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

As David Mitchell writes, the American Jobs Plan and the American Families Plan, described this week by President Joe Biden in his address to Congress, would make large-scale, and in some cases permanent, investments in the nation’s physical and human infrastructure. These measures would combat racial, income, and wealth inequality, and they would restructure large parts of the U.S. economy to strengthen and broaden economic growth, combat climate change, and build a lasting and effective care infrastructure. Mitchell summarizes the research that has helped to lay the foundation for the size, the scope, and many of the specifics, of Biden’s policy and programmatic proposals. Our hope, he writes, “is that policymakers follow the compilation of academic evidence that Equitable Growth and others have assembled and capitalize on this opportunity to make structural economic change that spurs strong, stable, and broad-based growth.”

As Congress debates whether those plans, along with the major COVID-19 relief plan enacted in March, are too big, too small, or just right, a new Equitable Growth factsheet addresses an important question: Could these measures, designed to bring about a strong recovery now and lay a foundation for strong and broadly shared long-term growth, send the economy into overdrive, leading to destructive inflation and high interest rates? The title of the factsheet provides the answer: “Overheating is not a concern for the U.S. economy.” The most salient evidence, the factsheet points out, is that the U.S. economy still has 10 million fewer jobs today than it likely would absent the coronavirus pandemic and resulting recession. While it does not rule out the possibility of overheating at some point, the factsheet suggests that it is unlikely in the near term, and that overheating can be addressed if and when it occurs. It concludes that the “general macroeconomic benefits—such as long-term employment gains and fully recovered labor force participation among women and workers of color—significantly outweigh any concern for possible overheating.”

The United States is rare among developed countries in its lack of federally mandated access to child care and early childhood programs and paid family and medical leave, and its weaknesses in long-term and elder care are also well-known. For these reasons, our nation’s care infrastructure is central to the current debate over the size and role of the federal government. The U.S. care economy is the topic of April’s Expert Focus, a monthly feature in which Equitable Growth highlights scholars, both in and beyond our network, who are at the frontier of social science research. The researchers about whom Christian Edlagan, Maria Monroe, and Emilie Openchowski write this month are examining care infrastructure and policies and their impacts on workers, their families, and their communities. The evidence points to longstanding challenges and deficiencies that predate the coronavirus pandemic, which has, our authors write, “only served to deepen these cracks in care infrastructure, particularly along gender and racial lines.”

The American Dream of intergenerational mobility—the hope that one’s children will have a better life than one’s own—is more alive in many other countries than in the United States. More than 90 percent of U.S. children born in 1940 had higher real incomes at age 30 than their parents did, but only about 50 percent of children born in 1980 can say the same, writes Robert Manduca of the University of Michigan. Manduca describes a new working paper he wrote with 13 U.S. and European co-authors that examines the question: Was this decline in upward mobility part of a global trend or unique to the United States? The answer, clearly illustrated below in this week’s Friday figure, is that several of the European countries the group studied have maintained high levels of intergenerational mobility, while the United States, along with Canada and Denmark, has declined. He attributes this to the fact that incomes for young adults in these three countries have fallen behind overall economic growth and, in this country, “shifts in the U.S. labor market that advantage employers at the expense of workers are a fundamental cause.”

Equitable Growth’s academic program awards research grants to scholars, mainly at U.S. universities and colleges, seeking evidence on issues related to the intersections between economic inequality and economic growth and stability. Since the organization’s founding in 2013, it has invested more than $6 million in the work of more than 200 grantees. In its second annual comprehensive academic research report, Equitable Growth describes the impact of its funded research, updating what we’ve learned and the questions we seek to answer. It’s an indispensable tool for understanding the organization’s mission and the extraordinary research that has provided evidence that underlies many of the groundbreaking proposals that have become central to the national policy debate.

Links from around the web

Lower-skilled workers suffered the most in the coronavirus recession. And Heather Long reports in The Washington Post that they are the slowest to regain employment as the economy recovers. Hiring has rebounded quickly for those with college educations, including two-year degrees, she writes, but for those with high school degrees or less, jobs are hard to come by, even as the economy begins to reopen and some employers say they are unable to find workers. She said the current economy looks like a “two-track recovery,” with some similarities to the recovery from the Great Recession a decade ago, when workers without college degrees struggled to find employment.

The economic narrative—our common understanding about what makes the economy grow and what it means to be a thriving nation—is fundamentally changing. So writes Chris Hughes, co-chair of the Economic Security Project, in Time. The economic ideology that has underpinned much of the nation’s economic policy since the 1980’s, based on the “myth … that markets, unfettered and free, are the best way to create economic growth,” was discredited during the Great Recession over a decade ago and has “collapsed” in the wake of the coronavirus pandemic and recession. What is replacing that narrative for Americans across the political divide, Hughes writes, is a “managed market paradigm.” As he describes it, “There are three key pillars to a new, managed market approach: effective regulation, sizable public investment, and careful macroeconomic supervision. A managed market requires centralized, accountable institutions embracing their power to create stable and competitive markets where innovation can flourish and labor shares in the wealth.”

As the country begins to come to grips with the fact that communities of color are far more exposed to environmental threats than White communities, a new study, conducted at five universities, shows that even a significant U.S. policy success of recent decades has had considerably less positive impact on Black, Latinx, and Asian American communities. As Juliet Eilperin and Darryl Fears report in The Washington Post, while the country has made great progress in reducing air pollution from fine-particle matter, such as soot, that comes from cars, trucks, factories, and elsewhere, nearly every source of “the nation’s most pervasive and deadly air pollutant still disproportionately affects Americans of color, regardless of their state or income level … The analysis … shows how decisions made decades ago about where to build highways and industrial plants continue to harm the health of Black, Latino and Asian Americans today.”

Friday figure

Figure is from Equitable Growth’s The American Dream is less of a reality today in the United States, compared to other peer nations.

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

Shaun Harrison delves into the many ways the nation’s local, state, and federal tax systems discriminate on the basis of race and exacerbate racial income and wealth disparities. Economists Carlos Fernando Avenancio-León at Indiana University Bloomington, an Equitable Growth grantee, and Troup Howard at the University of California, Berkeley find that for homes of equal market value, homeowners of color pay an average 10 percent to 13 percent higher tax rate, within the same local property tax jurisdiction, than White homeowners. Homeowners of color who sell their homes receive lower prices due to such factors as reduced neighborhood school quality, but they pay the same property taxes because these factors are not incorporated into tax assessments. Black and Hispanic homeowners also face discrimination in assessment appeals. The Institute on Taxation and Economic Policy explains the regressivity of state sales and excise taxes. Low-income households, which are disproportionately households of color, must spend a larger share of earnings to make ends meet, thus subjecting that larger share of income to consumption taxes. Fundamental elements of income tax systems benefit well-off, mainly White, taxpayers. Tax deductions, for example, save them more money than they do lower-income taxpayers. Finally, the relative lack of wealth taxation, due to various tax preferences, further entrenches racial inequity because U.S. wealth is disproportionately owned by White families.

