Tag Archives: economy

Financial Reforms Alone cannot Reduce Household Debts for Americans Facing Low Wages and Insecure Jobs

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Sara M. Bernardo
Sara M. Bernardo is in the Department of Public Policy and Public Affairs PhD program at the University of Massachusetts Boston. Her research focuses on the transitions within economic practices since the 1970's including social policy and the relationships between U.S. household debt, and financial and labor market developments.

From 1980 until the start of the financial crisis of 2007 and 2008, U.S. households accumulated debt at an unprecedented pace. Back in the 1960s and 1970s, the ratio of total debt to disposable income – a measure that reveals households’ ability to service their debts out of current income – hovered around 70 percent. Thereafter it rose, increasing to 90 percent by 1995 and peaking at 135 percent in 2007, before declining to 110 percent in 2013.

The financial meltdown brought new attention to the debt loads facing American households, in part because many analysts fingered defaults on subprime mortgages as a chief cause of the crisis. But policy responses have focused too narrowly on financial market reforms. Certainly it makes sense to curb the unfair and fraudulent lending practices that have proliferated over the past few decades, yet new financial regulation alone won’t make most working families more economically secure. For that, we must understand and address the intertwined social, political and economic trends that have created insecure labor markets and heightened debt risks. (more…)

Helping the Growing Ranks of Poor Immigrants Living in America’s Suburbs

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Els de Graauw
Els de Graauw is in the department of political science at Baruch College, City University of New York. She is the co-author of The Illegality Trap: The Politics of Immigration and the Lens of Illegality
Shannon Gleeson
Shannon Gleeson is in the department of labor relations, law and history at the School of Industrial and Labor Relations Cornell University. She is the author of Conflicting Commitments: The Politics of Enforcing Immigrant Worker Rights in San Jose and Houston.
Irene Bloemraad
Irene Bloemraad is in the department of sociology at the University of California, Berkeley. She is the co-author of Is There a Trade-Off between Multiculturalism and Socio-Political Integration? Policy Regimes and Immigrant Incorporation in Comparative Perspective.

Ask Americans to draw a mental map of who lives where, and they will likely say that immigrants and the poor live in large cities such as New York, Chicago, Los Angeles, and San Francisco, while middle-class whites make their homes in the surrounding suburbs. But these mental maps are often inaccurate. Today, more poor people live in suburbs than in central cities, and more than half of all metropolitan-area immigrants reside in suburbs. Immigration, job growth, and residential choices are making our nation’s suburbs more economically and culturally diverse. (more…)

$2-A-Day Poverty in the United States

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Luke Shaefer
Luke Shaefer is in the department of social work at the University of Michigan. He is the co-author of Unemployment Insurance and Low-Educated, Single, Working Mothers before and after Welfare Reform.
Kathryn Edin
Kathryn Edin is in the department of sociology at Johns Hopkins University. She is the co-author of Promises I Can Keep: Why Poor Women Put Motherhood Before Marriage.

Is it possible for people to live on $2 a day? This is a question most think applies to bygone centuries or impoverished Third World nations. But it turns out to matter for the 21st century United States as well. The U.S. welfare reform enacted in 1996 ended rights to cash assistance for poor families with children. Instead, welfare in America now gives cash assistance for a limited time only. Able-bodied people who apply for welfare must quickly try to find paid employment and participate in activities directly related to preparing for work. In the new system, extra benefits and tax credits go to low-income people with jobs. But what happens to those who cannot find employment – especially during prolonged periods of joblessness like the aftermath of the recent Great Recession?

To find out, we used data from the U.S. Census Bureau from 1996 to 2011 to study U.S. households with children getting by with a daily income of $2 or less, per person – adapting the poverty indicator used across the globe by the World Bank. (more…)

Why Jobless Americans Experience Deep and Prolonged Distress

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cristobal young
Cristobal Young is in the sociology department at Stanford University. He studies both ends of the financial spectrum in the US: the experiences of the unemployed and of the economic elite.

