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
Policymakers expanded investments in critical social infrastructure after the onset of the coronavirus pandemic and ensuring recession, expanding access and funding for programs such as Unemployment Insurance and the Child Tax Credit. These expansions have helped millions of U.S. families and workers but are only temporary, meaning policymakers are now debating whether to make these measures permanent. Michael A. Schultz urges policymakers to do so, detailing his recent working paper on poverty and low-wage workers’ mobility into higher wages. His research finds that 30 percent of low-wage workers who experience poverty in the previous year move to better wages within 2 years, compared to 45 percent of low-wage workers who did not experience poverty. A significant explainer of the difference comes down to household resources—which are bolstered by programs that provide income support, buffering the effects of falling into poverty. Schultz concludes by making several policy recommendations, including permanently expanding these social infrastructure programs, removing complexity and confusion around applying for them, and providing bank accounts to every American to ensure they are able to easily receive benefits.
Research published earlier this year looks into the effect of coronavirus disruptions in family caregiving and highlights the importance of investments in care infrastructure and paid leave. Yulya Truskinovsky details the findings of her co-authored working paper, which studied the mental health effects for family caregivers of added or changed caregiving responsibilities as a result of COVID-19. Truskinovsky and her co-authors show that those who experienced such disruptions were more likely to screen positive for depression, anxiety, and loneliness than either noncaregivers or those caregivers who did not face disruptions. This, she explains, underscores the essential nature of investments in care infrastructure and programs such as paid leave to support both caregivers and workers who take on caregiving responsibilities for loved ones. These programs are all the more vital considering that the U.S. workforce is aging, and as such, family caregivers will play an increasingly central role in the nation’s healthcare system.
Equitable Growth’s 2021 policy conference, “Equitable Growth 2021: Evidence for a Stronger Economic Future,” is coming up in a few weeks. This biennial event highlights our role as a connector of the academic and policymaking communities, bringing together experts and leaders across issue areas and disciplines to discuss policy solutions for the most pressing issues facing the United States. As speakers continue to be announced for this year’s virtual meeting, Christian Edlagan, Maria Monroe, and I look back at the incredible contributions and expertise of participants from our 2019 policy conference, in this month’s installment of Expert Focus. (And click here to register for this year’s event, on September 20 and 21.)
Links from around the web
Unemployment Insurance benefits helped a larger share of U.S. workers during the coronavirus pandemic and ensuing recession than during the Great Recession of 2007–2009, reports Yahoo!Money’s Denitsa Tsekova. A study by the Federal Reserve Board finds that 52 percent of UI recipients whose 2020 earnings dropped by 10 percent or more received to buffer their income loss, compared to 19 percent of recipients in 2009. Considering that around the same percentage of workers lost more than 10 percent of their income in 2020 and in the Great Recession—around 33 percent—the financial outcomes for workers during this economic downturn were much better thanks to the coronavirus aid packages that expanded unemployment benefits and provided stimulus payments. Tsekova details the differences in UI benefits between the coronavirus recession and the Great Recession and explains how the pandemic response was more supportive for those workers in need.
The climate crisis is increasingly at risk of becoming an economic crisis, writesThe New York Times’ Neil Irwin. With rising global temperatures comes added economic and financial problems alongside humanitarian crises. The current Fed Chair Jerome Powell has taken a more moderate approach to dealing with climate change, much to activists’ dismay. But, Irwin explains, perhaps one of the most important things the Fed can do to fight climate change is to maintain a stable, strong economy. Irwin details the research behind public opinion, climate politics, and the economy, explaining that if the U.S. economy is steady then there may be more political appetite and opportunity for bold climate action.
The U.S. government expanded Unemployment Insurance and support for families with children amid the coronavirus pandemic to a degree unprecedented in recent history. Preliminary estimates of these expansions show their positive impacts on U.S. households. These income support programs are, among other things, reducing child poverty by almost 50 percent and ensuring parents who lose their jobs through no fault of their own can keep paying for everyday necessities such as rent and groceries.
My new working paper finds that broader accessibility to household income support leads to positive labor market outcomes for workers. Some think expanding income support will increase the likelihood of low-wage workers choosing unemployment over work. My research, however, finds the opposite: Low-wage workers in households falling into poverty who receive greater income support are more likely to not only remain employed, but also start earning higher wages.
Household poverty and low-wage workers’ upward mobility
Although 80 percent of low-wage workers are not in poverty, low-wage work and poverty are often conflated. The low-wage labor market encompasses those workers earning less than $14 per day in 2021 dollars, using the international standard definition. This is currently about 25 percent of all workers in the United States and has remained a relatively stable share of the labor force for at least the past 50 years. (See Figure 1.)
Figure 1
It’s important to note that poverty is a household economic situation, not a permanent status. Most households in poverty are in poverty for only a year. Consequently, low-wage workers in poverty and not in poverty are similar in terms of education, work experience, jobs, and demographic characteristics, such as age, race, and gender. This also helps explain why, as Figure 1 shows, only about 20 percent of low-wage workers are in households in poverty in any given year, using the international standard definition of the poverty rate.1
My research sheds light on the interaction between low-wage work and poverty. I estimate what economists call “individual wage mobility”—the movement of low-wage workers up and down the lower rungs of the earnings ladder—for households in and not in poverty in the previous year.
Using a nationally representative survey called the Panel Study of Income Dynamics that follows U.S. households and the individuals within them over time, I find that about 30 percent of low-wage workers who experienced poverty in the previous year move to better wages within 2 years, compared to 45 percent of low-wage workers who did not experience poverty in the previous year. (See Figure 2.)
Figure 2
Simply put, falling into poverty disrupts households. Household disruptions make it more difficult for workers to search for alternative jobs. Finding alternative jobs is one of the primary ways workers in the U.S. labor market gain a wage increase. Disrupted households must divert more resources, such as time and money, to address the disruptions, limiting the ability to search for new jobs.
Households falling into poverty face the challenge of greater disruption with fewer resources to manage that disruption. Greater losses of household income when falling into poverty are an approximation of greater household disruption. Consistent with this explanation, I find that low-wage workers whose households lose a greater share of their household income when falling into poverty have lower rates of mobility out of low-wage work. (See Figure 3.)
