The curious case of the federal prosecutor who sided with defendants

Posted on by Maria Monroe
A top story posted on a LinkNYC near Times Square in New York City, February 2020.

Antitrust policy has been front and center in U.S. public policy debates over the past few years. The House Judiciary Committee recently completed its investigation into digital markets. Senate Democrats introduced multiple bills to reform antitrust laws. Even the comedian Jon Oliver devoted an episode of his show to concentration and market power.

The leadership at the Antitrust Division of the U.S. Department of Justice and U.S. Attorney General William Barr missed the memo. Antitrust enforcement by the Department of Justice is at historic lows, yet the Department of Justice is breaking new ground in one area—siding with defendants in antitrust actions brought by other enforcers, the Federal Trade Commission and state attorneys general.

Let’s look at three cases that are emblematic of this antitrust tilt toward defendants in antitrust cases brought by other antitrust agencies. As Equitable Growth recently reiterated, the United States has a monopoly power problem. During this critical moment, however, the Trump administration’s antitrust legacy at the Department Justice may be to limit the ability of the antitrust laws to combat that problem. Rather than criticizing other agencies for bringing cases, the leadership at the Department of Justice and its Antitrust Division would better serve the country by enforcing the law.

Peabody-Arch Coal: The most recent intervention

Let’s start with the most recent action. Back in February 2020, in a 4-1 vote, the Federal Trade Commission sought to block a joint venture (a form of coordination that is less than a full merger but still subject to the antitrust laws) between Peabody Energy Corporation and Arch Coal, Inc. According to the complaint, the two companies are combining their coal mines located in the Southern Powder River Basin in Wyoming. They are the two largest coal mines in the Southern Powder River Basin and fierce, direct competitors.

According to the Commission’s complaint, coal from this region is different than other coal. It is cheaper to mine, being close to the surface. It is cleaner to burn. And it boasts a higher heat content. This is why the Federal Trade Commission argues that the proposed post-merger joint venture would be able to increase the price of its coal—it won’t be profitable for utilities to shift to other types of coal or other types of energy. Currently, the agency is seeking a preliminary judgement in federal court to prevent the joint venture.

If granted, that injunction would block the deal until the FTC’s litigation on the full merits is concluded, which is an administrative trial. The federal court held a 9-day hearing on the request for a preliminary injunction, with the parties now awaiting the court’s judgment. The administrative trial is scheduled to start on December 1, 2020, before the FTC’s administrative law judge.

So far, this is a pretty standard antitrust complaint. It includes high market shares, direct competitors, and limited alternatives. Could the Federal Trade Commission be wrong? Maybe, which is why the agency has to go to court and convince a judge that the evidence supports its case.

Here is what is not so standard. After meeting with Wyoming Gov. Mark Gordon (R), who supports the merger, Attorney General Barr announced he was going to review the FTC’s case: “If I reach a conclusion in which I feel like the merger would benefit competition,” he explained, “then I will try to use whatever authority I have to rectify the situation.”

A judge will decide the merits of the Peabody-Arch Coal case, so let’s focus on Government 101. The Federal Trade Commission is an independent agency. It was created to be separate from the U.S. Department of Justice. Neither the Department of Justice nor Attorney General Barr have any formal authority over the FTC’s decision to bring an antitrust case. But the Department of Justice can interfere. It can file statements of interest in the case or intervene in an ongoing litigation.

The parties will almost certainly quote as often as possible Attorney General Barr’s statement: “It sounds to me like the whole picture wasn’t looked at here.” Why interfere in this case? It is not as though the agency has a reputation for being overly aggressive. It currently has three Republican commissioners, two of whom—Chairman Joe Simmons and Commissioner Noah Phillips—supported the action. Both a majority of the Commission and a majority of the majority party at the agency supported blocking the joint venture. 

Qualcomm: Opposing monopolization cases

Next up is the semiconductor monopoly case involving Qualcomm Inc. In 2017, the Federal Trade Commission alleged that Qualcomm used licensing and supply terms to maintain its monopoly on semiconductors necessary for cell phones to work. After the trial and before the judge issued her decision, the Antitrust Division of the Department of Justice filed a statement of interest, requesting that the judge hold additional hearings on remedy if she were to rule for the FTC.

When the judge did rule in the FTC’s favor and rejected the need for more hearings, the Division sided with Qualcomm in seeking a stay of the order and asking the federal Ninth Circuit Court of Appeals to vacate the lower court’s decision. The Ninth Circuit granted the stay and recently ruled in favor of Qualcomm.

The current administration’s Antitrust Division has not brought a single monopolization case (to be fair, the Division has brought only one monopolization case this century). But it opposes this monopolization case against Qualcomm brought by the Federal Trade Commission.

Although the Justice Department (along with the Departments of Defense and Energy) raised legal issues with the district court’s decision, it also mentioned national security 17 times in one brief, an argument the Justice Department itself had to refute when it sought to break up AT&T almost 40 years ago.

T-Mobile Sprint: Defending consolidation

Then, there is the case challenging T-Mobile US Inc.’s acquisition of Sprint Corporation. In November of last year, a group of state attorneys general sued to block the deal that would reduce the number of mobile phone carriers in the United States from four to three. The Antitrust Division had entered a settlement with the two companies, agreeing not to challenge the transaction in exchange for a remedy that the Division believed would resolve any competitive concerns.

The Antitrust Division filed a Statement of Interest in the states’ case defending the merger. In its view, “The Litigating States’ strong interest in this merger does not justify their attempt to substitute their judgment for the nationwide perspective of the United States.” The Assistant Attorney General Makan Delrahim even went so far as to encourage Dish Network Corporation, which would benefit from the settlement as a buyer of some of the merging parties’ assets, to lobby lawmakers to the settlement.

In short, the Antitrust Division was asking for the very deference it had failed to show the Federal Trade Commission in the first two cases detailed above. The district court ruled against the states.

The New York Times published an editorial titled “Why is the Justice Department Treating T-Mobile Like a Client?” More recently, the Department of Justice took the extraordinary step of issuing a press release congratulating T-Mobile and Dish for completing their divestiture. As professor Chris Sagers has pointed out, the same Department of Justice the very next day told the court that the “remedial divestitures the agency required for the deal to go through would not be fully carried out.”

The troubling history of interference in antitrust actions

Based on these three cases in just more than a year, one might think it is common for the Department of Justice to sit in judgment of the Federal Trade Commission’s and state attorneys’ general antitrust enforcement actions. Yet these are extraordinarily unprecedented interventions. Before the Trump administration, even when there were open disagreements among antitrust enforcers, the Department of Justice did not join any ongoing litigation to side with the defendants.

The closest example to this type of interference occurred in 2006 and cost consumers billions of dollars. The Justice Department opposed the Federal Trade Commission’s request that the Supreme Court hear its appeal in Federal Trade Commission v. Schering-Plough Corp., a case involving a patent settlement in which the branded pharmaceutical company allegedly paid its potential generic competitor to stay off the market (pay-for-delay agreements). Unlike the current examples, the Justice Department intervened only after specifically requested by the Supreme Court and did not comment on the ultimate merits. The Supreme Court rejected the FTC’s request.

Pay-for-delays then became ubiquitous. Roughly 8 years later, the Supreme Court finally took up the issue of pharmaceutical patent settlements and roughly adopted the same position that the Federal Trade Commission had advocated in the earlier Schering case. In the interim, pay-for-delay deals increased prescription drug costs by more than $60 billion. Had the Justice Department sided with the FTC back in 2006, those extra costs could have been avoided.