Many American workers have not yet regained their footing in the aftermath of the Great Recession, yet unemployment insurance has become politically controversial even though jobs are still scarce. Critics claim that America’s unemployment insurance program “subsidizes leisure” by “paying people not to work.” Some critics have lampooned extended unemployment benefits for supposedly turning “our social safety net into a hammock.” Congressional Republicans deferred to such criticisms in January, 2014, when they blocked the sort of renewal of long-term unemployment aid that has been traditional after previous severe economic downturns. As a result, roughly one million of the long-term unemployed saw their benefits abruptly cut off.

How much truth is there in these criticisms of unemployment benefits? By easing the financial harm of job loss, does unemployment insurance actually undermine people’s desire to find work? Does it make work less attractive or encourage the jobless to enjoy their added “leisure” time?

To address these questions, I used data from the Panel Study of Income Dynamics to track thousands of people over time as many experience events that change their life circumstances—not just job loss, but other disruptions such as changes in income, giving up their house, suffering a debilitating illness or injury, having a child, and watching children leave the family nest. What comes through loud and clear in my study is that job loss is a severely disruptive occurrence that proves psychologically devastating to many people who experience it. The effects can also persist long after formerly unemployed people find new jobs. (more…)

How the Decline of American Unions Has Boosted Corporate Profits and Reduced Worker Compensation

chart-profit-v-wage via MSNBC

This article is a Scholars Strategy Network Brief.

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Tali Kristal
Tali Kristal is in the department of sociology and anthropology at the University of Haifa. She studies pay-setting institutions, politics, and the causes of economic inequality in the United States, Israel, and other affluent countries.

Most research on rising economic inequality focuses on growing wage gaps between different groups of workers. But of course that is only part of the story. Just as important is the division of the national economic pie between profits going to capitalists and the “labor share” that includes all of the wages and benefits earned by workers. It’s a zero-sum game: the portion of the total national income that is not going to the workers goes to profits for capitalists.

In recent times, U.S. corporate profits have been going up at the expense of workers’ wages and fringe benefits. From 1979 through 2007, labor’s share of national income in the U.S. private sector decreased by six percentage points. What does that mean? Back in 1979, American workers claimed about 64% of national income, and if labor’s share had stayed at this level, the 120 million American workers employed in the private sector in 2007 would have received as a group an additional $600 billion in compensation. That is more than $5,000 extra per worker!

Where did that huge amount of money go instead of into workers’ wallets? It went to corporate profits, mostly benefiting very wealthy individuals. And things did not change with the recent economic recession. Although the big economic downturn of 2009 reduced corporate profits as a share of national income, the effect was short-lived. Since 2010, the golden age of swelling corporate profits has resumed. (more…)

How the Decline of Unions Has Increased Racial Inequality

A graphic created with U.S. Bureau of Labor statistics and sourced from The Daily Kos illustrates the wage advantages for union vs. non-union workers by race. Click for original article.

This article is a Scholars Strategy Network Brief.

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Kleykamp
Meredith Kleykamp is in the sociology department at the University of Maryland. She studies participation in the military as a unique labor market institution and the role of organized labor in ethno-racial and gender inequalities.
Jake Rosenfeld
Jake Rosenfeld is in the department of sociology at the University of Washington. His research focuses on economic inequality, political participation, and changes in the ways in which workers get paid.

By 1980, the wages earned by African-American women and white women came close to being equal, but since then the gap has nearly tripled. Meanwhile, average wages for African-American men stagnated, and wage inequalities between black and white men remained stubbornly high. In this same period, membership in U.S. labor unions has plummeted – from one in every three private sector workers enrolled in a union in the mid-1950s to just one in twenty today. So it is natural to ask whether such sharp union decline helps to explain racial economic gaps today.

Our research uses 40 years of nationally representative data and a technique sometimes called “counterfactual analysis” to discover what wage trends among blacks and whites, men and women, would have looked like if union membership in the private sector of the U.S. economy had not declined so sharply. The short answer is that union decline has made racial gaps worse, especially among women. (more…)

Why Now Is the Time To Build a Broad Citizen Movement for Green Energy Dividends

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This article is a Scholars Strategy Network Brief.

