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

Today is Juneteenth, the day that commemorates Black Americans’ emancipation from slavery in the United States in 1865. In any given year, this day is typically a celebration of freedom, resilience, and endurance. In 2020, the 155th anniversary of Juneteenth, the day is also a harsh reminder of the inequities that communities of color experience in the United States, as the country and the world face social unrest and protests against systemic racism and police brutality. Liz Hipple, Shanteal Lake, and Maria Monroe pull together eight graphics that highlight the deep economic disparities between Black and White communities, particularly with regard to wages, wealth, and health. These racial divides are all the more significant as a result of the coronavirus pandemic and recession. Hipple, Lake, and Monroe make several evidence-backed policy suggestions that would address the racial inequality so deeply embedded in U.XS. society, the economy, and institutions—including policies focusing on wealth building and closing the racial wealth divide, reversing racist differences in credit options, and addressing racism in the criminal justice system. They also provide a list of scholars to follow for more in-depth reading on these issues.

This week, Heather Boushey—along with former Fed Chair Ben Bernanke and Cecilia Rouse, dean of the Woodrow Wilson School of Public and International Affairs at Princeton University—led a group of more than 150 economists urging Congress to pass additional stimulus legislation in the face of the coronavirus recession. Among other demands, the scholars implore legislators to provide continued support for the unemployed, assistance to state and local governments, investments to preserve employer-employee relationships, and aid to stabilize aggregate demand. The group includes two former Fed chairs, four former chairs of the Council of Economic Advisors, and two Nobel laureates, among others.

Brad DeLong highlights several important articles from Equitable Growth and around the web in his latest installment of Worthy Reads.

Links from around the web

Juneteenth’s century-and-a-half history holds a lot of meaning in today’s fight for Black liberation, whether through protests against systemic racism or in calls to abolish or defund the police, writes Fabiola Cineas for Vox. Cineas walks through a history of the holiday, how people have commemorated the day over the years since 1865, and Juneteenth’s particular significance this year “as an opportunity for the United States to come to terms with how slavery continues to affect the lives of all Americans today.” It’s helpful background for those who may not know much about or who misunderstand the holiday—in large part, Cineas explains, because it is not often taught in schools. Perhaps if it were (along with improved teaching of racial oppression in America), the long history of racism and racial inequality in this country would be better understood by more of the U.S. public.

The coronavirus pandemic is ravaging our economy because it was already broken when the recession hit, writes Eric Levitz in New York Magazine. Inequality’s decades-long growth, made possible by policies to diminish the power of unions and lower taxes on the rich, reshaped the economy to be top-heavy and cater to the wealthy—and now, the wealthy aren’t spending their money, which means the economy can’t fully recover. “If more of America’s economic activity were geared toward meeting the needs of the median worker—and less toward serving the whims of the typical banker—then the pandemic-induced collapse in high-end consumption would have brought fewer jobs down with it,” explains Levitz. Likewise, he continues, if wages had been able to keep up with productivity gains, then the economy would have been bigger, with fewer financially vulnerable workers. While the coronavirus would have certainly caused economic difficulties regardless of our economy’s structure, deep and persistent inequality has made the recession worse—and likely will prolong the pain and delay the recovery.

Not only does the coronavirus worsen inequality in the United States, it could also widen the racial wealth divide by expanding the homeownership gap between Black and White Americans. Michelle Singletary explores the game-changing effect of owning a home for wealth and financial well-being, particularly for Black families, in The Washington Post. The disparities in homeownership rates began long before the coronavirus arrived on our shores, she writes, due to racist and discriminatory practices in the real estate industry, redlining, and access to credit. But the pandemic is certainly contributing to it. In fact, the rate of black homeownership is near the same level today as it was before anti-discrimination policies in housing came into effect in the 1960s.