Implications

The value of the Antitrust Division sitting in judgment of other enforcers is questionable. True, in both the Qualcomm case and the T-Mobile-Sprint litigation, the courts sided with the Division, although the Federal Trade Commission could still appeal in the Qualcomm case. Of course, it is much easier for the defendant to win when the Department of Justice is urging the court to reject the case. And, as the pay-for-delay example shows, there is no guarantee that the Department of Justice is correct.

The current Justice Department’s antitrust enforcement is not a record to be envied. Although there are rumors that the Antitrust Division may sue Alphabet Inc.’s Google unit, the Trump administration’s anger at Google’s supposed discrimination against conservative viewpoints—rather than the merits of any antitrust case—may be driving the interest of the leadership at the Justice Department. On Friday, Leah Nylan at Politico broke that story that President Donald Trump was pressuring an independent agency, the Federal Trade Commission, and its chairman Joseph Simons, to sue Google for is supposed censorship of conservative viewpoints. More generally under the Trump administration, criminal antitrust enforcement and civil nonmerger enforcement actions are at historical lows. And despite the merger wave prior to the coronavirus pandemic and resulting recession, merger enforcement was flat.

Regardless of the merits in these underlying cases, acting like a scolding nanny is not the role of the U.S. Justice Department. From a practical matter, this is a poor use of limited resources. As Equitable Growth has documented, federal antitrust enforcers have been starved of resources since 2010. As of 2018, in real terms, appropriations are 18 percent lower (after accounting for inflation) than in 2010.

Many policymakers, including me, today advocate for increasing appropriations, but it makes little sense to increase an enforcement agency’s budget if it is focused on preventing enforcement actions. To ensure that the U.S. Department of Justice uses its appropriations correctly, it may be time for Congress to consider requiring it to receive consent from the other government antitrust enforcers before it can intervene in an antitrust action initiated by the Federal Trade Commission or a state attorney general.

Posted in Uncategorized

Taxing wealth and investment income in the United States

Posted on by Maria Monroe

The federal income tax does a poor job of taxing income derived from wealth. The root cause of this problem is that the tax code allows taxpayers to defer (without interest) paying tax on investment gains until assets are sold. Moreover, even when assets are sold, the investment gains are taxed at preferential rates. The top federal tax rate on wages and salaries is 37 percent while the top federal tax rate on investment gains is only 20 percent. Finally, if taxpayers can avoid selling assets until they die, the investment gains are wiped out for income tax purposes. The result is a two-tier tax system, where middle-class families pay full freight on their wages while wealthy, disproportionately White families pay reduced rates on their investment income.

Taxing wealth and investment income in the United StatesDownload

Lawmakers in Congress should eliminate this two-tier system by reforming the taxation of wealth and investment income. To do so, they should adopt either a wealth tax or a reformed approach to income taxation, often referred to as mark-to-market or accrual taxation that would tax all investment gains on an annual basis regardless of whether assets are sold. Accompanying reforms to the estate tax—or the adoption of an inheritance tax—are also worth considering. The key resources below detail these solutions.

Key resources

“Taxing wealth by taxing investment income: An introduction to mark-to-market taxation,” by Greg Leiserson and Will McGrew

In a system of mark-to-market taxation, investors pay tax on the increase in the value of their investments each year rather than deferring tax until those investments are sold, as they do under current law. This issue brief first defines investment income and explains how mark-to-market taxation works. It then reviews the revenue potential of this approach to taxing investment income, explaining why a mark-to-market system can raise substantial revenues. Finally, it summarizes the distribution of the burden that would result, which would fall overwhelmingly on wealthy individuals.

“Wealth taxation: An introduction to net worth taxes and how one might work in the United States,” by Greg Leiserson

This brief provides an introduction to net worth taxes, also referred to as wealth taxes. It summarizes how a net worth tax works, reviews the revenue potential of such a tax, and describes the distribution of the economic burden that would be imposed.

“Net worth taxes: What they are and how they work,” by Greg Leiserson, Will McGrew, and Raksha Kopparam

Wealth inequality in the United States is high and has increased sharply in recent decades. This increase—alongside a parallel increase in income inequality—has spurred increased attention on the implications of inequality for living standards and increased interest in policy instruments that can combat inequality. Taxes on wealth are a natural policy instrument to address wealth inequality and could raise substantial revenue while shoring up structural weaknesses in the current income tax system. This paper provides an introduction to net worth taxes, perhaps the most explicit means of taxing wealth.

“The ‘silver spoon’ tax: How to strengthen wealth transfer taxation,” by Lily Batchelder

This 2016 analysis explains the case for better taxing estates or inheritances, and how lawmakers in Congress could do this. Batchelder shows how wealth transfers are extremely inequitable, currently lightly taxed, and that there are several practical solutions to resolve this problem.

“A modest tax reform proposal to roll back federal tax policy to 1997,” by Owen Zidar and Eric Zwick

In the economic boom times of 1997, federal taxes raised more revenue and were a more powerful force for equity. Zwick and Zidar propose several changes that would return the United States generally to this tax system, including increasing tax rates on capital gains, dividends, and profits from pass-through businesses, as well as some additional reforms, including taxing unrealized capital gains at death.

“Taxing Wealth,” by Greg Leiserson

This research paper outlines the case for major reforms to the taxation of wealth in the United States, details different approaches to reform, and discusses the economic effects of these approaches and their relative advantages and disadvantages.

Top experts

  • Greg Leiserson, director of tax policy and chief economist, Washington Center for Equitable Growth
  • Lily Batchelder, Frederick I. and Grace Stokes professor of law, New York University
  • David Kamin, professor of law, New York University
  • Emmanuel Saez, professor of economics, University of California, Berkeley, and an Equitable Growth Steering Committee member
  • Gabriel Zucman, associate professor of economics, University of California, Berkeley

To view the other policy sheets in this series, please click here.

Achieving universal paid family and medical leave in the United States

Posted on by Maria Monroe
Only 18 percent of private-sector workers have paid family leave and 44 percent have paid personal leave through their jobs.

The coronavirus pandemic and the recession it caused lay bare a familiar challenge for U.S. workers—balancing family and job responsibilities without access to paid family and medical leave. When a new child arrives, loved ones get sick, or a serious illness strikes, people need time away from work. But even at these times of joy or stress, bills and expenses will keep coming, and families must find a way to cope with financial uncertainty. While some workers can count on their employers to provide them with paid leave, it is rare: Only 18 percent of private-sector workers have paid family leave and 44 percent have paid personal leave through their jobs. Access to these benefits drops precipitously for lower-income and part-time workers.

This is not a new challenge, but it is often one that families deal with individually—with every household forced to patch together solutions as best they can.

Achieving universal paid family and medical leave in the United StatesDownload

The Families First Coronavirus Response Act, passed in March 2020, provided some private-sector workers with access to federal paid leave benefits for the first time, but the program fell far short of satisfying the needs of the workforce. In 2021, policymakers should prioritize the establishment of a national and permanent paid family and medical leave social insurance system. Evidence from states that already guarantee access to paid leave also suggests positive human capital and economic outcomes for families and the broader economy without meaningful negative effects on employers. Inclusive eligibility requirements, progressive wage-replacement structures, robust job protections, and leave lengths that meets the needs of workers and their families are all important policy design elements to consider in fashioning a paid family and medical leave program that meets the needs of the diverse workforce of the United States.