Aixa Alemán-Díaz and Austin Clemens summarize a new report released by UnidosUS that highlights one of the reasons for the wealth divide between Hispanic households and other households in the United States—low homeownership rates among single Latina women, compared to single White women. Although Hispanics are the fastest growing segment of the U.S. population, this group tends to face structural and systemic barriers to accessing homeownership, including structural racism, low incomes, and a lack of financial resources upon which to draw. As a result, Hispanics are less able to tap significant home-buying subsidies worth tens of billions of dollars annually. UnidosUS’s report uses data from a number of government surveys and other sources, but it notes that the existing data are insufficient: “The limitations of the sample sizes and data collection methods in federal surveys restrict disaggregated or detailed analysis of important racial and ethnic inequities at the national level.” The inadequacy of data prevents policymakers from understanding gaps in economic outcomes. To begin to address the persistent and disproportionate negative effects of economic inequality on Latinos across generations, the federal government must disaggregate economic indicators and report on disparities that marginalized populations face. 

Because the United States stands as the only advanced economy that does not guarantee paid family and medical leave to its entire workforce, millions of workers, families, and employers often lack the support they need during a family transition or health shock, including the arrival of a new child, an aging parent, a diagnosis of an illness, and personal injuries. Only 10 states and localities have implemented or begun to implement programs for their residents, so the coronavirus pandemic and recession exacerbated this national failing, creating excruciating caregiving and work-life conflicts for millions of U.S. workers. This is a critical reason that U.S. women’s labor force participation rate stood at a 33-year low in March 2021, with women of color hit the hardest. Policymakers preparing for the post-pandemic economy are proposing investments in U.S. physical and caregiving infrastructure—including paid family and medical leave, child care, and home-based health services. To assist their efforts, Equitable Growth staff have compiled a factsheet that reviews current research on—and lessons from—existing state-provided paid family and medical leave programs in the United States. Building on the evidence of the effects these programs are having on workers, families, and businesses would address one of the most pressing deficiencies in the nation’s caregiving infrastructure.

Links from around the web

“Housing segregation by race and class is a fountainhead of inequality in America,” writes Richard Kahlenberg of The Century Foundation. In a New York Times op-ed, he expresses support for national measures to bring about the reform of local zoning laws that reinforce racial and class housing segregation, noting, “Single-family exclusive zoning, which was adopted by communities shortly after the Supreme Court struck down explicit racial zoning in 1917, is what activists call the ‘new redlining.’ Racial discrimination has created an enormous wealth gap between White and Black people, and single-family-only zoning perpetuates that inequality.” While Kahlenberg endorses President Joe Biden’s proposal for federal grants to localities to end zoning measures that establish minimum lot sizes or bar multi-family housing, he urges policymakers to go further by requiring localities to begin dismantling segregation and creating a private right of action “to allow victims of economically discriminatory government zoning policies” to sue in federal court.

Facing such critical policy and enforcement questions as who is an employee and who is an employer, the U.S. Department of Labor’s Wage and Hour Division is at the center of a raging national debate and policy battlefield. Bloomberg’s Ben Penn reviews the key issues facing the agency, based on an interview with principal deputy administrator Jessica Looman, who is the agency’s acting head in the absence of a Senate-confirmed permanent administrator. The agency has already moved to repeal two rules from the previous administration that have not yet gone into effect. One would have made it easier to classify workers as independent contractors; the other would have exempted major franchisors, such as fast-food companies, from liability for wage violations committed by their franchisees. In addition, the new leadership seeks to recover from a 25-percent reduction in the agencies investigative staff to pursue employers who violate wage-hour and family-leave laws.

In an essay for Boston Review that will appear in a new book, Redesigning AI, economist Daron Acemoglu of the Massachusetts Institute of Technology calls for a rethinking of how artificial intelligence is being implemented in the workplace and society. On its current path, he writes, if AI technology continues to develop along its current path, it is likely to create social upheaval, in part for its effect on the future of jobs. AI technologies may excessively automate work, displacing workers and failing to create new opportunities to enhance productivity. It may also undermine democracy and individual freedoms. “Shared prosperity and democratic political participation do not just critically reinforce each other: they are the two backbones of our modern society,” Acemoglu writes. “Worse still, the weakening of democracy makes formulating solutions to the adverse labor market and distributional effects of AI much more difficult.” But these developments are not preordained. He suggests a number of prescriptions for redirecting AI research toward a more productive path, adjusting government funding of AI research, influencing the norms and priorities of AI researchers, and strengthening societal oversight of technologies and their applications.

Friday figure

Figure is from Equitable Growth’s Measuring what matters: Zeroing in on Latina women to address persistent low Hispanic homeownership rates in the United States.

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

Many Americans do not have the caregiving support they need in order to physically return to an office or workplace once the coronavirus pandemic wanes. This was an issue long before the onset of the pandemic and subsequent recession, but the past year only deepened the existing cracks in our nation’s care infrastructure. As policymakers consider President Joe Biden’s American Jobs Plan and forthcoming American Families Plan—his multipart investment proposal for boosting infrastructure and creating good jobs—Equitable Growth released a factsheet on U.S. care infrastructure and what the research says about its impact on the U.S. economy. It highlights recent studies on the state of the care economy, how undervalued caregiving is in the United States, and the impact that public investment in care infrastructure can have on economic growth, labor force participation (particularly among women and workers of color), and worker well-being. This research shows that policymakers must consider investments in both care and physical infrastructure in order to jumpstart the economic recovery from the coronavirus recession and support workers who are currently being forced to choose between receiving a paycheck and caring for loved ones or themselves.

There was a time in recent U.S. history in which care was part of infrastructure: the World War II era. Sam Abbott details the Lanham Act, which was passed in response to women’s increased labor force participation amid the war effort of the early to mid-1940s. This law was not, by definition, a child care bill, but nonetheless created government-funded child care centers in more than 650 communities with defense industries across the United States in order to support mothers on the factory lines and fathers on the front lines of battle. Regardless of income, families could send their children to Lanham Act centers for $11 per day (adjusting for inflation). These centers closed down in 1946, but research on the few years they were open reveals both short- and long-term benefits for women’s attachment to the labor force and for their children’s education and employment outcomes years later. This has important implications now, Abbott explains, as policymakers consider investments in both physical and care infrastructure to ensure an equitable post-pandemic economy.

