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

Equitable Growth round-up

In order to have a U.S. economy in which growth is strong, stable, and broadly shared, it is imperative to have institutions that are capable of ensuring that the rules are fair and fairly enforced. U.S. public institutions have failed Black Americans, writes Heather Boushey in a post on Medium, and if they fail Black Americans, they fail us all. African Americans have long not been able to, and still cannot, trust the government to act on their behalf. And this extends beyond the current administration to the overall governing ideology of this country, “where institutions of governance too often serve only those with economic or political power, who are able to subvert the process of governing to disproportionately benefit themselves,” Boushey continues. The coronavirus pandemic and resulting recession expose the many structural weaknesses in our economy, society, and political system. A robust federal government that incorporates the needs of all Americans into its policy agenda is the best answer to these shortcomings—so long as trust in public institutions can be restored.

The failure of government to support and protect all of its citizens equally is on clear display as new cases of coronavirus surge across the United States, especially in communities of color, and as millions of American workers remain unemployed due to the recession caused by the pandemic. One solution may be a modern-day Works Progress Administration. Delaney Crampton explains why bringing back this Great Depression-era jobs program in the form of an extensive nationwide network of contact tracers could help to both rein in the coronavirus and provide millions of adults with badly needed jobs that can be done from the comfort and safety of their homes. While some track-and-trace programs have been implemented sporadically on the state level, a national program is needed in order to fund and coordinate such a large-scale effort to effectively identify and isolate those who have been exposed to the coronavirus. Plus, Crampton adds, the contact tracers would be trained in new skills that may help these workers enter different (and essential) fields such as nursing or home healthcare during the post-pandemic recovery.

There is a great opportunity for lawmakers to include green stimulus investments in the next coronavirus recession relief package now under discussion in Congress, write Parrish Bergquist, Matto Mildenberger, and Leah Stokes. The spreading coronavirus pandemic and climate change are not unrelated, as recent studies show those who are exposed to dirty air pollution from fossil fuels are much more likely to die from COVID-19—and, adding to government’s failures listed above, this tends to more heavily affect populations of color in the United States. Thus far, Congress has not yet promoted green stimulus in its coronavirus-related spending, but a new survey done by Bergquist, Mildenberger, and Stokes looks at the effect on popular support of including clean energy investments in spending packages. Though the public does not favor a green stimulus at the expense of broad economic relief, the co-authors find that investments in wind and solar and in clean transportation push up popular support for stimulus spending by 8.5 percentage points and 6.1 percentage points, respectively.

Every month, the U.S. Bureau of Labor Statistics releases data on hiring, firing, and other labor market flows from the Job Openings and Labor Turnover Survey, better known as JOLTS. This week, the data for May 2020 shows that workers are less confident about the labor market and therefore are quitting their jobs less. The data also reveal that there were still nearly four unemployed workers for every one job opening in May, increasing the bargaining power of employers. Kate Bahn and Carmen Sanchez Cumming put together four graphs analyzing these and other results from the data release.

Check out this week’s Worthy Reads from Brad DeLong to get his takes on must-read recent content from Equitable Growth and around the web.

Links from around the web

Though we have known for a while that people of color are disproportionately affected by the coronavirus, an in-depth New York Times interactive using data from the Centers for Disease Control and Prevention reveals that these disparities ring true across the country, from urban to suburban to rural areas, and across all age groups.Richard A. Oppel Jr., Robert Gebeloff, K.K. Rebecca Lai, Will Wright, and Mitch Smith take a deep dive into the data, which was obtained only after the Times filed a Freedom of Information Act request with the CDC for its release. The authors interview several families and individuals affected by the coronavirus across the United States and highlight, in stark graphics, the racial divides in infections and COVID-19 deaths between White Americans and their Black, Latinx, and Native American peers.

