What the historically low U.S. unemployment rate means for women workers

Posted on by Maria Monroe

Women’s History Month began with some good news. One of the key indicators reported in the U.S. Bureau of Labor Statistics’ monthly Jobs Report—the unemployment rate—documents an exceptionally good environment for workers in general and for female workers in particular. Last month’s Jobs Report showed that at 3.5 percent, the share of women who are actively looking for a job but don’t have one continues to be near a 65-year low. At 3.6 percent, men’s unemployment rate is currently slightly above the rate for women.

Prior to 1983, that was rarely the case. Research published in 2017 by economists Stefania Albanesi of the University of Pittsburgh and Ayşegül Şahin (at the time with the Federal Reserve Bank of New York and now at the University of Texas at Austin) shows that for most of the post-World War II period and until the early 1980s, women’s unemployment rate was rarely below 5 percent and usually more than 1.5 percentage points above that of their male counterparts. In the ensuing four decades, however, the gender unemployment gap—the difference between the female and male unemployment rates—nearly disappeared except during recessions, when men consistently experience a higher joblessness rate. (See Figure 1.)

Figure 1

During the Great Recession of 2007–2009 and its aftermath, this relatively new phenomenon caught the attention of journalists, researchers, and policymakers, with some commentators even calling the economic downturn a “mancession.”

Some economists attributed men’s relatively higher unemployment rate to women boasting more college degrees. Because workers with higher levels of education tend to receive more intensive on-the-job training, they acquire specific skills that reduce employers’ incentives to lay them off.

Other researchers pointed to the “added-worker effect.” This happens when married women enter the labor force to make up for their husbands’ lost income. Additionally, most economists agree that at least some of the widening of the gender unemployment gap during the 2007–2009 recession was a consequence of men’s concentration in industries that are more exposed to fluctuations in the business cycle. In other words, because men hold the majority of jobs in sectors such as construction, extraction, and manufacturing, and because those sectors tend to be hardest hit by economic downturns, male workers are more likely to be unemployed during recessions.

Yet this trend masks how changes in U.S. occupational structure have also affected women in the labor force. Even as discussions about joblessness, job displacement, and economic anxiety tend to center around the effects of deindustrialization in male-dominated sectors of the U.S. economy, occupations with a predominantly female workforce have also seen a big dip in employment. Office and administrative positions—occupations in which 70.9 percent of workers are women—lost 2.79 million jobs between 2000 and 2019. This drop was only surpassed by the decline in production, which lost 2.89 million jobs in the same 19-year period.

Moreover, many of the new jobs more open to women employees are failing to provide the economic security, earnings, and career-advancement opportunities of the lost positions. The decline in office and administrative-support employment is being offset by strong job creation in other women-dominated industries such as hospitality and healthcare services—two sectors that are projected to keep experiencing big gains in the coming decade—yet many of these are poor-quality, low-wage jobs that offer little in terms of benefits. The shrinking share of middle-skill, middle-wage employment—what economists call “job polarization”—is affecting both male and female workers. (See Figure 2.)

Figure 2

The narrowing of the U.S. gender unemployment gap and the historically low female unemployment rate are evidence of important progress women have made in the workplace. In their research, Albanesi and Şahin show that the main driving force behind the decline in the gender unemployment gap was that women’s labor force participation rate began to catch up to men’s beginning in the 1980s. What sparked the change? Women postponed having children, family leave became more widespread, and the percent of mothers who quit their jobs during and after pregnancies declined. These and other factors made it less likely for women to experience unemployment when trying to return to work.

But it’s also important to highlight that the unemployment rate fails to capture many other factors that interact to shape both male and female workers’ labor market outcomes. Women’s median wage continues to grow more slowly than men’s, and the very occupational segregation that protects women from unemployment during downturns is responsible for much of the persisting gender wage gaps. At the same time, wage growth at the bottom 25 percent of the pay scale, where women are overrepresented, is growing faster than any other groups. These are factors that also need to be considered when looking at the gender unemployment gap going forward, particularly when the next economic downturn arrives.

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U.S. economic policymakers need to fight the coronavirus now

Posted on by Maria Monroe

The human tragedy of the coronavirus is now here in the United States. Nine deaths from the coronavirus have been reported in Washington state so far. Each day, more and more people are falling ill. Tragically, some will die; many others will recover but very well may spread the virus further. Quarantines are likely to be widespread.

The coronavirus is first and foremost a public health crisis. The front lines are the women and men who work at hospitals, community health centers, and pharmacies across the country. Each of us can contribute when we check on our elderly neighbors, make sure our children wash their hands (for 20 seconds with soap!), and take precautions to stay healthy and calm.

The coronavirus is a threat to our economy, too. We are starting to see it here, at the 26,000-feet (and falling) view of our volatile financial markets displayed in our living rooms, on our mobile phones, and on TVs in barbershops across the country. Last week, stocks plunged 11 percent in a single week—the most rapid correction ever. The yields on 10-year Treasuries, a benchmark interest rate for mortgages and other loans in the United States, are now less than 1 percent—the lowest level on record. (See Figure 1.)

Figure 1
Long-term interest rates in the United States fall to lowest level on record
Daily yields on 10-year Treasury bonds, percent change, 1960–2020

Source: Federal Reserve Economic Data, “10-Year Treasury Constant Maturity Rate” (March 3, 2020) available at https://fred.stlouisfed.org/series/DGs10.<br />Note: Shaded areas are recessions.

Low interest rates are good for many people, businesses, and local governments. If they need to borrow money, they will pay less in interest and can generally get a better deal from lenders. Here, the Fed is helping push interest rates lower. In fact, lowering rates is its primary way to provide support during tough times.

Indeed, at times like these—when uncertainty is high and misinformation rampant—lower interest rates are a sign of potential trouble. Unrest in financial markets is the primary reason why interest rates and stock prices are falling. When the Fed cuts rates, it is trying to support the economy and calm financial markets. The Fed does not control the market; it plays an important supporting role. So, why are interest rates hitting all-time lows? Investors around the world are buying up the safest assets available—U.S. Treasury bonds. Unless the government sells more Treasuries, their price—referred to as the yield—will continue to fall. The flight to safety today is a flight from the economic consequences of the coronavirus.

Yesterday, the Federal Reserve acted decisively. It cut the federal funds rate 0.5 percentage points. That may not sound like much, but it is a bold move from an institution known for its caution. As of last Friday, it said in a press release that it was “closely monitoring developments.” No word of a rate cut then. And it cut almost two weeks before its next regular meeting.

The Fed decided two weeks was too long to wait. Its decision to act outside of a meeting in Washington was not business as usual. Moreover, it acted a mere three hours after a phone call with central bank leaders and financial ministers across the globe. An hour later, Fed Chair Jerome Powell held a press conference to explain the decision

Can the Fed do it alone? No. Its policy tools, such as cutting interest rates, are too blunt to help the people who need it most. People in our country are getting sick, and the most vulnerable workers could lose their jobs if they are too ill to show up. Monetary policy cannot address this gaping public health problem. Yes, the Fed might calm financial markets some. Yes, the Fed might help businesses and borrowers who are taking on debt. The Fed is doing its part, doing what it can. But it needs help.

Chair Powell made that clear before the cameras, saying:

The virus outbreak is something that will require a multifaceted response. And that response will come in the first instance from healthcare professionals and health policy experts. It will also come from fiscal authorities, should they determine that a response is appropriate. It will come from many other public- and private-sector actors, businesses, schools, state and local governments. But there’s also a role for monetary policy.

