Brad DeLong: Worthy reads on equitable growth, July 13–19, 2018

Posted on by Emilie Openchowski

Worthy Reads on Equitable Growth:

  1. I have not yet welcomed the extremely sharp Kate Bahn to Equitable Growth: Kate Bahn: “Her areas of research include gender, race, and ethnicity in the labor market, care work, and monopsonistic labor markets. … She was an economist at the Center for American Progress. Bahn also serves as the executive vice president and secretary for the International Association for Feminist Economics. … She received her doctorate in economics from the New School … and her Bachelor of Arts … from Hampshire.”
  2. Very much worth reading from Equitable Growth alum Nick Bunker: “Puzzling over U.S. wage growth,” in which he makes the point that “hiring has not been particularly strong during this recovery.”

Worthy reads not on Equitable Growth:

  1. Here is the website for Gabriel Zucman, Ludvig Wier, and Thomas Torslavon’s work on missing profits from tax avoidance and tax evasion (yes, I have decided I should spend some time occasionally listing paper authors in reverse alphabetical order): “The Missing Profits of Nations.”
  2. Wealth inequality measures have been grossly understating concentration because of tax evasion and tax avoidance in tax havens. This paper by Annette Alstadsæter, Niels Johannesen, and Gabriel Zucman estimates the amount of household wealth owned by each country in offshore tax havens: “Who owns the wealth in tax havens? Macro evidence and implications for global inequality.”
  3. The “optimal tax” literature in economics has always been greatly distorted by the fact that models simple enough to solve bring with them lots of baggage that leads to misleading—and usually antiegalitarian and antiequitable growth—conclusions that would not follow if we had better control over our theories. Here Emmanuel Saez and Stefanie Stantcheva make significant progress in resolving this problem: “A simpler theory of optimal capital taxation.” They begin: “We first consider a simple model with utility functions linear in consumption and featuring heterogeneous utility for wealth.”
  4. I am genuinely confused here: Do we have an “eastern heartland” problem? Or do we have a “prime age male joblessness” problem? Those two problems would seem to me to call for different kinds of responses. Yet Lawrence H. Summers, Edward L. Glaeser, and Ben Austin are smooshing them into one in “A rescue plan for a jobs crisis in the heartland.” They write: “In Flint, Mich., over 35 percent of prime-aged men—between 25 and 54—are not employed.”
  5. I think that this is a very important thing to remember: The Fed’s view—and the zero-marginal-product workers view—and a lot of other pessimistic views about the economy’s noninflationary speed limit for recovery and growth were totally, catastrophically wrong over the past decade. The people who strongly advocated for such views thus had a badly flawed Vision of the Cosmic All. Thus I think there is no reason to put a weight higher than zero on their current views of how the world works—unless they have publicly and substantially done the work to mark their beliefs to market. Certainly the Federal Reserve has not yet done so, argues Timothy B. Lee in his Twitter comment that “Every additional month of strong employment growth and weak wage growth makes people who said we were near full employment in 2014, 2015, 2016, and 2017 look wronger.”
  6. If real wages are not growing faster than productivity, then we are not yet at full employment. We aren’t, says Matthew Yglesias on Twitter: “I think it [a labor shortage] would be a good thing, but it’s also mostly fake. We had a labor shortage in 1999 and it was glorious. I think we’ll get there again. But not yet.”
  7. The Trump administration and the Republicans who enable it do not understand that disrupting value chains does not get you the benefits in terms of shifting the terms-of-trade in your favor that (with no retaliation) tariffs can in the “optimal tariff” literature when levied on finished goods. Read Chad P. Bown’s Twitter comment that “BMW says it will build more of its SUVs overseas and NOT IN SOUTH CAROLINA because of China’s retaliation on US autos in response to Trump’s tariffs.”
  8. People are not effective price-sensitive consumers for health insurance. We can argue why they are not. But first we need to admit that they are not, argue Zarek C. Brot-Goldberg, Amitabh Chandra, Benjamin R. Handel, and Jonathan T. Kolstad in “What does a Deductible Do? The Impact of Cost-Sharing on Health Care Prices, Quantities, and Spending Dynamics.” They write: “We leverage a natural experiment at a large self-insured firm that required all of its employees to switch … to a nonlinear, high-deductible plan.”
  9. The empirical studies are finding more and more hysteresis—in the sense of a persistent downward shadow cast by a recession—than I would have believed likely. I keep hunting for something wrong with these studies. But there are too many of them. And they all—at least all those published that cross my desk—point in the same direction such as Karl Walentin and Andreas Westermark’s “Stabilising the real economy increases average output,” They note that “DeLong and Summers (1989) … argue that (demand) stabilisation policies can affect the mean level of output and unemployment.”
  10. Here is another study that finds a lot of hysteresis—an ungodly amount—by Christina D. Romer and David H. Romer: “Why Some Times Are Different: Macroeconomic Policy and the Aftermath of Financial Crises.” They write: “Analysis based on a new measure of financial distress for 24 advanced economies in the postwar period shows substantial variation in the aftermath of financial crises.”
  11. I think this a very interesting framework presented by Daron Acemoglu, but it is, I think, too simple to be of material use in trying to understand what is going on in the real world: “Directed Technical Change.” He writes: “Whether technical change is biased towards particular factors is of central importance.”
  12. A paper I badly need to read—and to read today—by Talia Bar and Asaf Zussman, is “Partisan Grading,” in which they write: “We study grading outcomes associated with professors in an elite university in the United States who were identified.”
  13. Nick Stern is right: Discount rates are highly endogenous to scenarios—and go way, way down in true catastrophe scenarios in which insurance is not possible. Societal discount rates cannot be read off of imperfect capital markets. Climate change studies that start from either the assumption of a pure positive real intertemporal discount rate or from financial market perfection are, I think, as close to worthless as anything on God’s Green Earth. Read Nicholas Stern, “Public economics as if time matters: Climate change and the dynamics of policy,” in which he observes that “subjects such as the dynamics of innovation, of potentially immense and destabilising risks, and of political economy, together with technicalities around non-linearities and dynamic increasing returns.”
  14. How, again, is President Donald Trump supposed to win a breath-holding contest with an authoritarian regime that both controls its media and sees little downside in redirecting resources to cushion the impact on potentially noisy losers, asks Paul Krugman in “How to Lose a Trade War.” He writes: “Trump’s declaration that ‘trade wars are good, and easy to win’ is an instant classic, right up there with Herbert Hoover’s ‘prosperity is just around the corner.’”
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Freedom & Justice Conference highlights economic research on Native Americans

