Tag Archives: inequality

The GOP’s Class Divide on Austerity



















This piece originally appeared on The Nation. 

To Influence Policy, You Have to Be More than Rich





Democracy By Coincidence?













The Donors And The Lobbyists





This piece originally appeared on Washington Monthly. 

The wealthy are ruining American health care
























This piece originally appeared on Al Jazeera America. 

Why hasn’t democracy reduced inequality?

More than a century ago, German scholar Werner Sombart published a book entitled “Warum gibt es in den Vereinigten Staaten keinen Sozialismus?” or, “Why Is There No Socialism in the United States?” Today, many scholars and political thinkers ask the same question, and the answers vary broadly. While many of the answers — racism, the malapportionment of the Senate, federalism, a pro-business Supreme Court, low levels of civic participation — all have some truth and explanatory power, it remains difficult nonetheless to square democracy and inequality. Democracy was supposed to be “the road to socialism,” after all.

Now a new study by Nicholas Stephanopoulos sheds light on why “democracy” hasn’t reduced inequality: Because it doesn’t exist.

Stephanopoulos used two sources for his analysis: first, the massive database of public opinion surveys covering 2,074 questions over a 25-year period (1981-2006) compiled by Martin Gilens for his book “Affluence and Influence;” second, he combined state level exit polls from between 2000 and 2010 with an index of state policy liberalism, thus allowing him to compare the preferences of different groups with the outcomes of policy. He controlled for group size by multiplying a group’s support for a policy by its share of the population. Like Gilens, Stephanopoulos only compared policies in which preferences between the two groups being studied differed by more than 10 points.

As shown in the charts below, Gilens’ dataset demonstrates convincingly that the preferences of women, people of color and those falling into low- and middle-income brackets have almost no effect on policy. A flat line indicates that policy preferences have no influence on policy, a downward-sloping line means that a group’s policy preferences have a negative impact on policy. An upward-sloping line indicates that a group’s preferences have a positive impact on policy — that is, they get what they want. This dataset is incredibly useful, because rather than examining broad ideological measures, it directly asks: Do the people get what they want?

The answer is: Yes, if they’re rich white men.

The negative line for women is particularly troublesome. For more than half of the United States population, supporting a policy actually means policymakers are less likely to pass it. As Stephanopoulos explains,

“As male support increases from 0 percent to 100 percent, the odds of policy enactment rise from about 0 percent to about 90 percent. But as female support varies over the same range, the likelihood of adoption falls from roughly 80 percent to roughly 10 percent. When men and women disagree, then, stronger female backing for a policy seems entirely futile.”

This is absolutely insane.

While the Gilens dataset only measures policy outputs at the federal level, the second dataset examines how opinions and policy correlate at the state level. The charts below document how the ideology of different groups interact with the ideology of state policy.

As you can see, whites and Latinos have positive and statistically significant influence on policy, while blacks do not. This means that if blacks in Mississippi are more liberal than blacks in Alabama, that won’t affect the relative policies of each state. And, once again, women have no influence on policy at all, nor do low-income people. Indeed, Stephanopoulos writes that “state policy liberalism actually decreases from about 1 (or roughly Ohio’s policy set) to about -1 (or roughly New Hampshire’s) as the ideology of those making less than $30,000 varies over the same range.” That is, poor people’s preferences are negatively correlated with policy in their state.

Much of what Stephanopoulos finds meshes with other research on the subject: Other studies (particularly the work of John Griffin and Brian Newman) find that people of color have divergent preferences and that those preferences aren’t well represented. However, Stephanopoulos finds much larger gender gaps than other research has suggested. Griffin and Newman, for instance, found that gender gaps in representation were rather small. However, their method was based on how frequently women had policy “wins,” meaning that the policy they supported was enacted. This means that their methodology can’t recognize “democracy by coincidence,” which Stephanopoulos’s work suggests may be occurring.