And again, saying:

You saw this morning’s G-7 statement of finance ministers and governors. I think that statement does reflect coordination at a high level in a form of a commitment to use all available tools, including healthcare policy, fiscal policy, and monetary policy as appropriate. So, in terms of fiscal policy, again not our role, we have a full plate with monetary policy, not our role to give advice to the fiscal policymakers. But you saw the mention in the G-7 statement as appropriate as well.

It is not Chair Powell’s job to tell the president and Congress what to do. Even so, his words are as close as a Fed official gets to sending out the “Bat Signal” and begging for a fiscal response.

So, what can the federal government do? Here is my proposal, grounded in more than a decade of research and forecasting at the Fed.

  • Act fast. It is time for the federal government—all parts of it—to move swiftly against the spread of the coronavirus and any economic distress it may cause. If it acts now and joins the Fed in fighting back, the economic consequences will be less severe. We could spare the country from the worst possible outcomes. People and businesses would know that the government has their back and will do whatever it takes to end this crisis. The Great Recession taught us a painful lesson: Policymakers waited too long and were far too timid when they did act. Our country is still paying for those mistakes. It’s time to act. Go big or go home.
  • Provide financial support to people who are suffering. Any person who has the coronavirus, is quarantined, or stays home to care for a loved one needs financial support immediately. The federal government should send them money—a check for $1,000, all at once, not $70 a week. The U.S. Treasury and regulators can also push banks to give people grace on their mortgages, credit card debt, and student loan payments. If that does not work, then give people directly affected a zero-interest rate loan until they are back on their feet. With interest rates at historical lows and demand for safe assets, it will cost the federal government very little to issue more bonds to pay for this program. Do it now.
  • Plan for the worst. The U.S. economy is strong today—thankfully, it was strong before the coronavirus. The global economy was not. The U.S. unemployment rate is at a half-century low. That does not mean that our economy is immune to a pandemic. Congress and the Trump administration must follow the Fed’s lead and prepare for the worst. Everyone is monitoring the fast-moving events. They must be ready to go. Even better, get ahead of economic fallout and act now. To be most effective, policymakers need to coordinate their actions in public health and economic aid. The federal, state, and local governments need to talk and work together. Cooperation has yielded big benefits in the past. We need that today.
  • Have automatic support ready for a recession. A recession occurs when consumers and businesses across the country pull back on spending and when production falls widely. We are not in a recession today, and the financial distress may end up being concentrated in particular regions of the country and not push the entire U.S. economy down. But again, we need to be ready. As soon as the national and local labor markets weaken, support from the federal government needs to start. In any recession, send money directly to people, as soon as the unemployment rate jumps. Other excellent ideas are to send support to states, increase support to the unemployed, and make supplemental nutrition assistance more generous. Do not target it to people who still have jobs, as a payroll tax cut would do. Get the money out to as many people as possible and as fast as possible.

U.S. policymakers can beat the coronavirus, but it will take a rapid healthcare response and bold economic policies. We have no choice. Too many Americans are one paycheck away from financial catastrophe. Four in 10 U.S. adults tell us that if they had a $400 emergency expense, they would have to borrow, sell something, or would not be able to pay it. (See Figure 2.)

Figure 2

Only 1 in 10 adults say they could not pay the expense by any means. But that expectation does not account for the consequences of that adult, or a family member, or co-workers, coming down with the coronavirus. Someone out of work for a week due to the pandemic would very quickly come up $400 short. Borrowing, trying to sell something, or picking up odd jobs is not how we want people to deal with this public health crisis.

If the federal government does not give people financial support now, then we most certainly risk a worse public health crisis. Many people have so little savings that they regularly do not get the medical care that they need. In 2018, one-quarter of adults said that they or a family member went without some form of medical care because they could not pay for it. More than 1 in 10 skipped visiting a doctor in the past year when sick. (See Figure 3.)

Figure 3

The coronavirus is highly contagious. If people cannot afford to go to see a doctor, they could get very sick and they might also spread the coronavirus to others. The federal government needs to give people the financial support they need to get healthy, stay healthy, and keep their family and co-workers healthy. This is a public health crisis—all arms of the federal government need to take coordinated action now.

The never-ending cycle: Incarceration, credit scores, and wealth accumulation in the United States

Posted on by Maria Monroe

There are many events in people’s lives that can suddenly change the course of their future. Being incarcerated, or having a history of incarceration, is one significant event that research shows can mark a person’s life adversely. Black Americans, in particular, are starkly overrepresented among the numbers of persons filling the nation’s prisons in a country with the highest incarceration rate on the planet. Persistent structural racism in law enforcement and the judicial system have targeted black males and created a system best described as one of injustice rather than justice. Because of this, black Americans are more likely to be currently subjected to incarceration, have a history of imprisonment, or have family members who have been incarcerated.

The three of us, in a new working paper, present the first evidence detailing the relationship between an individual’s FICO credit scores, wealth accumulation, race, and incarceration history. Using a sample from Baltimore of white and black individuals with and without a history of incarceration and their FICO score information, our report shows that having a personal incarceration history not only is associated with lower FICO scores but also with lower wealth accumulation.

To conduct this analysis, we surveyed individuals about their backgrounds and family histories and obtained their officially reported FICO scores. Given the stigma connected to incarceration history and the obscurity of the calculation of credit scores, the intersection of these components represents a challenge for researchers who want to evaluate the way that the accumulation of assets, debts, and net wealth connects to the most conventionally used indicator of financial health: credit scores. These challenges are reflected in the number of participants who responded to the survey: 51 people responded, including five respondents without a credit history.

After accounting for response bias, and keeping in mind the number of participants, there appears to be a strong relationship between credit scores, race, and incarceration history. Specifically:

  • Low FICO scores are connected to individuals in households with incarceration history, with blacks having the most considerable difference compared against whites with no incarceration history (more than 200 points difference).
  • FICO scores seem to be segmented by group, with white individuals without incarceration history concentrated at the top of the distribution and black individuals with an incarceration history concentrated at the bottom of this distribution. Blacks without incarceration history were spread across the distribution but with a lower representation at the top.
  • Black individuals with tangible assets such as cars and houses and individuals who have ever been incarcerated regardless of their racial background who also have such tangible assets remarkably do not display any significant improvement of their FICO credit scores.

Although the goal of the report is to identify the relationship between incarceration and wealth accumulation by including an “observable” measure such as FICO scores, the report also uncovers a telling story of discrimination. Never-incarcerated blacks, despite having more assets and less debt, have average FICO credit scores that are similar to whites who have ever been incarcerated. The difference in FICO scores is 77 points on average, or slightly less than half the difference between never-incarcerated blacks and and ever-incarcerated whites (170 points).

This report is a groundbreaking study in the arena of racial differences in wealth accumulation and to the relationship with a traditional measure—FICO scores—used to determine eligibility for access to financial instruments and resources. Two critical criteria are addressed in this study: incarceration history and credit scores. More research needs to be undertaken to move from simple associations to the causal mechanisms that produce a repeating cycle of distress for incarcerated Americans, and black Americans in particular.

