Must Reads: In the New York Times, David Brooks offers a new set of employer principles for hiring, which he argues will "correct some of the perversities at the upper reaches of our meritocracy." There is also this video on a panel from the Economic Policy Institute on neighborhoods with concentrated poverty. Meanwhile, the American Enterprise Institute's Aparna Mathur and Abby McCloskey have a new report on economic mobility with proposals focused on "experimenting with a wide variety of policies to encourage employment, such as work-sharing arrangements, relocation vouchers for those in hard-hit communities, and customized job-training programs."
Three stories struck your Heron editor hard this week on what poverty in America looks like and what it costs. In a Washington Post story about a young girl missing from a DC shelter, it was reported that she attended a school of 260 students, "55 of whom are also homeless." A formerly homeless woman was arrested for leaving her two small children in a hot car in Phoenix so she could attend a job interview, reports AZ Central. Lastly, in the Orlando Weekly, a 32-year-old woman with a heart condition made too much (an estimated $9000) to qualify for Medicaid and dropped dead while selling vacuum cleaners door-to-door because she couldn't afford her medicine. Check out this cartoon from Signe Wilkinson:
If we had Sweden’s rate of infant deaths, the United States would have around forty-seven fewer infants dying every day in the United States. That is what is achievable: every day forty-seven babies wouldn’t die if we had Sweden’s rate of infant deaths. Differences in mortality rates are not just a statistical concern— they reflect suffering and pain for very real individuals and families. The higher mortality in the United States is an example of what Paul Farmer, the noted physician and anthropologist, calls structural violence. The forty-seven infant deaths occur every day because of the way society in the United States is structured, resulting in our health status being that of a middle-income country, not a rich country. There is growing evidence that the factor most responsible for the relatively poor health in the United States is the vast and rising inequality in wealth and income that we not only tolerate, but resist changing.
In the New York Times, Thomas Edsall looks at who is poor in America based on a number of different measurements. In The Week, Matt Bruenig makes a case that social safety nets should not be cut in order for private charity to take over:
If you believe, as most claim to, that the aged and infirm should not die hungry on the streets, why exactly would you want to take their existing public benefits from them, give the money to other people instead, and then hope that those other people give it right back to the aged and infirm through charity? Even if it did somehow work out as planned, it would be a whole bunch of work to arrive at the same outcome...When our existing institutions already neglect the sick, the aged, or the poor, it's easy to say that such things should just be handled with charity. But when our existing institutions do not neglect these populations, it is nearly impossible to say that we should install reforms that cause these people to be neglected, thereby creating social problems that charity can solve.
Elisabeth Jacobs in a Brookings Post says long-term unemployment is detrimental to social mobility:
Joblessness, particularly long-term unemployment, has terrible consequences for social mobility. The long-term unemployed earn less if and when they become reemployed. They are in poorer health, and have children with poorer academic performance than similar workers who have avoided unemployment. Communities with a higher share of long-term unemployed workers have higher rates of crime and violence. Simply put, long-term unemployment creates all kinds of hurdles for social mobility—both within-career mobility for a given worker looking to move up the economic ladder through his efforts in the labor market, and across-generation mobility for the children of those workers who have lost their jobs.
Given this week was much about whether women workers should be given more protections to obtain equal pay for equal work, we have this piece from Soraya Chemaly and Elizabeth Plank in Policy Mic linking the fight for an end to the pay gap to the overall wealth gap:
The pay gap helps some people accumulate wealth and achieve long-term financial security, leaving others behind in the dust. In fact, it's a critical part of the wealth gap, the unequal distribution of assets. In the United States, a woman who has never been married typically owns .06 cents for every dollar a never-married man owns.