Posted on by Emilie Openchowski
Members of the Standing Rock Sioux Tribal Nation dance during a Cannon Ball flag day celebration in North Dakota. Research presented at the Freedom & Justice Conference in June highlights the difficulty in studying Native Americans due to a lack of high-quality data.

The National Economic Association and the American Society of Hispanic Economists hosted their annual Freedom & Justice Conference this past June at Salish Kootenai College, a four-year Native American tribal college in Montana. The location of the conference was designed to highlight the research being done on economic issues facing Native Americans, as well as the difficulty in conducting this research.

Native Americans face some of the bleakest economic outcomes among minority groups in the United States, including the highest poverty rate of any racial group. Yet there is a dearth of research understanding the economic dynamics facing those who make up 2 percent of the U.S. population. The lack of sufficient data, as well as the context needed to do high-quality research, makes it difficult to determine the most effective policies to ensure equitable opportunity and access to the gains from economic growth.

At the Freedom & Justice Conference, economist Randall Akee—associate professor at the University of California, Los Angeles in the Department of Public Policy and American Indian Studies, as well as a David Rubinstein Fellow in the Economic Studies Program at The Brookings Institution—gave a lunchtime keynote address that highlighted the challenges in doing research on indigenous Americans. Akee noted that these communities are varied within the United States, ranging from Alaska Natives to Native Hawaiians, American Samoans and Taino and Chamorro Pacific Islanders to the many North American Native American tribes. Yet he explained that they are all connected to a pre-invasion and pre-colonial past upon which they maintain distinct identities—ones based on different historical, political, and legal frameworks, as well as culture that need to be considered when conducting accurate research.

Notable past research on Native Americans demonstrates the importance of context in understanding how policy influences economic outcomes. Akee’s keynote reviewed examples of research including studies on the impact of assimilation, criminal justice, land-tenure institutions, and the effects of poverty alleviation on children’s future outcomes. One such example was recent research by economists Valentina Dimitrova-Grajzl at the Virginia Military Institute and Peter Grajzl and A. Joseph Guse at Washington and Lee University, showing how the adoption of state law rather than federal law on Native American reservations increased crime, attributed to jurisdictional confusion and lack of enforcement, and negatively impacted median household income. These outcomes were complicated by the impact of race and language and demonstrate how analysis needs to consider nonrandom effects such as these to avoid bias in economic research and subsequent policy recommendations flowing from the evidence.

Akee’s own recent research on the impact of poverty alleviation on political engagement—reviewed in his lunchtime keynote and since published as a National Bureau of Economic Research working paper with economists William Copeland and E. Jane Costello at Duke University, John B. Holbein at Brigham Young University, and Emilie Seimonova at John Hopkins University—relies on a so-called natural experiment within the “Great Smoky Mountain Study,” a longitudinal study of children in rural western North Carolina. Midway through the years of study, a casino opened up on the Eastern Cherokee Reservation that distributed a proportion of profits to all adult tribe members, regardless of income level or employment status. This unconditional cash transfer enabled the four researchers to examine its effects. They found that the cash transfers increased civic engagement as measured by future voting of those who were ages 13 to 17 when their families began receiving the allotment. Importantly, they found that the impact was greater for low-income families, effectively closing the participation gap between high- and low-income individuals among the Eastern Cherokee as they became voters.

Unfortunately, due to data limitations, even researchers with the backgrounds to understand the broader context of the society and culture of Native Americans often take necessary shortcuts in their analysis, while others don’t know that they are using faulty measures or variables in their analysis. One example Akee brought up was that some measures of economic well-being may not be directly applicable to the experience of these communities such as overcrowded housing for some traditional tribal homes with a single room. Likewise, years of schooling measures often do not reflect traditional knowledge, yet people can be considered masters of cultural or other practices that have great value to their communities.

What’s more, common economics research on topics such as income distribution are complicated by which measure one uses when studying Native Americans alone or in combination with other races. When studying income levels on reservations, a researcher needs to consider whether to examine only tribe members or the entire population of the reservation. These lessons can apply broadly to underrepresented demographic groups in economic research across the many indigenous American communities. These issues can lead to problematic research that would not stand up in other areas of economics that have more readily available data, and particularly areas that have data surveys designed to address standard pitfalls and common questions.