—William Darity Jr. is the Samuel DuBois Cook Professor of Public Policy, African and African American Studies, and Economics, and the director of the Samuel DuBois Cook Center on Social Equity at Duke University, as well as a member of the Washington Center for Equitable Growth’s Research Advisory Board. Sarah Gaither is an assistant professor of psychology and neuroscience and a faculty affiliate with the Samuel DuBois Cook Center on Social Equity and the Center on Health and Society at Duke University. Mónica García-Pérez is a professor of economics at St. Cloud State University, the director of the SCSU Faculty Research Group of Immigrants in Minnesota, and the president of the American Society of Hispanic Economists.

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Gross Domestic Product sets the tone of the U.S. economic debate while leaving working- and middle-class families behind

Posted on by Maria Monroe

In a now-infamous incident in 2016, social scientist Anand Menon of King’s College London was discussing the economics of Brexit at a public forum. Upon noting that Brexit was likely to lead to declines in the United Kingdom’s Gross Domestic Product, a heckler called out “That’s your bloody GDP, not ours!” The heckler was crude but essentially correct—GDP is no longer reflective of the fortunes of most people. Rising inequality has created separate economies for the rich and poor: Across the globe, aggregate measures of growth tend to track the fortunes of the former, particularly in the United States. (See Figure 1.)

Now, new research from four political scientists shows that reporters continue to treat GDP growth as a critical metric of economic progress despite the disconnect between the metric and the welfare of most Americans. Because GDP growth most closely reflects rising incomes among the rich, the result is that economic news is most positive when the rich are benefitting. By contrast, the tone of economic news is unrelated to the economic fortunes of middle-income and low-income individuals and their families when top-income growth is accounted for. This research emphasizes the need for new measures of economic progress that more accurately capture progress for people at all levels of income. Equitable Growth has advocated for GDP 2.0, which would break aggregate growth into quintiles or deciles so we could see growth not just on average but also for working- and middle-class Americans.

To see how newspapers cover economic progress, the researchers collected stories about the economy from 32 major U.S. newspapers and used automated sentiment analysis to assign a positive or negative tone to each article, ranging from 1 (positive economic news) to -1 (negative economic news). The resulting measure shows the tone of economic reporting over three-month periods beginning in 1980. And while this measure of tone is closely correlated with the fortunes of the top 1 percent of income earners, it is uncorrelated with income growth in the bottom four quintiles.

In fact, the four researchers—Alan Jacobs of the University of British Columbia, J. Scott Matthews of Memorial University of Newfoundland, Timothy Hicks of the University College London, and Eric Merkley of the University of Toronto—further show that tone mostly follows the fortunes of the top 10 percent of income earners. And this shapes how people view the U.S. economy—the researchers find that people’s responses to questions on the Survey of Consumer Attitudes about economic performance closely track the tone of the news. Survey respondents are more likely to say that business conditions are good, that they had heard favorable economic news, and that the government is doing a good job of managing the economy when the news tone is positive.

Why do reporters seem to follow the fortunes of the rich in reporting good news? The authors argue it is not because journalists are biased or ideological. Instead, it is simply because over time, journalists have learned to use major economic aggregates such as GDP growth or stock market indices to track the state of the economy. And these statistics tend to reflect the fortunes of the rich, as shown in Figure 1.

This research demonstrates how ostensibly neutral decisions about how economic progress is defined can have profound consequences for the economic narratives presented in the news. Because GDP growth is released frequently and prominently and has a long history as an important indicator, journalists rely on it, and the consequence is that the American public is led to believe that the economy is good when, in fact, it may only be good for a narrow slice of people at the top of the heap.

Luckily our statistical agencies are working to address the disconnect between GDP and the economic fortunes of Americans at the middle and lower end of the income distribution. A new BEA release, for which a prototype will be released this week, would report personal income growth for Americans in each decile of the income distribution. So, instead of knowing only that overall growth was, say, 2 percent, we would also have data on the growth experienced by those in the middle of the income distribution or those at the bottom.

If reporters continue to rely on GDP growth as an important measure of economic progress, then they will be misinforming the public. Rising inequality has given the lie to the old expression “a rising tide lifts all boats.” GDP growth does not necessarily reflect a good economy for all or even most Americans. To align the U.S. government’s headline measurements of economic progress with the real fortunes of American families, federal agencies must begin to report on growth and other outcomes up and down the income spectrum.

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Age discrimination in the U.S. labor market is a major economic obstruction

Posted on by Maria Monroe

There is ample evidence that employers in the United States discriminate against older workers, particularly in hiring and firing. Such discrimination is illegal, on paper. In reality, age discrimination goes on routinely because U.S. Supreme Court decisions have undermined the laws passed by Congress to outlaw it and because enforcement resources are inadequate. It’s time for Congress to impose a real ban on age discrimination by strengthening the law and providing robust funding for enforcement.

As in much of the world, the U.S. labor force is getting older. In a 2019 paper reviewing studies on demand for older workers and age discrimination, Steven G. Allen of North Carolina State University notes that the share of the U.S. labor force consisting of workers 55 and older has risen from 12.4 percent in 1998 to 23.1 percent in 2018. This, he reports, is for two main reasons. First, our population is aging, due in part to increased longevity—in 2010, 65-year-old Americans could expect to live another 19 years, a 20 percent increase from four decades earlier—and low birth rates. Second, labor participation rates for older workers are increasing, due to improved health, the better earning opportunities that come with our society’s increased educational attainment, greater work incentives in Social Security, the replacement of defined-benefit pensions by defined-contribution plans, and, possibly, the concerns of seniors that they cannot afford to retire.

The increase in older workers makes age discrimination a problem of growing significance. Age discrimination in hiring, in firing, and on the job is revealed by a variety of research and reports. A recent paper by David Neumark of the University of California, Irvine finds ample evidence of discrimination in hiring by using confidential data about two different hiring processes used by employers in a single restaurant chain.

Produced as part of a lawsuit, the data show that when potential employers knew the age of job applicants from the start, those over 40 were far less likely to be called in for an interview than those under 40. The result was that younger applicants were a whopping 68 percent more likely to be hired. In the other process, when employers did not know the age of applicants, older applicants were invited for interviews at a similar or higher rate than younger ones. Yet during this process, once interviews took place, revealing applicants’ ages, younger people were hired at a 40 percent higher rate.

Discrimination also occurs on the job. A 2018 survey by the American Association of Retired People found that nearly one in four workers age 45 and older had negative comments about their age directed toward them by supervisors or co-workers. And about three in five older workers say they have experienced or seen age discrimination at work.

Finally, a chilling example of how a large employer can systematically lay off older workers to replace them with younger ones is the technology giant IBM Corp., which, for decades, had a reputation of treating its workers well. An in-depth 2018 report by ProPublica shows that the company not only carried out a comprehensive campaign to “correct seniority mix” and “reprofile current talent,” but also managed to evade numerous provisions of federal law in doing so.

Job discrimination, especially in hiring and firing, can have a devastating impact on individual workers. According to a 2018 analysis by the Urban Institute and ProPublica, 56 percent of U.S. workers over the age of 50 reported losing full-time, long-held positions before they were ready to retire, and the researchers suggest that the real figure could be higher. Only 1 in 10 of these workers who experienced a significant drop in earnings ever earned as much again.

The IBM case, which is the subject of a class-action lawsuit, illustrates one of the stereotypes that contributes to many employers’ negative attitudes about older employees—that they are less knowledgeable about, and adept with, new technologies. That was a significant factor in IBM’s decision to lay off so many workers. Other stereotypes, some of which also figured into IBM’s actions, are that older workers have worse interpersonal skills and less physical ability, that they are less flexible and adapt poorly to change, and that they have lower productivity.

