Let's start with a portion of this cartoon from journalist Andy Warner, who attempts to illustrate how deep America’s economic divide is:
The Nation Magazine's Richard Kreithner argues in the Boston Globe that the U.S. Constitution helped entrench inequality:
The main purpose of the new Constitution, then, was to preserve inequalities among individuals and the inequalities in the distribution of property among them. “Those who hold and those who are without property have ever formed distinct interests in society,” Madison observes. Ever had it been, and ever under the Constitution would it be. The division of wealth and political power, between the haves and the have-nots, between (as the new Speaker of the House of Representatives Paul Ryan has put it) the makers and the takers, was to be carefully maintained. For Madison, in Federalist No. 10, the question was how to do so while at least nominally “preserv[ing] the spirit and the form of popular government.”
For starters, Madison suggested, put some distance between the people and the levers of actual power. Such representation would “refine and enlarge the public views by passing them through the medium of a chosen body of citizens, whose wisdom may best discern the true interest of their country and whose patriotism and love of justice will be least likely to sacrifice it to temporary or partial considerations.”
The implication is clear: Settle disputes between the people and the elite by making the elite the representatives of the people.
Does the American Dream depend on your zip code? TalkPoverty editor Greg Kaufman says yes, it does:
[A]s a new Center for American Progress report indicates, is that now—due to a lack of affordable housing and enduring patterns of residential segregation—the zip code where people live is largely determined by income, race, and ethnicity.
The report’s co-authors suggest that if we want to change this unacceptable status quo we need to work on two fronts: reinvest in impoverished neighborhoods so that residents have access to high-quality housing, jobs, good schools, transportation, and other basics; and ensure that families with low-incomes have access to affordable housing in neighborhoods that already offer residents these resources.
For low-income renters, the affordable housing situation is now a crisis. As Housing and Urban Development Secretary Julián Castro said at the release of the report: “This issue of an affordability crisis on the rental market is real, in big cities and in small towns.”...
When low-income families are able to move to neighborhoods that foster mobility, the benefits are clear: the children perform much better academically than their peers in high-poverty neighborhoods; their average annual earnings as adults increase by 31 percent; they are more likely to attend college and less likely to become single parents. There is also marked improvement in physical and mental health, particularly for adults and girls.
Meanwhile, a new report from Pew looks at parenting and what inequality has to do with it:
A new Pew Research Center survey conducted Sept. 15-Oct. 13, 2015, among 1,807 U.S. parents with children younger than 18 finds that for lower-income parents, financial instability can limit their children’s access to a safe environment and to the kinds of enrichment activities that affluent parents may take for granted...
Along with more negative ratings of their neighborhoods, lower-income parents are more likely than those with higher incomes to express concerns about their children being victims of violence. At least half of parents with family incomes less than $30,000 say they worry that their child or children might be kidnapped (59%) or get beat up or attacked (55%), shares that are at least 15 percentage points higher than among parents with incomes above $75,000. And about half (47%) of these lower-income parents worry that their children might be shot at some point, more than double the share among higher-income parents.
And what about poverty impeding development? We have Greg Jaffe over at CityLab on hand to discuss new research that finds in the United States an impoverished environment trumps genetics:
[A] strong new analysis published in the journal Psychological Science suggests that the role of genetics in intelligence indeed varies with socioeconomic status—at least in the United States. The data reveal no such pattern in other parts of the developed world, a finding the researchers attribute to “more uniform access” to social programs such as strong education and health care.“The differences observed across nations might be explained by weaker social safety nets in the U.S. compared to Western Europe and Australia,” the psychologist Elliot Tucker-Drob of the University of Texas at Austin, the paper’s lead author, tells CityLab via email. “While this study did not investigate specific policies or services that might explain the differences … I think that it is fair to say that the causes of the difference are likely to be manifold.”...
In the American samples, Tucker-Drob and Bates found a significant “gene-by-socioeconomic status” effect—meaning the genetic influence on IQ scores and achievement varied with social class. The chart below shows that genetic variance in intelligence was low for those below the mean socioeconomic status, and steadily rose for those above it. At two standard deviations above the mean, genetics explained about 61 percent of the intelligence outcomes. The role of the environment on intelligence, meanwhile, also tended to decline as social status improved, though that relationship was less statistically significant.
In Politico, Kenneth Vogel examines the Koch Brothers' "war on poverty":
The political operation created by the billionaire conservative mega-donors Charles and David Koch is quietly investing millions of dollars in programs to win over an unlikely demographic target for their brand of small-government conservatism ― poor people.
The outreach includes everything from turkey giveaways, GED training and English-language instruction for Hispanic immigrants to community holiday meals and healthy living classes for predominantly African American groups to vocational training and couponing classes for the under-employed. The strategy, according to sources familiar with it and documents reviewed by POLITICO, calls for presenting a more compassionate side of the brothers’ politics to new audiences, while fighting the perception that their groups are merely fronts for rich Republicans seeking to game the political process for personal gain.
The efforts include a healthy dose of proselytizing about free enterprise and how it can do more than government to lift people out of poverty. “We want people to know that they can earn their own success. They don’t need the government to give it to them,” Koch network official Jennifer Stefano told activists and donors during an August rally in Columbus, Ohio.