Recently, Equitable Growth relaunched our Research on Tap series, with a virtual event focused on investing in an equitable future co-hosted by the Groundwork Collaborative. The event kicked off with a conversation between Cecilia Rouse, the chair of the White House Council of Economic Advisers, and reporter Tracy Jan from The Washington Post, followed by a discussion on the need for structural changes among a panel of economic and social policy experts. The panel included Jhumpa Bhattacharya, vice president of programs and strategy at the Insight Center for Community Economic Development; Joelle Gamble, a special assistant to the president for economic policy on the White House National Economic Council; and Saule Omarova, a Cornell University law professor; and was moderated by Equitable Growth’s Policy Director Amanda Fischer. The event centered on the idea that markets alone cannot address the large structural challenges facing the country, including climate change, systemic racism and discrimination, and the lack of a 21st century care infrastructure. Instead, government must work together with the private sector to find solutions to these complex issues. Read our recap of the event to find out more about the policy ideas and reforms discussed that would ensure a stronger, more equitable future economy than the one with which the United States entered the pandemic.

In the latest installment of Equitable Growth in Conversation, Alix Gould-Werth speaks with Mark Rank, the Herbert S. Hadley professor of social welfare at Washington University in St. Louis, where he studies issues of poverty, inequality, and social justice in the United States. Their conversation touches upon different aspects of poverty in the United States, from how to usefully measure it and the actual causes of it, to poverty myths and their consequences. One important finding of Rank’s research that comes up is that the nearly 60 percent of Americans between the ages of 20 and 75 will experience at least 1 year in poverty, and three-quarters of Americans will experience either poverty or near-poverty in their lifetimes. Rank and Gould-Werth also discuss the intersections of poverty with race, inequality, the macroeconomy, and policymaking in the United States. Their conversation is a fascinating preview of next week’s Equitable Growth virtual event featuring Rank, Equitable Growth Presents: Dispelling Poverty Myths and Expanding Income Support.

Climate change is an incredibly complex policy issue, one that does not have a simple solution. But a policy workshop last year looked at the promises and challenges of carbon pricing as a path forward for reducing carbon dioxide and other greenhouse gas pollution in the United States. Gernot Wagner details the discussions at the conference, including how to price carbon, how to spend the revenues that may accrue from this policy, ways to foster innovation in this sector, and aligning carbon pricing policies with other measures that regulate emissions and fuel use. He also explains the political hurdles that could stand in the way of carbon pricing regulations, reviews the states and regions that have already been successful in implementing carbon pricing policies, and summarizes key recommendations that came out of the policy workshop for the Biden administration.

Links from around the web

There is a mountain of evidence that early childhood education and child care programs are beneficial not only for working parents and their children but also for the broader economy. So why is this industry so convoluted, unaffordable, and inaccessible to so many families? Vox’s Anne Helen Petersen proposes a straightforward solution: Make caring for children a good job with a livable wage, and make child care free and accessible for families. In 2019, the average early childhood worker was paid $11.65 per hour, or $24,230 per year—hardly enough to pay the bills, let alone save up or afford an emergency expense—yet the cost of sending a child to day care is increasingly out of reach for low- and middle-income families. This, Petersen writes, is the hallmark of a broken system. The first step toward fixing it involves changing the broader public’s thinking around caregiving work to that of a public good, much like we think of sanitation or libraries: essential to a functioning society, with no limits—financial, educational, geographic, or otherwise—on who can access it. Petersen explains how policymakers can go about this, and also looks at why it hasn’t been done thus far.

The American Rescue Plan’s extension and expansion of the child allowance is expected to cut child poverty in half—a significant achievement, considering that poverty leads to worse educational, health, and employment outcomes for children later in life. New research also looks at how poverty affects brain development among babies and young children, finding that those raised in poverty have subtle brain differences than their better-off peers, writes Alla Katsnelson in The New York Times’ The Upshot. The study examines whether reducing poverty itself can promote healthy brain development, studying the impact of providing families with cash payments that are comparable in size to those in the American Rescue Plan on future outcomes for children. Though it’s unclear what the policy implications will be, if any can be discerned at all, it could be an important insight into the role poverty plays in both individual lives and in future economic circumstances.

Though unionization efforts at an Amazon.com Inc. warehouse failed last week, the experience was illuminating, writes The New York Times’ Paul Krugman, highlighting the “continuing effectiveness of the tactics employers have repeatedly used to defeat organizing efforts.” But workers and labor advocates should not give up, Krugman continues. The United States needs unions in order to counteract expanding economic inequality and wage stagnation in this country—history itself shows the role unions play in ensuring an equitable economy for U.S. workers. Policy decisions in the 1980s reduced the size and scope of union membership, to disastrous effect for workers and their families, with more severe impacts than globalization and automation in lowering wages in the United States. Krugman explains how restoring the power and strength of unions would go a long way to boosting wages and reducing wage disparities among the U.S. workforce—and would work to level the political playing field as well.

The field of economics has a diversity problem—this is an undeniable fact. Indeed, this week, top policymakers at the Federal Reserve acknowledged and lamented that Black and Hispanic people are severely underrepresented among economists, reducing the effectiveness of policy decisions by limiting the perspectives that contribute. AP’s Christopher Rugaber covers the webinar, sponsored by the 12 regional Fed banks, in which top officials and experts, alongside leading economists and press, addressed the issue of diversity in economics. The Fed itself has an issue with diversity, with most leading policymakers being White males with a business background—an issue that was highlighted by a recent Brookings Institution report.

Friday figure

Figure is from Equitable Growth’s “Factsheet: What does the research say about care infrastructure?”

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 U.S. workers file their tax returns for 2020, new research shows that uncertainty about the amount individual filers may receive in their tax refunds hinders the effectiveness of tax-based redistribution from two refundable tax credits. The Earned Income Tax Credit and the Child Tax Credit comprise a significant portion of income for their respective 25 million and 48 million recipients, but the rules governing access and eligibility for the credits are complex and leave many individuals without an accurate estimate of the size of their refunds. This affects low-income workers in particular, write Sydnee Caldwell, Scott Nelson, and Daniel Waldinger, as well as those with dependents, those who experience large yearly changes in their incomes, and young filers. The co-authors summarize their recent working paper, which finds this uncertainty limits the ability of recipients to plan their finances throughout the year, reducing the value of these important tax credits. In fact, the co-authors find that average recipients would be willing to forgo roughly 10 percent of the total value of the credit they receive to eliminate uncertainty about the refund amount. Policymakers can use these findings as they design and implement stimulus efforts and strive to make tax policy work for filers along the income distribution.