Figure 3
I also find that workers in households experiencing longer poverty spells—of 3 or more years—are much less likely to move out of low-wage work than those workers in households in the first 2 years of poverty. Income support keeps households from falling deeper into poverty and helps shorten the time a household remains in poverty.
My study then estimates how other characteristics explain why workers in poverty households are less upwardly mobile. I find that human capital factors, such as education and work experience, explain just 20 percent of the difference in mobility outcomes among workers in households either experiencing or not experiencing poverty. Much more significant is a household’s resources, such as household savings and average income across the previous 3 years, which explains 60 percent of the poverty gap in mobility.
Improving U.S. social infrastructure helps workers find dignity at work
Policymakers should permanently expand social infrastructure programs, such as Unemployment Insurance and the Child Tax Credit. This can help boost workers’ wages and reduce household poverty by providing timely income support to families in need. Timeliness means the income comes to households before or as they need it, which buffers the household disruptions of falling into poverty and helps workers in these households find better jobs.
The newly expanded Child Tax Credit presents a potential path forward in terms of the structure of our nation’s income support delivery infrastructure. CTC payments are deposited directly to families’ bank accounts every month. This allows households to use these resources to meet pressing needs and more easily resolve the disruptions associated with living on a low income and working in a precarious labor market.
Responsive social infrastructure made up of timely income support programs can help workers avoid poverty spells and move to better-paying jobs. Higher wages help put these workers and their families on a more secure income trajectory. This strengthens the labor force and bolsters the overall economy. It also provides these workers and their families with the dignity that comes with better-wage jobs. Higher-paying employment is more stable and more likely to provide benefits such as health insurance and further training.
Easing access to income support programs and making the recent expansions permanent would have wide-ranging impacts across the U.S. economy and society. Not only would it boost wages for workers and lower the poverty rate, but it would also reduce economic inequality in the United States.
Equitable Growth is committed to building a community of scholars working to understand how inequality affects broadly shared growth and stability. To that end, we have created the monthly series, “Expert Focus.” This series highlights scholars in the Equitable Growth network and beyond who are at the frontier of social science research. We encourage you to learn more about both the researchers featured below and our broader network of experts.
Since our founding, Equitable Growth has sought to serve as a bridge between academia and the policymaking community in order to advance evidence-backed policy ideas that foster strong, stable, and broad-based economic growth. Part of our work in this area is reflected in our biennial policy conference, which brings together policymakers, academics, advocates, and thought leaders across issue areas and disciplines to discuss and share the best research-backed ideas for ensuring equitable growth across the U.S. economy.
On September 20 and 21, Equitable Growth is excited to host “Equitable Growth 2021: Evidence for a Stronger Economic Future,” a virtual event centered on using this unique moment in government to enact long-overdue structural changes. Not only has the coronavirus pandemic and ensuing recession exposed deep economic and societal fragilities in the United States—including along racial and gender lines—but policymakers also have a remarkable opportunity to address these longstanding challenges and create an economy that works for all Americans. As speakers continue to be confirmed for this year’s event, including U.S. Secretary of Labor Marty Walsh and U.S. Rep. Hakeem Jeffries (D-NY), we take a look at the incredible contributions and expertise of participants from past conferences. This month’s installment of Expert Focus highlights speakers from the 2019 policy conference, “Vision 2020: Evidence for a Stronger Economy,” all of whom have vast experience in the policy, academic, and nonprofit sectors.
Equitable Growth 2021: Evidence for a Stronger Economic Future
Byron Auguste is the CEO and co-founder of Opportunity@Work, a nonprofit social enterprise that seeks to expand access to career opportunities so all Americans can work, learn, and earn to their full potential. In 2020, he co-authored a working paper that explores the extent to which workers who are skilled through alternative routes, or STARs, can help fill the skills gap—and how STARs are often left out of the high-wage workforce due to the increasing weight placed on (often unnecessary) higher education credentials, exacerbating wage inequality and reducing upward mobility. Auguste was previously deputy assistant to the president for economic policy and deputy director of the National Economic Council during the Obama administration, where he focused on job creation, labor markets, investments, and infrastructure, among other areas. He recently joined Equitable Growth’s Steering Committee to advise on the academic grants program and strengthen connections within its scholarly community as a leading voice on U.S. economic inequality and labor market outcomes. Learn more about Auguste’s work and his take on structural racism in the economy from his panel, split intotwo parts, at Equitable Growth’s 2019 policy conference.
Arindrajit Dube
University of Massachusetts Amherst
Arindrajit Dube is a professor of economics at the University of Massachusetts Amherst. He is also a research associate at the National Bureau of Economic Research and a research fellow at the Institute for the Study of Labor. His work focuses on labor and health economics, public finance, and political economy, including research on competition and wage-setting in the U.S. labor market, monopsony, the impact of unions, fairness concerns in the workplace, and the role of unemployment insurance. He received an Equitable Growth grant in 2018 and has been a contributing author on several Equitable Growth projects, many of which focus on studying the effects of the minimum wage. Dube is currently a member of Equitable Growth’s Research Advisory Board, which provides critical support to the organization’s grantmaking and academic engagement. Learn more about Dube’s work and his take on monopsony power in the labor market via this fireside chat at Equitable Growth’s 2019 conference and his subsequent Vision 2020 essay.
Karen Dynan
Harvard University
Karen Dynan is a professor of the practice of economics at Harvard University. She has previously held roles in the federal government and at nonprofits, having served as assistant secretary for economic policy and chief economist at the U.S. Department of the Treasury during the Obama administration, as vice president and co-director of the economic studies program at the Brookings Institution, and in senior roles at the Federal Reserve Board. Dynan’s research centers on macroeconomic and fiscal policy, consumer behavior, and household finances, and her focus on consumption and savings patterns shaped her approach to economic analysis and policymaking in the aftermath of the Great Recession of 2007–2009. Her breadth of experience across sectors is an asset to Equitable Growth’s Steering Committee, where Dynan not only supports the next generation of scholars but also guides the organization’s efforts to study economic inequality and to ensure strong and stable growth through informed policy choices. Learn more about Dynan’s work and her perspective on the effects of inequality on macroeconomics from Equitable Growth’s 2019 conference, broken intotwo parts.