This lack of data, in turn, reinforces a perception that research in this subject area is not pure economics, but rather history or anthropology. This may further diminish pressure for government statistical agencies to collect sufficient data, through oversampling, with well-designed surveys in order to conduct high-quality econometric analysis. The potential for improving economic opportunities for Native Americans is constrained by the lack of evidence-based research that can demonstrate how policies impact these communities, and why high-quality data is necessary for doing policy analysis for many underrepresented groups.

—Thank you to Randy Akee for sharing his presentation materials, as well as his helpful feedback on this column.

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Measuring U.S. economic growth

Posted on by Emilie Openchowski

Each quarter, the U.S. Bureau of Economic Analysis releases its Gross Domestic Product report, which measures the value of goods and services produced in the United States. These numbers drive our national conversation about economic growth, yet they provide precious little information about the well-being of most Americans. The solution is to add a distributional component to our System of National Accounts that would tell policymakers and the general public not only the average growth of the economy, but would also report income growth for the rich, poor, and middle class.

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Measuring U.S. economic growth

In recent decades, income inequality in the United States has been rising, and larger shares of economic growth have flowed to the very top of the income distribution—the most wealthy. From 1980 to 2014, pretax income growth for the top 1 percent of all earners was 204 percent in the United States, far above the national average of 61 percent. Over the same time period, pretax incomes for the bottom 50 percent of individuals grew by just 1 percent.1

Therefore, the official GDP growth statistic may bear little resemblance to the experience of most Americans. Because it is a report of average growth across everyone in the United States, as incomes at the very top skyrocket, they drag the average up with them, making GDP growth less and less representative. (See Figure 1.)

Figure 1

Better understanding how economic growth in the United States is shared among income groups, geographic regions, and demographic groups will have a significant and lasting impact on how policymakers and economists alike gauge economic progress and evaluate policy.

Key takeaways

  • The measurement of GDP has fostered a national fixation on “growing the pie” that ignores how growth is distributed. That conventional wisdom has become antiquated, as more and more of the nation’s growth has accrued to the top 1 percent.
  • Policymakers interested in combatting rising income inequality cannot evaluate the effectiveness of their policies without a consistent, high-quality measure of how economic growth is distributed.
  • Existing statistics on inequality and the distribution of economic gains produced by the federal government do not account for all income, vastly underestimate the income of top earners, or are not given the level of attention received by other major economic statistical products.
  • A distributional component could be added to the National Income and Product Accounts, at least in part. The United States could include many of the most desirable features of such a system, although some others may require investments in new statistical infrastructure.

To learn more

“Disaggregating growth: Who prospers when the economy grows”
By Heather Boushey and Austin Clemens
March 2018

“What if we took equity into account when measuring economic growth?”
By Heather Boushey and Austin Clemens
November 2017

“Here’s why you should interpret tomorrow’s GDP growth estimate skeptically”
By Austin Clemens
October 2017

“Improving the measurement and understanding of economic equality in the United States”
By Robert Solow
July 2017

“Americans’ feelings about the U.S. economy make sense”
By Heather Boushey
February 2017

“The once and future measurement of economic inequality in the United States”
By Austin Clemens
March 2017

“Distributional National Accounts and measuring 21st century growth”
By Heather Boushey
December 2016

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Weekend reading: “where are the wages?” edition

Posted on by David Evans

This is a weekly post we publish on Fridays 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 the work 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

Elisabeth Jacobs discusses California’s comprehensive paid family leave policy and how since the policy was enacted in 2004 there has been an 11 percent decline in nursing home utilization.

Earlier this week, the U.S. Bureau of Labor Statistics released the newest data from the Job Openings and Labor Turnover Survey covering the month of May. Kate Bahn and Austin Clemens put together four graphs utilizing JOLTS data.

Dionna Cheatham and Iris Marechal explain a recent research paper that finds there are respiratory health disparities between different socioeconomic, racial, and ethnic communities. They detail how disadvantaged communities live in areas where they are more exposed to adverse environmental conditions. They argue that worsening respiratory health results in job insecurity due to limited paid leave and job schedule flexibility.

Somin Park recapped the Work and Family Researcher’s Network’s bi-annual conference held this past June, where Equitable Growth Executive Director and Chief Economist Heather Boushey spoke on connecting research to policy debates by establishing strong relationships with policymakers to help them understand the connection between certain research and their specific policy goals.

Brad DeLong compiles his most recent worthy reads on equitable growth both from Equitable Growth and outside press and academics.

Equitable Growth economist Kate Bahn and co-authors Meg Benner, Erin Roth, and Stephenie Johnson published a report for the Center for American Progress analyzing  teachers’ salaries and the effects of increasing teachers’ wages on job tenure, student achievements, and diversity. The authors advocate for a $10,000 Teacher Tax Credit, arguing it would give teachers economic stability to make long-term financial decisions as well as help provide low-income students with higher-quality education.