This week, a group of more than 200 economists—including many in Equitable Growth’s network and led by Hilary Hoynes, professor of public policy and economics at the University of California, Berkeley; Trevon Logan, professor of economics at The Ohio State University; Atif Mian, professor of economics, public policy, and finance at Princeton University; and William Spriggs, professor of economics at Howard University—sent a letter to congressional leadership urging them to invest in both physical and care infrastructure, as well as science and technology, as part of President Joe Biden’s infrastructure and jobs plan. The signees argue that the private sector alone cannot address the various structural challenges facing the United States, from climate change to systemic racism to a crumbling care economy. And, they write, the share of U.S. Gross Domestic Product invested in federally funded research and development has declined to just 0.6 percent, resulting in less knowledge creation, fewer good jobs, and added difficulty in boosting employment in new sectors. If passed, these public investments could spur strong, stable, and broadly shared economic growth—and policymakers can take advantage of the current low-interest-rate environment to reassert the United States’ global leadership position and solve the problems of the 21st century.

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 February 2021. Kate Bahn and Carmen Sanchez Cumming put together five graphics highlighting the main trends in the data.

In Brad DeLong’s latest Worthy Reads column, he summarizes and provides his take on recent content from Equitable Growth and across the internet.

Links from around the web

President Joe Biden recently released his plan to shore up the economy and bolster U.S. infrastructure. The $2 trillion plan will be paid for via higher taxes on corporations over 15 years and includes several proposals and areas for improving both physical and care infrastructure. Alicia Parlapiano and Jim Tankersley break down what’s in the legislative proposal in The New York Times’ The Upshot blog. They detail the main areas of the package—transportation, buildings and utilities, jobs and innovation, and in-home care—the cost of each proposal within the areas, and what they hope to achieve. It’s an easy-to-grasp summary of how President Biden hopes to accomplish some of his main goals: revitalizing the nation’s crumbling and outdated buildings, roads, and bridges; reducing U.S. dependence on fossil fuels; and improving jobs in the innovation, tech, and care sectors.

In an in-depth feature, Vox’s Emily Stewart interviews workers across the United States living on the minimum wage, documenting their challenges trying to eke out a living. The federal minimum wage has been set at $7.25 per hour since 2009—at 40 hours per week, this adds up to $15,000 annually—a rate that is not enough to cover basic expenses in any state, particularly for those with dependents. Millions of U.S. workers make that or even less, and many rely on the social safety net and other public assistance to supplement their income in order to get by. Though many of the workers who Stewart interviews expressed some concerns about the implications of a minimum wage hike, including job losses or increased automation, most also lamented the difficulty that they experience with their current salaries in paying their bills or saving, not to mention affording a vacation or covering an emergency expense. Stewart writes that these workers aren’t necessarily looking to live a life of luxury. Rather, they want to be able to afford everyday expenses such as food, health insurance, and rent. In other words, they just want to be able to live. The inability to earn a living, let alone save money, prevents many workers from achieving important wealth- and income-building milestones, such as buying a home or going to college, holding back the overall economy and contributing to widening inequality in the United States.

LinkedIn will soon allow workers to describe their employment status as “stay-at-home parent.” The Lily’s Soo Youn says this may help normalize caregiving as an occupation. Particularly amid and in the aftermath of the coronavirus recession—as 2.5 million women left the labor force, often citing caregiving needs as the reason—this is a welcome change. Though women are slowly starting to close the gender gap in unemployment during this recession, they also often have a harder time returning to work after leaving the labor force than men—though all workers experience penalties for taking time to care for their families. LinkedIn’s new feature aims to reduce this discrimination and stigma, Youn writes, hopefully ensuring those who take time off either voluntarily or otherwise don’t have to settle for lower pay or lesser roles when trying to reenter the job market.

Friday figure

Figure is from Equitable Growth’s “Uncertainty about the size of annual tax refunds hinders the effectiveness of tax-based U.S. redistribution,” by Sydnee Caldwell, Scott Nelson, and Daniel Waldinger.

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 President Joe Biden unveils his second major legislative proposal, this time focusing on infrastructure and jobs, it will almost certainly be accompanied by fears of inflation and too-high government debt. But these concerns are overblown, writes Shaun Harrison. The latest economic research in fact reveals that the United States has a substantial capacity to make public investments that will power a strong, stable, and broad-based U.S. economic recovery and support long-term growth. Plus, Harrison continues, the government can take advantage of the current low-interest-rate environment to embrace federal deficits. Harrison then summarizes a range of recent research on the role of fiscal policy in spurring economic growth and the implications of low interest rates.

Equitable Growth, since its founding, has promoted the use of research in policy and decision-making, building a bridge between academics and policymakers to ensure lawmakers have the tools they need to enact evidence-backed policies. That’s why, David Mitchell explains, we are heartened to see so many of the scholars with whom we’ve worked over the years entering into roles in the Biden-Harris administration—highlighting the value of research and evidence in the policymaking process. Mitchell runs through a list of those appointees and their areas of expertise, as well as their new roles and responsibilities in the executive branch. Equitable Growth congratulates these and other new hires across the administration and looks forward to continuing to work with them to promote economic policies that will ensure strong, stable economic growth across the United States.

The U.S. Census Bureau’s Household Pulse Survey provides incredibly valuable data on how the coronavirus recession affects U.S. households, asking workers about their health, employment status, and spending patterns. The results of this survey can guide policymaking around future coronavirus relief and stimulus legislation, as it provides an in-depth look at how families along the income distribution are faring and their access to income-support programs such as Unemployment Insurance and the Supplemental Nutrition Assistance Program. Carmen Sanchez Cumming and Raksha Kopparam put together a series of graphics that detail the data and its implications. They show that low-income families and families of color are more exposed not only to the pandemic and the economic shocks that followed it, but also to structural, longstanding disparities in the U.S. labor market. They urge policymakers to focus on addressing these challenges, without regard to austerity or the national debt, in order to stabilize the U.S. economy and boost growth for all—especially the most vulnerable and hardest hit since the onset of the coronavirus pandemic.

Each month, Equitable Growth highlights a group of scholars within and beyond our network who are at the frontier of social science research. As March is Women’s History Month, this installment of Expert Focus looked at researchers studying women’s impact and role in the U.S. labor market, as well as forces that inhibit their participation. This March also marked 1 year since many coronavirus lockdowns were enacted across the United States, which triggered what has now been dubbed the “shecession” due to the outsized impact of the downturn on women workers. Christian Edlagan, Maria Monroe, and I showcase the work of several scholars at varying points of their careers whose work has been pivotal and will continue to be so as policymakers navigate the recovery from the coronavirus recession and women work to recoup many of the labor market gains that were lost over the past year.