Friday figure

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

Worthy reads from Equitable Growth:

1. Although the federal government’s economic spending response to the economic recession caused by the coronavirus pandemic has been large, it is clear that it has been inadequate. It has been inadequate both from an aggregate demand maintenance perspective and from a distributional perspective. More needs to be done. Read Equitable Growth, “More than 150 economists tell Congress: More relief needed to avoid ‘prolonged suffering’ and ‘stunted economic growth’”: “Led by Ben Bernanke, Heather Boushey, and Cecilia Rouse, statement endorsers include two former chairs of the Federal Reserve, four former chairs of the Council of Economic Advisers, and two Nobel laureates, among others … More than 150 scholars [endorsed that a] new bill should be commensurate with the nearly 16 trillion nominal output gap our economy faces over the next decade … Americans … are still suffering from the unprecedented public health and economic crises facing the country … and because state and local governments face potentially disastrous budget shortfalls … The Congressional Budget Office estimates that, without further congressional action, the unemployment will be greater than 11 percent at the end of the year … Moreover, Federal Reserve chair Powell has made it clear that families and the economy need help from Congress.”

2. I confess that this was a remarkable surprise to me. Yes, I knew that social power gets turned into economic power, but it had never occurred to me that it would be a big deal with respect to something like the ratio of property tax assessment to market valuation of houses. I will have to rethink a bunch of issues some more. Read Carlos Avenancio and Troup Howard, “Misvaluations in local property tax assessments cause the tax burden to fall more heavily on Black, Latinx homeowners,” in which they write: “Looking within regions where every homeowner theoretically faces the same rate of taxation, we find that minority homeowners nonetheless end up paying a 10 percent to 13 percent higher tax rate on average within the same local property tax jurisdiction. For the median Black or Hispanic homeowner in the United States, this translates to an extra $300 to $400 annually in additional property taxes. In highly minority communities, the extra tax burden can be several times as large … The wedge between assessed values and market values arises in two ways. The first relates to residential segregation within local property tax jurisdictions. Market prices are highly sensitive to local attributes … Local property tax assessments are much less responsive to highly local, neighborhood-level attributes than market prices are … Divergence isn’t driven by attributes of the home itself, such as the number of bedrooms or size of the home. Rather, the difference arises from hyper-local neighborhood-level characteristics, which do affect market prices but are inadequately reflected in assessments … The remaining inequality in tax burden persists within neighborhoods … We argue that this within-neighborhood inequality arises from racial differences in appeals by homeowners about their individual property tax assessment.”

3. I guarantee this will be a good use of your time. Register for the Vision 2020: Structural change Amid the Coronavirus Recession event:  “On Thursday, June 25, the Washington Center for Equitable Growth will convene two panels of top economic experts to discuss how current finance, banking, and labor laws and institutions exacerbate economic and racial inequality, and what we can do now to set the stage for strong, stable, and broad-based economic growth in the future … Democratizing the Economy: How financial institutions and the Federal Reserve have exacerbated inequality and why we need new institutions, or drastically reformed ones, to ensure broadly shared growth … Building Power for Workers and Families: How enhanced collective bargaining rights, public benefit and social insurance programs, anti-discrimination protections, and other power-building policies can help Black, Latinx, and other workers emerge stronger from this crisis.”

Worthy reads not from Equitable Growth:

1. Will the economy snapback, and how fast? Three months ago I thought that the coronavirus pandemic would either be quickly stamped out or would roll over the world in a horrific six months with 150 million dead. (We are now, roughly, at perhaps 800,000 dead; and while the virus has been stomped in East Asia and is being stomped in West and Central Europe, it is alive and well and spreading elsewhere.) In either case, I thought the world would then return to normal, save that people’s fevers would be automatically scanned when they boarded planes and trains, and people with respiratory symptoms would be shunned and sent home. But at the current pace of infections it looks as though the time we will spend in at least moderate social distancing will be measured not in months but in years. And we cannot now even guess what the permanent shadow cast by the pandemic will be, or how much poorer and different the global economy will be afterwards. Read Tim Harford, “The economy won’t snap back after Covid-19,” in which he writes: “In the middle of a crisis, it is not always easy to work out what has changed forever, and what will soon fade into history. Has the coronavirus pandemic ushered in the end of the office, the end of the city, the end of air travel, the end of retail and the end of theatre? Or has it merely ruined a lovely spring? … A recession can leave scars that last, even once growth resumes. Good businesses disappear; people who lose jobs can then lose skills, contacts and confidence … Richard Baldwin, author of ‘The Globotics Upheaval,” argues that the world has just run a massive set of experiments in telecommuting. Some have been failures, but the landscape of possibilities has changed. If people can successfully work from home in the suburbs, how long before companies decide they can work from low-wage economies in another time zone? The crisis will also spur automation … There will be scars that last, especially for the young. People who graduate during a recession are at a measurable disadvantage relative to those who are slightly older or younger. The harm is larger for those in disadvantaged groups, such as racial minorities, and it persists for many years. And children can suffer long-term harm when they miss school. Those who lack computers, books, quiet space and parents with the time and confidence to help them study are most vulnerable. Good-quality schooling is supposed to last a lifetime; its absence may be felt for a lifetime, too.”