Links from around the web

Six months after the passage of the 2017 Tax Cuts and Jobs Act, data show that while corporations argued that they’d pass along the tax cut benefits through higher wages, they’ve held onto those benefits. Jason Furman, Harvard Kennedy School professor and Equitable Growth Steering Committee member, states that the corporate tax cut needs to improve wages in order for the tax changes to benefit the lives of U.S. workers. [the hill]

Studies show that union workers in the United States earn roughly 20 percent more than nonunion workers in similar positions, indicating that unions play a large role in decreasing income inequality. The authors believe that with the recent Janus v. AFSCME ruling, weak union membership may lead to greater income inequality. [nyt]

For the first time in 20 years, there are more job openings than unemployed workers in the United States, yet wages haven’t been improving over the past year. Minor wage growth coupled with low inflation resulted in a decline in real hourly earnings for a majority of laborers compared to May 2017. A new report from the Organisation for Economic Co-operation and Development points to a political explanation for this sluggish wage growth: U.S. policymakers have chosen policies that direct economic growth to shareholders rather than workers. [nymag]

In the city of Des Moines, Iowa, near-full employment has increased labor competition, forcing employers to seek labor outside of the standard application pool. Formerly incarcerated residents, retirees, and high-school graduates have access to training programs that allow them to be competitive applicants and workers, providing opportunities to negotiate for higher wages. [atlantic]

The office of Washington State’s attorney general came to an agreement with seven major fast-food and restaurant chains to prohibit “no-poach” clauses in their employee’s contracts. No poach previsions prevent employees from transferring within individual food chains. These rules prevent low-wage workers from working more hours, getting promoted, or experiencing greater labor mobility among these chains and franchisee-owned stores. [nyt]

Friday figure

Figure is from “JOLTS Day Graphs: May 2018 Report Edition”

 

 

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Brad DeLong: Worthy reads on equitable growth, July 5-12, 2018

Posted on by Emilie Openchowski

Worthy reads on Equitable Growth:

  1. “In a dynamic monopsony model, so-called search frictions—including imperfect information and other constraints to job mobility … would give employers more power to set wages below competitive levels, while still maintaining a sufficient supply of workers,” writes Kate Bahn in “Understanding the importance of monopsony power in the U.S. labor market.” She cites Doug Webber, who “tests the hypothesis of widespread dynamic monopsony and whether search frictions appear to maintain low wages across the U.S. labor market in his 2015 paper, “Firm market power and the earnings distribution.” Webber finds pervasive monopsony across the labor market, with the key finding that less monopsony power would lead to less income inequality.”
  2. At the “Work and Family Researchers Network’s latest conference,” Heather Boushey “participated in an “author-meets-readers” event for The Triple Bind of Single-Parent Families: Resources, Employment and Policies to Improve Well-Being, a collection edited by Rense Nieuwenhuis at the University of Stockholm and Laurie C. Maldonado at the Stone Center of Socio-Economic Inequality at the Graduate Center of the City University of New York. The book, available through Open Access, deals with the challenges faced by single parents and their children—an interplay of inadequate resources, employment, and government policies—drawing from research across disciplines and countries.”
  3. “JOLTS Day Graphs: May 2018 Report Edition”—“The Beveridge Curve, which estimates the unemployment rate for a given amount of job openings, has returned to its level during the expansion of the early 2000s.”
  4. Elisabeth Jacobs writes in “California’s paid family leave policy is decreasing nursing home use and saving Medicaid dollars” that “Kanika Arora and Douglas Wolf provide the first-ever empirical study assessing the impact of paid family and medical leave … utiliz[ing] longitudinal, state-level data to assess whether California’s state paid family and medical leave policy led to a decrease in nursing home utilization. California enacted a comprehensive paid leave policy in 2004, providing access to six weeks of leave for both new parents and family caregivers. The estimated effect of paid family and medical leave on nursing home utilization in California is a decline of more than 11 percent in the share of the elderly residing in nursing homes.”

Worthy reads not on Equitable Growth:

  1. Barbara Kiviat writes in “The art of deciding with data: evidence from how employers translate credit reports into hiring decisions” that “half of US employers consider personal credit history when hiring [and] faced with the context-free numbers of a credit report, and without predictively valid credit scores to fall back on, hiring professionals struggle to make sense of financial data without knowing the details of job candidates’ lives. They therefore reach beyond credit reports, both by inferring events that led to delinquent debt and by testing to see if candidates can offer morally redeeming accounts. A process of moral storytelling re-inflates credit reports with social meaning and prevents people with bad credit from getting jobs.”
  2. In “Uses and Abuses of Ideology,” Nathan P. Kalmoe argues that “ideology is a central construct in political psychology, and researchers claim large majorities of the public are ideological, but most fail to grapple with evidence of ideological innocence in most citizens.” In my view, Kalmoe distinguishing between ideology and partisanship seems to be a potentially fatal flaw in what is otherwise an absolutely brilliant essay. We East African Plains Apes think in groups: We outsource a great deal of what we believe to others whom we trust. Thus “partisanship” and “ideology” reinforce each other massively. But that also means that when thought-leader elites change what the partisans with access to audiences say, people’s “ideologies” will change as well—without them thinking about it much, if it all. At least, that is what I see as the potential hole in Kalmoe’s argument.
  3. Nicholas Bloom, John Van Reenen, Charles I. Jones, and Michael Webb argue in “Are Ideas Getting Harder to Find?” that “one of the key drivers of economic growth during the last half century is Moore’s Law: the empirical regularity that the number of transistors packed onto an integrated circuit serving as the central processing unit for a computer doubles approximately every two years.” I am provoked by this framing that technology is becoming harder to develop. “Harder” in what sense? In the sense of being more complicated, or more difficult relative to our (increasing) resources? The benchmark of constant research productivity defined as the same real dollar expenditure on research produces the same proportional increase in output? I have heard people say that the benchmark should be that the same share of national product spent on R&D should produce the same proportional increase in output. I have heard people say that the benchmark should be that the natural growth in the share of national product spent on R&D should be such as to produce the same proportional increase in output. I have never heard anybody say that the benchmark is that the same real dollar expenditure on research produces the same proportional increase in output.
  4. Joseph Gagnon writes in “QE Skeptics Overstate Their Case” that “David Greenlaw, James Hamilton, Ethan Harris, and Kenneth West … argued that the consensus of previous studies overstates the effects of quantitative easing (QE) on long-term interest rates.”
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Respiratory health disparities in the United States and their economic repercussions

Posted on by Emilie Openchowski
New research shows that respiratory diseases such as asthma can affect families’ economic well-being—particularly African American, Hispanic migrant, and LGBT families, which are disproportionately affected by respiratory health problems.