The U.S. Bureau of Labor Statistics released data today on the state of the labor market during the month of March, finding, among other things, that 916,000 jobs were added and the unemployment rate dropped to 6 percent. Kate Bahn and Carmen Sanchez Cumming put together five graphics on the major trends in the data. They also wrote a column on the data release, which explains that while the numbers are encouraging and a sign of positive growth in the U.S. economy, they also reveal that racial disparities continue to plague the recovery and long-term unemployment remains a serious challenge.

Links from around the web

March 24 marked Equal Pay Day, or the date into 2021 that U.S. women have to work, from the start of 2020, to make the same salary that men did in 2020 alone. In other words, full-time, year-round employed women earn 82 cents for every dollar that full-time, year-round employed men earn. Axios’ Ivana Saric reports that it will take women in North American around 61.5 years to reach economic parity with men, according to the World Economic Forum. The same report finds that women in South Asia may have to wait as long as 195.4 years, while women in Western Europe will reach parity in 52.1 years. the coronavirus pandemic only worsened gender disparities, Saric continues, with women in the United States and elsewhere exiting the labor force at higher rates than men.

Perhaps some of that gap can be attributed to the lack of a paid parental leave guarantee and penalties that working parents experience in the United States. Most of those U.S. workers who receive paid parental leave—about one-fifth of the workforce—are generally employed full time by big companies, while the majority of those who do not fit those descriptions, and even some who do, are left to fend for themselves if and when they decide to become parents. Claire Suddath explains for Bloomberg readers why all new parents should have access to this vital support, not only those who are “lucky” to get it from an employer. The Families First Coronavirus Response Act passed in March 2020 did include some temporary paid leave for parents whose children’s schools or day care had closed due to the pandemic, but this did not cover new parents. Suddath urges Congress and the Biden administration to address this emergency with a permanent fix. A paid leave policy would not only benefit the U.S. economy by allowing parents to be more productive workers, but also improve other important markers of a healthy society, from infant and maternal health to gender equality in parenting.

The coronavirus health and economic crises largely cemented the influence and power of billionaires in the United States—particularly tech billionaires, whose companies, from Amazon.com Inc. to Facebook Inc., have experienced skyrocketing profits since the pandemic began, further widening the gap between the richest and the rest of U.S. society. Recode’s Theodore Schleifer dives into why we can’t stop talking about these billionaires and how their rising wealth demonstrates how unequal the pandemic and its effects are today. Schleifer details how these uber rich Americans have been able to capitalize on the pandemic to grow their wealth and how their philanthropic giving has changed in the past year. He also looks at how this growing wealth translates—or maybe not so much—into political power and the implications this has on inequality in the United States, as well as public opinion and policy solutions to address these gaps.

Friday figure

Figure is from Equitable Growth’s “Equitable Growth’s Jobs Day Graphs: March 2021 Report Edition,” 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

The American Rescue Plan features a variety of much-needed supports for American workers and their families to navigate the coronavirus recession and boost the economy to ensure broad-based recovery. One such support program is the expanded Child Tax Credit. Liz Hipple explains the changes made to the child allowance and how they will help more households. She then offers evidence and data from research on how other income support programs, such as the Supplemental Nutrition Assistance Program and the Earned Income Tax Credit, boost individual families’ well-being, as well as the overall economy. These income support programs work to reduce income inequality by supplementing families’ bottom lines so they can invest some of their household budget in their children’s human capital development. This not only helps families and children directly receiving these benefits, Hipple writes, but also ends up paying economywide dividends in the future as these children have greater educational achievement, are more productive and healthier workers, and earn higher wages—thus paying more in taxes. Hipple concludes by urging Congress to make these CTC extensions permanent in order to ensure both short-term and long-lasting economic boons.

As news reports reveal the astonishing levels of wealth accumulated by billionaires during the coronavirus recession—steadily widening the income inequality that was already rampant in the U.S. economy—Daniel Reck, Max Risch, and Gabriel Zucman and their co-authors study the tax evasion tactics of the richest Americans. They find that the top 1 percent of income earners is much more sophisticated than the other 99 percent at tax evasion, and thus that conventional estimates seriously underestimate the level of tax evasion by the wealthy. Their study also reveals the main strategies the rich use to obscure and hide their income, including pass-through businesses and offshore bank accounts. The authors argue that policymakers can fight widespread tax evasion by both addressing these tactics in particular and also by increasing the funding available to the IRS to make tax enforcement more efficient and effective. These actions, the co-authors estimate, could yield $175 billion in currently uncollected taxes per year—more than enough to make permanent and expand further the child allowance extensions in the American Rescue Plan that Liz Hipple writes about.

Another way to address income inequality in the United States is to revamp pay-setting processes across the U.S. economy. In a new installment of Equitable Growth in Conversation, Kate Bahn talks to professor of sociology Jake Rosenfeld about what determines workers’ pay, how that impacts economic inequality, and policies that can support U.S. workers and decrease income disparities. They also touch upon the role of worker power and unions in the pay-setting process and how our traditional understanding of the determinants of salaries is misguided. They close their conversation with a discussion of the importance of interdisciplinary research on advancing our understanding of these dynamics and challenges.

Brad DeLong’s latest Worthy Reads column highlights recent must-read content from Equitable Growth and across the internet.

Links from around the web

Improving the U.S. child care industry is essential to the economic recovery from the coronavirus pandemic—and this is no small task as there are many issues involved. The Lily’s Anne Branigin details how high-quality child care has long been unaffordable or inaccessible to many U.S. families, while emphasizing the role of child care as a behind-the-scenes support for the whole economy, making it possible for parents to hold jobs and be productive. At the same time, child care workers are often low-wage employees who do not receive benefits such as access to health insurance or retirement plans. These dynamics only worsened amid the pandemic, Branigin continues. Many mothers and fathers (though more often mothers) were forced to leave the labor force in order to care for their children as schools and daycare centers closed or went virtual. And child care providers struggled to stay open and implement health standards—not to mention keep their workers safe. The industry received some emergency funding in the American Rescue Plan, but advocates argue it is not nearly enough to truly make headway on these challenges. Rather, they say, addressing the child care crisis ought to be treated the same way policymakers treat shoring up physical infrastructure in the United States—meaning major government investments will be necessary.