Key resources

“Vision 2020: The economic imperative of enacting paid family leave across the United States,” by Maya Rossin-Slater and Jenna Stearns

This essay examines paid family leave programs at the state and local level, which are helping to set the stage for a federal paid leave program. The authors then describe the current research on the impacts of paid family leave on workers, children, and employers, with an eye toward understanding the economic costs and benefits of a potential federal program and the key policy levers to consider. The authors also briefly discuss how paid family leave may relate to the growth in economic inequality in America and whether a federal policy could help curb this trend. While paid leave can cover both bonding with a new child and caring for other relatives, in this essay, the authors primarily focus on the effects of bonding leave.

“What does the research say about the FAMILY Act provisions?” by Equitable Growth

This factsheet summarizes the state of research on major paid leave policy issues by looking at the FAMILY Act, one of the most prominent, comprehensive paid leave bills introduced in the U.S. Congress. It summarizes studies on reasons for implementing paid leave, the definition of family members, the length of leave, wage replacement levels during leave, and job protection during leave.

“Paid medical leave research: What do we know and what do we need to know to improve health and economic well-being in the United States,” by Jack Smalligan and Chantel Boyens

Paid time off to address one’s own medical condition is the most frequently used type of paid leave, yet it has received far less attention in the policy debate and research. In this report, Smalligan and Boyens aim to inform future research by first providing background on what paid medical leave is and highlighting important features that make it distinct from parental and family caregiving. They then describe what is known about the expected impact of paid medical leave and the ways in which it could be expected to affect economic and health outcomes, including effects on individuals, public health, employers, and the U.S. economy. Paid medical leave could improve economic outcomes by reducing income volatility, helping workers to return to employment, improving productivity, and supporting labor force participation. Paid medical leave may also have positive effects on health outcomes by improving health management, encouraging earlier treatment, and reducing financial stress.

“Paid family care leave: A missing piece in the U.S. social insurance system,” by Jane Waldfogel and Emma Liebman

Leave to care for a family member with a serious illness, whether that be a spouse, domestic partner, child, parent, or other relative, is more widespread and more frequent than it is for the other types of family leave. In contrast to other types of leave—in particular, parental leave, which has been studied extensively—family care leave receives much less attention in existing research. Its inclusion in policy proposals is also uneven. This paper focuses on reviewing what we know and do not know about family care leave. This paper contributes to an understanding of the need for paid leave to care for a seriously ill family member and the current state of policy and research. Considering the evidence, Waldfogel and Liebman offer implications for policy and future research.

Top experts

  • Alix Gould-Werth, director of family economic security policy, Washington Center for Equitable Growth
  • Maya Rossin-Slater, assistant professor, Stanford University School of Medicine
  • Jane Waldfogel, Compton Foundation Centennial professor for the prevention of children’s and youth problems, Columbia University School of Social Work
  • Jack Smalligan, senior policy fellow in the Income and Benefits Policy Center, Urban Institute
  • Chantel Boyens, principal policy associate in the Income and Benefits Policy Center, Urban Institute
  • Tanya Byker, assistant professor, Middlebury College
  • Christopher Ruhm, professor, University of Virginia

To view the other policy sheets in this series, please click here.

Disaggregated data on Asian Americans, Native Hawaiians, and Pacific Islanders is crucial amid the coronavirus pandemic

Posted on by Maria Monroe
Among essential healthcare workers (20 percent of all those on the front lines), 9.2 percent are part of the AANHPI community.

Overview

The novel coronavirus pandemic and the recession it caused lay bare the clear links between racial and ethnic economic inequities, structural racism, and the outsized harm of these crises on communities of color in the United States. But the impact on Asian Americans, Native Hawaiians, and Pacific Islanders is less evident because the data on these specific communities are not disaggregated to show the full impact of the coronavirus recession among subgroups of AANHPI communities.

The data that are disaggregated, for income levels and educational attainment, demonstrate that aggregated data for all Asian Americans, Native Hawaiians, and Pacific Islanders mask serious socioeconomic inequities within and among the many subgroups in this catch-all category. To address both the public health and economic crises, disaggregating U.S. administrative data by detailed race and ethnicity is a critical element of a broader policy agenda to protect the most vulnerable workers and to address pervasive issues of systemic racism.

Disaggregated data on Asian Americans, Native Hawaiians, and Pacific Islanders is crucial amid the coronavirus pandemicDownload

“Disaggregating data in the current crisis reveals that anti-Asian bias and hate speech are not the only ways in which Asian American communities experience racism,” says Janelle Wong, a professor of American studies and Asian American studies at the University of Maryland, in an interview with the authors. “Within our community, it is clear that many of those Asian American groups that were already the most economically vulnerable are now hit hardest by doing the unappreciated and underpaid work of essential and front-line workers. This story cannot be told without disaggregated data.”

The sooner policymakers start to disaggregate data by multiple dimensions, the sooner we can target the unique barriers to emergency support in response to this crisis, including healthcare, workplace protections, and other critical services and resources at the local, state, and federal levels. This issue brief details why the U.S. Department of Commerce’s Bureau of Economic Analysis, the U.S. Department of Labor’s Bureau of Labor Statistics, the Federal Reserve Board and statistical agencies at the U.S. Department of Health and Human Services and state and territorial healthcare agencies need to act soon, and what they should do.

What the data reveal about the Asian American, Native Hawaiian, and Pacific Islander workers in front-line occupations

An important factor of this crisis’s disparate toll on people of color is their overrepresentation in lower-paying jobs with fewer benefits, such as paid sick leave, or jobs considered “essential” within the context of the current pandemic, including healthcare workers, cleaning staff, and fast food service workers, among others. According to the 2018 American Community Survey 5-year sample, front-line essential workers comprised 12.8 percent of the AANHPI workforce. (See Figure 1.)1

Figure 1

Percentage of AANHPI workers, compared to all other workers in essential U.S. occupations, 2018

A deeper look at the data shows notable heterogeneity for subgroups across occupations. Among essential healthcare workers (20 percent of all those on the front lines), 9.2 percent are Asian Americans, Native Hawaiians, and Pacific Islanders, which is higher relative to their 5.6 percent representation within the U.S. total population, according to our calculations.2 Disaggregated data of AANHPI subgroups, such as East Asian and Southeast Asian Americans, compared to White and other racial and ethnic groups, show notable heterogeneity. (See Figure 2.)

Figure 2

A breakdown of Asian American, Native Hawaiian, and Pacific Islanders by subgroup and front-line essential occupations, 2018

But these data still mask important differences between specific racial and ethnic groups within Asian American, Native Hawaiian, and Pacific Islander front-line workers. A deeper look at the American Community Survey data shows notable heterogeneity for subgroups across occupations, relative to the proportion of the total AANHPI population in the front-line workforce. A high proportion of the Filipino (11.5 percent) and Fijian (10.1 percent) subgroup populations are healthcare workers, relative to the rates of the largest AANHPI subgroup populations—Chinese (3.7 percent) and Asian Indians (5 percent), and to all other workers (3 percent).

This is also true in other front-line, essential occupations, which include food services, cleaning, retail, and public service employees such as police and firefighters. The workforces of certain subgroup populations are highly represented in these industries, such as Hawaiians (10.3 percent), Nepalese (13.6 percent), and Thais (16.3 percent), compared to other large subgroups such as Koreans (7.8 percent) and Vietnamese (7.2 percent), and to all other racial/ethnic groups (8.7 percent). (See Figure 3.)