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Theda Skocpol
Theda Skocpol is the Victor S. Thomas Professor of Government and Sociology at Harvard University and is the Director of the Scholars Strategy Network. Her research focuses on health reform, social policy, and civic engagement.

Reelected to a second term, President Barack Obama is speaking with new force and clarity about the threat of climate change; and he is encouraging the Environmental Protection Agency to take bold steps to reduce dangerous greenhouse gas emissions. To make up for Congressional unwillingness to legislate, the Obama administration seems ready to do all it can through executive actions. Many professional environmentalists are delighted, and will rely on inside-the-beltway lobbying to urge regulators onward. That is fine for the short run, but it would be too bad if efforts to counter damage from global warming stopped at insider advocacy.

The new few years are exactly the right time to build a broad nationwide network of popularly rooted organizations committed to supporting carbon-capping as part of America’s transition to a green economy. To be prepared when the next opening arises in Congress, organizational efforts must reach far beyond the Beltway – to knit together alliances and inspire tens of millions of ordinary Americans to push for change. (more…)

Why Does Immigration Arouse Deep Feelings and Conflicts?

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This article is a Scholars Strategy Network Brief.

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Skrentny
John D. Skrentny is in the department of sociology at the University of California, San Diego, where he is also the director of the Center for Comparative Immigration Studies.

Immigration – and public policies to manage it – arouses strong emotions and fierce social and political battles, not just in the United States but in most other countries across the world. Why is this true? Each nation has its own issues that inspire or enrage, of course, but there are widespread, underlying patterns that can be identified and taken into consideration by reformers.

Reformers trying to facilitate immigration are often locked in battles with groups that want to place limits on international migration. Combatants start from very different world views – not only emphasizing different values but almost speaking different languages. To avoid destructive backlashes, reformers must understand and respect the values and perspectives of all groups involved in public debates, as we can see from a closer look at the United States. (more…)

The New Deal and the Origins of Our Time

The author's latest book, Fear Itself.

This article is a Scholars Strategy Network Brief.

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Ira Katznelson
Ira Katznelson is in the department of political science at Columbia University and is the president of the Social Science Research Council. He is the author of Fear Itself: The New Deal and the Origins of Our Time.

“The only thing we have to fear is fear itself,” said incoming President Franklin Delano Roosevelt, as he pledged in March 1933 to lead the U.S. federal government in “action—and action now” to meet crises of global upheaval and economic collapse. Subsequent New Deal reforms have been lionized by analysts. But what were the pervasive fears to which Roosevelt pointed, the fears that shaped and informed transformations in U.S. policy and politics in the mid-twentieth century?

Just before his death in 2007, Arthur Schlesinger, Jr., noted that his magisterial Age of Roosevelt had been “conditioned by the passions of my era” and observed that “when new urgencies arise in our own times and lives, the historian’s spotlight shifts, probing …into the shadows, throwing into sharp relief things that were always there but that earlier historians had carelessly excised from collective memory.” Taking this insight to heart, my new book Fear Itself reexamines the New Deal from a perspective informed by the urgencies of the early twenty-first century—with its economic volatility, global religious zealotry, and military insecurity.  (more…)

Americans Care about Inequality when It Limits Opportunity

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This article is a Scholars Strategy Network Brief.

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Leslie McCall
Leslie McCall is in the departments of sociology and political science at Northwestern University, where she is also a faculty fellow at the Institute for Policy Research. She is the author of The Undeserving Rich: American Beliefs about Inequality, Opportunity, and Redistribution.

Do Americans care that income gaps between the rich and everyone else are growing by leaps and bounds? When citizens do care, what do they want done about it? Across the political spectrum, debates about these questions have raged with new force since the Occupy Wall Street movement took to the streets in 2011 and the 2012 elections highlighted the issue. To read daily coverage, though, is to hear little more than superficial or partisan assertions. We can do better by tracking public attitudes over many years, which show us both that Americans care about inequality and are very much aware of its negative consequences for all but a sliver at the top. (more…)