Though topline numbers clearly show how large—and growing—the disparities are between Black and White families’ wealth and income in the United States, these numbers have other, less-discussed consequences. Lynnette Khalfani-Cox writes for Vox that those Black households able to achieve a certain level of wealth face higher barriers than White households to growing that wealth. Longstanding discrimination limited Black families’ reliance on social safety net programs and access to wealth-building opportunities. And systemic inequality inhibited Black intergenerational mobility such that better-off Black families frequently relied on financial support from other family members who have not reached the same standard of living or have high levels of debt. This so-called Black tax—“the obligations of first-in-the-family college graduates, professionals, or others who ‘make it’ to assist their family members,” explains Khalfani-Cox—has implications on economic mobility and opportunity. The Black tax reduces overall wealth among Black families and their ability to save, invest, and grow their money, undoubtedly contributing to racial wealth disparities in the United States both now and in the future.  

Friday figure

Figure is from Equitable Growth’s “Tax evasion at the top of the U.S. income distribution and how to fight it,” by Daniel Reck, Max Risch, and Gabriel Zucman.

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

Unemployment Insurance is a vital resource for U.S. workers who lose their jobs through no fault of their own, but those who voluntarily leave their jobs typically are not eligible to receive UI benefits. This complicates job searches for married dual-earner couples. Studies show they tend to move to pursue job opportunities less often than single-earner households, partly because of the challenges involved in moving two jobs as opposed to one. When married couples do move, one spouse frequently becomes the so-called trailing spouse, leaving their job behind and usually facing earnings penalties and lower labor force participation rates as a result. A new working paper by Joanna Venator looks at the impact of Unemployment Insurance for trailing spouses—a program enacted in 23 states, as of 2017—which allows trailing spouses to apply for and receive Unemployment Insurance from the state in which the couple worked prior to moving. Venator explains in a column that her research finds access to this income support program increases the likelihood that a dual-earner household will move and improves married women’s labor market outcomes after a move, in part because women become the trailing spouse more often than men. In fact, she writes, married women who are able to claim the trailing spouses benefit receive higher annual earnings 3 years after moving of between $4,500 and $12,000, compared to similar women who are not eligible for these benefits. Venator details the policy implications in terms of the design of UI systems and policies meant to encourage moving for work opportunities.

Head over to Brad DeLong’s latest Worthy Reads column to get his takes on recent Equitable Growth content and other items from around the web.

Links from around the web

The Unemployment Insurance system in the United States dealt with unprecedented demand over the past year, starting with new benefit claims shattering records in March 2020 and continuing through this year. The U.S. Department of Labor reports the 52nd consecutive week with more than 1 million new claims filed. A Century Foundation factsheet, compiled by Andrew Stettner and Elizabeth Pancotti, distills a vast array of data on UI take-up and distribution since the onset of the pandemic, providing comparisons to data from previous downturns. One point in particular stands out: The co-authors show that 1 in 4 workers has relied at least once on UI benefits during the COVID-19 pandemic. They also highlight the various inequities, deficiencies, and delays that plague the system, particularly for workers of color, and how this affects unemployed workers and access to UI benefits amid the coronavirus recession. Stettner and Pancotti close with lessons to be learned after this trying year, including a call for implementing automatic stabilizers, expanding UI eligibility, increasing benefit levels and duration, and modernizing the current system to increase efficiency and prevent fraud.

Friday figure

Figure is from Equitable Growth’s “Moving with two careers is hard, but Unemployment Insurance for trailing spouses can help,” by Joanna Venator.

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

This Women’s History Month marks 1 year since COVID-19 restrictions began in many U.S. cities and states, and thus the unofficial start of what many have dubbed the “shecession,” thanks to the disproportionate impact of the coronavirus recession on women workers. Delaney Crampton looks at recent research on women’s longstanding challenges in the U.S. economy due to employer monopsony power, the child care crisis, and pay equity. These issues affect women of color in particular, both historically and today. One year into the pandemic, women workers of color are still experiencing higher rates of unemployment and loss of earnings than other workers. Crampton summarizes a series of studies showing how women, and especially women of color, face significant hurdles in the labor market and why each of these crises—earnings inequality, lack of access to child care, and monopsony power—must be addressed.

This week also marked Asian American and Pacific Islander Women’s Equal Pay Day, the day in 2021 until which, on average, Asian American, Native Hawaiian, and Pacific Islander women have to work, from the start of 2020, to earn as much as White, non-Latino men earned in 2020 alone. Kate Bahn and Carmen Sanchez Cumming explain the data on this 15-cent wage gap, particularly amid the coronavirus recession, due to the over-representation of AANHPI men and women among front-line workers. Though the wage divide between White, non-Latino men and AANHPI women narrowed significantly over the past two decades, Bahn and Sanchez Cumming write, many Asian American women continue to face pay discrimination and other obstacles in the labor market. A challenge for economic researchers lies in the lack of data that are disaggregated among the many subgroups of workers and families within the AANHPI community—an issue that Bahn and Sanchez Cumming argue is necessary to address in order to ensure that policymakers can target programs and aid more effectively.

Earnings inequality is a big driver of economic inequality in the United States. Recent research shows, however, that it’s not only what you do but also where you work that matters. Increasing alignment of earnings in occupations and at workplaces is making inequality worse. Nathan Wilmers and Clem Aeppli detail the findings in their new working paper, which showcases the importance of studying earnings inequality at workplaces and in occupations together, as high-paying occupations are increasingly clustered at high-paying workplaces and low-paying jobs at low-paying workplaces. This means higher-paid workers are earning increasingly more, while low-paid workers earn even less—resulting in “worse earnings inequality than either between-occupation or between-workplace variation would create by themselves,” the co-authors conclude. They then explain the implications for policymaking to address these two types of earnings inequality together rather than in silos.

Workers in the United States who typically experience lower earnings than they should are gig workers. Kathryn Zickuhr details how ride-hail drivers, such as those who work for Uber Technologies Inc. and Lyft Inc., are often misclassified as independent contractors by their employers in order for those companies to avoid paying them a minimum wage or providing full-time worker benefits such as health insurance or paid sick leave. Zickuhr then looks at a recent study of New York City’s 2019 pay standard for gig workers, describing how it increased the average hourly earnings of ride-hail drivers to be more in line with the city’s $15 minimum hourly wage. But, she notes, misclassification deprives these workers of more than wages. While the pay standard did effectively boost pay, updating labor laws to prevent misclassification and ensure worker protections would better address the lack of economic security and benefits that gig workers experience.

Every month, the U.S. Bureau of Labor Statistics releases data on hiring, firing, and other labor market flows from the Job Openings and Labor Turnover Survey, better known as JOLTS. This week, the BLS released the latest data for January 2021. Bahn and Sanchez Cumming put together four graphics highlighting trends in the data.