In another work, Griffin and Newman with Christina Wolbrecht find that much of the gender gap could be explained by the fact that Republicans tend to oppose policies women support. Indeed, much of the work on class and race on representation findsthatpartiescanserve as partial explanations for representation gaps by mediating preferences. The Republican Party has become “an efficient patronage machine for whites and the top 1 percent of U.S. earners.” Because the Republican party acts for the benefit of exclusively white rich men, whereas the Democratic party must juggle a broad and diverse coalition, the party system can give rise to representation gaps. However, parties are not the sole explanatory variable, because there is strongevidence that the Democratic party has shifted to the right in order to accommodate the increasing influence of the wealthy (and the declining influence of unions). In addition, Griffin and Newman note (see chapter 5) that while Democrats represent blacks and Latinos better than Republicans, they still favor the preferences of whites.

I have emphasized voter turnout frequently as a significant explanatory variable. The fact that people of color, young people, poor people and single women all turn out at a lower rate surely contributes to these gaps. The fact that nonvoters are more progressive than voters could explain the stubborn conservatism of our politics. Among these groups, who make up what pollster Celinda Lake refers to as the “Rising American Electorate,” 42 percent are unregistered, compared with 27 percent of non-RAE. Further, only 36.1 percent voted in the 2010 midterm, compared with 56.1 percent of non-RAE.

Turnout alone likely can’t explain these gaps, since women turn out at a higher rate than men, but still have less representation. However, turnout is only part of the equation: Wealthy white men also contribute far more to campaigns; Congress is full of rich white men, as are statehouses across the nation; and activists tend to be richer than non-activists. However, as long as voter turnout remains low, politicians can respond to the affluent first and foremost without fear. As political scientists Steven Rosenstone and John Mark Hansen write, “class differences in mobilization typically aggravate rather than mitigate the effects of class differences in political resources.”

Other scholars have emphasized the fact that inequality tends to reinforce itself in public opinion. For instance, Vladimir Gimpelson and Daniel Treisman find that“perceived level of inequality—and not the actual level—correlates strongly with demand for redistribution and reported conflict between rich and poor.” In addition, Kris-Stella Trump finds that rising inequality perpetuates itself, noting that, “Public ideas of what constitutes fair income inequality are influenced by actual inequality: when inequality changes, opinions regarding what is acceptable change in the same direction.” Social experiments suggest that higher levels of inequality lead lower income people to “resign” to the levels of inequality, rather than take actions to reduce the power of the rich. However, there is still strong support for redistribution and policies to reduce inequality among Americans. The problem is that support forthesepoliciesisconcentrated among the poor, people of color and women–the groups policymakers are least likely to listen to. The net result of the preferences of women, people of color, youth and poor people being ignored is to push American policy in a more conservative direction. Claims that Americans haven’t gotten redistribution because they aren’t aware of rising inequality or are too individualistic have some truth, but they obscure more than they illuminate. In reality, Americans want redistribution, but the elites who control the political system won’t give it to them. Why hasn’t democracy reduced inequality? Because it never had the chance.

This piece originally appeared on Salon. 

The case for a job guarantee

Long-term unemployment is the scourge of modern economies. In a society where people take value from work, unemployment is destabilizing and degrading. A bout of long-term unemployment can permanently scar worker, leaving them with lower wages and fewer usable skills. Last year, Jared Bernstein and Dean Baker put forwarda persuasive case for a return to full employment as the palliative to unemployment. But it’s increasingly clear the private sector cannot create full employment on its own. Even at the height of the Clinton boom, millions of African-Americans and low-skilled workers were jobless. To get full employment, progressives should embrace an idea that hasn’t surfaced recently in mainstream American political dialogue: a universal government job guarantee.

In a recent article, Derek Thompson explored a future “world without work.” While his article was well-researched and informative, it misses a key point: For inner-city Black Americans, “a world without work” is not a dystopian future, but a present reality. As Mark Levine writes, “By 2010, in five of the nation’s largest metropolitan areas, fewer than half of working-age black males held jobs. In 25 of the nation’s largest metropolitan areas, fewer than 55 percent of working-age black males were, in fact, employed.” In a recent Center for Economic Policy Research report Cherrie Bucknor notes the Black/white gap in employment rates “increased during the recent recession and is still larger than its pre-recession level.”