There is a looming crisis in housing across the United States as evictions are likely to rise dramatically this summer while unemployment remains high and eviction moratoriums are lifted, writes Renae Merle for The Washington Post. The one-time $1,200 coronavirus stimulus payment is a distant memory for most people, and the extra $600 weekly Unemployment Insurance benefits provided through the CARES Act, which have kept many households afloat as they weather the economic crisis, are also set to expire at the end of this month. The backlog of eviction cases is making its way through the court system, putting around 20 percent of the 110 million Americans who live in rental units at risk of eviction by the end of September. And, as with most other aspects of the coronavirus crisis and recession, Merle continues, Black and Latinx renters are expected to be the hardest hit.

Since the onset of the coronavirus pandemic, many workers have felt mistreated and underpaid by their employers, not protected enough from the virus, and tossed aside if they fall ill and have to miss work to recover. Those in so-called essential positions, from warehouse workers to food delivery drivers to grocery store clerks have walked out and participated in strikes in protest of these poor working conditions. Steven Greenhouse of DISSENT Magazine asks what we’re all thinking: Will COVID-19 spur a wave of unionization? Though Greenhouse admits that his instincts answered “no,” he also concedes that he underestimated the depths of the anger and frustration felt by many workers. While corporations continue to fight union organizing efforts as strongly as they did before the onset of the pandemic, workers have, in the past few years, shown an increasing tendency to be open to joining an union—and this, along with other factors, brightens the outlook for unionization in the United States.

Working parents are pulling out their hair trying to figure out how to go back to work when the U.S. economy reopens if schools are not open full-time. But, EJ Dickson argues in Rolling Stone, it’s really working mothers who are struggling the most. After all, it tends to be mothers who shoulder the majority of the childcare burden in households, not fathers. It typically is mothers who give up their jobs or take pay and hours cuts when household care responsibilities increase, not fathers. Women were already struggling to “have it all” before the pandemic began—and now, Dickson writes, that struggle is exacerbated: A recent report from the United Nations warns that the economic downturn may “roll back” many of the advances that feminism has made in recent decades, as women are disproportionately laid off or forced to leave their jobs to care for and provide schooling for their children. Parenting sits at the intersection of class, gender, and income—three areas that have been talked about profusely since the onset of the crisis—so why are so many of the solutions offered by states for reopening schools insufficient for working parents?

Friday figure

Figure is from Equitable Growth’s “JOLTS Day Graphs: May 2020 Report Edition” by Kate Bahn and Carmen Sanchez Cumming.

Worthy reads from Equitable Growth:

1. Cutting through the fog on the meaning of “financial inclusion,” which should not—but often does—mean “we will induce you to pay usurious interest rates for short-term loans,” should get you to this—one’s financial transactions mirror those of middle-class America: Read “In Conversation with Mehrsa Baradaran,” in which she says:  When you hear financial inclusion a lot in the media, it’s based on some new fintech company or blockchain or some new app … [but one] used to think about it as microcredit or some sort of alternative system for the poor … That, I think, is a misunderstanding … There are people … excluded from the financial system. They don’t have access to credit or services … unbanked or underbanked … they don’t have a bank account … It just costs a ton of money if you don’t have a bank account to do any sort of transaction. Anything you buy online, anytime you go to a store, checks, all of that stuff is provided for those of us who have bank accounts pretty seamlessly through apps and the internet, debit cards, credit cards, all of that stuff. If you don’t have a bank account, then you just have to pay a ton of money, up to perhaps 10 percent of your income just to cash checks and get prepaid debit cards.”

