Posts Tagged ‘blacks’

unions

When I ask my students that question, they don’t really have an answer. That’s because, like much of the rest of the U.S. population, they don’t have much experience with unions, either directly or indirectly—not when the union membership rate has fallen to below 11 percent nationwide and is only 6.4 percent in the private sector.

And if you pose that question to neoclassical economists, the response is: labor unions cause unemployment, by setting a wage rate that exceeds the equilibrium price for labor. According to the neoclassical story,

while union workers (“insiders”) may benefit, unemployed non-union workers (“outsiders”) lose out. So, their overall conclusion is, unions ultimately hurt workers and cause increased inequality. Unions should therefore be discouraged.

For my students who have taken a course in mainstream economics, that’s pretty much the only answer that will be offered to them.*

But what if we look back to the heyday of unions—to the period that begins during the first Great Depression (when the Wagner Act was passed and unionization rates once again began to rise) and extends through the 1950s?

According to a new study by Brantly Callaway and William J. Collins, who utilize a novel dataset compiled from archival records of a survey of male workers in five non-Southern cities conducted in 1951, unions played an important role in reducing inequality, especially at the bottom of the wage scale.

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Thus, for example, at the 10th percentile, union workers earned 20.3 log points more than comparable non-union workers—while the difference at the median was smaller and, at the 80th, the difference turns negative.

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For less-educated workers (those with less than a high-school education), the premium at the bottom was similar (at 19.1 log points) but the advantage persisted across all percentiles. And the union wage premium was relatively large, and it remained so, throughout the Black income distribution. The clear indication is that the emergence of industrial unions after 1935, which sought to unionize production workers along industry rather than craft lines, opened more better-paying union job opportunities for both less-educated and Black workers.

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Callaway and Collins also conduct some counterfactual estimations concerning wage inequality, by looking at what would happen if union workers had been paid according to the non-union wage schedule. Their Table 4 (Panel A), shows that in terms of all measures—overall inequality (the difference between the 80th percentile and the 10th percentile), lower-tail inequality (the difference between the 50th percentile and the 10th percentile), and upper-tail inequality (the difference between the 80th percentile and 50th percentile)—inequality is significantly higher in the counterfactual “no union” scenario than in reality. In other words, the overall wage distribution was considerably narrower in 1950 than it would have been if union members had been paid like non-union members with similar characteristics.

As I see it, there are two lessons that can be drawn from the Callaway and Collins study. First, in terms of U.S. history, unions played a significant role in mitigating the effects of competition among workers, both raising workers’ wages and reducing inequality among workers. Second, with respect to economic theory, their research shows that simple supply-and-demand stories (which neoclassical economists use to attempt to explain inequality in terms of skills and levels of education) are profoundly misleading precisely because they leave out institutions.

One of the most important institutions in the postwar period in the United States, when economic inequality was much lower than today, were labor unions.

 

*If students were exposed to something other than neoclassical economics, they’d learn that unions do many other things, including helping non-union workers, through: (1) the threat of unionization (nonunion employers worried about a possible unionization drive may match union pay scales to reduce the demand for organization), (2) the ripple effect (like minimum-wage increases, union wage rates for production workers can lead to increases in wages for those above them, e.g., their managers), and (3) the moral economy (unions help institute norms of fairness regarding pay, benefits, and worker treatment that can extend beyond the unionized core of the workforce). They might also learn that, historically and by examining the experience in other countries, unions have often defended and promoted the larger interests of workers—in their enterprises (by demanding a say in decisions about such things as safety and jobs), nationally (by contributing time and money to political parties and campaigns), and internationally (by cooperating with and assisting unionization efforts in other countries).

wealth

One of the most pernicious myths in the United States is that higher education successfully levels the playing field across students with different backgrounds and therefore reduces wealth inequality.

The reality is quite different—for the population as a whole and, especially, for racial and ethnic minorities.

As is clear from the chart above, the share of wealth owned by the top 1 percent has risen dramatically since the mid-1970s, rising from 22.9 percent in 1976 to 38.6 percent in 2014. Meanwhile, the share owned by the bottom 90 percent has declined, falling from 34.2 percent to 27 percent. And that of the bottom 50 percent? It has remained virtually unchanged at a negligible amount, falling from 0.9 percent to zero.

During that same period, according to the U.S. Census Bureau (pdf), the proportion of Americans aged 25 to 29 with a bachelor’s degree or higher rose from 24 percent to 36 percent. (For the entire population 25 and older, the percentage with that level of education rose from 15 to 33.)

So, no, higher education has not leveled the playing field or reduced wealth inequality. In fact, it seems, quite the opposite appears to be the case.

And that’s true, too, for racial and ethnic disparities in wealth. As William R. Emmons and Lowell R. Ricketts (pdf) of the Federal Reserve Bank of St. Louis have concluded,

Despite generations of generally rising college-graduation rates, higher education’s promise of significantly reducing income and wealth disparities across all races and ethnicities remains largely unfulfilled. . .rather than promoting economic equality across all races and ethnicities, higher education unintentionally has become an engine for growing disparities.

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Thus, for example, median Hispanic and black wealth levels decline relative to similarly educated whites as education increases until the very top. Moreover, only about 7 percent of black families and 5 percent of Hispanic families have postgraduate degrees, and wealth disparities remain large even there.