Reniqua Allen refers to this reality as the “permanent recession” that Black men face. People of color are the first to lose jobs during a recession and the last to gain them in a recovery. Further, many future losses from new technology will occur in heavily racialized sectors, like retail and fast food. Occupational segregation means that people of color, and particularly women of color, will bear the brunt of job losses. Racial justice requires addressing the future of work.

A government job guarantee has a long history in American politics. As Theda Skocpol notes in “Social Policy in The United States,” during the recession of the 1890s, the American Federation of Labor (which later merged with the Congress of Industrial Organizations to form AFL-CIO), requested public works to abate the recession. They repeated these demands during the early 1900s, and after World War I demanded that “a nation that sent men into battle had a moral and political obligation to make sure they had jobs when they returned home.”

However, the AFL were opposed to government-sponsored unemployment insurance. Skocpol cites Alex Keyssar who writes that, “unionists stressed that public works programs were preferable to simple poor relief in three respects: They paid workers a living wage rather than a pittance; they permitted jobless men and women to avoid the demoralizing consequences of accepting charity; and they performed a useful public service.” However, over the past decade, the government hasn’t guaranteed jobs; instead ,conservative austerity policies have lead to millions of public sector jobs being cut.

One partial reason the government job guarantee may be off the political map these days is because many of those who support such a program no longer turn out to vote. Using ANES, I find that while non-voters are more likely to support than oppose a government-job guarantee, voters are overwhelmingly opposed. However, the ANES question is also rather strongly worded: The option that “government should let each person get ahead on own” is appealing, but in an economy where millions of Americans are unemployed or under-employed even at the lowest levels of unemployment, it also seems mythological.

A recent YouGov poll asks a more pointed question: “Would you favor or oppose a law guaranteeing a job to every American adult, with the government providing jobs for people who can’t find employment in the private sector?” In this formulation support increases significantly, though as the chart below shows, there are still race and class gaps.

A job guarantee could leverage two of the strengths of the progressive movement: electoral power at the federal and city level. A progressive President could direct money and projects to mayors, thereby ending the scourge of inner-city poverty that has plagued America for far too long. Progressives have a long history of creating more jobs, but have failed to articulate an argument for why that is true. That is mainly because progressives have preferred an active monetary policy, rather than active fiscal policy, to boost employment. But voters struggle to understand monetary policy. On the other hand, they could understand a universal job guarantee.

Research suggests that Obama’s response to the Great Recession may lead to voters trusting Democrats more on the economy; but as of yet, this has yet to materialize, and Republicans remain more trusted. A universal job guarantee could change that.

A recent survey of 200 leading economic security experts by the Center for Global Policy Solutions finds that 91 percent say that job creation is important for closing the racial wealth gap. The report recommends a National Investment Employment Corps, guaranteeing jobs with an annual salary of $23,000.

The biggest opposition to a government job guarantee will almost certainly come from big business, and particularly the business-conservative wing of the Republican Party. This may seem surprising, since businesses would benefit from infrastructure and public works, as well as having a highly trained workforce. But this is to misunderstand what corporations seek: not profit, but power.

Economist Chris Dillow makes this argument, arguing that full employment would deprive business of political power by removing their mystical power over the “state of confidence.” If, in fact, the government can maintain full employment, it won’t have to kowtow to business on taxes, regulation and spending. There are also labor implications. If workers could chose to reject a private sector job knowing that a public sector job was available, business would actually have to make working conditions livable and pay a fair wage. This “reserve army of unemployed paupers,” as one economist called them, ensures that workers accept degradation on the job rather than suffer the horrifying fate of unemployment.