2. I used to lecture that in the 20th century in the global north the stakes involved in being poor were not overwhelmingly high—the life expectancy and mortality differences across economic classes had greatly narrowed relative to what they had been in previous centuries. I can no longer make that argument. The differential class impacts of the novel coronavirus, in income and in mortality, are large in the United States. Read Kate Bahn and Carmen Sanchez Cummings, “Latest jobs report for June reveals pre-existing inequality worsening amid coronavirus recession, in which they write: “The brunt of the job losses due to the coronavirus recession continue to fall heaviest on Black and Latinx workers … [in] May 2020 and June 2020 … the U.S. economy gained 4.8 million nonfarm payroll jobs, the share of the employed prime-aged population increased from 71.4 percent to 73.5 percent, and the jobless rate fell from 13.3 percent to 11.1 percent … The share of unemployed workers who report having permanently lost their jobs increased for the second month in a row, jumping from 14 percent in May to 20.9 percent in June … Improvements in the labor market have been uneven, and that Black and Latinx workers, in addition to women workers and low-wage workers generally, continue to be disproportionately affected by the coronavirus recession.”

3. If you missed this, it would be really worth your time to go back and watch “Experts Discuss Transformative Ideas for 2020 economic policy debate at Vision 2020 event,” in which the panelists proposed to: “Eliminate banks as the ‘middleman’ for federal anti-recession aid. Cancel all student loan debt. Give workers a say in how their workplaces reopen and empower them to form unions. Provide federal relief to childcare programs to prevent them from shutting down permanently. Get Congress to do its job so the Federal Reserve can get out of the business of making fiscal policy. These ideas for generating strong, sustainable, and broad-based economic growth and achieving racial justice in the wake of the coronavirus recession were put on the virtual table during a June 25 webinar sponsored by the Washington Center for Equitable Growth. “Vision 2020: Focusing on economic recovery and structural change.”

Worthy reads not from Equitable Growth:

1. In many cases, a skilled worker with a good job is an unskilled worker with a union. Thus I do not understand Danny Rodricks focus on “technology” and “globalization” as drivers of the income distribution. Yes, they are drivers of the distribution of economic activity among sectors and of the distribution of employment across job categories. But they have little to do with the issues of distribution that are at the core of concern. Read Dani Rodrik, “Reshaping Economic Strategy After COVID-19,” in which he writes: “The crux of the matter:  ‘good jobs’ are becoming scarce: ‘Good jobs’ [provide] stable employment that enables at least a middle-class existence, by a region’s standards, and comes with core labor protections such as safe working conditions, collective bargaining rights, and regulations against arbitrary dismissal. Underlying drivers: technology and globalization. But these are not exogenous processes outside our control! Employment and innovation decisions affecting labor demand produce significant externalities—’good jobs’ externalities.”

2. For reasons that have never been clear to me, central banks have hitherto always focused on influencing interest rates at the short end of the yield curve. I understand why you would do so in a financial crisis. In a financial crisis it is the stringency of short-term money that is the key problem. But when central banking moves out from dealing with dire and immediate crises into the business of making Say’s Law generally true in practice even though it is false in theory—the business of matching the propensity to save with the animal spirits of enterprisers—the short-run opportunity cost of immediate cash money is no longer a key or even an especially interesting financial economic quantity to manage. Yet central banks have consistently, historically, and traditionally focused on managing it. Now, finally, the Bank of Japan has been experimenting with alternatives. And they look very promising. Read Matthew Higgins and Thomas Klitgaard, “Japan’s Experience with Yield Curve Control,” in which they write: “Any central bank considering a move to implement its own version of Yield Curve Control … has many questions to ponder … For Japan … YCC has had one clear benefit. Under the new policy, the Bank of Japan has been able to exert fairly close control over the term structure of interest rates without resorting to large-scale interventions in the Japanese Government Bond market. Investors accept that the Bank can buy whatever quantity of JGBs is needed to keep yields from rising and, as a result, it has not had to buy many at all.”