Who's benefiting from this pay gap? Catherine Rampell on the Washington Post says that even within occupations, women almost always earn less than their male counterparts, which makes them a much better deal for employers: "hiring women will help your firm’s bottom line: They still, amazingly, come at a discount." In the Wall Street Journal, Mark Perry and Andrew Biggs of AEI agree, but see this as proof that the wage gap is close to nonexistent: "If women were paid 77 cents on the dollar, a profit-oriented firm could dramatically cut labor costs by replacing male employees with females. "
Over at the Urban Institute, Rolf Pendall says investment in mass transit would aid low-income families, many of whom do not have access to a car. You also may be interested in this video from Bill Moyers on tip-reliant restaurant workers, who are paid just over $2 per hour.
Time for a cartoon from Pat Bagley:
In the New York Times, Floyd Norris explores growing corporate profits and shrinking wages. He writes "Corporate profits are at their highest level in at least 85 years. Employee compensation is at the lowest level in 65 years." In Business Insider, Henry Blogett makes a similar connect and blames the sluggish economy on employers for not investing in better wages (charts show corporate profits increases and wages declines as percentages of the economy):
One reason the U.S. economy is still weak is that big American companies are "maximizing profits" instead of investing in their people and future projects. This behavior is contributing to record income inequality in the country and starving the primary engine of U.S. economic growth — the vast American middle class — of purchasing power. (See charts below). If average Americans don't get paid living wages, they can't spend much money buying products and services. And when average Americans can't buy products and services, companies that sell products and services can't grow. So the profit obsession of America's big companies is, ironically, hurting their ability to grow.
Meanwhile in the New York Times, Berkley's Laura D’Andrea Tyson and McKinsey's Susan Lund say what's troubling is the major decline in productive investment by both the private and government sectors:
The decline in net productive investment, both private and public, is a matter of urgent concern for economic growth and job creation. Fixed investment expands capacity and usually improves productivity, particularly when new capital embodies new technologies, in that way generating more income, higher demand and yet more investment. This virtuous circle enables robust job creation as well. Historical trends show a strong correlation between growth in private investment in equipment and software and growth in private employment. Although correlation does not prove causation, that both are at very low levels today is both a reflection of the anemic recovery and a bad omen for future growth.
Writers for the Harvard Crimson discuss the school's decision to sign onto the UN-supported Principles for Responsible Investment for its $33 billion endowment, which could have big implications for other institutional endowments. In Institutional Investor, Michael Petlz looks at risks climate change poses for investment portfolios. Pamela Hartigan and Danielle Logue discuss the potential of a $650 billion impact investing market. Meanwhile, McKinsey says to prepare for the age of bigger, bolder shareholder activism. Over at the Pioneers Post, Virgin's Richard Branson says more CEOs should stand up to shareholders more often. In this McKinsey video, Harvard Business School's Bill George says the market should "rethink capitalism" in terms of new business hurdles such as shareholder maximization:
In The Week, Michael Brendan Dougherty offers an interesting thoughts on a century-old arguments by conservative Catholics arguing the best hope for democracy was "a society with well-distributed property [ownership, which] would provide a check against the rich and the state both."
Is a degree under $10,000 worth much? Two states (Texas and Florida) are experimenting with keeping tuition low to give access to poorer students, but some question "the quality and marketplace credibility of such a comparatively cheap degree," reported Lara Seligman in the Atlantic. However, check out this chart in National Journal showing that picking a degree matters for of future fortunes:
At Vox, Matthew Yglesias looks at high U.S. youth unemployment and the need for German-like apprenticeships:
The biggest and most salient difference in terms of youth labor market policy between the United States and Germany is that Germany takes vocational education seriously. In the US, vocational schooling became stigmatized as a way of shortchanging some kids' potential so we shifted to a mentality that's notionally focused on the idea of sending everyone to college. But of course we don't send everyone to college and in fact have lots of people dropping out of high school. As Berube and Parilla write, German vocational education is a serious option that "blends classroom education with on-the-job training through apprenticeships, equipping young people not bound for university with practical labor market skills."
The Harvard Business Review's Sarah Green interviews CareerBuilder CEO Matt Ferguson on how college grads are taking over the high school grad job market and what it means. There's also this piece from Nancy Cook on what happens when teens can't find work. Meanwhile, Economic Policy Instutute finds that long-term unemployment is elevated across education groups.