Weekend reading: Vision 2020 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
Emblematic of Equitable Growth’s mission to promote ways to encourage strong, stable, and broad-based economic growth is our Vision 2020 conference today. Coming together at our event are leading policymakers, academics, journalists, and thought leaders to discuss and advance specific policies for the next Congress and administration to consider. Speakers include Federal Trade Commissioner Rohit Chopra, International President of the Service Employees International Union Mary Kay Henry, Equitable Growth President and CEO Heather Boushey, and many more, covering topics ranging from boosting labor power to busting monopolies, from addressing structural racism to incorporating climate change into economics. The event also introduces our Equitable Growth 2020 project, which will feature around 20 essays to be published in January 2020, cataloguing these and other policy ideas. Read more here about today’s sessions and speakers.
How does exposure to strikes affect the way workers see striking and labor organizing more broadly? A new Equitable Growth working paper suggests that firsthand exposure to strikes and those participating in them increases public support for both the strikes and the workers. Looking at schools where teachers had walked out of classrooms, the researchers found that support for the teachers and knowledge of their demands among parents of students in those schools was quite high—and parental support for future strikes, especially those regarding school funding, was equally high. In a column covering the research’s findings, Kate Bahn and co-author of the original study Alexander Hertel-Fernandez write that “the most striking finding was that parents exposed to the teacher walkouts also became more interested in taking labor action such as strikes at their own jobs.”
Bahn also testified before the House Judiciary Committee this week in a hearing on “Antitrust and Economic Opportunity: Competition in Labor Markets.” In her testimony, she focused on monopsony—when a labor market lacks competition among employers when hiring workers—and its effect on the U.S. labor market and on stagnating wages as well as its contribution to U.S. economic inequality and gender wage gaps. She concluded with a summary of why understanding monopsony and its powerful effects is such a vital part of advancing policies that will grow the economy for everyone.
Equitable Growth announced two exciting new hires this week: soon-to-be Director of Macroeconomic Policy Claudia Sahm, currently a section chief at the Federal Reserve Board; and Mehrsa Baradaran, professor at University of California, Irvine School of Law, who will join our Board of Directors. We are looking forward to welcoming both Sahm and Baradaran to our team and learning from their expertise and valuable experience.
Links from around the web
What does the walkability of your neighborhood growing up have to do with your future economic outcomes? Apparently quite a lot, according to a new study covered by Richard Florida for CityLab. The study finds that even considering other factors, the more walkable a child’s neighborhood, the higher their earnings will be in adult life. The study uses Walk Score, an economic mobility measure based on data developed by Harvard University economist Raj Chetty and his research team, to compare walkability and its effects on school quality, income inequality, race, social capital, and the share of single-parent families across more than 380 commuting zones in the United States. The study’s co-authors write that “the more walkable an area is … the more likely Americans whose parents were in the lowest income quintile are to have reached the highest income quintile by their 30s.”
After the Great Depression, political upheaval and an intellectual revolution changed the way we thought about economic policy solutions in order to boost employment and productivity and grow the economy. The world economy today is “stuck in a low-growth trap, argues Mervyn King for Bloomberg “This time around, we’ve got the political turmoil but no comparable questioning of the ideas underpinning economic policy. This needs to change,” The economy these days is different than it used to be, King continues, and as such, traditional economic models and policies must be adapted to reflect the reality of the 21st century—before the next financial crisis hits.
The United States, once considered a free-market haven where market competition drove down the cost of everything from internet service to cellphone plans to plane tickets, is now dominated by market concentration. Many services “are now much cheaper in Europe and Asia than in the United States, and the price differences are staggering,” writes Thomas Philippon for The Atlantic. “In 1999, the United States had free and competitive markets in many industries that, in Europe, were dominated by oligopolies,” he writes. “Today the opposite is true.” Philippon attributes this change to two phenomena: first, that other countries were inspired by the United States and caught up, and second, that the United States became complacent about antitrust enforcement and fell behind. This process has contributed to the erosion of the middle class and the expansion of inequality in the United States.
Looking solely at the unemployment rate and Gross Domestic Product in the United States, you would think that the economy is booming for everyone. But, writes Patricia Cohen for The New York Times, these statistics largely ignore the many Americans who can’t find a job that provides them with a decent living. Despite the impressive labor market gains over the past few years, there are many Americans whose realities are not reflected in low unemployment rates and who continue to be left behind by the economy recovery. “One in four workers say they have unpredictable work schedules.” Cohen writes. “One in five adults who are employed say they want to work more hours. Annual wage growth has struggled to reach 3 percent. And nearly 40 percent of Americans, a Federal Reserve report found, are in such a financially precarious state that they say they would have trouble finding $400 for an unexpected expense like a car repair or a medical bill.”
Figure is from Equitable Growth’s “Testimony by Heather Boushey before the Joint Economic Committee” and part of her presentation at our Vision 2020 event today in Washington, DC.