The ultimate goal of business conservatives is to turn labor into one homogeneous glob that can be fired, re-located and re-trained at will. Thus they oppose paid sick leave, family leave and higher wages, even though all of these changes boost workerproductivity. Business conservatives despise the minimum wage, though there is very little credible evidence that a higher minimum wage would eliminate large numbers of jobs. The threat of the minimum wage is that it would cut into profits and, more importantly, power. Though more worker ownership would boost worker happiness and productivity, it worries bosses who feel they would be ceding control. Business wants to control workers as much as possible, devising Orwellian strategies to intrusively monitor workers. Business conservatives want workers to be expendable, so they have fought to ensure that if a worker is killed or maimed on the job, they will receive next to nothing.

With workers free to pursue a well-paid, productive public job, corporations would have to pay fairer wages and ensure better labor standards. But while private companies say they love competition, in reality nothing is more terrifying. That will be the most difficult force to overcome in the push for a public jobs program. But if it can be overcome, Americans will benefit extraordinarily. In the wake of the Great Recession, LaDonna Pavetti, writes, “thirty-nine states and the District of Columbia used $1.3 billion from the fund to place more than 260,000 low-income unemployed adults in temporary jobs in the private and public sectors.” The result for workerswas higher incomes, and an easier transition into the workforce after the subsidy program ended.

During the Great Depression, make-work programs funded art and infrastructure, most of which we still enjoy today. In the future, robots may do many of the jobs that humans currently do. That shouldn’t be a lament: We can now put human effort into healing the environment, curing disease and ending hunger.

Today, millions of Americans are jobless. Putting them to work would be a boon for economic growth. In the future, everyone can have a truly fulfilling and life affirming job. But that’s going to require some will, and some government.

This piece originally appeared on Salon

How the 1 percent is systematically destroying the middle class

The idea of a property-owning democracy has long roots in American political thought. In their book, “The Citizen’s Share,” Joseph R. Blasi, Richard B. Freeman and Douglas Kruse argue that the Founding Fathers wanted everyone (well, everyone who was white and male) to own a small slice of property. Both Madison and Washington praised the relatively equal distribution of property in the United States (compared with Europe). Thomas Jefferson wrote, “It is not too soon to provide by every possible means that as few as possible be without a little portion of land. The small landholders are the most precious part of a state.” Indeed, the concept is still popular today, even on the right. James Poulos writes, “Without an ownership society, where citizens are prudent stewards of broadly distributed private property, freedom tends to become what it was in revolutionary France — an abstract ideal that can easily arouse destructive political feelings that know no bounds.” But new data suggests America may no longer be such a society, and that has worrying implications for democracy.

The idea of a property-owning democracy is no longer the reality in the United States. Edward Wolff finds that the wealthiest 10 percent own 90.9 percent of all stocks and mutual funds, 94.3 percent of financial securities but only 26.5 percent of the debt. For the middle class, their home makes up 62.5 percent of their limited wealth. (The bottom 40 percent have negative wealth.) The Gini coefficient for net worth has increased from 0.803 in 1962 to 0.871 in 2013. (By way of comparison: A Gini coefficient of 1 means that 1 person owns all of the wealth.) As the chart below shows, financial instruments and wealth are far more unequally distributed than income.

The United States is no longer more equal than European nations, but actually deeply more unequal. The chart below shows that the United States has the most unequal distribution of the wealth of any Organisation for Economic Co-operation and Development (OECD) member country examined. Across the OECD, the bottom 60 percent own about 13.3 percent of the wealth. (The bottom 40 percent own only 3.3 percent.) In Canada, the bottom 60 percent own 12.5 percent of the wealth, and the bottom 40 percent own 2.2 percent. In France, the respective numbers are 11.6 percent and 1.8 percent. And in Britain, they are 16 percent and 4.7 percent.

In the United States, however, the bottom 60 percent own a mere 2.5 percent of the wealth and the bottom 40% own negative 0.4 percent of the wealth.

As wealth and stock ownership has become more concentrated, good jobs that lead to a middle class lifestyle are increasingly eroded. Unfortunately, not enough people seem to be noticing.