Bradley Hardy
Georgetown University
Bradley Hardy is an associate professor in the McCourt School of Public Policy at Georgetown University. He is also a nonresident senior fellow in economic studies at the Brookings Institution and a research fellow with the Center for Household Financial Stability at the Federal Reserve Bank of St. Louis, as well as an elected member of the National Academy of Social Insurance. Hardy’s research interests lie in labor economics, income volatility trends, and racial economic inequality, among other areas. He received an Equitable Growth grant in 2017 to study the long-term effects of racial segregation on human capital and upward mobility in the United States, and co-authored a chapter for Equitable Growth’s Vision 2020 series of essays on race and the lack of U.S. intergenerational mobility. Hardy also recently discussed his work on anti-poverty policy, socioeconomic outcomes, and neighborhood economic development within the United States at an Equitable Growth virtual event on addressing regional inequalities. Learn more about Hardy’s work on race, intergenerational mobility, and the need for structural change in the United States from his panel at Equitable Growth’s 2019 policy conference, split intotwo parts.
Cecilia Muñoz
New America
Cecilia Muñoz is a senior advisor at New America, an organization dedicated to confronting the challenges caused by rapid technological and social change and seizing the opportunities those changes create. She is also a senior fellow at Results for America, a nonprofit that works to advance the use of data and evidence in policymaking. Previously, she served on President Barack Obama’s senior staff as the first Latinx director of the Domestic Policy Council and director of Intergovernmental Affairs. Prior to her time in the executive branch, Muñoz spent 20 years at the National Council of La Raza (now UNIDOS US), the largest Hispanic policy and advocacy organization in the United States. Muñoz has written about the importance of diversity and the challenges many women and people of color face in fields historically dominated by men and White people, as well as the importance of recognizing the economic contributions of immigrants in the United States. Learn more about Muñoz’s experience working with questions around technology and the future of work, as well as the structural changes necessary to ensure the U.S. economy works for all workers, from her panel at Equitable Growth’s 2019 policy conference, divided intotwo parts.
Interested in learning more about our biennial policy conference?
For information about “Equitable Growth 2021: Evidence for a Stronger Economic Future,” click here. To register to attend the event on September 20 and 21, click here.
To watch more sessions and highlights from Equitable Growth’s “Vision 2020: Evidence for a Stronger Economy,” click here.
Equitable Growth is building a network of experts across disciplines and at various stages in their career who can exchange ideas and ensure that research on inequality and broadly shared growth is relevant, accessible, and informative to both the policymaking process and future research agendas. Explore the ways you can connect with our network or take advantage of the support we offer here.
Most workers in the United States at some point over the course of their lives will take on multiple unpaid caregiving responsibilities, be it caring for a child, an elderly parent, or an ailing relative. This can be highly rewarding and meaningful work, but it also can be incredibly challenging, particularly for those trying to balance these responsibilities with paid work.
The coronavirus pandemic highlights anew some of these work-life challenges, particularly as relates to working parents, especially mothers, who have had to piece together child care arrangements in the midst of school and day care closures or leave the labor force altogether. But much less is known about how the pandemic affects other family care arrangements or the consequences of these disruptions on caregivers’ mental health and employment status.
A working paper I co-authored earlier this year with Jessica Finlay and Lindsay Kobayashi of the University of Michigan, Ann Arbor explores this less-studied area of caregiving amid the pandemic. We look at how family caregivers ages 55 and older dealt with sudden disruptions in caregiving arrangements due to the coronavirus and COVID-19, the disease caused by the virus, in the in the spring of 2020.
Family caregivers are those people who provide care for a spouse, elderly parent, or other relative with a long-term illness or disability, as well as grandparents who care for their grandchildren and those providing unpaid care to recipients without a formal kinship relationship, such as a friend or a neighbor. Family caregiving typically does not include parents caring for their own children. We decided to study those ages 55 and up because this group typically provides family caregiving while also facing age-based elevated risks for COVID-19 morbidity and mortality.
Using data collected between April 17 and May 15, 2020 from the COVID-19 Coping Survey, an online questionnaire, our study measures the mental health and employment outcomes for a national sample of around 2,500 respondents, of whom 535—or more than 1 in 5—were family caregivers. We find that the coronavirus pandemic disrupted more than half of family caregiving arrangements, with more than 30 percent of caregivers reporting additional or new care responsibilities as a result of the crisis. Another 20 percent of caregivers reported that they were providing less care than usual, likely due to social distancing measures and concerns about their health or the health of their loved ones.
Troublingly, we also find that these disruptions were associated with negative mental health outcomes, such as increased depression, anxiety, and loneliness. Those respondents whose care arrangements were disrupted were 18.1 percentage points more likely to screen positive for depression, 19.5 percentage points more likely to screen positive for anxiety, and 16.1 percentage points more likely to screen positive for loneliness than either noncaregivers or those caregivers who did not face similar disruptions. Notably, mental health outcomes vary only slightly depending on whether disruptions resulted in caregivers providing more care than usual, or no care or less care than usual. (See Figure 1.)
Figure 1
Caregivers who experienced disruptions due to COVID-19 were not only more likely to report negative mental health effects but also 13.9 percentage points more likely to report employment disruptions. And those caregivers who provided more care because of the pandemic—disproportionately women and people of color—were almost 19 percentage points more likely than noncaregivers to report an impact on their employment, typically in the form of a job loss, furlough, or transition to working from home.
These findings confirm research that highlights the importance of investments in care infrastructure, not just for caregivers and their loved ones but also for the broader U.S. economy. Our research also emphasizes the need for policymakers to finally enact a nationwide paid leave program.
Turnover in the professional caregiving industry has long been high due to low wages and poor working conditions, a trend that the coronavirus pandemic has not curbed. These workers—whose daily efforts make it possible for the rest of us to do our jobs effectively and for our loved ones to live with dignity and grace—should be compensated at a level that is commensurate with the contributions they make to the economy.
Investing in the care economy to make these jobs attractive and well-paid would help workers who have left the labor force due to caregiving responsibilities over the course of the pandemic go back to work and would boost worker productivity. These actions would reverberate across the U.S. economy, bolstering the economic and labor market recovery from the coronavirus recession.