Links from around the web

One way to address the vast racial wealth divide between Black and White Americans in the United States is reparations—and one Chicago suburb is set to become the first city to financially compensate its Black residents for centuries of wealth and opportunity gaps resulting from enslavement, systemic racism, and discrimination. NBC News’ Safia Samee Ali reports the latest news on a reparations program in Evanston, Illinois, a program approved in 2019 and funded via community donations and revenue from a 3 percent tax on recreational marijuana sales. Critics are debating the legislation from several sides, but proponents argue that it’s an historic model that could be used in cities across the United States—at least until a federal reparations program is enacted. The city council is expected to vote in the coming weeks on a plan to release the first $400,000 to address housing needs.

President Joe Biden this week signed the $1.9 trillion American Rescue Plan and with it, may have started the second War on Poverty, writes Vox’s Dylan Matthews. The COVID-19 relief bill includes some of the most far-reaching anti-poverty policies in decades, Matthews explains, harkening back to former President Lyndon B. Johnson’s collection of government programs to combat U.S. poverty in the 1960s. The parallels between the two presidents and their two anti-poverty plans are clear, and while the American Rescue Plan may not be as impactful, it is estimated that poverty will fall by one-third overall, with child poverty cut in half, as a result of the bill’s enactment. Matthews runs through the various policies included in President Biden’s plan and the effects they’ll likely have on poverty, then turns to policies the president can push for in future legislation to continue waging this war on poverty now that the American Rescue Plan has been signed.

The passage of the American Rescue Plan also signals a shift in lawmakers’ willingness to use their authority to set the U.S. economy on the path to recovery, writes The New York Times’ Neil Irwin in The Upshot. The coronavirus recession shows that leaders from both parties are willing to borrow and spend money to “extract the nation from economic crises … [a power] they ceded for much of the last four decades.” This change stands in direct contrast to the response to the Great Recession of 2007–2009, Irwin argues, which was largely dealt with by the Federal Reserve—an entity with much more limited tools to address recessions. And, if successful, the American Rescue Plan could be a blueprint for how the U.S. government responds to future crises.

While the American Rescue Plan, on its face, is a coronavirus relief package, it also will have an impact on U.S. climate policy, writes The Atlantic’s Robinson Meyer. Of course, it isn’t a sweeping, climate change-specific bill, but by reviving many institutions that are central to addressing climate change that have been battered by the pandemic, it is part and parcel of the Biden administration’s overall climate agenda. Meyer briefly examines the various programs in the bill that will impact U.S. climate policy, from boosting public transit agencies to supporting state and local governments, and shows how this legislation has begun to shift political perspectives in such a way that opens the door for fighting climate change directly.

Friday figure

Figure is from Equitable Growth’s “Women’s History Month: Systemic gender discrimination continues to harm working women amid the coronavirus recession” by Delaney Crampton.

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 President Joe Biden considers ways that he can improve the economy using executive authority, Equitable Growth released an Executive Action Agenda, a series of factsheets on economic policy proposals that can fight inequality and a ensure strong, broad-based economic recovery and sustained economic growth. David Mitchell summarizes each of the five factsheets released over the past few weeks and how they would advance widespread economic growth. We have written about the ideas in the factsheets before but repurpose the proposals in this series to provide specific steps the administration can take and list experts in each area with whom policymakers can consult for guidance.

Here are the five topics already covered, with more to come:

• Executive action to coordinate federal countercyclical regulatory policy
• Executive action to combat wage theft against U.S. workers
• Executive action to reform the cost-benefit analysis of U.S. tax regulations
• Executive action to coordinate antitrust and competition policies across the federal government
• Executive action to improve U.S. economic measurements

In addition to executive orders on the economy, President Biden is pushing for Congress to pass his $1.9 trillion American Rescue Plan. New data on personal incomes from the Great Recession of 2007–2009 and its sluggish recovery demonstrate that spending too little is a far more dangerous prospect than spending too much, writes Austin Clemens. He says Congress risks repeating the errors of the past, which, in the decade following the previous recession, led to a slow and uneven recovery and left millions of U.S. workers and their families struggling. Clemens unpacks the new data series produced by the U.S. Bureau of Economic Analysis, explaining why these data—which are broken out to show how people across the income distribution fared, rather than an aggregate growth number—provide a key look at why the recovery from the Great Recession was so anemic. These new data make clearer the necessity of a big stimulus bill, as well as the utility of distributional datasets, Clemens concludes, urging policymakers to learn their lessons and act accordingly.

Part of the American Rescue Plan is extended Unemployment Insurance benefits that run through August 2021. Equitable Growth research shows that automatic triggers for relief programs are better for economic recovery than arbitrary expiration dates, but there’s no doubt that unemployment benefits are an important support for struggling families. It’s also well-established that Black and Latinx workers are less likely to access these benefits than their White peers, which can have a major impact on the stabilizing effects of UI benefits on the broader U.S. economy, writes Alix Gould-Werth. New research shows that some demographic groups’ consumption and spending in their local economies is more sensitive to fluctuations in income: A $1 change in income means a 7-cent change in spending for White workers, a 15-cent change in spending for Latinx workers, and a 22-cent change in spending for Black workers. This means that when Black and Latinx workers lose income as a result of losing their jobs, they curtail their consumption more significantly, which leads to further unemployment. But it also means that when these workers gain income from UI benefits, they spend significantly more of it, boosting their local economies. This research, Gould-Werth concludes, highlights why extending Unemployment Insurance is a vital part of propelling the broader U.S. economy toward recovery—and why policymakers must also act to address the racial disparities in UI benefit receipt.

One year into the coronavirus recession, unemployment rates are still well-below what they were in February 2020. Kate Bahn and Carmen Sanchez Cumming analyze the latest data released from the U.S. Bureau of Labor Statistics on employment and the U.S. labor market in February. And check out their charticle presenting five key charts on the new unemployment data.

Links from around the web

The way the federal government and many economists and analysts currently measure economic health is not working, write Jhumpa Bhattacharya and Andrea Flynn in The Nation. Looking at aggregate Gross Domestic Product growth or how high the stock market is doesn’t accurately reflect the lived experience of most Americans, especially during the coronavirus recession, in which the rich have gotten richer and low- and middle-income families are struggling. Instead, Bhattacharya and Flynn explain, we should focus on improving the lives of the most marginalized in our society—without fearing the cost of doing so—because this will improve everyone’s standards of living. Insufficient action and aid from the government at this point would only serve to reinforce and exacerbate the stark racial and gender divides that predated this pandemic-induced recession but have only worsened over the past year. “The health of our economy is only as good as the economic health of the American people—all of them,” the co-authors conclude. Measuring the economy in new ways that showcase the lived experience of all people, and especially the most vulnerable, would guide policy in a way that ensures broad-based solutions and a strong recovery.