Indeed, the Wall Street Journal recently reported that “apps do your chores” — but the unfortunate reality is that workers, not “apps,” are doing those chores. The workers are called “contractors,” instead of employees, meaning that they don’t get the protections full-time employees do. And examples of exploitation are piling up.

A startup called CrowdFlower Inc. — which, according to WSJ “breaks down digital jobs, such as data entry, into tiny tasks performed by millions of workers” — was recently sued for paying some of those workers between $2 and $3 an hour. Industry leader Uber, meanwhile, has been criticized for exaggerating the wages of its contractors.  This practice is becoming widespread. A recent study finds that 53 million Americans are doing some sort of freelancing work. Of those, 40 percent are full-time independent contractors, meaning they have no other source of income.

The rich are driven by two main desires: First, to make sure they have more money; and, second, that someone else does the work. There is literally no job the rich are not lazy enough to outsource. Because they cannot figure out the location of their post office, they need “Shyp.” With “Luxe,” they can get a person to park their car for them. And with “Saucey,” they can save themselves a trip to the liquor store. In a recent article for  The New Yorker, Patricia Marx describes some of the more absurd tasks that were included on TaskRabbit, including “Lego sorting,” locating “a reptile handler who is in legal possession of a rattlesnake” and finding a fake wedding ring that looks just like a real one.

It is not of insignificant concern that the rich may cease to be capable of performing the basic tasks necessary in the modern economy. The result is something like the dystopia described in the recent science-fiction film “In Time,” except that the rich elongate their lives by making the poor do their mundane tasks.

Robert Kuttner writes of TaskRabbit:


Together these trends should be worrying: The vast majority of Americans own no assets, but are instead laden with debt. The social safety net is being shredded by plutocrats and their political henchmen. Conservatives say workers should instead get benefits from their (preferably privately owned) employers. But those companies are supporting workers less and less: Defined benefit pensions are a thing of the past, and even basic retirement plans are in decline. And that’s just for those who are lucky enough to have jobs with benefits. Many workers are misclassified, or are never employees to begin with, meaning they must manage for retirement and health insurance without all the benefits the government funnels through the employee-employer relationship.

As Matt Bruenig notes, in the United States,

“employers often handle sickness (health insurance, subsidized by federal government), old-age insurance (401k and defined-benefit pensions, subsidized by federal government), survivor’s insurance (life insurance, subsidized by federal government), family benefits (paid leave and health insurance for children), unemployment (severance, though more typically rely heavily on public unemployment insurance), on top of providing socially adequate levels of cash income.”

That is, government has funneled important social benefits through corporations. This not only makes a corporate job more cushy than otherwise, it also makes freelance work more precarious. Christopher Mims notes that, “Uber isn’t the Uber for rides — it’s the Uber for low-wage jobs.” A large portion of Americans now have two choices: Become servants to the rich for minimal wages, or starve to death. The idea that low-wage work is merely a short-term part of the rung towards a better life is also largely illusory: Upward mobility has been destroyed.

America has fallen into neo-feudalism: A wealthy capital-owning class exists behind a servile class with no assets, and only a life of drudgery ahead of them. The master-servant relationship will only further degrade social trust and civic values. Americans can’t see themselves as equals in the political sphere when large portions are consigned to wait upon the whims of new aristocracy. Conservative politics relies on the middle class making a devil’s bargain, believing they have more in common with the rich than the poor. It won’t be long before that facade crumbles.

This piece originally appeared on Salon. 

Unions still matter

This year the Republican war on unions has returned with a vengeance. In former labor stronghold Illinois, GOP Gov. Bruce Rauner is pursuing right-to-work legislation — which allows workers to gain the benefits of union representation without paying dues — and looks likely to succeed. Wisconsin became a right-to-work state last month, and its Republican Gov. Scott Walker looks set to ground a presidential bid in union busting, recently saying his political fight with unions prepared him to take on the Islamic State in Iraq and the Levant. The Supreme Court appears ready to overrule its Abood v. Detroit Board of Education decision, which allows unions to collect dues from nonmember public sector workers who nonetheless benefit from collective bargaining.

