Getting Back on Offense: Diagnoses and Prescriptions

What’s Gone Wrong and What Social Workers (and other sane people) Can Do About It

Jared Bernstein5/9/2013

Diagnosis: What Are the Biggest Problems We Face?• Disconnects: Growth, Productivity, Jobs, Wages, Poverty Reduction• WHY? • Inequality: What are it’s causes and what does it cause (this latter question

essential and underappreciated)?

• Relationship between inequality of income and that of opportunity• Inadequate job creation: quantity and quality• Disinvestment: What’s NDD and why does it matter?

Productivity and Real Hourly Compensation of Middle-Wage Workers

Source: Larry Mishel, Economic Policy Institute

Causes of Inequality• increased globalization, particularly import penetration from low-wage producers;• diminished unionization, as unions are associated with a more equitable distribution

of earnings;• higher unemployment, which like less unionization, reduces the bargaining power of

many in the workforce;• ongoing technological change, which increases the relative demand for more highly

educated workers—HAS “LABOR-SAVING” TECH ACCELERATED?• the decline in the real value of the minimum wage;• regressive changes in the tax code, particularly tax cuts to high marginal income tax

rates and rates on non-labor income; • financial deregulation and “innovation” and the increased “financialization” of

industry: the increase of the financial sector as a share of economic activity and the associated growth of income sources, such as capital gains, that are concentrated at the top of the income scale.

5

Enrichment Expenditures: music and art lessons, books, sports, tutoring.

Source: Whither Opportunity? Russell Sage

6

Dif=0.45

Dif=0.31

7

Sources: BLS, BEA; employment is for full-time equivalents.

Isn’t There Anything Good Going On?• Of course—macro-economic resilience. • More germane to social workers—safety net has performed far better

than most realize.• Recognition (by some) that something’s gotta give• Money in politics; disproportionate influence of wealthy; feedback

from wealth concentration to undue influence• Frustration with dysfunctional DC, gridlock, filibuster, Benghazi, repeal

of ACA…• Changing demographics (CIR and 27%)

Source: CBO

How Do We Get Out of this Mess?• Go on offense—safety net works and is needed; markets fail!• Yes, raise the minimum, but also the median• Full employment!• It takes a movement…ala immigration reform• Packer: “An idea of the future that’s genuinely shared by

large numbers of people…”• Economic rights frame?• OWS…Opportunity/Accountability for All!