So should we rejoice that an oil tycoon is sharing his wealth with his 1400 employees by giving them each a $100,000 bonus? Check it in Forbes.com:
It’s the continuation of a tradition at Hilcorp, owned by billionaire Jeffery Hildebrand. Five years ago, when Hilcorp achieved its goal of doubling its oil and gas production, Hildebrand gave every employee the choice of $35,000 cash or $50,000 towards a new car. This year, despite the downturn, Hilcorp doubled its output again, to more than 150,000 barrels per day. So Hildebrand doubled the bonus — to $100,000...
Hilcorp is the largest privately held oil and gas producer in the country. Hildebrand, believed to be the sole owner, doesn’t hand out these bonuses to get attention, but to motivate. Unlike the bosses of publicly traded companies, Hildebrand can’t divvy out stock options. But he is known for generous salaries and benefits and a workplace perennially voted as one of the best in the industry.
In the Wall Street Journal, Melanie Trottman looks at the fight over raising the minimum wage and whether it would reduce use of welfare benefits:
The study, partly funded by the right-leaning Employment Policies Institute, contends a $15 minimum wage is poorly targeted to recipients of these programs. Among those who would be affected by a $15 minimum wage, just 12% are SNAP recipients and just 10% are Medicaid recipients.
It’s a less-explored part of a years-old debate between economists who have researched the hot-button topic of minimum wage and its effects on the U.S. economy...
Mr. Sabia said higher minimum wages did help some workers get off the welfare rolls but others stayed stuck because of adverse employment effects such as a reduction in jobs or hours worked. While each 10% minimum wage increase resulted in reduced receipt of SNAP and WIC, for example, the amounts weren’t statistically significant and at the same time the receipt of school-nutrition assistance and housing assistance increased.
“Minimum-wage increases redistribute the income of low-skilled workers, helping some, hurting others,” Mr. Sabia said, and added that there’s scant evidence minimum-wage boosts reduce welfare caseloads or public spending on needs-based public programs. He said expanding the earned-income tax credit program would be a “far better” tool.
You may want to think twice about buying shrimp for your holiday gathering because there is slavery in the shrimp supply chain reports the Chicago Tribune.
In Linkedin, Aspen Institute's Judy Samuelson says inequality is worthy of a business response:
It is hard to imagine business reverting to a U.S. 1950s-style social contract, given today’s global and hyper-competitive markets, and technology and process improvements that allow for fewer employees. So how can firms and business leaders contribute to shared prosperity and long-term growth?...
Our Faculty Pioneer Awards recognize teachers who prompt students to think expansively about their role as managers — not only about how they drive corporate performance, but also how they influence the way the economy works...Business decisions are cast in a new light when connected with the imperative to build a more inclusive economy.
In Medium, Mark Warner and Mitch Daniels discuss the Aspen Institute's future of work initiative:
First, government must catch up with the times. Policymakers don’t even know how many people work in the on-demand economy — the last government survey of the contingent workforce took place a decade ago. This initiative will survey participants in the on-demand economy to measure economic impact and attitudes among workers and consumers. Making this new economy work better for more people starts with credible data.
Second, we must seize the opportunities and confront the challenges of the on-demand economy — and of the contingent workforce more generally. This initiative will examine several innovative approaches such as hour banks for pooled benefits and online benefits marketplaces that follow workers wherever they may work.
Finally, a new social contract for a changing workplace also depends on employers making longer-term investments in their workforce. Currently, our system incentivizes spending on plant and equipment rather than promoting investments that strengthen a company’s workforce. This initiative will explore a range of potential measures and incentives for employers to invest in pay, training, and benefits, to provide additional economic security for workers while reducing employer costs for recruiting and retaining a quality workforce. To ensure a prosperous future for themselves and their workers, business leaders should remember an old-fashioned lesson: take the long view.
The Economic Policy Institute's Lawrence Mishel argues that the estimates of the freelance income taking over may be exaggerated:
Based on current trends there is no reason to believe that in the near or intermediate future a large and growing share of people will obtain their main source of income from freelancing or doing gig work...
[A]ny assessment that self-employment has been stable does not speak to whether employee misclassification as independent contractors has risen. Blue-collar construction workers on major federal public housing projects who are inappropriately and illegally treated as independent contractors—as recently documented in the award-winning McClatchy series—probably don’t respond to BLS surveys by answering that they are self-employed. Nor should an analysis of self-employment minimize the growth in overall nonstandard work and the fissuring of the workplace, including the spread of subcontracting to shield major firms from liability for shady employment practices and from the demands of low-wage workers.
In Forbes, Devin Thorpe interviews Omidyar's Paula Goldman and discusses whether impact investing is at a tipping point:
Can we avoid a social impact bond bubble? The Bridgespan Group's Paul Carttar offers some advice:
[I]n the U.S. and worldwide, there is a rush to do deals, with the total number increasing from just a couple in 2011 to more than 50 today. As the numbers have grown, so has the range of issue areas on which these SIB's are focused, from the early concentration on reducing recidivism rates among ex-offenders to subjects such as early childhood education, homelessness, teen pregnancy and maternal health, workforce development, asthma, and foster care.
What can be done to maximize the likelihood that SIBs deliver compelling, documented value, thereby avoiding the creation of a bubble?
I believe the answer begins with rigorously focusing all SIBs on what appears to be their "highest and best use"—creating the optimal conditions for governments to test the effectiveness of discrete, preventive programs or services with the potential to generate significant, direct budgetary savings to the public.