Weekend reading: Closing racial economics gaps and reducing inequality edition
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
As we commemorated the Rev. Martin Luther King Jr. and his tireless efforts to bring about a more just society this past week, we are also reminded of the heaps of work we still need to do in order to achieve his dream. The economic gaps between black and white Americans, especially with regard to earnings and wealth, remain profound, and black women face even bigger hurdles due to double discrimination based on gender and race. This week, we took a look at how governmental policies have worked to reinforce these gaps in the past and how they can work instead to close them.
Inequality is constricting the U.S. economy and obstructing productivity and growth, which is why Equitable Growth seeks sensible, evidence-backed solutions to address these issues throughout various areas of the economy—from taxes and antitrust to family economic security and labor. Now, we’ll be raising these concerns and seeking answers via Medium, where our President and CEO Heather Boushey just launched an account and will be posting regularly on issues we care about.
More and more economists are coming around to the idea that the United States needs to do more to measure economic well-being than calculate Gross Domestic Product. Austin Clemens reviews a recent event, in which a panel of high-profile economists discussed the shortcomings of using GDP as the sole measure of economic growth. Most of the panelists argued in favor of maintaining the GDP reports as they are and releasing more detailed data separately. Though releasing more in-depth data is a good idea, doing so without altering the much-anticipated and much-discussed quarterly GDP reports would likely mean most people would continue to focus on GDP and ignore the new data. Instead, Equitable Growth proposes a new kind of GDP report, what we call GDP 2.0, in which growth is broken out by income to accurately measure who prospers when the economy grows.
The U.S. Congress is once again considering the Family and Medical Insurance Leave Act, or FAMILY Act. So this week we looked at the five states that have already implemented paid leave programs, as well as the others that are in the process of doing so. Our issue brief explains what the research says about the effects of implementing paid family and medical leave, who typically takes this leave and for how long, wage-replacement options, and job protection during leave periods.
Brad DeLong’s latest Worthy Reads column lays out his takes on must-read content from Equitable Growth and around the web.
Links from around the web
Oftentimes during economic downturns or recessions, colleges and universities can act as a natural shock absorber for young people. As the job market shrinks and people are laid off, enrollment in colleges rises. This was certainly the case during the Great Recession of 2007-2009, and likely will be the case again in the next downturn, writes Susan Dynarski for The New York Times. But during and after the Great Recession, many public colleges couldn’t keep up with higher demand, and either restricted enrollment, spent less money per student, or increased tuition fees—causing many students to enroll in for-profit colleges instead and to take out large loans in order to afford their degrees. The ramifications of this series of events are still being felt today, with high levels of debt and default among young workers. Before the next recession, Dynarski warns, we must ensure that public colleges are adequately supported, which will most likely require federal action.
Nearly 10 million children live in low-opportunity neighborhoods in the United States, meaning they have limited access to good schools, parks, and healthy food options, reports Erica Pandey for Axios. This means an incredibly high number of children are being born into disadvantage, as studies show that where a child is raised affects many aspects of their future lives, including health and economic outcomes. There is also a clear racial divide, continues Pandey, writing that of these 10 million children, 4.5 million are Hispanic and 3.6 million are black. These racial disparities will certainly play a role in maintaining the racial economic gaps.
Despite what the Trump administration says, it is becoming more clear with each day that the enormous tax cuts provided to the wealthy and to large corporations in the 2017 Tax Cuts and Jobs Act will not end up paying for themselves. So why are we still hearing this line of argument? “The claim that tax cuts don’t cost money is a lie that won’t die, because proponents of tax cuts have learned that many voters like to hear it,” writes The New York Times Editorial Board. “Two years later, the results are in. The annual federal budget deficit has topped $1 trillion.”
If there is one thing most people across the political spectrum nowadays can agree on, it is to be mad at tech companies, explain Nancy Scola and Cristiano Lima for Politico, “from Democrats who want to break up the ‘big four’ of Apple, Amazon, Google and Facebook to Republicans—including [President Donald] Trump himself—who think the industry and its products are biased against conservatives.” But one congressman in particular, Rep. David Cicilline (D-RI), who also happens to be the chairman of the House subcommittee on antitrust, is wading heavily into the fray. Last year, he announced that a (rather surprising, considering the partisan times we are living in) bipartisan group of House members were opening an investigation into whether digital markets are illegally anti-competitive. And though his chances of “fundamentally revamping the country’s antitrust laws or resetting regulators’ approach to Silicon Valley [are] slim,” Scola and Lima write, he seems more than willing to take on the heavy burden of trying.
Figure is from Equitable Growth’s “For Juneteenth: A look at economic racial inequality between white and black Americans,” by Liz Hipple and Maria Monroe.