Weekend reading: GDP 2.0 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
Looking only at Gross Domestic Product is no longer an adequate way to measure U.S. economic growth and prosperity across the income ladder because average income no longer reflects the fortunes of most families, writes Austin Clemens. “It does little good to target GDP as an outcome if the majority of GDP growth flows to a small group of families, leaving the rest with scraps,” he continues. But rather than getting rid of GDP—or the dataset to which it belongs, the U.S. National Income and Product Accounts—altogether, the U.S. Bureau of Economic Analysis should instead include a distributional component to its GDP reports. This idea, what Equitable Growth calls the GDP 2.0 project, would report on growth in each quintile of the income distribution, as well as at the very top, in order to adequately show who is prospering when the economy expands, modernizing how we measure growth in the 21st century economy.
Equitable Growth President and CEO Heather Boushey recently participated in a Reddit “Ask Me Anything,” or AMA, focused on economic inequality. People from around the world were able to submit their questions online on topics ranging from the prospect of a wealth tax to the role of the Federal Reserve in warding off the next recession to addressing racial disparities in income and wealth. Check out the AMA’s highlights here.
Young adults today in the United States are not achieving the same financial milestones as in recent past generations, writes Liz Hipple in an essay also published by New America in a collection on the millennial wealth gap. This wealth gap not only affects intergenerational mobility and exacerbates existing racial and economic inequalities in the country, but also impacts the next generation’s human capital development. As such, policymakers need to respond before it’s too late and the window of economic mobility for millennials shuts prematurely.
Links from around the web
Could it be, asks Sam Pizzigati on Inequality.org, that part of why so many Americans distrust government is its (inaccurate) assumption that GDP reflects everyone’s income reality? Quoting testimony from recent congressional hearings—including Heather Boushey’s last week—Pizzigati looks at why disaggregating GDP will provide a better representation of all Americans’ well-being across the income spectrum in light of today’s rampant inequality. He also highlights the policymakers who are already on board with the idea and the legislation they’ve introduced in Congress to get us there.
Before anyone gets too excited about the fact that joblessness is at a 50-year low, and that the most recent U.S. jobs report showed average hourly wages rising in September, keep in mind the wage growth reported is not actually economically significant, writes Teresa Ghilarducci for Forbes. Wages have, in fact, been growing at the same persistently slow rate year over year. Why? “Decades of eroding union membership, unequal trade penetration, rising healthcare costs, increasing tax and investment benefits for the wealthy few, and the wealthy spending of some of those funds on politics and lobbying—all of these are holding back wages,” Ghilarducci argues—while effectively stifling economic growth at the same time.
Despite the wild speculation about robots taking over everyone’s jobs, this prediction has yet to materialize. But what can be studied—and recently has been, reports Shirin Ghaffary for Vox.com’s Recode—is how technology is changing workers’ jobs right now. The new study, focused on warehouse work automation, shows that emerging technology probably won’t actually replace the more than 1 million warehouse workers in the United States anytime soon, and actually may help with the more monotonous and physically strenuous tasks on their plates. The bad news is, robots probably will also make their lives harder over the next decade. The study’s authors argue that automation will likely ratchet up the pressure on workers to complete tasks faster to boost productivity, increasing burnout and stress levels, and will limit the amount of human interactions workers experience on a daily basis. But, the co-authors say, this outcome is not inevitable—policymakers can still enact regulations to support workers as these transitions take place.
While many workers nowadays are lucky enough to have a standard 9-to-5 schedule, nearly one-fifth of U.S. workers’ schedules are volatile and variable, and many others work way beyond the traditional 40-hour week. In fact, writes Judith Shulevitz in The Atlantic, if you combine those with unpredictable schedules and those who work prolonged hours, you’d probably get to about a third of the U.S. workforce. “When so many people have long or unreliable work hours, or worse, long and unreliable work hours,” Shulevitz continues, “the effects ripple far and wide. Families pay the steepest price.”
Figure is from Equitable Growth’s “GDP 2.0: Measuring who prospers when the U.S. economy grows,” by Austin Clemens.