These stereotypes are used by many employers as a means of weeding out older job applicants even before they apply for a position. In a 2019 paper, Ian Burn of the Swedish Institute for Social Research, Patrick Button of Tulane University, and Luis Felipe Munguia Corella and David Neumark of the University of California, Irvine use computational linguistics to describe how certain language in ads is associated with age discrimination. The Age Discrimination in Employment Act generally prohibits the use of language in job ads that refers to age, such as “age 25 to 35,” “young,” “college student,” or “recent college graduate.” But the authors used sophisticated linguistic analysis, combined with the data used in a previous paper by Neumark, Burn, and Button, to show that when employers use key phrases associated with stereotypes about older workers, fewer older applicants get called in for interviews.

According to classical economic models, discrimination is a market inefficiency that should harm employers. Those models say that employers must set wages at workers’ “marginal product.” In other words, workers’ wages should reflect the economic value their work creates. Age discrimination, like other forms of discrimination, should be “competed away,” as firms that do not discriminate against older workers, and are therefore more productive, enter and thrive in the market. However, monopsony, or the ability of employers to set wages below marginal product, is gaining increasing attention as a possible factor in lagging U.S. wages. And Equitable Growth Director of Labor Market Policy and economist Kate Bahn describes in a recent article how monopsony may be enabling such discrimination against older women.

Allen’s review of studies on age discrimination looks at the productivity of older workers and finds mixed results. While wages and benefits generally increase with age, productivity might or might not. Allen points to studies that suggest an aging workforce slows down growth of Gross Domestic Product. Yet a European study of physical laborers found that their slower speed was offset by the greater care they took in their work, which resulted in fewer serious mistakes. Also, the value of mentoring younger workers is hard to measure. And older workers have had the opportunity to gain greater experience in the workforce and, perhaps, at a particular firm.

It’s understandable that employers might not want to pay more for mixed productivity results, but again, it’s uncertain what those results are, and, of course, it’s against the law to discriminate. There are steps employers can take to address, say, certain older workers’ lack of immediate familiarity with new technologies—on-the-job training, for example.

Even if some part of discrimination is “rational,” do we want to live in a society where older people are discarded by the labor market, the only channel through which most Americans can make ends meet? As Equitable Growth President and CEO Heather Boushey points out in her book Unbound: How Inequality Constricts Our Economy and What We Can Do about It, labor market discrimination that obstructs certain Americans, including older Americans, from fulfilling their potential creates a drag on productivity and, by extension, economic growth.

There is some risk that older workers crowd out job opportunities for younger workers. Again, Allen’s review of studies finds mixed evidence, with some papers suggesting that employers consider older and younger workers to be substitutes for one another, meaning worker longevity might be harmful to younger workers, but other papers finding no such relationship and therefore no harm to younger workers when older workers stay in the labor force longer. (There is also some anecdotal evidence that younger workers can be the direct victims of ageism, in the form of so-called reverse age discrimination, but more research is needed to determine how serious this problem really is.)

If age discrimination may affect our economic health and certainly affects the well-being of affected older workers, what can we do about it? What is the current law against age discrimination, why is it not working, and how can we minimize discrimination?

Age discrimination has been against the law for more than a half-century. Congress enacted the original Age Discrimination in Employment Act in 1967, at the urging of President Lyndon B. Johnson. The language of the ADEA was based in large part on the employment discrimination title of the Civil Rights Act of 1964, Title VII. (The rationale for not including age discrimination in that bill was that discrimination based on race and religion was thought to be fueled, at least in part, by hostility to those minority groups, whereas older Americans did not face such hostility.) As with Title VII, the prohibitions on employer discrimination in the ADEA included an exception for bona fide requirements, such as casting age-appropriate actors for TV shows and movies. While the ADEA applied initially only to ages 40 to 64, the upper age limit was eventually raised and then abandoned in subsequent legislation.

Two developments have undermined protections against age discrimination: decisions by the Supreme Court and Congress’ weakening of funding for the federal Equal Employment Opportunity Commission, which is charged with enforcing the law against discrimination.

Three major Supreme Court decisions seriously undermined the ADEA. The first, in 1993, enabled an employer to flout the law when it said the plaintiff’s firing at age 62, weeks before he would have been eligible for his pension, was not age discrimination because it was based on length of service. Given the ease with which employers can use length of service as a proxy for age, that decision suggested the Court did not take age discrimination very seriously.

The next decision, in 2009, made it clearer. That year, the Court raised the burden of proof for age discrimination well beyond the burden for proving other forms of discrimination. It ruled that to prove discrimination, a worker would need to show that an action taken against him—in this case, a demotion—was taken only on account of age and that there were no other factors whatsoever. This overruled precedent—specifically, a precedent that still applies for other forms of discrimination—that age discrimination need be only one of the factors relied upon by the employer.

A third decision, in 2018, has an impact that is broader than age discrimination but nevertheless weakens the ability of workers to sue employers who discriminate based on age. The decision essentially enables employers to obtain from workers when they are hired a waiver of their right to engage in class-action lawsuits against their employer. An inability of older workers to sue as a class is yet one more way in which the Court has effectively undermined the ADEA.

Finally, as AARP puts it, the Equal Employment Opportunity Commission is a watchdog that has lost its bark. According to an analysis by Vox, while the commission seeks to maintain a focus on age discrimination, its shrinking staff is overwhelmed by the number of cases.

Members of Congress are fighting back. On January 15, a strong bipartisan majority of the House of Representatives passed the Protecting Older Workers Against Discrimination Act, a bill that would reverse the 2009 Supreme Court decision, Gross v. FBL Financial Services, Inc., returning to the pre-2009 level of proof required to show age discrimination. The bill is now pending in the Senate, where it also enjoys bipartisan support, though a floor vote there is still unlikely.

Congress also has pushed back against President Donald Trump’s recent budget requests to decrease funding for the Equal Employment Opportunity Commission. For fiscal year 2018, the first under President Trump’s leadership, Congress increased the agency’s funding by $15 million. In fiscal year 2019, Congress held that funding steady, rebuffing President Trump’s proposed $15.7 million cut.

There are other things Congress can do. It can respond to the 2018 Supreme Court action by preventing employers from effectively barring collective action by their workers. In addition, Congress should consider giving older workers the legal right to a phased retirement, lowering the stakes for employers that might be reticent to make long-term commitments to older workers and giving workers the chance to delay claiming Social Security. Finally, despite modest funding increases in recent years, the Equal Employment Opportunity Commission needs more money; Congress should raise appropriations to a level that would enable the commission to do its job and protect aging workers and others who are victims of discrimination.

Employers as well bear responsibility for eliminating discrimination in the workplace. They should be fighting stereotypes through job training and educational campaigns. And their application processes should be made as age-blind as possible, enabling older workers to compete fairly for positions.

The older our society becomes, the more damage age discrimination will cause. Now is the time for Congress, the Equal Employment Opportunity Commission, and employers to recognize discrimination, ensure that federal law against discrimination is meaningfully interpreted and enforced, and, ultimately, give all workers the ability to make a contribution in the workplace as long as they can do the job. Every worker deserves that opportunity.