Figure 3

Breakdonw of front-line workers by AANHPI subgroups compared to all front-line workers of other races and ethnicities

Asian American, Native Hawaiian, and Pacific Islander health disparities amid the coronavirus pandemic

The role of front-line workers from Asian American, Native Hawaiian, and Pacific Islander communities compounds the dangers of these workers and their families and communities to the coronavirus and COVID-19, the disease caused by the virus. The nature of pandemics, of course, means that the success of public health initiatives to contain a deadly virus or bacteria depends on the protection and treatment of populations most at risk. And structural and economic inequalities play major roles in healthcare outcomes across all racial groups. While incomplete, the existing data on the race and ethnicity of cases of coronavirus and COVID-19 reveal deep inequities.3

The latest data on cases by state and race/ethnicity show that 4 of the 10 states with the highest number of cases are also among the top 10 states in the continental United States with largest number of Asian Americans, Native Hawaiians, and Pacific Islanders per capita.4 “As we have seen in other diseases, such as cardiovascular disease, diabetes, and cancer, aggregating these diverse race and ethnic groups leads to missing important high-risk groups,” says Latha Palaniappan, professor of medicine at Stanford University School of Medicine, in an interview with the authors of this issue brief. She adds that because of the unique health needs of AANHPI communities, “it is also important not to study just one group, say Chinese, and extrapolate to other AANHPI groups, say Filipino.”

Important factors affecting health outcomes, including insurance coverage, language and cultural barriers to medical care, and risk of certain health conditions, vary widely among Asian Americans, Native Hawaiians, and Pacific Islanders. Research from Stanford University shows that diabetes, heart disease, and strokes are common causes of death in AANHPI communities. When looking at health insurance rates, a study from 2018 found that while uninsurance rates among Americans in these communities of color shrank after the enactment of the Affordable Care Act in 2010 (from 18.8 percent to 9 percent), they are still slightly higher than White uninsurance rates today (8.8 percent).

So, even as data reporting on the health impact of the coronavirus and COVID-19 by race and ethnicity improve, states and communities empowered to provide accessible health resources will have difficulty doing so equitably and efficiently using aggregate data alone. As Figure 3 demonstrates, the wide heterogeneity of front-line workers among subgroups of Asian Americans, Native Hawaiians, and Pacific Islanders means that knowing more about those subgroups’ health disparities would help public health officials deal with the pandemic based upon deeper evidence-based data.

Why disaggregated data for Asian Americans, Native Hawaiians, and Pacific Islanders matter

Significant occupational differences are not the only motivation to understanding the heterogeneity within the Asian American, Native Hawaiian, and Pacific Islander communities. AANHPI subgroups (as is true for all racial and ethnic groups) are distinct in terms of their language diversity and English proficiency, caregiving preferences, naturalization rates and immigration histories, and generational cohort sizes. Altogether, these have important implications for policy interventions and government support targeted to these subgroups within the AANHPI population in the United States. Disaggregated data can be critical for state and local jurisdictions with diverse AANHPI populations, for example, so that policymakers can take the proper and effective steps to protect these workers, their families, and their communities, and contain the virus.

It can also empower policymakers at all governing levels to adopt more robust and holistic approaches to address issues that may well be exacerbating the crisis for these communities. A breakdown of the data into AANHPI subgroups by unemployment, healthcare and family care provisions, food and income insecurity, unstable or inadequate housing, and workplace hazards or discrimination would deepen our understanding of these communities.

Or consider language accessibility.5 This is crucial for inclusive public health emergency advisories on testing information, transportation service disruption announcements, workplace protection notices (from adequate break time for workers to access to personal protective equipment), and targeted program uptake (including supports for small businesses during the crisis, as well as families with complex household care needs).6

Then, there’s the travesty faced by all of these subcommunities of Asian Americans, Native Hawaiians, and Pacific Islanders—the compounded amounts of potential harm due to the notable rise of anti-Asian harassment and assault since the onset of this pandemic, as well as massive drops in traffic to AANHPI-owned restaurants and businesses compared to other companies. According to a study published by Pew Research Center, approximately 31 percent of AANHPI adults have been victims of racial slurs, jokes, or attacks, and around 39 percent have said people have acted uncomfortable around them since the coronavirus outbreak began in the United States. Continuing inflammatory rhetoric by some of our nation’s public officials only encourages this racism.  

Investing in our public economic infrastructure and strengthening collective bargaining laws are two ways to more broadly help these and other communities of color and our nation at large.7 So, too, would immigration reform—and all of which would help to expedite relief during the current recession, bolster worker power, and provide legal recognition and protections for at-risk workers.8 And the long-term trauma of the coronavirus pandemic and resulting recession will require more public investment in our public mental healthcare infrastructure. This needs to be culturally competent and inclusive to meet the needs of the very diverse subcommunities of Asian Americans, Native Hawaiians, and Pacific Islanders.  

Conclusion

Asian Americans, Native Hawaiians, and Pacific Islanders are the fastest growing part of an increasingly diverse U.S. population. The U.S. Census Bureau and other federal agencies, as well as some state and local agencies and universities, now collect data on 23 distinct Asian American and 21 distinct Native Hawaiian and Pacific Islander ethnic groups.9 But persistent problems remain in the collection, standardization, and dissemination of these disaggregated data.

Currently, only the American Community Survey and the U.S. Census Bureau produce disaggregated administrative datasets on subgroups within AANHPI subcommunities. But the Census Bureau’s Annual Social and Economic Supplement of its Current Population Survey does not, as is also the case for the Bureau of Labor Statistics data and the Federal Reserve’s Survey of Consumer Finances.

One assumption as to why federal agencies are against collecting disaggregated data is that collecting specific ethnic and racial data for all groups under the AANHPI umbrella is tedious and can minimize sample sizes to the point that any analysis may not be statistically significant. At the state level, too, some groups have pushed back against efforts to disaggregate data. “One of the biggest contemporary challenges to collecting these data is that some members of our own communities have been opposing the collection of high-quality detailed data,” said University of Maryland’s Wong, who also is a research fellow for AAPI Data, a publisher of demographic data and policy research on Asian Americans and Pacific Islanders.

“For example, in Minnesota, Massachusetts, and Connecticut, some Chinese Americans have lobbied against the efforts of Asian American advocacy organizations to collect detailed data on Asian American populations,” notes Wong. “The unfounded fear of these groups is that identifying disparities within our communities will somehow have a negative effect on the most economically advantaged subgroups.”10

It’s vital that policymakers have a clearer understanding of the intersection of racial health disparities, socioeconomic precarity, and participation in essential occupations to effectively address the coronavirus pandemic and the continuing recession. The White House Initiative on Asian Americans and Pacific Islanders, a federal interagency working group under the U.S. Department of Commerce, should recommit to improving data collection, access, and dissemination on all AANHPI communities and encouraging researchers and policymakers to leverage these datasets for new analysis and smarter planning, which had formerly a been top priority of this initiative in the previous Obama administration.

Federal policymakers should also enact the policies proposed in Equitable Growth’s GDP 2.0 project, which calls for producing headline economic statistics that represent the well-being of all Americans at the top, middle, and bottom of the income distribution. While disaggregating administrative data by race, ethnicity, and gender has proven to positively impact economic and public health initiatives across the country, the combination of this data with disaggregated income data would paint a clearer picture of the state of inequality across all groups and income levels. The extent of cultural heterogeneity revealed would have significant implications not just for the lived experiences of different members of the many Asian Americans, Native Hawaiians, and Pacific Islanders, but also for how policymakers can fully grasp and identify structural weaknesses in the U.S. economy affecting all workers and families during this crisis and the long recovery to follow.

