In this issue, old is new in trade policy, jobs men don't like, Radiolab talks poverty, AEI proposes a safety net overhaul, and feature on impact investors ring in 2017.
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The new Trump administration is eyeing trade policy as way to improve employment conditions but some critics worry that it might run counter to 21st century trends. For example, last year, Fortune's Chris Matthews reported that the United States was well on it is way to overtaking China in manufacturing by 2020. China, he says, has been shedding manufacturing jobs for the last two decades. "The decline of manufacturing employment is a natural economic process that many industries, like agriculture, have gone through in past eras. As sectors become better at what they do, they often require fewer people to get the work done."
Over at Business Insider, Linette Lopez argues that, while it is fair to argue that "American and multinational corporations have sold out their employees and customers while worshipping at the altar of their shareholders," going backwards is not the answer:
"We envision a more Germany-style economy, where 20 percent of our workforce is in manufacturing," [Trump adviser Peter] Navarro told CNBC in a recent interview. "And we're not talking about banging tin in the back room."
Again, yes the US economy is the envy of the world for its high-tech sector and services sectors, but that isn't to say that we don't have a manufacturing sector at all. In 2014, the International Monetary Fund calculated that if the US manufacturing sector stood alone, it would be the eighth-largest economy in the world. Germany's entire economy comes in fourth.
"Germany has the greatest 19th-century economy in the world," Lee Branstetter, an economics professor at Carnegie Mellon and trade expert with the Peterson Institute of International Economics, told Business Insider. "The best Germany can do is make carburetors, they make wheel bearings and fuel-injections systems. It's really strange that the top economist in the administration wants us to be like them."
That's where this zero-sum game comes in. The Trump administration wants to dedicate more resources to jobs that are being gobbled up by robots more and more by the day, even in Germany and China. This worries a bunch of economists who believe we should play to our strengths.
The Trump administration also has signaled it will renegotiate the much maligned North American Free Trade Agreement (NAFTA). At CNN, Stephen Collinson says messing with multi-lateral trade deals such as NAFTA could be tricky:
The President's belief that trade pacts are responsible for the flight of many US jobs overseas represents a political risk, since higher tariffs and trade disputes that may result could make foreign goods more expensive for consumers or slow economic growth.
Disrupting NAFTA may also be dangerous: Trade between the US, Canada and Mexico hit $1.1 trillion in 2016, according to a Wharton Business School report. Supporters of the pact say it supports millions of jobs in the United States that could be at risk if it falters.
Trump's decision to reopen NAFTA therefore represents another significant gamble. For all his claims to being one of the world's great deal makers, the leaders of Canada and Mexico will be under intense political pressure to seal a better deal for their own people in new NAFTA negotiations -- and are unlikely to simply roll over and allow Trump to win all the spoils.
You might be interested in this Atlantic article on whether NAFTA is over. Meanwhile, another issue driving the manufacturing debate is that where the job market has been most robust in the United States are in sectors traditionally dominated by women, reports the New York Times' Claire Cain Miller:
Women have always entered male-dominated fields — usually well-paid, professional ones — more than men enter female-dominated ones. There are now many female lawyers, but male nurses are still rare. One reason is that jobs done by women, especially caregiving jobs, have always had lower pay and lower status. Yet when men, especially white men, enter female-dominated fields, they are paid more and promoted faster than women, a phenomenon known as the glass escalator.
Much of men’s resistance to pink-collar jobs is tied up in the culture of masculinity, say people who study the issue. Women are assumed to be empathetic and caring; men are supposed to be strong, tough and able to support a family.
“Traditional masculinity is standing in the way of working-class men’s employment, and I think it’s a problem,” said Andrew Cherlin, a sociologist and public policy professor at Johns Hopkins and author of “Labor’s Love Lost: The Rise and Fall of the Working-Class Family in America.”
As an example, in The Hill, Robert Espinoza discusses the home health care sector's increasing shortage of workers:
For home care workers and nursing assistants—the “direct care” workforce that provides the majority of hands-on, paid long-term care in this country—this shortage can be explained by low wages, meager benefits, and the marginal career advancement opportunities that are characteristic of this difficult and unsafe occupation. Workers simply don’t want these jobs. Similarly, many long-term care providers—their employers—cite low, unappealing wages as the primary impediment to recruiting direct care workers, pointing to a general lack of Medicaid funding to cover these costs...We should be concerned—and we should imagine policy solutions that span the array of issues spurring this workforce shortage. For starters, we need policy reforms that expand and stabilize the direct care workforce, including higher wages, overtime protections, better health insurance, and increased access to benefits, from family leave to the EITC, and more. We need federal training standards and competency requirements for home care workers, as well as initiatives that improve training and advancement of personal care aides.