But more must be done. Given the piecemeal structure of the U.S. long-term care system, caregiving routines will always be subject to disruptions, meaning working family members are likely to require time off from their jobs to cover their loved ones’ care needs as new arrangements are made. A nationwide paid leave policy would ensure that workers do not have to make the impossible choice between caring for their ill family members and paying their bills or putting food on the table. As of now, only six states and the District of Columbia have paid leave policies for workers needing to care for ailing family members. These policies must be extended nationally to cover all family caregiving needs and situations.
Expanding paid leave also would work to address some of the racial and gender inequalities that arise as a result of caregiving responsibilities. Our study shows that caregivers who were more vulnerable to disruptions were disproportionately female, Black, and Hispanic, and that those who experienced disruptions were more likely to report negative mental health and employment outcomes. These trends were not brought about by the pandemic but have nevertheless been exacerbated in its wake. Policymakers cannot allow these inequalities to fester or worsen. (See Figure 2.)
As the U.S. population ages, family caregivers will increasingly play a central role in the national healthcare system. And while it is still too early to know for sure, the chaos and heartbreaking scenes of sickness and death in nursing homes over the past year may induce even more families to choose home- and community-based care for their loved ones.
These trends mean that good working conditions for professional caregivers and programs such as paid leave for all workers are all the more essential. Now is the time for policymakers to ensure these vital players in the U.S. economy and labor market have the support and infrastructure they need to take care of themselves and balance their caregiving responsibilities with their jobs. The benefits will extend beyond those directly impacted to the broader economy.
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
Workplace surveillance is not new, but the types of monitoring that employers utilize to track workers’ movements, behavior, and productivity has expanded, largely unchecked, due to declining worker power and lack of legal protections or regulations on these behaviors. The coronavirus pandemic also contributes to this growth in invasive and exploitative surveillance practices, as up to 50 percent of workers have shifted to remote work in 2020 and employers have implemented new, cheap, and easy forms of monitoring as a result. Kathryn Zickuhrexplains how worker surveillance shifts the balance of power in favor of employers, driving inequality and harming employees via increased discriminatory practices, stress, and de-skilling or misclassification of work. Workplace surveillance also hampers worker organizing, she continues, further weakening worker power. Zickuhr details the various forms of workplace surveillance that are commonplace across the U.S. labor force, examines how COVID-19 exacerbates these issues (and likely will continue to do so even after the pandemic has abated), and concludes with policy recommendations for addressing the future of workplace surveillance.
Last week, Reps. Ro Khanna (D-CA) and Dean Phillips (D-MN) in the U.S. House of Representatives and Sens. Elizabeth Warren (D-MA) and Michael Bennet (D-CO) in the Senate introduced the CBO FAIR Scoring Act. This proposed law would direct the Congressional Budget Office to prepare distribution analyses for all legislation, estimating the impact of laws by race and income groups. Corey Husak details why the CBO Fair Scoring Act would dramatically improve the way policymakers evaluate how their proposals could impact various groups of beneficiaries. Husak then walks through the specific instances in which distribution analysis would be helpful for legislators and explains the academic history of distribution analysis.
In a recent installment of Equitable Growth in Conversation, Director of Markets and Competition Policy Michael Kadesspeaks with Michelle Meagher, a senior policy fellow at the University College London Centre for Law, Economics and Society and co-founder of the Balanced Economy Project, which is building a global anti-monopoly movement. They discuss what’s missing from antitrust policy, the problem with worshipping competition, the broader impact of failing competition on the environment, and more. Meagher also discusses her most recent book, Competition Is Killing Us, which covers corporate power and accountability and the myths embedded in free market capitalism and shareholder primacy. Her book is also the subject of a recent Equitable Growth post by Raksha Kopparam, who discusses Meagher’s suggested six myths surrounding free markets and competition, and their impact on humanity and the planet.
In a recent opinion piece for The New York Times, Josh Bivens and Stuart A. Thompson provide 179 reasons that fears and panic about inflation are probably overblown. They use graphics to detail recent price increases in commodities, from gasoline and cars to airfare and hotels. They also look at commodities in which prices are falling or stable, including computer software, medical equipment, and cosmetics. In analyzing these trends, they explain the possible outcomes of the recent uptick in daily costs and compare the current state of the U.S. economy with that of the 1970s, when there were widespread fears of inflation and stagflation. They conclude that, for now, inflation should not be of major concern and recommend the Federal Reserve keep an eye on it but not yet act rashly to counter the trends.
If anyone was looking for proof that poverty is a policy choice, the unprecedented government investment in social infrastructure over the past 18 months is a good indication. Vox’s Dylan Matthews examines the drop in poverty since the onset of the coronavirus pandemic. He shows how increased spending on programs from Unemployment Insurance to the Supplemental Nutrition Assistance Program, along with the eviction moratorium and stimulus checks, all worked to reduce the number of Americans living below the poverty line. Matthews provides an explanation of how we currently measure poverty—a complex and not-uncontroversial topic—and details recent research on the impact of coronavirus relief programs, as well as the counterfactual of what poverty in the United States would be if the aid packages had not been passed. He then explains the implications of these findings—namely, that policymakers have the tools to reduce poverty and usually simply choose not to use them.
Many employers have taken advantage of the circumstances surrounding the pandemic and ensuing recession to adopt new technologies, such as robotics and artificial intelligence. This trend, paired with rebounding government investment in infrastructure, could pave the way for a big productivity boom in the U.S. economy, writesThe Washington Post’s Heather Long. According to data released by the U.S. Labor Department, worker productivity already rose 4.3 percent in the first quarter of 2021, and while it slowed to 2.3 percent in the second quarter, that’s still double the 1.2 percent average during the decade after the Great Recession of 2007–2009, Long explains. This leads some economists to hope for a coming productivity boom that could rival that of the late 1990s, when worker productivity averaged 3.1 percent thanks to a rise in computing capabilities. While it’s too soon to know for sure, Long concludes, many are optimistic, even for just a small boost in productivity.
The American Sociological Association last week held its annual meeting, virtually gathering scholars with the goal of making sociology “relevant to positive social transformation.” Over 5 days, attendees met and discussed research findings and implications on a range of topics relevant to the year’s theme of “Emancipatory Sociology: Rising to the Du Boisian Challenge.”
