signs of recovery from the coronavirus recession, it’s important to remember that many Americans are experiencing job displacement, where their prior positions no longer exist. This type of job loss occurs amid shifting economic and business conditions, such as business closures, corporate downsizing, or outsourcing, and is generally out of the control of individual workers. Kate Bahn and Carmen Sanchez Cumming look at the long-lasting and rippling effects of job displacement on workers and the broader economy, the especially severe labor market outcomes for those who are displaced during recessions, and the higher likelihood of being displaced for workers of color, especially Black workers. Bahn and Sanchez Cumming then present several policy ideas that would address these negative consequences for U.S. workers and job displacement, including ramping up the Short-Time Compensation and Unemployment Insurance programs, and bolstering unions and unionization efforts. Overall, they write, the critical element of these proposals is to maintain employee attachment to their jobs when possible and supplement their incomes when job loss can’t be avoided.

The economy continued to add new jobs in April, but much fewer than were expected. The latest Employment Situation Report from the Bureau of Labor Statistics indicates that many younger workers could face long-term harmful effects on future economic outcomes. Young workers tend to be among the most affected populations during and after recessions because early-career periods are typically characterized by strong earnings growth, which can be disrupted by slack business conditions. Bahn and Sanchez Cumming explain that the coronavirus recession has been no exception: At the height of the downturn last spring, young workers faced exceptionally high rates of joblessness. The co-authors pull together several graphics to highlight the trends in the BLS data, and also provide a more in-depth analysis of the data and its implications for the broader economy. They urge policymakers to make long-term investments in supports for workers and their families, particularly those programs that help those who are most vulnerable to economic shocks and those hardest hit by the current recession.

The Senate Judiciary Committee will soon consider a new bipartisan bill that modernizes and increases funding for antitrust enforcement. The Merger Filing Fee Modernization Act of 2021, introduced by Sens. Amy Klobuchar (D-MN) and Charles Grassley (R-IA), would boost enforcement funding and revamp the merger filing fee structure so that firms engaged in larger deals, which generally require more resources, have to pay their fair share of fees. Michael Kades examines the current funding streams and merger filing fee structures, why additional resources are needed, and how the new bill would impact antitrust enforcement. As Kades explains, the filing fee structure currently treats very differently sized mergers the same: A $1 billion deal pays the same filing fee as a $100 billion merger. Additionally, Congress has, for more than a decade, underfunded the antitrust enforcement agencies—the Federal Trade Commission and the U.S. Department of Justice’s Antitrust Division—even as their workloads have grown. Kades acknowledges that this bill will not address the serious market power problem in the U.S. economy, but he argues that it makes an important down payment on antitrust enforcement—and its bipartisan nature suggests that more comprehensive reforms may be possible.

Head over to Brad DeLong’s latest Worthy Reads column, where he provides his takes on recent must-read content from Equitable Growth and around the web.

Links from around the web

A recent report by the Federal Reserve Bank of New York finds that many small businesses that closed at the beginning of the coronavirus pandemic in 2020 may never reopen. The report finds that the restaurants, shops, and concert venues that shut their doors right when the public health crisis began are less likely to reopen than those that stayed open until July 2020. Marketplace’s Nancy Marshall-Genzer reports on the study’s findings, which argues that the longer a place remains closed, the more likely it is that customers forget they exist or move on to other businesses. These businesses also may have been ineligible for Paycheck Protection Program support—and often were owned by people of color, who not only had more difficulty accessing PPP loans but also less frequently have financial cushions to weather the recession due to longstanding systemic discrimination.

Systemic racism has entrenched a racial wealth divide in the United States so vast that even policies such as forgiving student debt and implementing baby bonds aren’t enough to close it. In a guest contribution for The New York Times, Duke University public policy professor William Darity Jr. looks at the realities of the disparities in wealth accumulation between Black and White Americans, including that the average wealth gap between Black and White households was $840,000 in 2019. Darity Jr., a member of Equitable Growth’s Research Advisory Board, urges, policymakers to consider instituting a reparations program for Black Americans whose ancestors were enslaved in the United States. This group makes up about 12 percent of the total U.S. population but own less than 2 percent of wealth in the United States, Darity Jr. continues, indicating that policies such as student loan forgiveness that have previously been proposed to close the wealth divide would help but won’t be sufficient.

It’s time to value care, writes Kristin Smith in an op-ed for the New Hampshire Union Leader. The coronavirus pandemic has laid bare the impossible choices many families face between providing care to their loved ones or earning a paycheck. Policymakers must invest in care infrastructure and family supports, argues the Dartmouth University professor, such as those  proposals President Joe Biden put forth recently. These important investments would help workers who are crushed by competing demands on their time and lack of caregiving support. They also would bolster the care economy, which is the invisible engine that powers the overall U.S. economy by enabling workers to be productive, by properly paying and valuing those who perform care work. Considering the number of workers who have left the workforce due to caregiving responsibilities over the past year, Smith concludes, it is long past time to make these investments.

Friday figure

Figure is from Equitable Growth’s “Equitable Growth’s Jobs Day Graphs: April 2021 Report Edition,” by Kate Bahn and Carmen Sanchez Cumming.