Darrick Hamilton and William A. Darity, Jr. (pdf), who participated in the same symposium, go even further. According to them, the United States has a fundamental problem in discussing wealth disparities according to race and ethnicity:

Much of the framing around wealth disparity, including the use of alternative financial service products, focuses on the poor financial choices and decisionmaking on the part of largely Black, Latino, and poor borrowers, which is often tied to a culture of poverty thesis regarding an undervaluing and low acquisition of education.

Thus, while they agree that a college degree is positively associated with wealth within racial and ethnic groups, it is still the case that it does little to address the massive wealth gap across such groups.

And yet the myth persists. American elites and policymakers still to choose to emphasize the economic returns to education as the panacea to address socially established wealth disparities and structural barriers of racial and ethnic economic inclusion.

The question is, why?

According to Hamilton and Darity, such a view

follows from a neoliberal perspective, where the free market, as long as individual agents are properly incentivized, is supposed to be the solution to all our problems, economic or otherwise. The transcendence of Barack Obama becomes the ideal symbolism and spokesperson of this political perspective. His ascendency becomes an allegory of hard work, merit, efficiency, social mobility, freedom and fairness, individual agency, and personal responsibility. The neoliberal ideology is not limited to race. It more generally places the onus on individual actions, and more broadly leads to deficiency narratives for low achievement, but this is especially the case when considering race and other stigmatized workers. Perhaps the greatest rhetorical victory of this paradigm is convincing the masses that implicit in unfettered markets is the “American Dream”—the hope that, even if your lot in life is subpar, with patience and individual hard work, you can turn your proverbial “rags into riches.”

And so the myth of college and the American Dream is perpetuated, while the unequal distribution of wealth—across the entire population, and especially with respect to ethnic and racial minorities—which has been growing for decades, continues unabated.

mortality

We don’t need Louisiana Detective Rodie Sanchez coming out of retirement to solve the crime against the members of the working-class currently being committed in the United States.

We already know many of the details of the crime. We also know the identities of both the victims and the serial killer. The only real mystery is, what’s the country going to do about it?

The investigation itself is being painstakingly carried out by Anne Case and Agnus Deaton (pdf). They show, with abundant statistics, that mortality trends in the United States run counter to those in other rich countries, where they have been steadily declining for decades.

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The headlines, of course, have been about one group—middle-age white non-Hispanics with a high-school degree or less—whose mortality rates, especially those attributed to “deaths of despair” (drug overdoses, suicides, and alcohol-related liver mortality), increased from 1998 through 2015.* The focus in on that group for a number of reasons, including the fact that increasing rates for them (as against blacks and nonwhite Hispanics) have all but erased the racial gap in mortality among non-college-educated Americans—and, of course, because of the prominence of “white working-class” voters in explanations of Donald Trump’s electoral victory.

But we also need to go beyond the headlines and understand that, while rates for different ethnic and racial groups in the United States have moved in opposite directions in recent decades, the rates for working-class blacks and Hispanics are still very high—and, in recent years (as can be seen, in the case of blacks, in the chart at the top of the post), they’ve also begun to rise.

That’s the real crime story. All three groups within the American working-class—whites, blacks, and Hispanics—are being killed at abnormally high rates compared to the populations of other rich countries.

And the serial killer? Case and Deaton have a much more difficult time working in this area. That’s because they follow the headlines and emphasize the differences in the long-term trend rates and lose sight of the larger picture. So, they discount the role played by income inequality and, instead, endorse Charles Murray’s story about the decline in traditional American virtues among working-class whites (which I wrote about back in 2012).

The fact is, the labor-market factors identified by Case and Deaton—which have negatively affected whites, blacks, and Hispanics with a high-school degree or less—have become more severe as inequality has soared and the social safety net ripped apart in the United States from the early 1970s onward. The upward trend for whites and the narrowing of the racial gap, as significant as they are, shouldn’t hide from view the more general problem (as I wrote about in 2015) of a large and growing gap between the life expectancies (for both men and women) of those at the top and bottom of the distribution of income in the United States.

American TV is currently captivating viewers with stories of people accused of committing horrific acts. It’s time, however, to focus on the story of an economic system that has created its own killing fields.

 

*Mortality increases for whites in midlife have also been paralleled by morbidity increases, including deteriorations in self-reported physical and mental health, and rising reports of chronic pain.

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race-wealth-income

According to a new study by the St. Louis Federal Reserve Bank (pdf), higher education does not protect the wealth of all racial and ethnic groups equally.

Compared to their less-educated counterparts, typical white and Asian families with four-year college degrees withstood the recent recession much better and have accumulated much more wealth over the longer term. Hispanic and black families headed by someone with a four-year college degree, on the other hand, typically fared significantly worse than Hispanic and black families without college degrees.

In other words, while higher education leads to higher income and wealth compared to non-college graduates for all ethnic and racial groups, changes in wealth and income during the Second Great Depression are much more uneven.

Thus, in terms of wealth, white and Asian college-headed families generally fared much better than their less-educated counterparts, while the typical Hispanic and black college-headed family lost much more wealth than its less-educated counterpart. When it comes to changes in real income, the experience of whites and Hispanics runs counter to their respective wealth changes; for blacks, however, the results are similar: black college-headed families lost much more wealth and income than non-college families.

The authors of the study thus conclude,

Higher education alone cannot level the playing field. Evidence presented here suggests that college degrees alone do not provide short-term wealth protection, nor do they guarantee long-term wealth accumulation.