This frame centered the event’s sessions and discussion on some of the most pressing socioeconomic issues facing the United States, from addressing inequalities along the lines of race, gender, and socioeconomic status in education, healthcare, and the labor market, to the politics of enacting climate change policy and mitigating other environmental crises. Addressing these issues is key to Equitable Growth’s mission of advancing evidence-backed policies that promote strong, stable, and broadly shared economic growth in the United States—which is why we were so thrilled to expand our participation and attendance this year.
Over the years, approximately 12 percent of Equitable Growth’s grantees have come from sociology backgrounds. As such, this conference offered a key opportunity for Equitable Growth to broaden our network of scholars in fields beyond economics and attract interdisciplinary research around inequality in the United States. Equitable Growth grantees and members of our broader academic community were featured in at least 19 different panels, roundtables, and paper sessions at this year’s ASA conference. A few highlights:
Equitable Growth grantee Daniel Schneider of Harvard University presented research done with Allison Logan of the University of California, Berkeley on the effects of parents’ schedule instability on their children’s sleep quality, in a session on family and work.
In a session on economic inequality, Equitable Growth grantee Nathan Wilmer of the Massachusetts Institute of Technology presented research on organizational social capital and income inequality, which finds that the distribution of social capital across firms in the labor market explains part of within-industry inequality in wage premiums.
In a session on critical approaches to portraying Indigenous peoples in social science research, Equitable Growth grantee Randy Akee discussed challenges for researchers studying Native Hawaiian, American Indian, and Alaska Native populations, particularly as relates to the lack of data collection efforts and disaggregating data from large national surveys.
In a session on racial discrimination and stratification in U.S. labor markets, Janet Xu, a Ph.D. candidate in sociology at Princeton University and an Equitable Growth grantee, presented funded research on race and the reputational effects of diversity scholarships in the labor market, finding that Black diversity scholarship winners are treated more similarly to Black applicants without scholarships than Black applicants with nondiversity merit scholarships.
During a panel session exploring the call for reparations for descendants of enslaved Americans, Equitable Growth grantee Trevon Logan, the Hazel C. Youngberg Trustees distinguished professor of economics at The Ohio State University, discussed the violent economics undergirding American slavery. Logan, along with other speakers, also provided historical perspectives on racial wealth inequality and the wealth redistribution policies that previously were enacted by the U.S. federal government.
Equitable Growth grantee Siwei Cheng, assistant professor of sociology at New York University, organized a paper session on various aspects of social class, socioeconomic status attainment, inequality, and mobility using the Panel Study of Income Dynamics, or PSID.
A session on artificial intelligence, machine learning, and inequality featured a paper presentation by Equitable Growth grantee Steve Viscelli at the University of Pennsylvania, in which he discussed his research comparing legacy delivery systems used by United Parcel Service Inc., FedEx Corp., and the U.S. Postal Service to those systems created by Amazon.com Inc. that reflect gig-economy trends.
In addition to attending the above and other sessions at this year’s virtual event, Equitable Growth staff had various roles in this year’s conference. Director of Family Economic Security Alix Gould-Werth joined a team presenting research on poverty trends and mechanisms about research on transportation insecurity in the United States and its contribution to poverty and inequality. The session also covered research on the effects of childhood poverty on racial differences in economic opportunity in young adulthood; on late-career precarious employment’s effect on and implications for late-life poverty; and on understanding the ethnic and racial differences in poverty in the United States.
For the first time, Equitable Growth staff also organized a professional development workshop on best practices for writing successful grant proposals for research on inequality, which was a collaboration between Engagement Project Manager Aixa Alemán-Díaz and Director of Academic Programs Korin Davis. The session featured Elisabeth Jacobs, deputy director of WorkRise at the Urban Institute (and formerly a director at Equitable Growth), and a panel discussion with Equitable Growth grantees Wilmer of MIT and Harvard’s Schneider. The workshop elevated how different funding opportunities around inequality research provide a host of benefits—monetary and nonmonetary—that range from networking to writing for different audiences and other opportunities with media and policymakers.
This year’s ASA event allowed Equitable Growth staff to not only learn about cutting-edge research that will almost certainly inform our policy work in the coming months, but also raise awareness among a different audience about our work and research network. We were able to engage with and promote scholars at various stages of their careers, from underrepresented and diverse backgrounds, and across the social sciences. Following Equitable Growth’s participation in this year’s annual conference, we look forward to exploring opportunities for further collaboration with ASA sections and members, including at future annual conferences and other events.
1. Back when I worked at the U.S. Department of the Treasury during the Clinton administration, it was completely and totally routine for us to have distribution tables by income—not by race, but the ones by income were not an unreasonable proxy. It was a problem that distributional tables were not very good. To make them good would’ve required a significant staff boost. The same will be true for the Congressional Budget Office. That’s why the CBO budget needs a substantial boost to do a good job of carrying out this increase in its mission. Read Corey Husak, “Congress needs distribution analyses to make informed, equitable policy choices and the CBO FAIR Scoring Act would deliver it,” in which he writes: “Before voting on legislation, members of Congress usually receive a cost estimate, or score, for that legislation from the Congressional Budget Office. This score provides nonpartisan CBO analysts’ best estimate of how the legislation will affect the federal budget deficit. A cost estimate … represents only one side of the equation. … Members of Congress rarely receive analysis to assess who will benefit from bills and by how much. … Reps. Ro Khanna (D-CA) and Dean Phillips (D-MN) in the U.S. House of Representatives and Sens. Elizabeth Warren (D-MA) and Michael Bennet (D-CO) in the Senate introduced the CBO FAIR Scoring Act … directing the Congressional Budget Office to prepare distribution analyses by race and income for all legislation with substantial budgetary effects … provid[ing] members … with CBO analysts’ best estimate of how the legislation would affect different groups of people—critical information for evaluating who would benefit.”
2. Michelle Meagher is a truly impressive economist and policy analyst, and this is one of the most insightful and interesting interview sessions I have seen this year. Read Michael Kades “In Conversation with Michelle Meagher,” in which they discuss: “The Balanced Economy Project and the missing infrastructure of antitrust policy. … The global monopoly problem. … The problem with worshiping competition. … The broader impact of failing competition on the environment and society. … The monopoly problem with global supply chains. … The problem of monopoly power in global economic development. … The big antitrust and competition research questions.”