Chronic respiratory diseases such as asthma, lung diseases, and pulmonary hypertension are now the third-leading cause of death in the United States, killing more than 150,000 people a year. While the overall cardiovascular mortality rate has dropped sharply over the past 50 years, a large portion of the population has not experienced this decline. A recent research paper shows the uneven prevalence of chronic diseases and exposure to risk factors among demographic groups defined by race, ethnicity, and socioeconomic status.2 The prevalence of asthma is sharply higher among the poor and in African American communities. (See Figure 1.)

Figure 1

Respiratory diseases intensify economic inequality through the cyclical nature of disparate health outcomes. Disadvantaged groups end up living in areas more exposed to risk factors. These groups develop respiratory problems that prevent them from going to work, and they struggle to improve their economic situation. This issue brief contextualizes the relationship between respiratory health problems and how structural inequities such as environmental segregation and residential racism play a role in the persistence of economic inequality.

How does respiratory disease impact economic growth?

The inflexible work culture in the United States contributes to the financial strain of adequately providing care for families while maintaining stable employment. Sickly people and primary caregivers experience job insecurity by not having paid leave and flexible work schedules. Connecting social inequities with health inequities provides insight on how people are locked out of obtaining and building wealth.

Indeed, having a chronic disease impacts working conditions and worker productivity significantly, slowing down economic growth. Estimates indicate that Chronic Obstructive Pulmonary Disease, or COPD, and asthma cost U.S. society between $50 billion3 and $56 billion4 a year, respectively. Professors Thomas LaVeist of John Hopkins University, Darrell Gaskin of the University of Maryland, and Patrick Richard of George Washington University, focusing on the years 2003 to 2006, estimated that eliminating health disparities would have considerably decreased medical expenditures by $229 billion during this period.5

University of California, San Francisco professors Mark Eisner, Edward Yelin, Laura Trupin, and Paul Blanc demonstrated a strong relationship between chronic respiratory diseases and work disability in their 2002 study, “The Influence of Chronic Respiratory Conditions on Health Status and Work Disability.”6 The co-authors used the California Work and Health Survey to interview workers about their health conditions and observed that employees with asthma, COPD, or other breathing disorders perceived “a limitation in the amount of work they could perform.” Additionally, among COPD-infected adults, the likelihood of current employment was lower than for people with no chronic diseases. These costs are a significant drag on the economy. Sarah Barnett and Tursynbek Nurmagambetov of the Centers for Disease Control and Prevention estimate that the economic costs of asthma in 2007 resulting from missed workdays were $3 billion.7

Families with small children are hit the hardest, according to the authors of “State-level medical and absenteeism cost of asthma in the United States.”8 Children aged 0 to 17 years old with major respiratory health concerns miss an average of 2.2 days of school upon entering primary and secondary education, and fall behind their peers who do not miss school due to asthma-related issues. And parents suffer work-related concerns. The authors find that parents who take parental leave if offered by their employers lose an estimated total average of $1.19 billion. Single-parent homes are especially hard hit if forced to miss work to take care of children.

Even more striking is this survey conducted by the University of Michigan: Roughly one-third of parents claim that taking days off in order to take care of their sick child could lead to them losing pay or losing their job.9 These economic outcomes unevenly harm African Americans, Hispanic migrants, and lesbian, gay, bisexual, and transgender Americans. Below, we discuss the unique challenges facing each of these populations.

African Americans

Black children uniquely experience environmental harm because they live in neighborhoods that are oftentimes too close in proximity to chemical waste fields and factories. Federal Reserve economist Diana Alexander and Janet Currie of Princeton University sought to explain the disparity of asthma rates between black children and nonblack children.10 They examined the relationship between asthma, race, birth weight, and location. Using data on health outcomes and geographic location of children in New Jersey, they found key environmental differences between black and nonblack ZIP codes that determine the prevalence of asthma among children with low birth weights.

Because of the neighborhoods they live in, black children are more likely to experience structural racism—social and institutional factors that contribute to racial inequality. These social structures and economic systems include the social environment, physical environment, health services (or lack thereof), residential segregation, inadequate enforcement of housing policies, and lack of access to economic opportunities. African Americans are much more likely to be uninsured relative to whites and those with higher incomes. Low-income individuals and people of color face increased barriers to accessing care, receive poorer quality care, and ultimately experience worse health outcomes.

In Detroit, for example, the average family income is $25,764; the residents are 82 percent black; and there is the world’s largest municipal incinerator. The toxins emitted by the incinerator have been shown to be hazardous to human health and particularly children in their formative stages.11 The connection between the location of the incinerator, built in the mid-1980s, and the racial composition of Detroit neighborhoods over the past three decades is telling. (See Figure 2.)