It is well-documented that the coronavirus pandemic and recession are disproportionately affecting people of color in the United States, but a lack of disaggregated data is preventing policymakers from targeting aid to both the communities that need it and the programs that would be most efficient in providing it. Yahoo!’s Brian Cheung reports on the importance of breaking out data by race and ethnicity to ensure disparities are addressed in relief efforts. Disaggregating data on access to the COVID relief programs passed by Congress in 2020, for instance, would show how different demographic groups utilized the aid and where bottlenecks occurred, which would allow policymakers to be more deliberate as they craft, debate, and pass the American Rescue Plan. Gathering these data, Cheung explains, is a vital part of ensuring equity in government programs and combatting broader economic inequality in wealth and income in the United States.

The coronavirus pandemic and recession has pushed millions of workers from the U.S. workforce, disproportionately affecting women and workers of color, so many of whom have lost the labor market gains they made in recent decades. A new survey from Indeed shows that the pandemic also widened the gender divide in requests for raises and promotions, with men being 8.6 percent and women 12.1 percent less comfortable asking for more money or a better job title from their employers. Indeed’s AnnElizabeth Konkel reviews the survey’s findings and its implications for gender parity in the U.S. labor force. The survey also finds that women are now more comfortable asking for flexible work schedules and conditions amid the pandemic, probably as a result of increased responsibilities at home, which fall heavily on women’s shoulders. Konkel explains that if employers become less accommodating after the pandemic eases, this could push even more women out of the labor force, further widening gender divides in the U.S. workforce.

Friday figure

Figure is from Equitable Growth’s Executive Action Agenda factsheet “Executive action to combat wage theft against U.S. workers.”

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 history of violence and suppression of Black Americans is long and atrocious, and the institutionalized racism and systemic oppression that began centuries ago continue to impact the economic outcomes of Black Americans. As Black History Month comes to a close, Liz Hipple and Shanteal Lake highlight how the lingering impacts of this historical discrimination and subjugation prevent many Black families from achieving the so-called American Dream. Hipple and Lake review a few of the papers that were presented at this year’s Allied Social Sciences Associations conference that elevate research on this topic and explain the impact that this research has on broader understandings of the Black experience in the United States. This research, they write, shows how decades of “violence, predatory financial practices, and labor market discrimination have stolen opportunities—and billions of dollars—from African Americans,” exacerbating racial disparities in areas from economic well-being to educational achievement to health. These policies were designed to promote racial inequality and violence, and therefore, they note, can be re-designed to promote equality and restore humanity.

Each month, Equitable Growth highlights scholars from our network and beyond who are working to better understand the effects of inequality of broad-based economic growth. This Black History Month, Christian Edlagan and Maria Monroe showcase Black scholars leading the way to diversify the economics profession. The lack of diversity in economics, both at university and professional levels, stymies research on economics, social sciences, and policy. These scholars and experts, Edlagan and Monroe write, are doing the critical work of increasing and sustaining diversity in the field and addressing pipeline and pathway challenges for people of color in economics.

Wage theft, which occurs when an employer doesn’t justly compensate an employee for their labor, exacerbates inequality and puts families at risk. The workers who are most at-risk are women, workers of color, and noncitizens—often already-vulnerable workers who occupy low-wage positions in industries where workers have little power to protect themselves and demand fair compensation and working conditions. An Equitable Growth factsheet looks at the dangers posed by wage theft for workers and the economy more broadly, and then provides several executive actions that President Joe Biden’s administration can take to crack down on wage theft, protect workers, and raise their wages and living standards.

As the Biden administration explores ways to improve efficiency and outcomes in government, it should consider eliminating the cost-benefit analysis requirement for tax regulations. An Equitable Growth factsheet explains why this requirement, which was implemented in 2018, fails to provide accurate assessments of the merits and downsides of tax regulations. The factsheet then lays out possible executive actions President Biden can take to properly evaluate tax regulations, particularly by examining the impacts of these rules on revenues, the level and distribution of the tax burden, and any compliance costs.

Links from around the web

The prevalent zero-sum thinking on race and wealth in the United States takes a huge toll on society and the U.S. economy, writes Heather McGhee in an op-ed for The New York Times. For too long, policies and politicians have pitted people against each other in a way that ends up leaving us all worse off than we could be, McGhee continues. Starting around the Civil Rights era, the percentage of White Americans who support government provision of public goods cratered and has remained low since then. Describing her 3-year quest to “understand what stops us from uniting for our mutual benefit,” McGhee looks at the impact of racial resentment on per-capita government spending and provision of services (or lack thereof) in the United States. She then urges policymakers, stakeholders, and the public to dispel the idea that there is a fixed quantity of prosperity to go around, and instead focus on uniting across racial lines to ensure the provision of basic needs for all, from a livable wage to clean air.

Tying economic relief for the coronavirus recession to economic indicators and trends is a vital way to ensure both that the aid is adequate and the economic recovery is strong. Because the COVID crisis is unlike any other modern economic downturn, it is hard to know for sure when things will be back to normal. As such, setting a random date—March 14, or the end of August, for instance—for badly needed government aid to expire sets up a cliff that the U.S. economy could easily tumble over. Instead, Vox’s Emily Stewart explains, the relief programs ought to be phased out as the economy improves. Stewart describes the benefits of these so-called automatic stabilizers and why they would be better than arbitrary expiration dates for certain government supports and emergency benefits. This is the best idea left on the table for the next coronavirus stimulus package: It removes the guesswork involved in trying to predict an unpredictable “end” of the pandemic, and it eliminates the ability for political brinksmanship to cut-off important aid to U.S. households and families that are struggling the most.

Though there was much discussion surrounding the recent Congressional Budget Office projection that a $15 minimum wage would result in 1.4 million jobs lost, this estimate does not line up with the empirical evidence on the topic. In an op-ed for The Washington Post, Arindrajit Dube runs through recent research on U.S. state and local minimum wage hikes (as well as those from countries abroad), which show an overall minimal impact on employment rates—and large economic and societal gains in terms of reducing poverty and improving standards of living. Indeed, Dube estimates, using modern literature and recent findings, raising the federal minimum wage to $15 would result in fewer than 500,000 jobs lost. While he concedes that a major national policy change such as this may result in more losses than were found in studies of cities and states that raised the minimum wage, he maintains that the CBO’s projections are off. He concludes by urging policymakers to consider the risks of keeping the minimum wage too low: increased poverty, heightened inequality, and exacerbated racial injustice.

Friday figure

Figure is from Equitable Growth’s “Reconsidering progress this Juneteenth: Eight graphics that underscore the economic racial inequality Black Americans face in the United States” by Liz Hipple, Shanteal Lake, and Maria Monroe.