3. I hoisted this still very relevant column by Leah Stokes and Matto Mildenburger from February of last year. I would say that it is not so much that the coronavirus recession increased income or wealth inequality but rather that it has very much sharpened the stakes. Differences that you could say were differences between convenience and inconvenience before are now differences that are matters of health and sickness, and within the limit of life and death. Read their “A plan for equitable climate policy in the United States,” in which they write: “This crisis will increasingly and dramatically exacerbate economic inequality in the United States. Low- and middle-income Americans have minimal safety net protections from the impact of climate change. These communities are more vulnerable to health-related risks, don’t have the financial resources to recover from climate disasters, and are more vulnerable to climate-related hazards in the first instance. And U.S. workers and communities who may face economic costs from the energy transition to a more clean economy don’t have guaranteed access to healthcare, pensions, and the necessary assistance to maintain their dignity and quality of life. Already, insurers are declining coverage for housing against growing climate risks such as flooding and wildfires. Without equitable climate policies in place, low-income Americans will have to face a double threat. They will be more likely to die in heatwaves, struggle to recover from hurricanes and wildfires, and, without health insurance, face greater burdens from diseases pushing into new ranges as the planet warms. At the same time, they will struggle the most to pay for the costs associated with preventing even worse climate change impacts. … Equitable climate policy is both good economic policy and good politics.”
Worthy reads not from Equitable Growth:
1. As I predicted. Read Matthew C. Klein, “U.S. Inflation Is Normalizing,” in which he writes: “The temporary acceleration in price increases is already fading. But keep an eye on a few consumer services dependent on low-wage workers. … Prices that were depressed during the pandemic continue to normalize and as consumer demand for motor vehicles continues to moderate. The Consumer Price Index in July was 0.47 percent higher than in June on a seasonally adjusted basis. That’s the slowest monthly CPI inflation rate since February 2021 (0.35 percent) and significantly slower than in June (0.90 percent). Inflation is currently running just 1.1 standard deviations faster than the January 1995-February 2020 average, compared to 2.7 standard deviations faster in June.”
2. I think this is painting things a bit too rosy. Whether it is true will ultimately depend on the shape the congressional budget reconciliation bill takes, and whether it passes. And it may not pass at all, not in any form. Read Noah Smith, “Score 2 for Bidenomics,” in which he writes: “The bipartisan infrastructure bill is a solid success for the new economic paradigm. … It’s a very rare thing for Republicans to pass legislation that helps the country while a Democrat is President; if Dems act too triumphant about the bill, it could cause the GOP to lose face, since that would mean they handed Biden a partisan victory. Instead, they have to wail and moan, both to allow Republicans to say “Hey look, we got away with stiffing the Dems,” and to leave no doubt in the Dems’ mind that they’ll be letting their voters down if the reconciliation bill gets watered down. In fact, the bill is a major success for the Bidenomics agenda, even if Biden himself ends up reaping only modest political rewards. Remember that government investment is a core element of Biden’s program. Government investment has been falling as a percent of GDP for decades, even as private investment has mostly held up. … Cleaning up lead is an amazing landmark initiative, and of course electric vehicles are great, but I’d have probably skipped the rural broadband (as the technology threatens to be obsolete soon). But you know what? These kinds of spending initiatives are highly encouraging, because they suggest that our leaders have at least some small smidgen of vision for a country that doesn’t just look like a patched-up version of 1985. I mean, come on—we just got Republicans to vote to replace all the lead pipes in the nation. How cool is that??”
Before voting on legislation, members of Congress usually receive a cost estimate, or score, for that legislation from the Congressional Budget Office. This score provides nonpartisan CBO analysts’ best estimate of how the legislation will affect the federal budget deficit.
A cost estimate is useful information for legislators, but it represents only one side of the equation. Costs are incurred to deliver benefits, yet members of Congress rarely receive analysis to assess who will benefit from bills and by how much. Currently, without any requirement for this type of analysis, members of Congress all too often must vote on legislation with formal analysis of the costs but with only informal or no analysis of the benefits.
Today, Reps. Ro Khanna (D-CA) and Dean Phillips (D-MN) in the U.S. House of Representatives and Sens. Elizabeth Warren (D-MA) and Michael Bennet (D-CO) in the Senate introduced the CBO FAIR Scoring Act. The proposed law would represent a major step forward for the legislative process by directing the Congressional Budget Office to prepare distribution analyses by race and income for all legislation with substantial budgetary effects. In short, these analyses would provide members of Congress with CBO analysts’ best estimate of how the legislation would affect different groups of people—critical information for evaluating who would benefit. (See Figure 1.)
Figure 1
The need for a better understanding of how legislation would affect different groups of people is apparent in the high levels of inequality in the United States. In 2019, prior to the onset of the coronavirus pandemic, the median wealth of White families was $188,200, while the median wealth of Black families was only $24,100 and the median wealth of Hispanic families only $36,100. Families in the top 1 percent of the income distribution accounted for 20 percent of income, and families in the top 1 percent of the wealth distribution accounted for 33 percent of all wealth.
The coronavirus pandemic exacerbated, and was itself exacerbated by, these disparities. Job losses, for example, were concentrated among lower-wage workers. Unemployment rates for Black workers and for Hispanic workers remain consistently higher than unemployment rates for White workers since the onset of the pandemic more than a year ago.
If enacted, the CBO FAIR Scoring Act would ensure that members of Congress receive the distribution analyses they need to make informed policy choices in light of these economic disparities. It would clarify which bills would reduce economic disparities and which bills would increase them. And it would serve as an independent check on policymakers’ sometimes-inaccurate claims about who their policies would benefit.
Specific instances where distribution analysis would be useful in legislation
The laws that Congress already passed in response to the ongoing pandemic highlight the importance of this requirement. When the Coronavirus Aid, Relief, and Economic Security, or CARES, Act, passed in March 2020, the Congressional Budget Office estimated its cost at $1.7 trillion and produced subsequentreports of the detailed breakdowns of those costs by program. But where did the money go? Who benefited from this legislation? The Congressional Budget Office has not answered that question in a comprehensive fashion.
In a notable exception, however, the Joint Committee on Taxation produced a distribution analysis of a single provision of the law—a relaxation of limits on the tax deductibility of certain business losses. The analysis’ finding that this provision delivered significant financial benefits almost exclusively to the richest Americans drew substantial attention and confirmed the interest in distribution analysis among legislators and the public. (See Figure 2.)