Figure 2

The placement of polluting industries near low-income and majority-black neighborhoods is a pattern repeated across the country. Outcomes for health in New York City, for example, also demonstrate the drastic difference of living in black ZIP codes as opposed to white neighborhoods. The Dyker Heights and Bay Ridge communities are both 60 percent white and experienced just 94 avoidable adult-asthma hospitalizations per 100,000 residents. In contrast, residents in Bedford-Stuyvesant in Brooklyn—where the population is 64 percent black—experienced a rate almost 6 times as high: 531 avoidable adult-asthma hospitalizations per 10,000 residents.12 To make matters worse, in this community, one in five adults had no health insurance, and one in eight went without needed medical care prior to 2014 (implementation of the Affordable Care Act has reduced these rates in New York City generally and should also reduce rates in these neighborhoods). The residents in this neighborhood experience the poorest housing conditions due to housing-related exposures to cockroaches, mice, and lead. In fact, Bedford-Stuyvesant is affected by the most harmful air pollutants in New York City.

Studies of Baltimore also demonstrate the impact of ZIP code on respiratory disorders.13 Residents in ZIP code 21223 visit hospitals for asthma at 4 times the rate of other, wealthier areas. Ironically, prestigious medical centers—Johns Hopkins and the University of Maryland Medical Center—are located close to this neighborhood and receive substantial tax breaks for providing “community benefits.” These health institutions’ lack of attention is likely to increase the cost of this issue; as explained by Ben Carson, currently the secretary of the U.S. Department of Housing and Urban Development and previously a surgeon at Johns Hopkins, “the cost of not taking care of people is probably greater than the cost of taking care of them.”14

Hispanic migrants

Asthma is a complex sickness due to both genetic and environmental factors, which lead to increased prevalence of the disease among migrants. As explained by University of Pittsburgh’s Fernando Holguin and Mark Schenker of the University of California, Davis, migrants who move from less-industrialized countries to more-developed ones face increased prevalence of asthma over time.15 They discuss two main reasons for this phenomenon: acculturation and occupational hazard. Additionally, Wake Forest University professors Ann Hiott, Joseph Grzywacz, Stephen Davis, Sara Quandt, and Thomas Arcury found that in 2008, the combination of stress, depression, or anxiety with environmental factors led to a higher risk of developing chronic respiratory diseases for migrant farm workers.16

Then there are the health problems associated with acculturation, the process by which migrants change their attitudes toward those of the host society.17 This phenomenon seems to affect the prevelance of respiratory diseases, especially for the Hispanic population. Although Hispanics of Mexican descent have a lower prevalence of asthma (5.3 percent) than the rest of the American population (7.6 percent),18 the risk of having asthma among Mexicans that have migrated to the United States is less than half the risk facing Mexicans born in the United States.19

A study of Canadian migrants examined what the reserachers call the “healthy immigrant effect.” They find that the risk of having a disease for more acculturated families approaches the one of the host country. Elizabeth McQuaid of Brown University and Daphne Mitchell and Glorisa Canino of the University of Puerto Rico explain that acculturation leads to migrants having contact with new types of allergens, an increased smoking rate compared to Mexico, and higher rates of obesity.20 Spanish-speaking parents are also less likely to be taught what to do during asthma attacks or to have access to health insurance.

Fernando Holguin of the University of Pittsburgh and Marc Schenker of the University of California, Davis focus on the incidence of working conditions and occupational hazard among Hispanic migrants.21 According to the NAWS 2009–2010 Survey, 82 percent of the 5 million people hired as farm workers are Hispanic. Since nearly half of them are not legally authorized to work in the United States, they have limited access to health benefits. Moreover, farming work increases the risk of asthma because workers are exposed to pesticides and dust, and live in low-quality housing with poor ventilation and mold. No wonder researchers documented rates of depression as high 30 percent to 46 percent for migrant workers,22 mainly explained by their isolation from the rest of the society due to cultural and language barriers.

Lesbian, gay, bisexual, and transgender Americans

More than 10 million Americans self-identify as LGBT, but the respiratory disparities linked to sexual orientation remain understudied. John Blosnich, Joseph Lee, Robert Bossarte, and Vincent Silenzio of the University of Rochester examined the 2004 Behavioral Risk Factor Surveillance System and found a significantly higher rate of asthma among same-sex partners.23 In the sample studied, the prevalence of asthma among same-sex male couples was 12.3 percent, compared to just 5.9 percent for heterosexual men. This pattern was even more pronounced among women: 21.4 percent for same-sex partners, versus 9.5 percent for heterosexual ones.

Emily Clausen of Duke University and Alison Morris of the University of Pitsburgh suggest two factors to explain the higher prevalence of respiratory disease among LGBT Americans.24 First, they are less likely to see a physician for fear of disapproval. They experience a “perceived pressure to hide sexual orientation” that does not affect other populations. A 2010 study quantifies this pressure.25 It found that only 60 percent of bisexual and homosexual women get a routine annual checkup, compared to 71 percent of heterosexual women. Moreover, physicians are not always trained to deal with LGBT health-related issues: One-third of medical education programs do not include this theme.26

Second, cigarette and alcohol use is more prevalent in the LGBT community. A review of the available data in 2009 highlighted the higher prevalence of smoking in the LGBT population.27 The data show that 23.9 percent of LGBT adults smoke cigarettes, compared to just 16.6 percent of straight adults.28 In addition, the rate of binge drinking among lesbian and bisexual women is roughly twice that of heterosexual ones.29

How can respiratory health equality be achieved?