2. The coronavirus pandemic has, however, given what looks to me to be a five-year boost to the process of telecommuting and the global cloud information infrastructure. It has, quite frankly, been amazing how easily the backbone cloud data storage and bandwidth providers such as Alphabet Inc.’s Google unit and Amazon.com Inc. have been able to deal with the surge in demand for their businesses. Read Ben Thompson, “Zoom’s Earnings, Zoom & AWS,” in which he writes: “We are 14 years into the public cloud revolution, and the impact is probably still underrated. A company in Zoom’s position previously would not only have been incapable of building out so much capacity so quickly—actually building data centers and filling them with servers takes time!—but would not have done so even if they could have. After all, once you build it, you own it, and what happens if demand drops after the pandemic? Instead, though, Zoom could not only meet demand, but it could in fact generate even more demand (by offering Zoom for free to schools, for example) because its costs were marginal, not fixed … The second remarkable fact is that AWS had the capacity to not only support Zoom in this way, but a whole host of other companies that saw usage explode as companies went remote. There was a lot of talk a few years ago that AWS and Microsoft were overbuilding, but AWS in particular never slowed its spending, and that paid off in a big way during the pandemic.”

3. If the coronavirus cannot be stomped, is it worth incurring a substantial depression in order to simply push cases out six months or a year? Here we have real data: relatively cheap interventions have every promise of pushing the bulk of the caseload out beyond the date at which an effective vaccine is developed, and the disease ceases to be a major threat. Read Solomon Hsiang et al., “The effect of large-scale anti-contagion policies on the COVID-19 pandemic,” in which they write: “Governments around the world are responding to the novel coronavirus (COVID-19) pandemic with unprecedented policies designed to slow the growth rate of infections. Many actions, such as closing schools and restricting populations to their homes, impose large and visible costs on society, but their benefits cannot be directly observed and are currently understood only through process-based simulations. Here, we compile new data on 1,717 local, regional, and national non-pharmaceutical interventions deployed in the ongoing pandemic across localities in China, South Korea, Italy, Iran, France, and the United States. We then apply reduced-form econometric methods, commonly used to measure the effect of policies on economic growth, to empirically evaluate the effect that these anti-contagion policies have had on the growth rate of infections. In the absence of policy actions, we estimate that early infections of COVID-19 exhibit exponential growth rates of roughly 38 percent per day. We find that anti-contagion policies have significantly and substantially slowed this growth. Some policies have different impacts on different populations, but we obtain consistent evidence that the policy packages now deployed are achieving large, beneficial, and measurable health outcomes. We estimate that across these six countries, interventions prevented or delayed on the order of 62 million confirmed cases, corresponding to averting roughly 530 million total infections. These findings may help inform whether or when these policies should be deployed, intensified, or lifted, and they can support decision-making in the other 180+ countries where COVID-19 has been reported.”

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

Following Equitable Growth’s statement last week on the lack of diversity in the field of economics and our commitment to support more Black scholars, Equitable Growth highlighted important work from our network in the areas of incarceration, police militarization, the economic consequences of racist violence, exclusion, disenfranchisement, and reparations to address the history of oppression of Black Americans. Our colleagues and network of academics and grantees have studied the pervasive role of White supremacy in American society and politics in limiting or destroying economic opportunity for Black communities. We will use this body of work as a starting point from which to be more inclusive in our organization and push for inclusion in the economics profession as a whole. While this is a first step in elevating the research and policy ideas of diverse voices in our field, there is much more to be done.