Building worker power in the United States

Posted on by Maria Monroe
Union and AARP members rally in New York City on the city hall steps, March 2016.

Wages have stagnated for most U.S. workers over the past 40 years while the labor market institutions that promote worker power have faltered in a pro-business and anti-worker policy environment. These two phenomena are two sides of the same coin—productivity decoupled from wage growth results in employers more able to exploit workers to produce more per hour worked while undercutting wages.

Labor market policies, such as minimum wages or premium pay amid the coronavirus pandemic, are not keeping up. Meanwhile, labor laws meant to protect collective action and unionization efforts, guarantee freedom from discrimination, and promote workplace safety are not well-enforced. Furthermore, trends such as domestic and international outsourcing and the fissuring of the workplace are changing the U.S. economy in ways our labor market institutions were not built to handle. These trends unbalance power between workers and corporations so that workers are not able to share in the high profits they create and the economic growth they drive. 

Building worker power in the United StatesDownload

Traditional labor market polices, such as increasing minimum wages, expanding overtime pay, instituting prevailing wages, and enforcing anti-discrimination laws and workplace safety through co-enforcement, remain useful and implementable at all levels of government—local, state, and federal. Agencies, including the U.S. Department of Labor, the federal National Labor Relations Board, and the Federal Trade Commission, can make it easier for workers to organize, cut down on independent contractor misclassifications, and restrict the use of noncompete and no-poach agreements, which augment employers’ power over workers.

The United States also needs new policies to address economic power that is further tilted in favor of corporations. This includes new ideas such as sectoral bargaining among U.S. workers in the same industries and the co-determination of corporate governance for U.S. workers.

The pandemic makes all of these policies more necessary, as workers face unsafe working conditions with no voice, and with the likelihood of greater exploitation with rising unemployment and large corporations continuing to profit. The key resources below provide the details for these policy solutions.

Key resources

“Factsheet: How strong unions can restore workers’ bargaining power,” by Equitable Growth

A decades-long decline of unions has weakened workers’ ability to fight for a fairer workplace. About 10 percent workers are union members today, compared to 35 percent of the U.S. workforce in the mid-1950s. Over the past 40 years, the power of organized labor has declined alongside a steep rise in income inequality, the erosion of labor standards, and employers’ ability to dictate and suppress wages. Yet unions still play an important role in shaping U.S. labor market outcomes, helping both union and nonunion members share in the economic value they create. This factsheet details those outcomes, including:

  • Strong unions that benefit both union and nonunion members
  • Workers who are not part of a union today but want to belong to one
  • Strong unions that can counteract employers’ wage-setting power
  • The ability to strike, which remain a powerful way for workers to achieve fair wages and better working conditions

“The coronavirus recession exposes how U.S. labor laws fail gig workers and independent contractors,” by Corey Husak and Carmen Sanchez Cumming

Independent contractors are among the most vulnerable amid the coronavirus recession. Many independent contractors provide face-to-face services. They are either the workers most exposed to the novel coronavirus on the job or those most likely to be out of work without a safety net. Despite being classified as essential, those in the first group often lack the most basic rights and protections, such as sick leave or health insurance. Because they are at the frontlines, they and their families are at particular risk of getting sick. This issue brief describes the challenges faced by independent contractors and policy solutions to help these workers moving forward.

“Factsheet: The PRO Act addresses income inequality by boosting the organizing power of U.S. workers,” by Kate Bahn and Corey Husak

The PRO Act, passed in February 2020 by the U.S. House of Representatives, would address important structural policy barriers that keep workers from joining unions. This factsheet summarizes recent research around unionization, strikes, workplace fissuring, and long-term labor market trends. It demonstrates that the PRO Act, the most prominent labor reform bill to pass the House since 2018, could succeed in allowing more workers to fulfill their desire to join unions, and that this would ensure more equitable and efficient labor markets.

“Aligning U.S. labor law with worker preferences for labor representation,” by Alexander Hertel-Fernandez

This essay shows that steeply declining U.S. union membership does not reflect a lack of worker demand for unions, with nearly half of all nonunion workers expressing interest in joining a union. It shows that U.S. workers value industrywide or statewide collective bargaining and union-administered portable health and retirement benefits, making the case that state and federal lawmakers should change laws prohibiting unions from providing these to their members.

“Rebuilding U.S. labor market wage standards,” by Arindrajit Dube

This essay first examines the evidence demonstrating that raising the federal minimum wage boosts the incomes of those workers at the bottom of the income distribution without any significant job losses for those workers. Dube then explains how establishing wage boards to set minimum pay standards by industry and occupation would also raise wages for U.S. middle-income workers.

Top experts

  • Kate Bahn, director of labor market policy, Washington Center for Equitable Growth
  • Arindrajit Dube, professor of economics, University of Massachusetts Amherst, Equitable Growth grantee, and Research Advisory Board member
  • Suresh Naidu, associate professor of economics, Columbia University, and Equitable Growth grantee
  • Alexander Hertel-Fernandez, associate professor of international and public affairs, Columbia University, and Equitable Growth grantee
  • Michelle Holder, assistant professor of economics, John Jay College CUNY
  • Terry-Ann Craigie, associate professor of economics, Connecticut College
  • Sylvia Allegretto, co-chair, Center on Wage and Employment Dynamics at the University of California, Berkeley, and Equitable Growth grantee
  • David Howell, professor of economics and public policy, Milano School of International Affairs, Management, and Urban Policy at The New School, and Equitable Growth Research Advisory Board member

To view the other policy sheets in this series, please click here.

Improving automatic stabilizers to combat U.S. economic recessions

Posted on by Maria Monroe
Making recession aid more automatic will allow relief to start quickly, making the recession less severe.

The new coronavirus pandemic and the recession it caused show that the typical set of economic policies used to fight recessions in the United States should be designed to automatically turn on and off in a downturn. It is impossible to predict when the economy will fall into a recession and, on the other end, when it will recover. Making recession aid more automatic will allow relief to start quickly, making the recession less severe. It also would commit Congress to stay the course until objective economic criteria are met and the recovery is well on its way.

Improving automatic stabilizers to combat U.S. economic recessionsDownload

Without this commitment, aid for the most vulnerable can be caught up in partisan politics and deal-making when artificial deadlines loom. Many times, as during the Great Recession, vital aid is not renewed, causing the entire economy, and especially marginalized groups and communities, to suffer for years. Instead, Congress could set automatic stabilizers to start as soon as the unemployment rate increases in a recession. The benefits would then phase out and end when the unemployment rate returns to near its pre-recession level. Specifically, this should apply to:

  • Enhanced jobless benefits
  • Direct payments to families
  • Aid to state governments

These automatic stabilizers would allow Congress to focus on novel aspects of the recession, whether they be public health, financial instability, or another cause, without having to relitigate fights over economically vital, previously authorized relief.

Key resources

“The coronavirus recession highlights the importance of automatic stabilizers,” by Greg Leiserson

This issue brief first explains what a recession is and what role public policy plays in fighting recessions, and then discusses a few important ways in which this recession differs from previous recessions. Finally, the issue brief explains why Congress should expand and reform the United States’ existing automatic stabilizers.