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Brad DeLong: Worthy reads on equitable growth, February 22-28, 2020

Posted on by Maria Monroe

Worthy reads from Equitable Growth:

  1. As of the end of February, U.S. stock markets are forecasting a very sharp, sudden recession, with that probability going from near zero a week ago to better-than-even today. That is the only way to make sense of the drop of the S&P 500 over the past week. Thus it is not too late to plan. It is, rather, time to act to offset the likely spending economic contraction that may well be closer on the horizon. Here are the plans we should have made. Read Alyssa Fisher, “Planning for the next recession by reforming U.S. automatic stabilizers,” in which she writes: “Equitable Growth has joined forces with The Hamilton Project to advance a set of specific, evidence-based policy ideas for shortening and easing the impacts of the next recession [in] Recession Ready: Fiscal Policies to Stabilize the American Economy [offering] six concrete ideas … expand eligibility for Unemployment Insurance and encourage take-up of its regular benefits … reduce state budget shortfalls during recessions [by] increasing the federal matching rate for Medicaid and the Children’s Health Insurance Program … eliminate work requirements for supplemental nutrition assistance during recessions … expand federal support for basic assistance during recessions … [create] an automatic infrastructure investment program [to] boost consumer spending during recessions by creating a system of direct stimulus payments to individuals that would be automatically triggered when rising unemployment signaled a coming recession … Congress should consider them now, because when the next recession appears on the horizon, it may be too late.”
  2. Perhaps the greatest harm done by Robert Bork and Richard Posner to American well-being was their extremely aggressive push of the idea that vertical merger integration could never be bad. Read Phil Weiser, “Competitive Edge: The states’ view of vertical merger guidelines in U.S. antitrust enforcement,” in which the Colorado Attorney General writes: “Vertical integration is not always benign and indeed has the potential to create significant anticompetitive harms … Indeed, in some cases, a vertical merger may remove the most likely potential rival to an incumbent firm. Consider, for example, the case of Live Nation Entertainment Inc.’s merger with Ticketmaster in 2010. In that case, Live Nation’s concert promotion and venue business prepared Live Nation to enter into the ticketing platform business, but the merger with Ticketmaster undermined that nascent competition. Indeed, Live Nation had already begun that entry before the merger. This is why a vertically related firm in one market (say, wholesale distribution) might be the natural entity to sponsor entry against a dominant firm in a related market (say, retail sales), and that potential sponsorship could be undermined on account of the merger between the dominant firm and the vertically related one. That is particularly true in evolving or fast-growing sectors such as technology markets. Second, it is important to recognize how vertical mergers, once completed, can be used to undermine existing rivals or raise entry barriers that make future entry materially more difficult. Colorado, like other states, has addressed such dangers.”
  3. If we do not remember our history, we are condemned to repeat it. Read Robynn Cox and Dania Francis, “Improved public school teaching of racial oppression could enable U.S. society to grasp the roots and effects of racial and economic inequality,” in which they write: “There is a lot more to black history than what our schools showcase during the shortest month of the year. Many Americans don’t ever truly discover the depths of the African American experience in ways that fully convey the harm inflicted upon those enslaved before the Civil War and the generations of blacks who continued to suffer from blatant and pervasive racial discrimination over the next 150-odd years. Public schools tend to gloss over the details of enslavement. And most teachers are not properly equipped to handle discussions of this sordid past in their classrooms or to teach their students about the violent resubjugation of blacks in the South after the Civil War via race riots, lynchings, mass incarceration, voter disenfranchisement, and segregation—actions that spread across the nation as African Americans embarked on the Great Migration out of the South beginning in the late 19th century and continuing well into the post-WWII era.”
  4. This is excellent from Kate Bahn and Adia Harvey Wingfield, “In Conversation with Adia Harvey Wingfield,” in which “Director of Labor Market Policy and economist Kate Bahn talks with sociologist Adia Harvey Wingfield, the Mary Tileston Hemenway Professor of Arts & Sciences and associate dean for faculty development at Washington University in St. Louis. Her research examines how and why racial and gender inequality persists in professional occupations. She is the author of several books, most recently Flatlining: Race, Work, and Health Care in the New Economy … Bahn and Wingfield explore: Racial and gender inequality and U.S. labor market outcomes; race, gender, and occupational status; lack of diversity and representation in U.S. services industries; the consequences of lack of diversity for black professionals in the healthcare industry; policies to improve racial and gender inequality in U.S. labor market outcomes; how sociologists can elevate their findings and solutions in economic policymaking; lack of racial diversity in scholarly research; and diversity itself as a research topic.”

 

Worthy reads not from Equitable Growth:

  1. Kevin Drum is correct in his “The Great Income Decline Is Real.” Moreover, real disposable income as economists measure it is not everything. Many for whom real income has risen find that the indicia of middle-class status have moved further out of reach: In his piece, Drum writes: “A little spate of skepticism over the notion that middle-class incomes have been stagnant … a reaction to Bernie Sanders, who certainly has a habit of making things sound a little more catastrophic than they really are. But that’s no reason to doubt the basic fact … Since 1980, the income of every men’s age group has declined except for those ages 55 to 64—and even that age group has been stagnant since 2000 … Women’s incomes have been rising steadily, though they’re still considerably lower than men’s incomes. Now, this is cash income and … it uses CPI-U-RS as its inflation gauge … However, cash income is best if you’re interested in how people view their own financial situation … Middle-class men of prime working age have been on a slow downward slide for 40 years, and an even steeper slide since 2000 … Just about everyone has good cause to be frustrated and unhappy. That’s especially true since the affluent have been doing so well during the same period. Frankly, it’s sort of a miracle that people aren’t more pissed off than they are.”
  2. One of the big lessons that Paul Krugman’s 1999 paper on the liquidity trap ought to have taught economists and central bankers is that inflation targeting has absolutely no place in a financial crisis, or any time interest rates have any provability of approaching the zero lower bound. Yet remarkably few were able to grasp that lesson then. And a great many still refuse to learn that lesson now. Read Wolfgang Münchau, “The ECB Should Ditch Its Inflation Target,” in which he writes: “The ECB remains critical for the eurozone’s cohesion, if not survival … Over the course of this year, the ECB will put its entire monetary policy strategy on the table … Under European law, the ECB’s primary target is to deliver price stability. The lack of precision was deliberate. It was supposed to give central bankers room for interpretation and manoeuvre—room the ECB chose not to use. In late 1998, the ECB adopted its first inflation targeting regime. Four years later, it modified it to an annual inflation rate of close to, but below, 2 per cent … The ECB’s research staff have recently published a fascinating 300-page working paper that has a direct bearing on this discussion. Its goal has been to shed some light on the successes and failures of the ECB’s policies over the past 20 years. The paper tries to establish how the ECB’s policies affected the economy. The surprise result was that the effect on inflation was smaller than previously thought, but the impact on economic growth larger. This finding suggests that a policy based only on inflation targeting is not very effective at a time like this. My own preferred target would be based on nominal gross domestic product—economic activity measured in actual euro prices. You can think of it as a metric of both economic activity and inflation folded into one.”
  3. John Taylor thinks that the main threat to economic freedom is the Business Roundtable. At least, that is the only threat to economic freedom that he names in his “The New-Old Threat to Economic Freedom.” And the point is really weird. In all long-term win-win economic relationships the duties of managers and representatives are always diffuse: they are agents not just of their formal principals but of all those whose participation is essential to the value creation process. Recognizing this is not a threat to freedom. And I do not understand what kind of mind thinks it is. Here is what Taylor writes: “Achieving economic freedom is difficult: one always must watch for new obstacles … Many such obstacles are simply arguments rejecting the ideas that underpin economic freedom … Even the Business Roundtable is weighing in, announcing last August that U.S. corporations share ‘a fundamental commitment to all of our stakeholders,’ including customers, employees, suppliers, communities, and, last on the list, shareholders. That is a significant departure from the group’s 1997 statement, which held that ‘the paramount duty of management and of boards of directors is to the corporation’s stockholders; the interests of other stakeholders are relevant as a derivative of the duty to stockholders.’ Moreover, as that earlier statement was right to point out, the idea that a corporate board “must somehow balance the interests of stockholders against the interests of other stakeholders” is simply ‘unworkable.’”
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Weekend reading: Working to close racial gaps in economics, the workforce, and education 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