Equitable Growth’s Amanda Fischer spoke with board member Mehrsa Baradaran in the most recent installment of Equitable Growth in Conversation. Baradaran is a leading scholar on financial services law, and her most recent book looks at the racial wealth divide in the United States. Their discussion ranged from financial inclusion and the role of Black banks in building wealth for Black communities in a segregated economy, to the different standards of responsibility that small and large businesses are held to, and why wealthy people profit off of crises while lower-income communities tend to suffer. They also spoke about the Federal Reserve’s monetary policymaking strategies and several policy ideas to make the economic recovery from the coronavirus recession more equitable.

A new Equitable Growth working paper reveals that misvaluations in local property tax assessments cause the tax burden to fall more heavily on Black and Latinx households. Carlos Avenancio and Troup Howard studied market value estimations using administrative tax data and found that minority households pay 10 percent to 13 percent more in property taxes than their white counterparts living in homes of similar value in the same local property tax jurisdiction. For the median homeowner, this translates to $300 to $400 per year in additional property taxes—a significant burden, especially considering other recent research that shows that nearly 40 percent of Americans say they would struggle to handle a $400 emergency expense.

Earlier this week, Equitable Growth and The Hamilton Project co-hosted a virtual event on the coronavirus recession and the automatic stabilizers that policymakers should put in place to ensure an equitable and quick recovery. The event centered on the six policy ideas proposed in Recession Ready: Fiscal Policies to Stabilize the American Economy—a book Equitable Growth and The Hamilton Project published last year—which would automatically turn on and off depending on specific economic indicators (typically, the unemployment rate). Speakers included U.S. Rep. Don Beyer (D-VA), former chair of the president’s Council of Economic Advisers Jason Furman (a member of Equitable Growth’s Steering Committee), former Philadelphia Mayor Michael Nutter, Equitable Growth CEO and President Heather Boushey, and Jay Shambaugh, director of The Hamilton Project.

Links from around the web

Economics has a race problem, write Dania Francis and Anna Gifty Opoku-Agyeman in Newsweek. Surveys of those in the profession clearly show that Black economists feel less respected and more socially excluded, and are more likely to not apply for jobs in order to avoid discrimination and harassment. Sixty percent of Black women economists report not only experiencing gender discrimination, but also racial discrimination. And, Francis and Opoku-Agyeman continue, amid widespread protests against police brutality and anti-Black racism in the United States over the past two weeks, non-Black economists have been largely silent—“a function of their inability to confront the anti-Black racism that is embedded throughout every aspect of the discipline.” Francis and Opoku-Agyeman conclude their column with a list of three steps that non-Black individuals and economists can take to address anti-Black racism in the field of economics.

Not only does the economics profession have a race problem, but the assumptions and data that mold economic policy do as well. Racism shapes how economics is taught and practiced, writes Joelle Gamble in Dissent magazine. This means that many economic assumptions—focusing on the aggregate, for instance, instead of breaking data down to get insights about well-being—uphold racist systems by upholding measurements that are based on the economic security of White Americans. A glance at last week’s Employment Situation Report release proves this, as most headlines touted a surprising drop in unemployment while the joblessness rate among Black workers actually increased. Gamble explains how three neoclassical economics assumptions—using aggregate data to measure overall well-being, equating value with price, and considering behavior the result of independent and rational individual preferences—fail to account for racism’s influence in economics data and how racism has manifested itself in norms, institutions, and policies in the industry.

With each week that passes, the coronavirus recession is proving ever more clearly that those workers who lagged behind in the recovery from the past economic downturn are being hit harder during this one. Familiar patterns are reappearing: Black and Latinx workers continue to lose their jobs more often and for longer periods of time and are having more difficulty getting government support, write Patricia Cohen and Ben Casselman in The New York Times—and they have less of a financial cushion thanks to the racial wealth divide. Even owning a business or being self-employed hasn’t protected African Americans from suffering more during the pandemic—and, report Cohen and Casselman, some are concerned that the almost-inevitable cuts coming in state and local government jobs will disproportionately harm Black middle class families as well.

Friday figure

Figure is from Equitable Growth’s “Misvaluations in local property tax assessments cause the tax burden to fall more heavily on Black, Latinx homeowners” by Carlos Avenancio and Troup Howard.