Figure 2
Congress frequently revises legislation because of CBO cost estimates or designs bills to fit certain spending goals with CBO estimates in mind. With more frequent distribution analyses, Congress could also fine-tune legislation in response to the distribution analyses. Congress may want to revise a bill if an official CBO analysis shows that it would widen racial income gaps, or if almost all benefits accrue to the rich, as in the above example.
For instance, President Joe Biden and Senate Democrats are currently proposing a bill that will include massive investments in the U.S. economy, but media coverage of the bill overwhelmingly focuses on its costs, rather than its contents and benefits. The bill will include an extension of the recently enacted Child Tax Credit expansion, or child allowance, which delivers monthly checks of $250 to $300 per child to most families in the United States. Outside analyses show this will lower child poverty by nearly 50 percent, but Congress’ official scorekeeper may only analyze the costs of the bill, not its benefits, depriving Congress of crucial information before they vote.
A requirement that the Congressional Budget Office conduct distribution analyses of all legislation with substantial budgetary effects would build on existing informal practice. Currently, distribution analyses are conducted only on a discretionary basis by the Congressional Budget Office and the congressional Joint Committee on Taxation. The most common application is for tax legislation. Indeed, the JCT provided Congress with a set of distribution analyses by income during consideration of the Tax Cuts and Jobs Act in 2017, and think tanks such as the Tax Policy Center regularly produce distribution analyses for tax proposals. (See Figure 3.)
Figure 3
Yet there is no requirement that distribution analyses be provided—and the lack of such a requirement is apparent in the inconsistency with which they are produced. The Congressional Budget Office prepared revised cost estimates for the Tax Cuts and Jobs Act in April 2018, for example, but it did not prepare revised distribution analyses when it did so.
Moreover, there is no tradition of providing distribution analyses by race by either the Congressional Budget Office or the Joint Committee on Taxation. The Institute on Taxation and Economic Policy, together with Prosperity Now, produced a distribution analysis by race for the Tax Cuts and Jobs Act, but no similar analysis has been produced by official scorekeepers.
Distribution analysis in academia
There is a long tradition of conducting distribution analysis in the tax context, yet it is underused in other contexts. Application of a distributional logic to these programs is on the rise in academic work, however. Recent research by economists Nathan Hendren and Ben Sprung-Keyser at Harvard University applied the same economic logic that underlies tax distribution analyses to a range of spending programs, from education and training programs to Unemployment Insurance—exactly the kinds of areas that rarely benefit from this lens in the policy process.
This recent academic research not only uses the techniques of distribution analysis to examine policy impacts for a wider array of programs, but also further clarifies why such analyses should be centered in the consideration of public policies.
The impact of legislation on the federal budget deficit can be measured in dollars and cents, but there is no single measure that captures the impact on all people affected. This academic work by Hendren and Sprung-Keyser highlights that the direct impact on people and families is an accurate measure of how it affects their well-being. Hendren’s prior work lays out in detail why these direct impacts answer this question. And Greg Leiserson, formerly of Equitable Growth, has formalized a similar logic in the specific case of the distribution analysis of tax legislation.
With policy impacts on people and families in hand, analysts must make choices about how to group and compare those impacts to illustrate what the legislation does in a more accessible way. And it is in that step where the need for a distributional perspective comes in.
The distribution analyses produced by the Congressional Budget Office and Joint Committee on Taxation in the past focused on different impacts by income, but the CBO FAIR Scoring Act requires distribution analyses both by income and by race. Thus, the analyses will not just report how legislation affects those at different income levels, but also how it affects Black families and families of Hispanic origin.
This aspect of the legislative proposal builds on prior research by Mehrsa Baradaran, a professor at University of California, Irvine School of Law, that proposes directing the Congressional Budget Office to assess how proposals would affect the racial wealth gap. And recent commentary from Andre Perry at The Brookings Institution and Darrick Hamilton, the director of the Institute for the Study of Race, Stratification and Political Economy at the New School, similarly argues that the White House Office of Management and Budget should develop a means for scoring proposals for racial equity.
Better information will deliver better results
Many inequalities in the United States are the result of policy choices. Just as we need to track who benefits from economic growth economywide—a measure Equitable Growth calls GDP 2.0—lawmakers need to be able to track who benefits from specific legislation they pass.
Public policies can exacerbate economic inequality, and they can reduce it, too. If members of Congress are to enact policies that foster broad-based growth rather than policies that deliver increased poverty and unequal growth, then it is essential that they receive analysis of the distributional impact of policies during the legislative process when it can inform their decision-making. Reps. Khanna and Phillips’ and Sens. Warren and Bennet’s CBO FAIR Scoring Act would require exactly that and would thus represent a dramatic improvement in the legislative process.
Competition around the globe is facing a crisis today. Mega corporations benefit from neoliberal ideologies and lax enforcement of the antitrust laws. Growing market power among fewer and fewer firms harms workers, new firms, consumers, and, more broadly, most of humanity and our planet. A powerful clutch of corporate executives earn more money and gain more power while workers face worsening conditions, declining worker power, and reduced pay and benefits while communities around the world suffer from growing environmental crises.
Meagher, a senior policy fellow at the University College London Centre for Law, Economics and Society and co-founder of the Balanced Economy Project, calls current antitrust and corporate laws “arcane spheres of regulation” that have failed to execute upon their responsibilities. Yet she believes that a reassignment of power and a redefinition of antitrust and corporate law are the keys to holding corporate power accountable.
Meagher outlines six myths about free markets, rooted in neoclassical economic thinking, and the importance of seeing past them to stop the harms that they inflict upon our planet. Those myths are that:
Free markets are competitive.
Companies compete by trying to best respond to the needs of society.
Corporate power is benign.
We already control corporate power with antitrust laws and regulations.
The law requires companies to maximize financial value for shareholders.
We are all shareholders, so we all benefit from corporate focus on shareholders’ interests.
Meagher argues that current markets in free market economies are not competitive. Modern research in competition supports her claim. As now evident in the beer, homebuilding, and agriculture industries, for example, consolidation of competitors prevents the entry of new firms, thus contributing to the persistence of monopoly and duopoly power. As a result of five decades of consolidation, the four largest biotech companies controlled 85 percent of the corn seed market in 2015, compared to only 50.5 percent in 1985.