Recession Ready: Fiscal Policies to Stabilize the American Economy 

A year before the risks of the new coronavirus and the ensuing recession enveloped our nation, this book advanced a set of six evidence-based policy ideas for shortening and easing the adverse consequences of recessions. With the use of proven economic triggers, aid to households and states would increase through the following six pathways during an economic crisis and only recede when economic conditions warranted.

  • “Direct stimulus payments to individuals,” by Claudia Sahm
    • Congress should create a system of direct stimulus payments to individuals to be automatically distributed when the unemployment rate increases rapidly. Direct stimulus payments to individuals are effective at boosting consumer spending in response to a recession and replace lost income.
  • “Strengthening SNAP as an automatic stabilizer,” by Hilary Hoynes and Diane Whitmore Schanzenbach
    • Congress should set SNAP benefits to increase by 15 percent during downturns. Research shows that every dollar in new SNAP benefits spurred $1.74 in economic activity during the deep recession in 2007­–2009. Recipients quickly spend their SNAP benefits, which provides a rapid fiscal stimulus to the local economy.
  • “Increasing federal support for state Medicaid and CHIP programs during economic downturns,” by Matthew Fiedler, Jason Furman, and Wilson Powell III
    • Congress should automatically increase the federal share of expenditures on Medicaid and the Children’s Health Insurance Program during recessions. Declines in state revenues and increased demands on government programs, together with states’ balanced budget requirements, lead states to reduce spending, increase taxes, or both, during and after recessions. Those responses deepen recessions, slow subsequent recoveries, and deprive residents of valuable public and private goods. This proposal is designed to offset approximately two-thirds of state budget shortfalls.
  • “Infrastructure investment as an automatic stabilizer,” by Andrew Haughwout
    • The federal government should help states develop and maintain a catalogue of potential infrastructure projects and then expand infrastructure spending in downturns to counteract the declines in public investment that typically accompany recessions.
  • “Unemployment Insurance and macroeconomic stabilization,” by Gabriel Chodorow-Reich and John Coglianese
    • Unemployment Insurance is one of the most important existing automatic stabilizer programs. Congress should make reforms to the base program, including new triggers to expand the program in recessions.  
  • “Improving TANF’s countercyclicality through increased basic assistance and subsidized jobs,” by Indivar Dutta-Gupta
    • Congress should make reforms to the Temporary Assistance for Needy Families program to expand federal support for basic assistance during economic downturns and create an ongoing job subsidy program that is more robust in recessions. Safety net programs can be a crucial backstop for families struggling in hard economic times. Unfortunately, because of its block grant structure, the TANF program is unresponsive to changes in need and unhelpful for mitigating the effects of recessions. This proposal would make it more responsive to families’ real economic needs.

Top experts

  • Claudia Sahm, macroeconomic policy director, Washington Center for Equitable Growth
  • Gabriel Chodorow-Reich, associate professor of economics, Harvard Univeristy
  • Indivar Dutta-Gupta, adjunct professor of law and co-executive director, Center on Poverty and Inequality, Georgetown University
  • Jason Furman, professor of the practice of economic policy, Harvard University Kennedy School; nonresident senior fellow, Peterson Institute for International Economics; and a member of Equitable Growth’s Steerinig Committee
  • Diane Whitmore Schanzenbach, the Margaret Walker Alexander professor of education and social policy, Northwestern University
  • Jay Shambaugh, professor of economics and international affairs, Elliott School of International Affairs at The George Washington University, and a nonresident senior fellow in economic studies, The Brookings Institution
  • Hilary Hoynes, professor of economics and public policy, University of California, Berkeley, and the Haas distinguished chair in economic disparities, UC Berkeley’s Hass School of Business, where she also co-directs the Berkeley Opportunity Lab

To view the other policy sheets in this series, please click here.

Addressing the U.S. racial economic mobility and inequality divides

Posted on by Maria Monroe
Intentional policy action is necessary to correct the systemic and institutional barriers facing Black Americans.

Economic mobility in the United States has been declining over the past half-century at the same time that economic inequality has been rising. Research by Harvard University economist and former Equitable Growth Steering Committee member Raj Chetty and his co-authors shows that rates of absolute intergenerational mobility have precipitously declined in the country during the latter part of the 20th century. People born in 1940 had about a 90 percent chance of growing up to earn more than their parents, but people born in 1980 had only about a 50 percent chance. Chetty also finds that Black Americans are more likely to experience downward mobility than White Americans, and that differences in family education, wealth, and marriage patterns cannot explain this Black-White mobility divide.

Addressing the U.S. racial economic mobility and inequality dividesDownload

Intentional policy action is necessary to correct these systemic and institutional barriers facing Black Americans. Just as government policy helped create these racial disparities in the first place via legalized discrimination, redlining of housing, and the often discriminatory impact of the criminal justice system and incarceration, policies are needed now to promote mobility and begin to address the legacies of these racially discriminatory structures. These policy solutions include:

  • Improving family income security by expanding refundable tax credits and by fully funding Section 8 Housing Choice Vouchers to make them available to all who qualify
  • Supporting wealth accumulation for low-wealth families, such as through proposals for “baby bonds”
  • Addressing racial inequities in credit access and student debt
  • Redirecting public investment from the criminal justice system to education and social services 

These policies can be implemented at the federal level, such as through reforms to the Community Reinvestment Act to improve access to credit and reforms to the Department of Education’s stewardship of student loans, as well as at the state and local level through budgetary decisions related to police, prison, and education funding.

Key resources

“Reconsidering progress this Juneteenth: Eight graphics that underscore the economic racial inequality Black Americans face in the United States,” by Liz Hipple, Shanteal Lake, and Maria Monroe

This post features graphics on Black-White disparities in wages, intergenerational mobility, wealth, homeownership, incarceration, and health. The post demonstrates how policy decisions and racial discrimination created and continue to perpetuate economic disparities between White and Black Americans and offers policies to address the structural barriers driving these disparities.

“Race and the lack of intergenerational economic mobility in the United States,” by Bradley Hardy and Trevon Logan

This post explains that geographic and racial differences in economic mobility are particularly important from a policy perspective for three reasons. First, racial differences in mobility can exacerbate racial differences in other areas such as in housing, education, and health. Second, inequalities in opportunity are antithetical to our nation’s creed of equal opportunity for all. And third, structural differences in mobility limit the potential for overall U.S. economic growth.

This essay first examines the historic links between intergenerational economic mobility and race and income inequality—trends heavily influenced by changing patterns in geographic mobility—and how these trends are tied to explicit policy decisions in the past that persist today in terms of housing, education, and health inequality among low- and middle-income Black Americans. The authors discuss educational, housing, and income remedies for persistently low intergenerational economic mobility among Black Americans and how these policies could be put into action and paid for.

“Overcoming social exclusion: Addressing race and criminal justice policy in the United States,” by Robynn Cox

This essay discusses how the exponential growth in incarceration in the United States over the past 50 years has been due to more punitive criminal justice policies that tried to address racial and economic inequality through the criminal justice system instead of social programming. Cox calls for U.S. policymaking to shift toward addressing the root causes of racial inequality and poverty. One first step would be to conduct an audit of current federal crime-control policies and funding to eradicate policies that lead to greater racial disparities within the criminal justice system.