We need more black women economists in the United States, argues Claudia Sahm in her most recent column covering the Federal Reserve. Not only is there just one black woman economist working at the Federal Reserve Board, but black women also make up a miniscule percentage of undergraduate economics students and recent Ph.D.s. This lack of diversity in the profession and in the ranks of decision-makers means that economists don’t have as wide a perspective on certain issues that are necessary to accurately study them, and that race has played less of a role than it should in the Fed’s policy discussions. And while the Fed is working to change that fact through efforts to improve staff diversity, more needs to be done to increase the number of women, and black women in particular, who enter the field. Sahm concludes by discussing her recent experience with the Sadie Collective, a group working to do just that.

In the latest “Equitable Growth in Conversation,” Kate Bahn talks with sociologist Adia Harvey Wingfield about racial and gender inequality in the U.S. labor market, the consequences of that inequality, and policies that can work to improve it. Bahn and Wingfield’s conversation dives into Wingfield’s research, which looks at the intersections of race and gender in service industries in the United States, particularly in healthcare, and how the work of making these fields more accessible and equitable for people of color tends to fall on the shoulders of people of color already working in those areas. The effects of this added burden are profound—burnout, alienation, feeling exploited—in short, “it’s simply too much,” says Wingfield. But there are things that can be done to can help workers of color, she continues, including providing them with more resources and support and making certain structural changes in organizations and companies.

If the public education system in the United States improved the way it teaches African American history and the implications of slavery, Jim Crow, and racial discrimination, perhaps the black lived experience would be better understood by everyone, write Robynn Cox and Dania Francis. The authors of two chapters from our recently released book, Vision 2020: Evidence for a stronger economy, opine that because U.S. public education tends to gloss over our nation’s sordid past, the legacies it has left behind—which still profoundly affect African Americans to this day, despite all the gains made over the past 150 years—are often misunderstood, disbelieved, or ignored. This means that the various documented inequalities faced by African Americans, from health to wealth, become ever more challenging to address. Cox and Francis argue for several policy ideas that would elevate the largely untaught aspects of U.S. history and the African American experience in order to better equip ourselves and future generations to address these gaps and inequalities.

For more information about our new book, Vision 2020: Evidence for a stronger economy, and the launch event we hosted last week, check out David Mitchell’s post detailing the release and the chapters of the four speakers who sat on the event’s panel. The speakers were Cox, whose chapter looks at race and criminal justice policy; Susan Lambert, whose chapter addresses work schedule instability and unpredictability; Fiona Scott Morton, whose chapter dives into increased concentration in the U.S. economy and antitrust reform; and Equitable Growth president and CEO Heather Boushey, whose chapter argues for new metrics to measure inequality and economic growth in order to show how the economy is delivering for all Americans. The authors also each sat for short video interviews detailing their research and work, which you can find in Mitchell’s post.

Colorado and 26 other states filed comments with the Antitrust Division of the U.S. Department of Justice and the Federal Trade Commission this week regarding their proposed Vertical Merger Guidelines. Colorado’s Attorney General Phil Weiser penned a Competitive Edge post explaining the comments and the areas of competitive harm that warrant attention by the two agencies—namely, that vertical mergers can be as harmful to competition as horizontal mergers, and highlighting the use of anticompetitive merger remedies in vertical mergers.

Links from around the web

American workers today are struggling because U.S. labor laws are unable to help and protect them, writes Emily Bazelon for The New York Times. To show just how broken these laws are, especially for low-wage workers, she takes an in-depth look at a case involving the National Labor Relations Board and McDonald’s Corp. The case exemplifies how the Trump administration has repeatedly undermined the National Labor Relations Act, which is meant to protect the rights of workers to unite to improve their working conditions. In detailing the long history of the law—which was passed in 1935 by President Franklin Delano Roosevelt—Bazelon explains how it originally benefitted workers and increased union membership, and then how big business responded and has since overwhelmed the power of workers and unions in the United States.

In an age when almost everyone appears affected by inequality—when “almost everyone is reckoning with financial crises, climate disaster and economic insecurity”—it can be difficult to explain what, exactly, is different about racial inequality, writes Tressie McMillan Cottom for TIME. Racial oppression may be less overt, less visual these days than when slavery or segregation made it unavoidably obvious, but black people still have to work much harder than their white counterparts to stay afloat—and forget about getting ahead. McMillan Cottom goes through exactly what it means to “hustle,” how black communities are hustling on every rung of the income ladder, and how even that hasn’t allowed them to move up the ladder, despite the gains made since the civil rights movement: “For black Americans, achieving upward mobility, even in thriving cities that compete for tech jobs, private capital and national recognition, is as complicated as it was in 1963. … [In 2020] despite hustling like everyone else, they do not have much to show for it.”

New research shows that the United States has been measuring segregation incorrectly for many years—that we have actually been separating by race more and more as the years have gone by, despite the widespread belief that suburbs have diversified and urban areas have gentrified, writes Trevon D. Logan for NBC News’ THINK blog. The new paper by Logan and his colleague finds that segregation in rural areas increased as dramatically as in urban areas between the end of the 19th century and the middle of the 20th century. In other words, “blacks leaving the rural and urban South were migrating to increasingly segregated Northern cities, but the areas they were leaving behind were becoming increasingly segregated as well.” This paved the way for policies that have reinforced segregation even after it became illegal, from mass incarceration to school funding, and continue to drive us further apart. When it has been proven that personal contact with other races reduces prejudice and bias, how are we to bridge a racial gap if we are less likely to interact with each other as neighbors, Logan asks.

A recent experiment highlighted in The New York Time’s The Upshot shows that U.S. conservatives are unique in their views about why inequality exists (typically attributing wealth to merit), but at the same time are quite like their global peers in their views of how to address inequality. The study of people from around the world looked at beliefs in the differences between rich and poor—finding that American conservatives, on average, are some of the only people globally who do not believe these differences are unfair—and performed an experiment looking at redistributing income—where American conservatives acted much like the average person from another country would. This suggests that “policy preferences are not based on core philosophical differences so much as the stories that parties tell themselves about why people are rich and poor to begin with,” writes Jonathan Rothwell in The Upshot.

Friday Figure

Figure is from Equitable Growth’s “Black economists are missing from the Federal Reserve and the U.S. economics profession,” by Claudia Sahm.

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Black economists are missing from the Federal Reserve and the U.S. economics profession

Posted on by Maria Monroe

More than 40 years ago, Congress made the Federal Reserve responsible for fighting racial discrimination in the U.S. economy. The Fed’s maximum employment mandate arose directly from the civil rights movement, and the Community Reinvestment Act was a response to discriminatory practices at banks.