3. One of Karl Polanyi’s insights from the third to the sixth decades of the 2000s was that people demand not that the distribution of income be equal but that it be fair and that it be secure. Those who find themselves lacking security, and who also believe that they are unfairly not receiving what is their due, make up what Guy Standing calls the “precariat.” They form a reservoir for counter-establishment political movements as they attempt to use politics as a channel for society’s reaction against the unfair and unstable workings of the economy. Here Nouriel Roubini sees a certain symmetry in two wings of this precariat. I am not at all sure he is right. But it is an interesting argument to consider. Read Nouriel Roubini, “The Main Street Manifesto,” in which he writes: “After the 2008 financial crisis, many firms sought to boost profits by cutting costs, starting with labor. Instead of hiring workers in formal employment contracts with good wages and benefits, companies adopted a model based on part-time, hourly, gig, freelance, and contract work, creating what the economist Guy Standing calls a “precariat.” Within this group, he explains, “internal divisions have led to the villainization of migrants and other vulnerable groups, and some are susceptible to the dangers of political extremism .. One segment of the precariat comprises younger, less-educated white religious conservatives in small towns and semi-rural areas who voted for Trump in 2016. They hoped that he would actually do something about the economic “carnage” that he described in his inaugural address … But the American precariat also comprises urban, college-educated secular progressives who in recent years have mobilized behind leftist politicians like Senators Bernie Sanders of Vermont and Elizabeth Warren of Massachusetts. It is this group that has taken to the streets to demand not just racial justice but also economic opportunity … As a satirical headline in The Onion recently put it: “Protesters Criticized for Looting Businesses Without Forming Private Equity Firm First.” It is no secret that what is good for Wall Street is bad for Main Street … The American Dream was always more aspiration than reality … But with social mobility now declining as inequality rises, today’s young people are right to be angry. The new proletariat—the precariat—is now revolting.”

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

Occupational segregation—the overrepresentation or underrepresentation of demographic groups in certain industries and jobs—hurts the entire U.S. economy by entrenching racial and gender wage gaps, lowering earnings for all workers, and preventing workers from entering their preferred professions. This trend is rampant in the U.S. labor force, write Kate Bahn and Carmen Sanchez Cumming, crowding certain groups of workers into some jobs and limiting their access to other, better, or higher-paying positions. For instance, White men still make up the majority of those in top-paying jobs, such as CEOs, while women, and women of color in particular, tend to make up a higher proportion of workers in lower-wage, more insecure jobs and jobs in the service sector. This job stratification along the lines of race, ethnicity, and gender tend to lead to devaluation of certain types of jobs and industries, which exacerbates wealth and income divides and puts women and workers of color at higher risk of hardship during recessions. Bahn and Sanchez Cumming put together four graphics to showcase occupational segregation in the workforce by race and gender, as well as a factsheet with more information on this trend and its impact on recessions and other troubling trends such as income and wealth inequality.

Bahn and Sanchez Cumming also relate occupational segregation to the most recent Jobs Report, using unemployment data released yesterday to show how these pre-existing inequalities are getting worse during the coronavirus recession. The data, released by the U.S. Bureau of Labor Statistics, indicate that Black and Latinx workers continue to be worse-off in terms of job losses during the economic downturn caused by the pandemic. Despite overall unemployment falling between May 2020 and June 2020, a higher percentage of women, Black, Latinx, and low-wage workers are unemployed, compared to their White, male, and better-off counterparts. As Bahn and Sanchez Cumming show, occupational segregation plays an outsize role in funneling these more vulnerable workers into the jobs and sectors that have been hardest hit in the recession, such as service, retail, and care positions.

Likewise, as women tend to do more of the unpaid care work in households, the health crisis caused by the coronavirus pandemic is falling more heavily on women’s shoulders. Kate Bahn, Jennifer Cohen, and Yana van der Meulen Rodgers expand on this insight in their column on feminist economics, the pandemic, and the fight for racial justice. The co-authors explain how the coronavirus crisis has highlighted the foundational role of care in U.S. society, both within families and households, as well as across communities, while also showcasing how undervalued this work has been and how it has become gendered and racialized. They then describe why any future comprehensive response to the pandemic must recognize how integral care work is to a society and economy that prioritizes human well-being.