The American Enterprise Institute has primer on overhauling the safety net for "low-income work-able families" by Angela Rachidi who notes that the majority of spending in via Medicaid and for seniors who have exhausted other means. The report notes that roughly $150 billion is in cash transfers or food assistance to families and proposes some reforms:
Reforms are needed in TANF to ensure that the most vulnerable do not fall through the cracks and that states are held accountable for achieving program goals. More focus is needed in SNAP on healthy eating and encouraging rather than discouraging work. And the EITC needs reform to decrease improper payments, offer periodic payments to beneficiaries, and ensure that childless workers receive the same employment-related benefits from the EITC as families. If policymakers and program administrators focus on these issues in coming years, the safety net for low-income families will come closer to fulfilling the twin goals of alleviating material hardship and promoting self- sufficiency through work.
In the Pacific Standard, Dwyer Gunn looks are a proposed executive order that would bar immigrants from participating in safety net programs.
Meanwhile in Fast Company, Ben Schiller discusses why even a small bout of jail time can make escaping poverty nearly impossible and how philanthropy can help:
There are many reasons why low-income Americans fail to make it out of poverty, including poor education, housing, or lack of health insurance. But the fact that we lock up so many people is a big and under-acknowledged one. The penal state is a drag on public resources and an unnecessary drag on people's lives. "Over-criminalization substantially reduces an individual’s chance of reaching middle class by middle age," said a report from the Bridgespan Group, a Boston-based consulting nonprofit. "Men who have been imprisoned are significantly less upwardly mobile, in both absolute and relative terms, than those who have not," the report added. One estimate says incarceration reduces future earnings by 40%. And that's just prison. Even short jail stays "have toxic effects" says Laurie Garduque, director of justice reform at the MacArthur Foundation, in an interview with Co.Exist. People lose their jobs and lose their children; over time, the effects of jail time compound, meaning even misdemeanors can be life-altering...The strategies MacArthur is sponsoring include diverting the mentally ill to separate treatment facilities (an estimated 17% of men and 34% of women in jails could fall into this category) and new public-safety assessments to evaluate whether someone needs to be in jail to meet a court date.
In the Stanford Social Innovation Review, Angela Glover Blackwell looks at how programs targeting help for the vulnerable end up benefiting all of society, using the push to make sidewalks wheelchair accessible as an example:
When the wall of exclusion came down, everybody benefited—not only people in wheelchairs. Parents pushing strollers headed straight for curb cuts. So did workers pushing heavy carts, business travelers wheeling luggage, even runners and skateboarders. A study of pedestrian behavior at a Sarasota, Fla., shopping mall revealed that nine out of 10 “unencumbered pedestrians” go out of their way to use a curb cut. As journalist Frank Greve has noted, the barricades stormed by disabled advocates in Berkeley 40 years ago were a few inches high, “yet today millions of Americans pass daily through the breaches.”
...There’s an ingrained societal suspicion that intentionally supporting one group hurts another. That equity is a zero sum game. In fact, when the nation targets support where it is needed most—when we create the circumstances that allow those who have been left behind to participate and contribute fully—everyone wins. The corollary is also true: When we ignore the challenges faced by the most vulnerable among us, those challenges, magnified many times over, become a drag on economic growth, prosperity, and national well-being.
As more and more institutions deploy impact investing to meet today’s challenges, foundations are uniquely positioned to take the lead. First and foremost, they are experienced; foundations have engaged in “mission investing,” or “social investing,” for decades—long before the term “impact investing” originated. Foundations also have a deep understanding of and fundamental commitment to social impact. In addition, they can often provide more flexible, risk-tolerant, and patient capital than other types of investors. Indeed, foundations are increasingly using their catalytic capital to de-risk individual investments or markets, and attract other types of investors—including those from the private sector and government—who can bring much greater resources to bear. This leveraging of fellow investors is accelerating impact investing’s potential to drive big change.
You also might be interested in this new series by Kimberlee Cornett, which will feature interviews with 12 female impact investors over the course of the year. In Conscious Company Magazine, Katherine Pease looks at things impact investors can do to get more impact, including reconsidering risk sharing, building capacity and bridging the gap between investor and investee:
While the investment community is actively exploring new ways to mobilize capital through impact investing, for the most part it’s trying to do so within the old paradigm of minimizing risk and maximizing immediate financial returns. Let’s keep working on rebalancing these variables so investors can achieve profits — but with a bit more risk-sharing and within a timeframe that reflects the realities of how social change really happens.
Meanwhile, Heron's Clara Miller looks at why people should be more open to Ford's Darren Walker joining the Pepsi board:
We foundations are and always have been places where public and private interests overlap, starting with our dominant business model, where 100 percent of our endowment assets and income derive from the capital market: equity and debt investments in public and private companies, alternative assets (such as private equity, hedge funds, managed futures, and real estate) and government bonds...Notwithstanding the widespread notion that grants are foundations’ core business, they are in fact a relatively small part of the whole. To the uninitiated, we look more like conventional investment funds with small giving programs, obedient more predictably to tax law than to mission. When push comes to shove, we are more dependent on corporate America than on social justice champions.