Growing evidence supports the finding that consolidation across many industries is harmful. A recent study by the Federal Reserve shows that mergers and acquisitions lead to an increase in price mark-ups and present little evidence of effects on firm-level productivity. And a deeper dive into hospital merger data finds that hospital mergers neither reduced costs nor improved the quality of care provided. The research demonstrates that when large hospital groups merge and become the only healthcare provider and employers in a region, they are able to suppress employee wages—specifically high-skilled physician and nurses’ wages—below competitive rates, a practice known as monopsony power. Decreased quality of care, increased prices, and slower wage growth are all factors that contradict the needs of society.
Meagher disputes the myth that competition results in the fulfillment of society’s needs. Instead, competition often leads firms to exploit regulatory loopholes or externalities. She explains that in the name of competition, global companies will move production to areas with weaker environmental or labor protections. While that decision allows the company to increase its profits, it results in global environmental damage done in the name of such competition.
When corporate leaders prioritize shareholder profits, they often exploit what economists refer to as “externalities” to their benefit. One such externality is pollution. Recent research found that only 100 companies are responsible for 71 percent of global emissions, and just 20 companies are responsible for 55 percent of global single-use plastic waste. Discussing how the environment is a victim of free market competition, Meagher references the 2010 Deepwater Horizon oil rig explosion, an environmental tragedy that killed 11 people, caused the deaths of billions of marine life forms, and spewed 4.9 million barrels of petroleum into the Gulf of Mexico.
Indeed, investigations found that BP plc, owners of the Deepwater Horizon oil rig, resorted to unsafe construction practices after the projects exceeded their budget and timeline. BP’s eagerness to begin production drove them to compromise their workers and the environment for the sake of growing profits. To Meagher’s argument, environmental exploitation often occurs so firms can compete with one another, and as the past four decades have shown, our environment is not a benefactor of antitrust enforcement.
Meagher argues that the assumption that corporate power is benign and held in check by antitrust laws is rapidly proving to be false. Take Big Tech firms such as Alphabet Inc.’s Google unit, Facebook Inc., Amazon.com Inc., and Apple Inc. They have enjoyed decades of exponential growth, exclusivity, and influence in our socio-political environment because the courts have been unable to use existing antitrust laws to rein in their power. In return, new entrants face insurmountable barriers and workers maintain little to no power in the workplace.
Monopolistic firms argue that everyone, not just firm executives, are shareholders, and that consumers benefit from their power in the form of reduced prices and innovative products. But rising mark-ups, weakened privacy protections, and the prevalence of killer acquisitions indicate otherwise. In reality, shareholders who maintain seats on corporate boards benefit the most from consolidation and monopolistic power, while workers see declining wages and working conditions.
Meagher’s solution is simple: stakeholder antitrust and corporate law reform.
Minimum wage laws, pro-union laws, and wealth redistribution are valuable tools to combating unchecked corporate power, but without policies that put stakeholders above shareholders, Meagher says we are essentially “turning all the taps on full blast to fill up the bathtub without plugging the drain.” When stakeholders, consisting of firm employees, community residents, local governments, and the environment, are given a sliver of the power granted to shareholders, corporate power would effectively be used to serve the public interest rather than line the pockets of the few.
Addressing the role that power plays in free market competition and using corporate law to relay that power to stakeholders would allow policymakers to control and even curb some of the political and environmental externalities previously not considered. Participative antitrust, a term coined by Nobel laureate Jean Tirole, an economist at Toulouse 1 Capitole University, incorporates the voice of stakeholders in the development of regulative policies. Rather than fill the table with industry veterans and executives who would benefit from lax regulation, consumers, employees, suppliers, and other actors in the industry down the ladder should have a say in how new antitrust policies are built.
Additionally, Meagher suggests that corporate law can incentivize firm leaders to promote the environmental and social equities that society desires, forcing private-sector actors to consider the negative implications of their actions when competing. Broadening the scope of antitrust enforcement would require firms to address society’s needs, such as narrowed wealth gaps, environmental preservation, and worker safety, in order to compete.
In the United States, amid the coronavirus pandemic, for example, most households struggle to make ends meet due to layoffs and caretaking responsibilities while the net worth of the top 15 richest Americans has grown by almost $600 billion, or 70.85 percent. New research finds that high-temperature days result in a 6 percent to 15 percent increase in workplace injuries among some of the most vulnerable workers in our labor force, such as construction and agriculture workers.
Critics of this stakeholder theory believe that antitrust law is not the vehicle for environmental and societal remedies. One commissioner of the Federal Trade Commission, Noah J. Phillips, disputes the calls for stakeholder capitalism and the role antitrust laws play in regulating corporate power. He claims that while stakeholder goals, including stronger wages, reduced economic inequality, and environmental protections, are ideal, they do not fit into the definition of competition policy. Antitrust protects competition, and “healthy competition doesn’t always produce what is best for all stakeholders.”
While our current antitrust and corporate laws adhere to this doctrine, Meagher believes that we need to think about competition more broadly, not just about antitrust and the single mandate of seeking low prices. Expanding the scope of competition policy and corporate law can result in positive externalities such as environmental preservation and worker power.
Meagher brings up the example of B-Corps, firms that are legally bound to provide a positive impact on the environment, their stakeholders, and our society. While not perfect, these companies prioritize the public interest, from fair wages to net-zero emissions, over global growth and prove that corporations can generate profits and returns on investments while incorporating the voices of all actors. Even further, the presence of more than 2,500 B-Corps across various industries, from banking to textiles, proves that all industries are capable of serving stakeholders—it’s just a matter of corporations’ desire to do so.
Meagher concludes her book by reaffirming that our current policies fail to prevent uncontrollable power. In order to revitalize competition for a modern global economy, we must ask ourselves how antitrust law can become more meaningful. On the transformation of private entities, she makes the powerful statement that “the options for doing less harm and more good are limited only by corporate imaginations.”
For more on Michelle Meagher’s work, see the latest installment of the In Conversation series, featuring Meagher and Michael Kades, Equitable Growth’s director of markets and competition policy, in which they discuss the effects of monopoly power on the economy, environment, and society and how Meagher’s new works aim to develop the solutions.