Respiratory inequalities are an ethical issue but also are an important component of equitable economic growth. Some groups are held back economically because of where they are born or where they live due to health-related disparities. Comprehensive policies to protect these vulnerable populations should address this issue by promoting health reform that targets specific populations. Prevention campaigns targeting minorities, promotion of ethnic diversity among medical school students, and an increase in Medicaid coverage for medical fees associated with respiratory diseases are among the policies that could be pursued to address these health inequities and break the cycle of economic deprivation caused by respiratory diseases.

—Dionna Cheatham previously worked at the Washington Center for Equitable Growth and is now a BSC Consultant for the Office of Planning, Research and Evaluation at the U.S. Department of Health and Human Services. Iris Marechal was an intern at the Washington Center for Equitable Growth in 2017–2018 and is now pursuing a double master’s degree in corporate and public management at HEC and SciencesPo Paris.

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Work and Family Researchers Network’s latest conference focuses on transparent, evidence-based family economic security research

Posted on by Emilie Openchowski
Research recently discussed at the biennial Work and Family Researchers Network conference highlighted that policies aimed at all families are just as beneficial for single-parent families, as is the importance of job opportunities and employment protections.

At the end of June, members of the Work and Family Researchers Network came to Washington, D.C., for their biennial conference, bringing together a global community of work and family academics and scholars, as well as policymakers, advocates, and journalists. This year, the theme of the WFRN conference was “Open Science: Assumptions and Translation of Work and Family Research.” The proceedings focused on the need for transparent science for evidence-based policy that helps today’s working families. WFRN provides an important forum for interdisciplinary work on family scholarship.

Equitable Growth Executive Director and Chief Economist Heather Boushey participated in WFRN’s pre-conference day on “Translating Scholarship into Action,” a full day of training to help scholars—many of them early in their careers—identify opportunities for research that policymakers and business leaders might use to decide which policies will help us best reach key goals. During the training, Boushey joined a panel with WFRN co-president Kathleen Christensen of the Alfred P. Sloan Foundation and Brad Harrington of the Center for Work and Family at Boston College. The panelists focused on how to connect research to the policy debate through relationship-building and willingness to go the extra step to help policymakers understand how one’s research addresses their specific policy goal.

Boushey also participated in an “author-meets-readers” event for The Triple Bind of Single-Parent Families: Resources, Employment and Policies to Improve Well-Being, a collection edited by Rense Nieuwenhuis at the University of Stockholm and Laurie C. Maldonado at the Stone Center of Socio-Economic Inequality at the Graduate Center of the City University of New York. The book, available through Open Access, deals with the challenges faced by single parents and their children—an interplay of inadequate resources, employment, and government policies—drawing from research across disciplines and countries.

Triple Bind is an important contribution to our understanding of the disadvantages faced by single-parent families and how those issues are shaped by inequality. Research described in the book also highlights that policies aimed at all families are just as beneficial for single-parent families, as is the importance of job opportunities and employment protections. Jobs matter, but to truly support families, they must be good jobs.

Building a bridge between academics and policymakers is an ongoing mission for Equitable Growth, and the work of groups such as WFRN helps turn this goal into reality.

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JOLTS Day Graphs: May 2018 Report Edition

Posted on by Austin Clemens

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. Today, the BLS released the latest data for May 2018. 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. Below are a few key graphs using data from the report.

1.

The quits rate continued to change little in May, continuing it’s upward trend and indicating a tightening labor market as workers feel confident about their opportunities.

2.

The vacancy yield, or the job-filling rate, increased slightly from 0.82 in April to 0.87 in May. But the long-term trend is downward and below historical levels.

3.

The ratio of unemployment-to-job openings was 0.91 in May, continuing its trend below the significant barrier of 1.0. A ratio below one means there are more open jobs than officially unemployed workers.

4.

The Beveridge Curve, which estimates the unemployment rate for a given amount of job openings, has returned to its level during the expansion of the early 2000s.

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California’s paid family leave policy is decreasing nursing home use and saving Medicaid dollars

Posted on by Emilie Openchowski
A new study finds that enacting paid family and medical leave can decrease the utilization of nursing homes for the elderly by looking at data from California.

Nearly every American at some point will face a conflict between family caregiving responsibilities and paid work. Women now comprise nearly half of all employed workers; the majority of married mothers are either breadwinners or co-breadwinners; and the share of single-parent families has more than doubled since 1970. Family caregiving includes not only caring for a new child but also for an aging relative. As Baby Boomers age amid improvements to life expectancy, work-family conflicts for prime-age workers with both young children and aging parents will only grow stronger.

Government policy conversations about paid family and medical leave often focus on the direct and indirect benefits of parental leave, but an important new study sheds light on the impact of paid caregiving leave. The research implies that paid leave for family caregiving may change the way that families care for their aging relatives, with potentially important positive outcomes for aging Americans, their family caregivers, and state and federal budgets.

In their recent article published in the Journal of Public Policy and Administration, University of Iowa’s Kanika Arora and Syracuse University’s Douglas Wolf provide the first-ever empirical study assessing the impact of paid family and medical leave on long-term care patterns. Specifically, the two authors utilize longitudinal, state-level data to assess whether California’s state paid family and medical leave policy led to a decrease in nursing home utilization.