“Low intergenerational mobility in the United States shows impact of race and public policy,” by Liz Hipple

This research analysis compares intergenerational mobility in the United States versus Canada. The author highlights findings showing that despite the United States having higher average incomes than Canada, areas of particularly low mobility are concentrated on the U.S. side of the border, cover a large proportion of the U.S. population, and are driven by racial disparities in mobility between Black and White Americans. One explanation for why this pattern is observed almost exclusively in the United States is offered in another piece of research by University of California, Berkeley economist and Equitable Growth grantee Ellora Derenoncourt , who finds that as Black Americans migrated from the South, Northern cities decreased their investments in all public goods other than policing.

Top experts 

  • Liz Hipple, senior policy advisor, Washington Center for Equitable Growth
  • William Darity, Jr., Samuel DuBois Cook professor of public policy, African and African American studies, and economics, Duke University
  • Darrick Hamilton, incoming Henry Cohen professor of economics and urban policy, The New School
  • Bradley Hardy, associate professor of public administration and policy, American University
  • Ellora Derenoncourt, assistant professor in the Department of Economics and the Goldman School of Public Policy, University of California, Berkeley
  • Trevon Logan, Hazel C. Youngberg Trustees distinguished professor of economics, The Ohio State University
  • Robynn Cox, assistant professor at the USC Suzanne Dworak-Peck School of Social Work

To view the other policy sheets in this series, please click here.

Brad DeLong: Worthy reads on equitable growth, August 11-17, 2020

Posted on by Maria Monroe

Worthy reads from Equitable Growth:

1. Read this excellent and brand-new analysis by John Sabelhaus, “Restoring the federal estate tax is a proven way to raise revenue & address wealth inequality,” in which he writes: “There are four principal reasons why expanding the estate tax could well be the most effective and efficient way … First, policymakers have repeatedly cut the estate tax over the past 20 years, without regard for the true economic and distributional consequences … Second … the estate tax, in practice, is better described as an effective backstop to the federal income tax … Third, the very failure to collect taxes on the true incomes of the very wealthy increases wealth inequality within generations and amplifies the inequality due to intergenerational wealth transfers … Fourth … reviv[ing] the estate tax … would greatly improve the overall fiscal outlook of the federal government, and in a highly progressive way.”

2. I have talked about this before, but now it is back on the agenda for a large number of reasons. Read Bradley Hardy and Trevon Logan, “Race and the lack of intergenerational economic mobility in the United States,” in which they write: “Geographic and racial differences in economic mobility are particularly important from a policy perspective for three reasons. First, racial differences in mobility can exacerbate racial differences in other areas … Second, inequalities in opportunity are antithetical to our nation’s creed … Third, structural differences in mobility limit the potential for overall U.S. economic growth … [because of] the historic links between intergenerational economic mobility and race and income inequality … The known policy remedies for persistently low intergenerational economic mobility among African Americans … [is] a mix of policies to promote more equitable housing and educational opportunities alongside moves to boost income security and wealth accumulation.”

Worthy reads not from Equitable Growth:

1. It now looks like there was enough of a bounce back in July to give the U.S. economy a 5 percent boost to third quarter GDP—that is a 20 percent reported annualized growth rate for the current quarter—unless the economy is falling off a cliff now or does so in September. Unfortunately, the economy may well fall off a cliff this month or next. The renewed spread of the coronavirus, plus the decision by the Trump administration and the Senate leadership that they would rather have no fiscal stimulus at all then negotiate with the leaders of the House of Representatives, are not pieces of good news for aggregate demand. Read Tim Duy, “Fiscal Follies Continue,” in which he writes: “Incoming data still reflects the push-pull dynamics of the shutdown and reopening; we don’t have a clear picture of the growth trajectory after those dynamics play out. Fiscal policy in the United States is a mess.”

2. We kinda-sorta understood the economies of the past—the agrarian-age economy based on agriculture in handicrafts, the succeeding commercial-age economy to which was added commerce, the industrial-revolution economy based more on manufacturing and non-animal power sources, and then modern economic growth based on mass production and engineering communities. But now we have a problem. Our problem now is that, increasingly, our computer age information and attention economy works differently. And we do not understand it terribly well. Read John Quiggin, “Intangibles = Monopoly,” in which he writes: “The most profitable companies, particularly tech companies, don’t have all that much in the way of capital assets compared to their market value. What they have is monopoly power … Intangibles … can’t be reproduced by anyone else … There’s a complicated relationship here between the rise of monopoly and the development of the information economy … There is very little relationship between the value of information and the ability of corporations to capture value from it … Traditional ideas about capital and investment are largely irrelevant in the information economy.”

Posted in Uncategorized

Reforming Unemployment Insurance across the United States

Posted on by Maria Monroe
Unemployed men wait in line to file Social Security benefit claims, circa January 1938.

Longstanding problems with the Unemployment Insurance system in the United States are immediately evident amid the coronavirus recession and echo the problems experienced during the Great Recession more than a decade ago. These include:

  • Administrative failures at state Unemployment Insurance agencies
  • Lack of a permanent Unemployment Insurance program that includes the self-employed and others traditionally left out of the program
  • Low benefit levels that require emergency top-offs
  • The temporary nature of fixes when recessions hit, which, in turn, requires renegotiations just months after political compromises are reached

The current disarray in the Unemployment Insurance system is neither a surprise nor an accident. It is the result of decades of conscious choices made by policymakers at the state and federal levels: Over the past decade, many states limited Unemployment Insurance benefits, made accessing the program more difficult, and allocated insufficient funds for program administration. This results in chaos and uncertainty just when Unemployment Insurance is critical to prevent deterioration in the wider economy and save families from precarious financial situations.

Reforming Unemployment Insurance across the United StatesDownload

As in the Great Recession, states’ trust funds are now being depleted, which sets the stage for the erosion of benefit levels while the crisis remains ongoing. And, as was the case in the Great Recession, in the first months of the coronavirus crisis, policymakers have yet to remedy the issues at the heart of these administrative failures.

But it’s not too late. Unemployment Insurance is a joint state-federal system. These programs are run at the state level but follow federal guidelines under the Social Security Act. Reforms to this system are important at both levels. The key resources below provide the details for enacting these reforms.

Key resources

“Unemployment Insurance reform: A primer,” by Till von Wachter

This primer summarizes how the Unemployment Insurance system functions in the United States and four ways it falls short. First, the current UI system suffers from financial instability that risks compromising its major role as a stabilizer in recessions. Second, the coverage of unemployment benefits has eroded over time, with a declining fraction of workers receiving lower benefits amounts. Third, the UI system does little to avert the large, long-lasting earnings losses among re-employed workers. And fourth, there are persistent questions about the effectiveness of Unemployment Insurance and related programs to quickly re-employ job losers. This primer lays out easy-to-implement small changes to address these problems, as well as fundamental changes to modernize the program.

“Unemployment Insurance and macroeconomic stabilization,” by John Coglianese and Gabriel Chodorow-Reich

The authors lay out a plan for improving the Unemployment Insurance program’s function as an anti-recessionary automatic stabilizer. They propose measures that increase take-up of regular unemployment benefits, full federal financing for extended benefits alongside improvements in the formula and design of extended benefits triggers, and an increase in the unemployment benefit amount when extended benefits are triggered.

“Fool me once: Investing in Unemployment Insurance systems to avoid the mistakes of the Great Recession during COVID-19,” by Alix Gould-Werth

Gould-Werth presents a description of the problems in the Unemployment Insurance system exposed during the Great Recession and then repeated during the coronavirus crisis. She shows that policymakers have an opportunity to intervene and improve the functioning of the Unemployment Insurance system by increasing and indexing the federal taxable wage base, redesigning extensions to respond to economic changes quickly, and standardizing a minimum benefit level and duration that are sufficiently generous.

