Must reads: As we head into Father’s Day weekend, new evidence indicates that the stalled closing of the gender pay gap may be hurting working fathers as much as mothers. While working mothers sacrifice financially when they go home for their unpaid “second shift,” fathers sacrifice their family time because of the pressure to work long hours in order to win raises and promotions. In Texarkana, a town that straddles the Texas-Arkansas border, some residents now have healthcare under the Affordable Care Act and others do not--but in the daily attempt to get by, the New York Times asks, is moving a few blocks a viable option? And from Al Jazeera America, five stories of families who are above the official poverty line but too poor to be middle class provide a clear view of the difference between the federal poverty line and a self-sufficiency measure developed at the University of Washington (see chart below).
Source: Insight Center for Community Economic Development, insightcced.org, via Al Jazeera America.
Poor Today, Jail Tomorrow
American Express has commissioned “Spent”, a 40-minute documentary on the struggles of those without the funds to qualify for (or afford) traditional financial services. The New York Times quotes Daniel H. Schulman, group president for enterprise growth at American Express: “There is this saying, ‘It’s expensive to be poor,’ and usually the less money you have the more it costs to manage it.” In the Stanford Social Innovation Review, leaders of the GAFIS financial inclusion project in five developing countries hope their lessons may help similarly unbanked or under-banked Americans:
Government reports by the Federal Deposit Insurance Corporation [PDF] say that 8 percent of all US households do not have savings or checking accounts—that’s roughly 19 million Americans. Many workers cash paychecks, pay the rent, and put whatever they have left over in their pockets. Because they don’t save, they have little financial cushion if they face illnesses or other unexpected expenditures. Some give up minimum-wage jobs simply because they need their car to get to work, and they can’t afford repairs. This is particularly true in rural areas. The need for financial inclusion is clear, not just in the United States, but around the world.
Unfortunately, it may not just be expensive, but also criminal to be poor: Think Progress has a heartbreaking story this week of a mother who died in jail, having been locked up because of her children’s truancy fines.
Thousands of people have been jailed over truancy fines in the county since 2000, and two in three of those jailed have been women, according to the AP. But the criminalization of poverty is a much broader national phenomenon, with court costs and fees magnifying the statutory penalties for a variety of minor infractions such that the financial penalty snowballs into an unpayable debt for low-income people. The results, as catalogued in a year-long National Public Radio investigation, are staggering: a 19-year-old jailed for three days after catching a smallmouth bass during rock bass season, because he couldn’t pay the fine; a homeless man sentenced to a year in jail over $2,600 in penalties incurred by shoplifting a $2 can of beer; a recovering drug user sent to jail three times for being unable to make payments on nearly $10,000 in court costs.
In the ongoing conversation about whether inequality is just a fact of life or an extreme situation causing outsized poverty and hardship, the Economic Policy Institute adds a data point, illustrated with this 30-second video: "The CEO-to-worker compensation ratio was 20-to-1 in 1965... peaked at 383.4-to-1 in 2000, and was 295.9-to-1 in 2013, far higher than it was in the 1960s, 1970s, 1980s, or 1990s." They excluded Facebook from the data, as its skewed the ratio to over 510-to-1. In Seattle, that ratio may be about to shift, as the city council recently voted to gradually raise the minimum wage to $15—but only within city limits. You may have seen our post from earlier this week as economists weighed in on the potential pros and cons and wondered about the effects on urban versus suburban low-income workers. You may also enjoy this take by New Yorker cartoonist Mick Stevens:
E21 of the Manhattan Institute weighs in with a new issue brief [PDF] that seeks to “debunk some of the popular myths about inequality”. The report includes this chart on income growth by quintile over the past 60 years.
On the jobs front, noncompete agreements are being used in new and surprising places, writes Steven Greenhouse in the New York Times.
Noncompete clauses are now appearing in far-ranging fields beyond the worlds of technology, sales and corporations with tightly held secrets, where the curbs have traditionally been used. From event planners to chefs to investment fund managers to yoga instructors, employees are increasingly required to sign agreements that prohibit them from working for a company’s rivals.
As employees and employers both must think about their longer-term interests, there is disagreement about whether noncompetes help or hinder the economy. Supporters say noncompetes encourage businesses to invest in their workers, while critics such as venture capitalist Paul Maeder say they "are a dampener on innovation and economic development... They result in a lot of stillbirths of entrepreneurship — someone who wants to start a company, but can’t because of a noncompete.”
A recent Gallup survey on long-term unemployment says one in five Americans who have been unemployed for a year or more say they currently have or are being treated for depression, which "may be detrimental... to their ability to find good jobs." Take a look at this chart:
However, Nicholas Eberstadt of Real Clear Markets takes the cheerful view that joblessness has become a viable lifestyle choice for men where it wasn’t before:
The postwar phenomenon of "flight from work" has been most evident, and acute, among men. As women moved into paid positions over the past two generations, a growing share of men seem to have checked out of work altogether. This is even true for men of prime working ages-the 25-54 group.
For every such unemployed man today who is looking for work, there are another two who reportedly are not even looking. Note this is not a new situation to be attributed to the 2008 crash (or alternatively, to the Obama Administration). It is many decades in the making.
On another cheering note, Allister Heath at the Telegraph says not to be concerned about robots stealing all our jobs. The mechanization of our workforce merely follows with the rest of history, and the increase in productivity should come with increased wages and the emergence of new job types. However, on this side of the pond, many say that wages are not, in fact, rising with productivity and have not been for decades--including for example this recent report from the Economic Policy Institute.
Emergent Philanthropy Already Emerged
The big new conversation in philanthropy kicked off with a recent SSIR article by John Kania, Mark Kramer and Patty Russell proposing a shift from strategic to emergent philanthropy (you may have seen the overview on our blog). It was accompanied by responses from a collection of influencers, including Darren Walker of the Ford Foundation, many of whom agreed that strategic philanthropy is applied too often in a way that ignores the complexity of human behaviors and social challenges. Vodafone Foundation's Mark Speich summarized his agreement and skepticism thusly:
A complicated situation is fully sufficient to wreak havoc on the beauty of a pure strategy. Thus emergent strategy describes the day-to-day duties of a foundation manager who in a prudent way feels responsible for the success of the programs he is overseeing. There is nothing wrong with that. But there is no need to style such an approach as strategy, when in a Clausewitzian sense it seems to be mere adaptive tactics and sound judgment.
William Schambra at the Nonprofit Quarterly added to the exchange by imaginatively responding to the original article from the perspective of a small nonprofit director (with a lengthy response in the comments by Mark Kramer):
Wait…what? My program officer had assured me that logic models and theories of change and chains of cause and effect were the wave of the future! But here the journal she so strongly recommends is saying that they’re so yesterday—flawed, inadequate, Newtonian, outdated. So I’m committing my organization to an approach that the experts tell me is rigid, simplistic, useless. Of course, I could have told them that, based on my everyday experience.
The three original authors got the last word, answering their critics and inviting foundations to foster “co-creation among kindred spirits who seek to improve the outcomes of work in philanthropy”, and noting the need for flexibility in order for evolution to take place:
The dissonance between fluid strategies for complex problems and the rigid foundation structures of today is noted by several respondents, most extensively by Harvard University’s Christine Letts. Letts comments, “Adaptation takes time because of the necessity to plan, do, check, then act, evaluate, and start over. . . . [Foundations] need to be given flexible funding to respond with agility to changes in the world rather than rely on grantmaking timelines of the board. Many foundations simply need to have more staff in order to be learning and adjusting along with partners and grantees. The board needs to get as big a kick from learning as from launching initiatives.”