Worthy reads from Equitable Growth:

1. Read “Elevating economic research on racist violence and exclusion in the United States,” in which Equitable Growth writes: “On May 25, 2020, a police officer murdered George Floyd in Minneapolis … one of the most recent murders of Black people either by law enforcement or by civilians who faced no immediate consequences … Ahmaud Arbery … Breonna Taylor … Tony McDade, David McAtee … far too many others… the unacceptable view of the expendability of Black lives … the undeniable harm caused by racism and the persistent damage that is present today … The violence and repression wielded against Black people, often carried out by authorities at all levels of government in the country or implicitly sanctioned by those same authorities, is deployed in order to minimize Black Americans’ political power and economic opportunity … It is impossible to understand our economy, our failure to ensure broad-based growth and stability, and the economic connections to social and political power without addressing these forces in our policy frameworks and policymaking. That’s why the Washington Center for Equitable Growth is elevating key empirical research … on incarceration and police militarization, as well as economic consequences of racist violence, exclusion, and disenfranchisement … Equitable Growth must still do much more.”
2. A very smart piece from Iona Marinescu. One of the frequent complaints about unemployment insurance is that it is not compatible with job-search incentives. A cash bounty for those losing their jobs no matter whether they get quickly reemployed would eliminate this worry. Read her “Moving from Federal Pandemic Unemployment Compensation to a job losers’ stimulus program amid the coronavirus recession,” in which she writes: “My proposed policy, the job losers’ stimulus program, is a cash stimulus for workers who have lost their jobs regardless of whether they remain unemployed or find new employment. Compared to only providing higher unemployment benefits to the unemployed, the job losers’ stimulus program boasts the twin benefits of providing greater support to workers who have been most affected by pandemic-related job losses while also modestly increasing overall employment. The exact size of the impact of this new stimulus program is difficult to predict, but a simple policy simulation shows that it could increase the amount of stimulus by 34 percent and allow an additional 6 percent of workers to exit unemployment and return to work within 4 months of losing their jobs.”
3. I am becoming increasingly skeptical of how much the unemployment rate, as the U.S. Census Bureau’s Current Population Survey questions are asked and answered, corresponds to the reality of our economy: Read Kate Bahn and Carmen Sanchez Cumming, “Equitable Growth’s Jobs Day Graphs: May 2020 Report Edition,” in which they write: “On June 5th, the U.S. Bureau of Labor Statistics released new data on the U.S. labor market during the month of May. Below are five graphs compiled by Equitable Growth staff highlighting important trends in the data. As the overall unemployment rate declined to 13.3 percent, this was led by a decline in white unemployment from 14.2 percent to 12.4 percent. Meanwhile, Black unemployment increased slightly from 16.7 percent to 16.8 percent and Hispanic unemployment declined from a historic high of 18.9 percent to 17.6 percent … Employment across sectors began to rebound in May, and growth was led by leisure and hospitality after this industry lost nearly half of all employment in the prior month … After the most extreme decline in employment levels in history in April, the prime-age employment rate moved upward in May to 71.4 percent.”

Worthy reads not from Equitable Growth:

1. I am writing before this event has taken place. But I am extremely confident that it will be—was—very interesting and very useful: Watch “Recession Ready: Fiscal Policy Options to Support Communities and Stabilize the Economy,” on Monday, June 8, 2020 from 2:00-3:00 p.m. EDT: “The Hamilton Project at The Brookings Institution and the Washington Center for Equitable Growth will host a webcast discussing the importance of expanding aid to state and local governments as part of the continued fiscal policy response to the COVID-19 pandemic. The webcast will begin with a fireside chat with Rep. Don Beyer, vice chair of the U.S. Congress Joint Economic Committee, and Heather Boushey of the Washington Center for Equitable Growth. The webcast will also include a roundtable discussion between Jason Furman of Harvard University, former Mayor of Philadelphia Michael Nutter, and Jay Shambaugh of The Hamilton Project. The webcast will coincide with the one year anniversary of the release of The Hamilton Project and Washington Center for Equitable Growth book Recession Ready: Fiscal Policies to Stabilize the American Economy.