Weekend reading: Protecting and honoring workers this Labor Day 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

This coming Monday is Labor Day, a holiday in which we commemorate the U.S. workforce and celebrate the social and economic achievements of American workers over the years. One way to honor the labor force in the United States would be to boost labor standards and institutional support for collective action. Kathryn Zickuhr and Carmen Sanchez Cumming explain the history of U.S. labor laws and how they were weakened over recent decades, to the detriment of U.S. workers and their career advancement. This coincided with a decline in unionization rates—and thus collective action—among the U.S. workforce as unions are proven to help workers negotiate for and achieve better pay and working conditions. Zickuhr and Sanchez Cumming show how workers benefit from strong labor laws and institutional support for collective action, and conclude with several policy ideas for lawmakers who want to reinforce worker power in the United States.

In a report for Equitable Growth, Janice Fine, Daniel Galvin, Jenn Round, and Hana Shepherd explain the importance of labor standards enforcement further, drawing on evidence from the Great Recession of 2007–2009 to show how high levels of unemployment weaken the labor market power of low-wage workers who remain employed. This makes these workers vulnerable to exploitation by employers, resulting in minimum wage violations that disproportionately affect Black, Latinx, and women workers. The co-authors describe the current, complaint-based enforcement system—where enforcement of labor standards is only triggered when a complaint is filed by a worker—which, they explain, is problematic in many ways, not least because it is reactive instead of proactive. The four co-authors urge policymakers at all levels of government to bolster labor standards enforcement, particularly and strategically in times of economic stress such as the one we are living through right now, to protect low-wage workers, who are already more vulnerable in recessions and less able to make ends meet. They also suggest moving from complaint-based enforcement to a strategic and co-enforcement approach in order to boost worker power and provide for a more robust system of labor standards enforcement.

Another way to pay homage to our workers is to send more direct payments to those who are struggling during the coronavirus recession. Michael Garvey and Claudia Sahm look at the effects of the pandemic and economic downturn over the past several months. They also discuss how aid included in previous stimulus bills, such as the Coronavirus Aid, Relief, and Economic Security, or CARES, Act, helped workers, especially low-income workers, to weather the economic storm. New studies show that the direct payments sent to individuals and families were particularly useful in buffering the freefall in consumer spending and helping people get back to work. In fact, between 40 cents and 60 cents of every rebate dollar was spent, mostly within weeks or months of receiving the rebate. Unfortunately, Garvey and Sahm explain, much of this economic relief expired at the end of July. They call on policymakers to act swiftly to bring it back and protect workers and their families from financial catastrophe.

This recession is unlike any of the previous ones in our history, thanks to its root cause—a public health crisis—and the health measures needed to get to a recovery. These factors are not your standard economic determinants that have been used to guide us through past downturns, writes Heather Boushey on Medium, so it isn’t easy to make predictions of how the recovery will go. What is clear is that as everyday Americans and small businesses are struggling to get through this crisis, the stock market is recovering nicely, housing markets in well-off neighborhoods are booming, and big firms are raking in profits. This indicates a sideways Y shaped recovery, Boushey writes, as workers and certain firms suffer while other industries are either unaffected or are profiting. The situation is worsened by decades of historically high inequality, which left the United States vulnerable to shocks. Boushey urges policymakers to support and protect workers and their families, as well as small businesses, and tackle inequality head on to ensure a resilient economy.

Equitable Growth announced this week a record $1.07 million in research grants on economic inequality and broadly shared growth, our seventh and largest year to date. The funds will be distributed to 46 economists and social scientists, including faculty, postdoctoral scholars, and Ph.D. candidates at leading U.S. colleges and universities, as well as some scholars from government research agencies. This year, we placed a special emphasis on racial and ethnic elements of inequality, economic mobility, the impact of domestic outsourcing, market concentration, and climate and the environment. Learn more about our 2020 grantees and their work.

Did you miss last week’s rundown of our recently released factsheets guiding the next presidential administration and Congress on ways to reduce inequality in the coming years? Corey Husak and David Mitchell provide an excellent summary of the evidence-based guides and how the policymakers and economists coming to Washington in 2021 can take action in eight areas to spur strong, stable growth for all—which will be an essential task, considering the impact of the coronavirus pandemic and recession on U.S. society and the economy.

Links from around the web

There is no doubt we are in a recession right now, with high levels of unemployment and business closures wreaking havoc on our economy and society. But not everyone is feeling the pain the same way, writes Emily Peck for the Huffington Post. This downturn and pandemic have reinforced just how much income and wealth inequality exists in the United States, and how much of that inequality falls along racial lines, with White families much more likely to weather the storm with ease than Black and Latinx households. And this recession has the potential to further exacerbate these disparities, Peck continues, as many lower income families are struggling to afford food while the stock market has already rebounded from its dip in the spring, leaving most wealthy families with barely a scratch. And the uber-wealthy—America’s high net-worth individuals and billionaires—are having a banner year: The world’s 500 richest people gained more than $800 billion this year so far. But, Peck warns, if lawmakers don’t do something to help those who are being hit the hardest, this could end in an economic catastrophe that everyone will feel. 

Black women are often left behind and left out, especially when it comes to the U.S. economy and policies to bolster it. But in order to make the economy work for everyone, those who are usually left out should be front and center. This is the premise of a fascinating interview from Marketplace’s Maria Hollenhorst and Kai Ryssdal with Janelle Jones, the managing director of policy and research at the Groundwork Collaborative, and Michelle Holder, an assistant professor of economics at John Jay College at the City University of New York. Jones and Holder explain why diversifying the voices in economics helps incorporate those usually marginalized by bringing lived experiences and varying perspectives on what works best and how to help vulnerable populations that are often ignored. And, they argue, “if we set up the economy in a way that makes sure Black women are doing well, the rest of us benefit.”

Earlier this week, the Trump administration announced a temporary eviction moratorium, ensuring millions of Americans won’t be kicked out of their homes. But it declined to include rent relief, setting up a potential crisis for renters at the end of the year, when the moratorium expires and unpaid rents and fees will be due. The Washington Post’s Kyle Swenson looks at the looming crisis in the Washington, D.C. area specifically, where an estimated 1.15 million to 1.64 million people may lose their homes. In order to stabilize the housing market, rent relief will be essential, but, Swenson writes, as the federal government did not provide for it, that means it will fall on state and local governments to fund, costing a lot of money at a time when many of their budgets are strapped.

Heather Boushey and Equitable Growth were recently featured in The New York Times. Katy Lederer writes about Boushey’s vision for economic policy that is grounded in evidence-based research and that reduces inequality. Our goal to ensure the economy works for everyone and we can all prosper is especially relevant during the coronavirus pandemic and recession, which, as seen above, is affecting already-vulnerable communities more than others. Lederer also summarizes Boushey’s two most recent books, Finding Time: The Economics of Work-Life Conflict and Unbound: How Inequality Constricts Our Economy and What We Can Do About It, drawing on their themes to explain how Boushey is part of a new generation of economists approaching age-old questions in innovative ways.

Friday figure

Figure is from Equitable Growth’s “Maintaining effective U.S. labor standards enforcement through the coronavirus recession” by Janice Fine, Daniel Galvin, Jenn Round, and Hana Shepherd.