Also essential to any future coronavirus recession-related legislation are automatic stabilizers, or programs that wind up and ramp down automatically depending on certain economic indicators, such as the unemployment rate. Greg Leiserson examines the critical role these policies—proposed in Equitable Growth and The Hamilton Project’s 2019 publication Recession Ready—can play to speed up the recovery now and aid in future recessions. Leiserson first defines how economists measure recessions and mark the onset of downturns, how public policy plays a role during recessions, and why the coronavirus recession is different from past recessions and thus deserves a different approach. He then runs through what policymakers have already done to address the coronavirus crises on both public health and economic fronts, and why the uncertainties surrounding this recession, its length, and its impact make automatic stabilizers a particularly smart policy for lawmakers to enact.

Last week, Equitable Growth held a webinar on structural change and economic recovery as part of our Vision 2020 initiative to discuss transformative ideas for 2020 U.S. economic policy debate. Panelists discussed ideas from canceling all federal student loan debt to eliminating banks as the “middleman” for anti-recession federal aid. Read about more of the proposals and watch recordings of the two panels here.

Links from around the web

Despite the monthly joblessness rate declines in May and June, unemployment in the United States still stands above the previous peak of 10 percent, during the Great Recession of 2007–2009. The jobs crisis is far from over, writes Anneken Tappe for CNN Business. Millions of jobs have been shed from the economy in a mere 4 months and even after 2 months of solid growth, the unemployment rate is still shockingly high, especially considering that it was near a 50-year high of 3.5 percent in February. The pain from this recession has not been spread evenly throughout the economy, and even as the aggregate numbers appear to be improving, Tappe continues, the U.S. labor market is still facing tough times ahead.

The student loan crisis is perpetuating inequality in Black and Latinx communities that exacerbates the racial wealth divide and holds back Americans of color in the middle of the pandemic and economic crisis, writes Erik Ortiz for NBC News. Looking at a new report released by the Student Borrower Protection Center, which studied borrower data from regional Federal Reserve banks and city governments in New York City, Washington, D.C., Philadelphia, and San Francisco, Ortiz explains the results showing those in majority Black and Latinx neighborhoods are more reliant on loans and take on more debt. These communities are more likely to take out loans because they don’t have the same levels of intergenerational wealth as their White peers do, and they disproportionately struggle to pay back their loans because they tend to be pushed into lower-paying jobs, thanks in part to occupational segregation. These lower-paying jobs make it harder for workers of color to build wealth, and thus the cycle continues.

Long-term trends in the U.S. economy that favor profits over people and drive the decline in union membership and power have caused a level of inequality and disparity between those at the top of the wealth and income ladders and the rest of us that is on full display in the coronavirus recession. “COVID-19 has brought into sharp relief the contrast between the experiences of the higher-income Americans who receive deliveries and the lower-income Americans who fulfill them, between those who can work safely from home and those who must expose themselves to risk, often with inadequate protection, between those who have the power to safeguard their health and their living standards and those who do not,” write Lawrence H. Summers and Anna Stansbury for The Washington Post. These trends have exacerbated the racial and gender income and wealth divides in our economy. Now, more than ever, workers need more power and higher wages. Summers and Stansbury briefly run through how we got to this point and then push for several approaches policymakers can take to increase worker power.

Amid the coronavirus recession, working parents are like candles being burned from both ends. Those lucky to still have jobs and be able to work from home are also having simultaneously to care for their children, run an impromptu homeschool, and/or babysit. As if this wasn’t tough enough, as the U.S. economy reopens and workers are expected back in the office, many public schools are facing new restrictions for health reasons that will leave children at home rather than at school for much of the time. Where does this leave working parents? It seems, writes Deb Perelman in The New York Times, as though you’re “allowed” either a kid or a job, not both. Perelman runs through various arguments (very valid, in some cases) against fully reopening schools and then explains why all the proposed solutions are untenable for most working parents using her family’s experience over the past four months as an example.

Friday figure

Figure is from Equitable Growth’s “Four graphs on U.S. occupational segregation by race, ethnicity, and gender” by Kate Bahn and Carmen Sanchez Cumming.