So, of course, the Fed would extend a similar mandate and responsibility in hiring its staff economists, including people of color, and encouraging them to work hard on those important responsibilities, right? Wrong. Among the 408 economists at the Federal Reserve Board in Washington, only one is a black woman. (See Figure 1.)

Figure 1

Few other women of color or minority men work for the Federal Reserve Board. Moreover, only a small fraction of the staff’s research and economic analysis focus on race. People of any background could study race, yet in real life, our lived experiences often guide the questions we ask. Economists are no different.

Economists of color missing from the Fed means that race has largely been missing from its policy deliberations. Narayana Kocherlakota, the former president of the Federal Reserve Bank of Minneapolis, pointed out that Fed actions have outsized effects on racial minorities. In the Great Recession, the black unemployment rate climbed to more than 16 percent. Any conversation at the Fed about full employment should have include the hardest-hit groups. It did not.

Today, the Federal Reserve is finally talking some about race—both in its evaluation of the economy and among its ranks. The Board has started many efforts to make its staff more diverse and its work environment more inclusive. But is the answer simply to hire more economists who are people of color? Wrong, again. Black economists are not only missing from the Fed, but also from the entire U.S. economics profession.

In 2017, only seven black women received a Ph.D. in economics in the United States. One year later, it was only four. Those abysmal numbers are out of the more than 1,000 individuals who receive a doctoral degree in economics each year. The Fed only hires its economists with doctoral degrees.

To make matters worse, the low numbers of black women in economics also occur at the undergraduate level. White women comprise 35 percent of all bachelor’s degrees, but only 13 percent of bachelor’s degrees in economics. Only 2 percent of economics undergrad degrees go to black women. (See Figure 2.)

Figure 2

We need diverse viewpoints among economists, but the pipeline of talent is broken—yet not beyond repair. Since 2017, the economics profession in the United States has had a long-overdue awakening about gender and race. The leadership of the American Economics Association now recognizes the problem and is taking steps to combat discrimination and harassment. Even so, it is individuals who are up and coming in the economics profession from underrepresented groups who are demanding change and making it happen.

Last week, the Sadie Collective held its second annual conference for young black women interested in economics. Black women, from high school students to recent Ph.D.s, gathered to share their research, support each other, and learn from women who blazed a trail in the profession. They heard from Bridget Terry Long, the first black woman dean of the Harvard Graduate School of Education, Susan Collins, the acting provost at the University of Michigan, and many other black woman economists.

I was spellbound to sit in the room with more than 270 young black women interested in economics. The energy, ambition, and talent were striking and heartening. These women have a strong voice, and it is a voice that economics and the Federal Reserve need to hear.

Former Fed Chair Janet Yellen also spoke to these black women. She underscored that diversity is crucial for the quality of economics and the quality of policy advice. She promised, as the current president of the American Economics Association, to push forward to make the profession better. The leaders of the Sadie Collective standing with her was a joy to witness.

In 1921, Sadie Tanner Mosell Alexander was the first African-American to receive a Ph.D. in economics and is the namesake of the Sadie Collective. After Alexander received her Ph.D., discrimination stood in the way of her economics career. Undaunted, she received a J.D. and went on to practice law. Alexander’s legacy ties back the Federal Reserve as well. She spoke extensively about the moral and economic case for full employment. The young black women at the Sadie Collective are honoring and carrying forward her work.

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Competitive Edge: The states’ view of vertical merger guidelines in U.S. antitrust enforcement

Posted on by Maria Monroe

Antitrust and competition issues are receiving renewed interest, and for good reason. So far, the discussion has occurred at a high level of generality. To address important specific antitrust enforcement and competition issues, the Washington Center for Equitable Growth has launched this blog, which we call “Competitive Edge.” This series features leading experts in antitrust enforcement on a broad range of topics: potential areas for antitrust enforcement, concerns about existing doctrine, practical realities enforcers face, proposals for reform, and broader policies to promote competition. Phil Weiser has authored this contribution.

The octopus image, above, updates an iconic editorial cartoon first published in 1904 in the magazine Puck to portray the Standard Oil monopoly. Please note the harpoon. Our goal for Competitive Edge is to promote the development of sharp and effective tools to increase competition in the United States economy.

Phil Weiser

Colorado and 26 other states filed comments today with the Antitrust Division of the U.S. Department of Justice and the Federal Trade Commission on their proposed Vertical Merger Guidelines. These two federal antitrust enforcement agencies are commendably working to update an outdated set of guidelines from 1984 that downplay the risks posed by vertical mergers—mergers between companies at different levels of the chain or production, distribution, or marketing of products or services. In our comments, we highlight areas of competitive harm that warrant attention, areas for improvement in these guidelines, and a suggested added focus on remedies.

In so doing, as I have written about previously, we emphasize that vertical integration is not always benign and indeed has the potential to create significant anticompetitive harms. In this post, I summarize and highlight some of the points made in our comments.

First off, it is important to understand that vertical mergers of, say, a wholesale distributor and a retail outlet, have the potential to harm competition and hurt consumers just like horizontal mergers—mergers between two rivals—do. Indeed, in some cases, a vertical merger may remove the most likely potential rival to an incumbent firm.

Consider, for example, the case of Live Nation Entertainment Inc.’s merger with Ticketmaster in 2010. In that case, Live Nation’s concert promotion and venue business prepared Live Nation to enter into the ticketing platform business, but the merger with Ticketmaster undermined that nascent competition. Indeed, Live Nation had already begun that entry before the merger. This is why a vertically related firm in one market (say, wholesale distribution) might be the natural entity to sponsor entry against a dominant firm in a related market (say, retail sales), and that potential sponsorship could be undermined on account of the merger between the dominant firm and the vertically related one. That is particularly true in evolving or fast-growing sectors such as technology markets.

Second, it is important to recognize how vertical mergers, once completed, can be used to undermine existing rivals or raise entry barriers that make future entry materially more difficult. Colorado, like other states, has addressed such dangers. In June 2019, Colorado took action to prevent anticompetitive harms from occurring as a result of the merger of DaVita Inc. and UnitedHealth Group Inc. In that case, UnitedHealth, a health insurer, was facing an upstart rival, Humana Inc., which undermined UnitedHealth’s once-dominant position in the market, leading it to drop from around 75 percent to around 50 percent of the Colorado Springs Medicare Advantage market. Humana’s growth in this market reflected, on its account, its strong relationship with DaVita’s physician clinics in the area.

The acquisition raised the threat of customer foreclosure by limiting access to the relevant patient population. UnitedHealth already had an exclusive arrangement with Centura Health, another clinical network. This acquisition would give UnitedHealth control over DaVita. As a result of this merger, UnitedHealth would have the incentive and ability to increase costs for DaVita’s services to UnitedHealth’s rival insurers, or even to withhold such services altogether, leading Medicare Advantage rates to go up and/or quality to decrease. To prevent this harm, our state office required that the DaVita contract be extended and that UnitedHealth end its exclusive contractual arrangement with Centura Health. By doing so, the remedy protected Humana’s access to doctors who can enable access to Medicare Advantage customers.