“Factsheet: Unemployment Insurance and why the effect of work disincentives is greatly overstated amid the coronavirus recession,” by Equitable Growth

One of the biggest political obstacles to fixing the UI system is the fear that increasing access and generosity of benefits will discourage people from working. This Equitable Growth factsheet breaks down the research on work disincentives, showing that the amount of attention given to work disincentives (quite large) is disproportionate to the magnitude of the disincentives themselves, which are substantively small. At the same time, relatively little attention is paid to the benefits of Unemployment Insurance.

Top experts

  • Alix Gould-Werth, director of family economic security policy, Washington Center for Equitable Growth
  • Kate Bahn, director of labor market policy, Washington Center for Equitable Growth
  • Till von Wachter, professor, Department of Economics, University of California, Los Angeles
  • Adriana Kugler, full professor, McCourt School of Public Policy, Georgetown University
  • Gabriel Chodorow-Reich, associate professor of economics, Harvard University
  • John Coglianese, economist, Federal Reserve Board of Governors
  • Jesse Rothstein, professor of public policy and economics, University of California, Berkeley, with affiliations in the Department of Economics and the Goldman School of Public Policy
  • Steve Woodbury, professor of economics, Michigan State University, and senior economist, W.E. Upjohn Institute for Employment Research

To view the other policy sheets in this series, please click here.

Weekend reading: Racial health and economic disparities on Black Women’s Equal Pay Day edition

Posted on by Maria Monroe

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

August 13 was this year’s Black Women’s Equal Pay Day, or the date until which Black women have to work, from the start of 2019 through to August 13, 2020, to earn as much as White men earned in 2019 alone. Women workers of color face unique barriers in the labor market at the intersection of race and gender. On average, Black women who are employed full time, year round earn 62 cents for every one dollar that their White men peers earn—a gap that most research shows can’t be fully explained by human capital variables. Kate Bahn and Carmen Sanchez Cumming answer five key questions about this day and why it falls more than 7 months into 2020—including factors such as decreased anti-discrimination enforcement, occupational segregation, and the role of labor market monopsony in exploiting Black women workers. Bahn and Sanchez Cumming also explain how enhancing worker power and increasing the minimum wage would help close the income and wealth divides for Black women workers.

The end of July saw important congressional testimony from the CEOs of Apple Inc., Amazon.com Inc., Facebook Inc., and Alphabet Inc.’s Google unit on competition in the tech industry. The hearing was focused on exclusionary conduct, or practices that allow dominant companies to prevent or stifle competition. While all four CEOs denied that their practices fall under the exclusionary conduct umbrella and instead are beneficial for consumers, Michael Kades shows how courts’ interpretations of the antitrust laws result in lenient enforcement and harmful anticompetitive behavior. Kades runs through the various current problems with U.S. antitrust enforcement and then explains how the Anticompetitive Exclusionary Conduct Prevention Act, a recent bill introduced by Sens. Amy Klobuchar (D-MN), Richard Blumenthal (D-CT), and Cory Booker (D-NJ), would better protect competition and reduce abusive market practices by dominant firms.

Every month, the U.S. Bureau of Labor Statistics releases the Job Openings and Labor Turnover Survey, which collects data on job openings, hires, layoffs, quits, and other U.S. labor market dynamics. Often, this release gets less attention than the monthly jobs report from the same agency, but JOLTS data can provide a different view of the labor market that is especially helpful during the coronavirus recession. Kate Bahn and Carmen Sanchez Cumming provide an overview of the four main labor market indicators to watch in JOLTS releases—the quits rate, the ratio of unemployed workers to job openings, the vacancy yield, and the Beveridge Curve—and explain how each one provides additional insight into why this downturn is different from previous ones.

This month’s Expert Focus from Christian Edlagan and Maria Monroe looks at scholars in the Equitable Growth network and beyond who have been pioneers in their approaches to understanding the role of race, ethnicity, and gender in the U.S. economy. These researchers have looked at how community and inequality intersect, centering racial equity more consciously in their analysis to foster interdisciplinary dialogue about the role of structural racism in driving wealth and income inequality in the United States.

Brad DeLong’s latest Worthy Reads highlights the most important content from Equitable Growth and around the web, and provides his insights and analysis on key take-aways.

Links from around the web

A recent New York Times interactive from Gus Wezerek looks at the effect that race has on mortality rates in the United States, and adjusts the numbers based on the coronavirus, highlighting that Black Americans have long had shorter lifespans than their White counterparts and that COVID-19, the disease caused by the virus, has exacerbated this trend. This is largely thanks to centuries-long, systematic neglect of Black people’s health in this country. In fact, between 1900 and 2015, if Black people had the same death rates as White people, 8.8 million fewer Black Americans would have died. These excess deaths cannot be attributed to genetics, explains Wezerek. And this fatal health disparity can’t be fully explained by income levels, educational achievement, or lifestyles between Black and White Americans. Rather, Wezerek writes, it has to do with structural racism and can be traced back to slavery and segregation. And though the disparities have narrowed in recent years as a result of legislation such as the Civil Rights Act and the Affordable Care Act, residential segregation and wealth and income disparities are still causing racial health inequities today, as evidenced by the disproportionate effect of the coronavirus on communities of color.

The economic repercussions of the coronavirus pandemic and resulting recession are hitting workers of color the hardest. Darrick Hamilton explains in Politico why enacting a paycheck guarantee would not only reduce the overall harm to the U.S. economy but also naturally direct assistance to Black workers who need it the most. A paycheck guarantee ensures workers receive their salary and benefits and remain connected to their employers regardless of the economic situation because the federal government steps in to pay them directly while requiring employers to keep workers on payroll for the duration of the crisis. A paycheck guarantee, Hamilton continues, also would ensure that even those workers who don’t currently have the option to work from home—disproportionately workers of color in the United States—would still receive their salaries, addressing the racialized impact of the coronavirus pandemic. Hamilton also shows that a paycheck guarantee is widely popular among the U.S. public, even across political party and racial lines. Many countries, from France to Australia, have put such programs in place during the coronavirus pandemic, preventing layoffs and business closures while keeping the unemployment rate relatively steady.

At the start of the coronavirus outbreak, grocery store workers were treated like heroes, showing up to work, despite the severe risks, so that the rest of us would remain well-fed and safe. Many received a temporary boost in pay as a gesture of appreciation from their employers for continuing to come in. But lately, writes Abha Bhattarai for The Washington Post, morale among supermarket staff is plummeting as many report feeling overworked, overwhelmed, and unappreciated—and sometimes even physically in harm’s way, when left to deal with hostile customers. For the workers who our society has deemed “essential,” many have been left feeling anything but. An increasing number of grocery store workers are quitting, sometimes even in the middle of their shifts, leaving the remaining staff to work harder, for more hours, and for less pay, as their hazard bonuses have long been eliminated. Bhattarai tells the story of several grocery employees across the country, who feel increasingly expendable amid the continuing health and economic crises, in an eye-opening account of what it’s like to work on the front lines of the coronavirus pandemic.

Friday figure

Percent distribution of workers paid on hourly rate with earnings at the federal minimum wage, by gender and race/ethnicity, 2019

Figure is from Equitable Growth’s “Five ways to understand Black Women’s Equal Pay Day,” by Kate Bahn and Carmen Sanchez Cumming.

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