California enacted a comprehensive paid leave policy in 2004, providing access to six weeks of leave for both new parents and family caregivers. The authors analyze data on nursing home utilization (defined as the share of a state’s older population that resides in a nursing home at any point during a given year) for all 50 states plus the District of Columbia from 1999 through 2008. Their longitudinal data allows for a difference-in-difference model comparing the change in nursing home utilization in California before and after the enactment of paid family leave to the change in other states without a public paid family leave program in place—taking into account many other differences in the long-term care environment across states, as well as other related economic factors. The results are striking. The estimated effect of paid family and medical leave on nursing home utilization in California is a decline of more than 11 percent in the share of the elderly residing in nursing homes.

While the mechanism connecting paid leave to lower nursing home utilization is not directly tested in the study, the authors argue that paid leave allows family members to provide timely care to aging relatives in order to prevent institutionalization. Specifically, family leave may allow caregivers to step in and shorten post-acute institutionalization such as nursing home care following a surgical procedure, as well as delay the beginning of nursing home care for what could become a lengthy period of institutionalization for a progressive condition such as Alzheimer’s disease.

Three big take-aways from the study are worth keeping in mind.

First, the decrease in nursing home utilization has important implications not only for aging Americans and their families, but also for the bigger fiscal picture. Nursing home care accounts for the largest share of long-term care costs in the country. These costs not only strain family budgets but also place significant pressure on public finances. Medicaid, which is a joint federal-state program that is financed largely by the states, is the primary payer for 62 percent of nursing facility residents, some of whom deplete their assets in order to become eligible for the program. Medicare, which is fully federally financed and mainly applies to short stays following a hospitalization, covers the costs of about 15 percent of nursing home utilization overall. Institutional care is a substantial burden on state and federal budgets and also is unpopular, as most seniors prefer to receive family or community-based care. That’s why paid family caregiving is so important for policymakers to understand.

Second, the link between paid family and medical leave policy and other social policies designed to facilitate family economic security is an important and underexplored relationship for scholars and policymakers. Existing research on paid leave has focused on the direct effects of paid family leave on women’s labor market participation and long-term wages, as well as indirect effects including child health and business outcomes. Policymakers need more research like Arora and Wolf’s, which recognizes that paid leave policies may have effects on existing public programs. Given that existing social insurance programs such as Social Security Disability Insurance and Medicare are under considerable financial and political pressure, future research would do well to continue to explore the ways in which paid family and medical leave policies may interact with existing programs in ways that could alleviate (or exacerbate) fiscal pressures on both state and federal budgets in the long term.

Third, Arora and Wolf’s nursing home study illustrates the need for access to meaningful data on a host of related issues for policymakers seeking to boost family economic well-being. The authors note that assembling the necessary data for connecting the dots between paid family leave and nursing home care was a substantial challenge and required “a combination of publicly- and privately-available (i.e. supplied by helpful colleagues) and somewhat obscure and hard-to-locate sources.” Like others calling for more readily available administrative data, Arora and Wolf suggest that “a comprehensive repository of relevant state-level data, extending back over a long time period, would be a wonderful public resource, but one that is unlikely to be undertaken without a very substantial investment of funds.”

Paid family and medical leave that allows family caregivers to take time away from work to provide care for an aging family member is a critical element of the policy picture. It’s important for families and also a potentially critically important piece of solving the fiscal issues that arise in light of an aging population and looming fiscal challenges to social insurance programs such as Medicare and Medicaid.

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Weekend reading: “workers and wages” edition

Posted on by Ed Paisley

This is a weekly post we publish on Fridays 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 the work 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

 

Last week’s Supreme Court decision in Janus v. American Federation of State, County, and Municipal Employees is expected to decrease the size and budgets of public-sector unions and in turn decrease their effectiveness in collective bargaining for their members. Kate Bahn explains how the decline in worker power also could lead to an increase monopsony power, or the power of firms to set low wage levels.

Brad DeLong rounds up his latest worthy reads on equitable growth from both inside and outside of Equitable Growth.

Equitable Growth released its monthly Jobs Day Graphs. The graphs show wage growth remains positive but tepid and the employment rate of prime-age workers still trails its pre-recession peak despite increasing characterization of the U.S. labor market by the media as strong.

 

Links from around the web

 

An overview of recent economic research exploring the broader impact of unions on workers’ wages concludes that the continued erosion of workers’ bargaining power will further exacerbate wage stagnation. [ft]

Assumptions about who does or does not work in the United States and why have just as much insight to offer in to who does or does not support a Universal Basic Income program as does the economic rationale, Nathan Heller explains in a review of several new books about the concept. [new yorker]

Former U.S. Treasury Secretary Larry Summers argues that the idea of a universal job guarantee is a policy idea that’s worthy of serious consideration, but further thought about how to make the details work is needed before it could become reality. In other words—take the idea seriously but not literally. [wapo]

In the midst of the 2018 World Cup, University of California, Berkeley economist Gabriel Zucman points to Portuguese soccer star Christiano Ronaldo as an example of the prevalence of tax evasion by some of the world’s wealthiest people. Zucman argues that law and financial firms have made a lucrative business out of this evasion and should be sanctioned to decrease the prevalence of these practices. [nyt]

Eight years into the current U.S. economic recovery, the quits rate is almost back at its 2001 peak in the latest example pointed to as a metric of job market strength. [wsj]

 

Friday figure

Figure is from “Equitable Growth’s Jobs Day Graphs: June 2018 Report Edition”

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