The DaVita/UnitedHealth case is one of many examples of how vertical mergers can be consummated for the purpose and effect of excluding rivals or raising their costs. In some cases, such as this one, the impact relates to access to customers. In other cases, the merger impacts access to critical inputs (termed by economists as “input foreclosure”). Consider, for example, the merger of Comcast Corp. with NBCUniversal, in which the Department of Justice in 2011 was rightly concerned that Comcast’s control of NBCU would lead Comcast to limit the ability of rival upstart online distribution platform companies to access NBC content, a critical input into their own offerings.

Similarly, the proposed 1998 merger between Ingram, a leading book distributor, and Barnes & Noble, then the dominant book retailer, threated to entrench Barnes & Noble’s dominant position. At the time of the merger, Ingram was Amazon.com Inc.’s leading supplier, filling more than 58 percent of its orders. With respect to the merger, Amazon.com and independent booksellers raised a series of concerns as to how the merger could harm competition in retail books sales, including on issues such as “credit, speed of delivery, and access to popular titles.” In the face of opposition by the Federal Trade Commission, the merger was abandoned.

In addition to highlighting the prospect of competitive harms on account of vertical mergers and discussing the types of evidence that could be collected to challenge such mergers, the comments submitted today to the two federal antitrust enforcement agencies by the state attorneys general also discussed the use of merger remedies. Many vertical mergers offer the opportunity to impose a conduct remedy that can allow the merger to go forward while blocking anticompetitive outcomes.

In the UnitedHealth/DaVita merger, for example, Colorado’s remedy did just that, extending an existing contract and banning an exclusive contracting arrangement that bolstered UnitedHealth’s market position. In other cases, however, such remedies may well be impractical or difficult to administer in practice. Where monitoring and administration of a decree may be difficult, the better course is to simply prevent the merger from taking place—as happened in the blocked merger of Barnes & Noble/Ingram—rather than attempting to implement a conduct remedy that is prone to abuse and may well prove ineffective.

As captured in our comments, State Attorneys General play an important role in protecting their citizens from anticompetitive consolidation. By sharing our experience, we are doing our part to help ensure that the federal merger guidelines are effective in protecting competition.

—Phil Weiser is Colorado Attorney General, sworn in as the State’s 39th Attorney General on January 8, 2019.

Improved public school teaching of racial oppression could enable U.S. society to grasp the roots and effects of racial and economic inequality

Posted on by Maria Monroe
Fifteen fugitive slaves arriving in Philadelphia along the banks of the Schuylkill River in July 1856.

Every February for the past 45 years the United States commemorates African American history—a month dedicated to learning about and celebrating the accomplishments and stories of black Americans throughout our nation’s history. Typically, Black History Month is observed through various activities and lessons in school. In our public school systems in particular, teachers add elements to their curriculum about famous African American authors, scientists, politicians, and innovators. In history classes, many teachers explore the clash over slavery leading up to the Civil War, the passage of the 13th and 14th Amendments to the Constitution, and the civil rights movement of the 1960s, perhaps discussing the passage of the Voting Rights Act of 1965 and almost always distributing passages written by the Rev. Martin Luther King, Jr. and perhaps Maya Angelou, too.

It’s great that all of these topics are being discussed in public schools. But there is a lot more to black history than what our schools showcase during the shortest month of the year. Many Americans don’t ever truly discover the depths of the African American experience in ways that fully convey the harm inflicted upon those enslaved before the Civil War and the generations of blacks who continued to suffer from blatant and pervasive racial discrimination over the next 150-odd years.

Public schools tend to gloss over the details of enslavement. And most teachers are not properly equipped to handle discussions of this sordid past in their classrooms or to teach their students about the violent resubjugation of blacks in the South after the Civil War via race riots, lynchings, mass incarceration, voter disenfranchisement, and segregation—actions that spread across the nation as African Americans embarked on the Great Migration out of the South beginning in the late 19th century and continuing well into the post-WWII era.

Because these particular lessons of American history go largely untaught in our public schools, the cascading ill-effects of these discriminatory, state-sanctioned actions on African Americans’ opportunities to succeed and thrive amid the growth of the wealthiest and most powerful nation on earth also goes untaught. The missing chapters in our nation’s history of racial discrimination and the ensuing economic consequences over generations mask the social costs of inequality and the ways in which it obstructs, subverts, and distorts our economy, and society’s ability to stimulate unbiased economic growth as the Washington Center for Equitable Growth’s Heather Boushey explains in her book Unbound: How Inequality Constricts Our Economy and What We Can Do About It.

Indeed, evidence-based research demonstrates that racial economic inequality, driven by opportunity-hoarding and discrimination, obstructs the supply of talent, ideas, and capital in our economy, slowing productivity growth. Our racialized criminal justice system and unresponsive political institutions subvert the ability of the vast majority of African American individuals, families, and communities to thrive. And discrimination in our credit, housing, and labor markets across generations slows wealth creation among African Americans and distorts the macroeconomy by undermining consumer spending.

In short, those omitted chapters in U.S. history have wide-ranging policy implications today. And because many Americans do not study the consequences of historical discrimination, they also fail to recognize the profound costs, including social exclusion and marginalization of African Americans, racial economic disparities and the racial wealth gap, lower rates of innovation among minority communities, higher rates of incarceration, poorer health outcomes, and more.

What’s more, white supremacy and related violence and vitriol are rising at an alarming pace such that the U.S. Department of Homeland Security, in 2019, acknowledged its serious threat to society. Even the Black Lives Matter movement—which merely asks society to acknowledge the disparities faced by African Americans and the fact that their lives are valued less than other demographic groups (not that black lives should be valued more than others)—sparked an outcry from people who likely don’t understand the depths of injustice that black Americans have endured for centuries.

We have both advocated extensively for improving the public education system’s ability to teach our students about the baleful historical consequences for African Americans of enslavement, Jim Crow, and ongoing racial discrimination, as well as the ramifications that continue to this day. Most recently, in Equitable Growth’s newly released book, Vision 2020: Evidence for a stronger economy, we each urge in our separate essays—“Overcoming social exclusion: Addressing race and criminal justice policy in the United States” and “The logistics of a reparations program in the United States”—that the next presidential administration consider new ways to elevate this largely untaught aspect of American history and the African American experience in public schools. Our ideas include:

  • Allocating funding to local and state-level governments to establish programs and initiatives across subjects within the public Kindergarten through 12th-grade school system that would educate the public about the history of race in the United States and how this history affects social outcomes and our society’s beliefs about race
  • Beginning the necessary work to implement a reparations program that would elevate the full history of the African American experience and improve public education around these topics as a means to acknowledge this complete history and attempt to repair the damage done
  • Educating people about racial biases and implicit biases, as well as systemic racism, and how these structures and perceptions shape society and the African American experience within it

Perhaps if our public school systems were given the tools and the encouragement to really teach the atrocities and outcomes of slavery, Jim Crow, and ongoing racial discrimination, the African American experience would be better understood by everyone. Improving education around these topics would provide much-needed context to the lived experiences of black Americans and their ancestors, opening up the possibility for understanding around the past and how its legacy continues to affect the present. Maybe then, our society could garner the mainstream support needed to create the targeted policies needed to close the gaps in educational attainment, innovation, economic standing, and the criminal justice system between African Americans and their white counterparts. Maybe then, all Americans could observe Black History Month fully conscious of the plight of black Americans throughout our history, how much they have achieved despite being held back at every turn—and how much more they could do if they weren’t.

—Robynn Cox is an assistant professor at the University of Southern California Suzanne Dworak-Peck School of Social Work. Dania V. Francis is an assistant professor of economics at the University of Massachusetts Boston.