With the enemies at the gate, the liberal elite seems to have finally learned to love unions. Nicholas Kristof writesthat, contrary to his earlier opinion, “we should strengthen unions, not try to eviscerate them.” Former Treasury Secretary Robert Rubin, a key architect of Bill Clinton’s finance-friendly economic policy, recently argued, “Measures that facilitate collective bargaining can result in a broader participation in the benefits of productivity and growth.” And in “The Report of the Commission on Inclusive Prosperity,” which is likely to become the centerpiece of Hillary Clinton’s presidential campaign, the commission, co-chaired by Ed Balls and Lawrence Summers, concludes that “we need to support the growth of unions.”

But it may be too little, too late. Democrats did little to defend unions when it counted. Under President Jimmy Carter, Alfred Kahn began deregulating the airlines. Carter then signed into law legislation deregulating railroads and trucking (both hobbling powerful unions). President Bill Clinton pushed for the North American Free Trade Agreement against union opposition and deregulated finance, greatly empowering capital. To be fair, some of these pressures came from global trends, but public policy played a key role in tilting the field against labor. Now Republicans are fighting to drive a final spike in the heart of the most effective anti-inequality movement in history. If liberals do nothing to shore up unions, their decline will only continue. That will have important implications for inequality.

What unions do

Unions not only give their members a voice at work but also can have much broader political effects. By mobilizing voters and contributing to campaigns, organized labor is in effect the only lobbying group operating in the interest of ordinary Americans.

In a 1998 study, political scientists Benjamin Radcliff and Martin Saiz found that “the relative strength of the labor movement across the American states is one of the principal determinants of policy liberalism.” They found that the rate of unionization has a dramatic effects on spending for Aid to Families With Dependent Children and education as well as on tax progressivity and that these effects are stronger than Democratic governors and Democratic legislatures. As Radcliff told me, “strong labor unions are able to influence public policy, so as to create programs … that benefit everyone in society, not merely organized workers.”

Unions are the most important institution in the fight against inequality.

One way unions reduced inequality was by boosting voter turnout, which gave them political leverage. It’s rarely noted, but the campaign for Seattle’s $15 minimum hourly wage could not have succeeded without a massive, union-led voter registration drive. Many studies have confirmed that unions boost voter turnout and that their Election Day mobilizations push candidates and parties to the left.


In a country where few politicians come from a blue collar background, unions have often been a conduit for workers to enter politics. Political scientist Nicholas Carnes found that “a 10-point increase in the percentage of the state that belonged to labor unions was associated with a 1-point increase in the percentage of state lawmakers from the working class.” Given that politicians’ occupational background and wealth influences their voting behavior, this is another important way unions can promote policies beneficial to the working and middle classes.

The right-to-work revolution

But unions have always faced deep opposition, especially in the South, where many of the first right-to-work laws were passed. Historian Elizabeth Shermer writes, “The central message in the Southern right-to-work campaigns was preserving the Old South’s racial order.” Southern elites feared that an organized working class would be a threat to the racist social and economic practices that had long defined the region. They successfully kept collective bargaining at bay with laws that forbade unions from requiring beneficiaries of its negotiations to become members and pay dues. These right-to-work laws appealed to non-elites by channeling widely held anti-government individualism. But labor law expert Raymond Hogler notes that the question has often been posed in deceptive terms:

Many polls show a strong majority of Americans are against making workers pay union dues to keep a job. That’s the wrong question. When workers in a union are asked whether anybody benefitting from a collective bargaining agreement should pay dues to support the agreement, they say yes.

As right-to-work laws spread from the South to the rest of the country, the results have been devastating. A paper by Holger, Steven Schulman and Stephan Weiler shows that right-to-work states have seen an 8.8 percent decrease in union density and that these laws account for slightly more than three-quarters of the difference in union density across states.

Another study found that from 1989 to 2002, whether a state had a right-to-work law was more important than partisan control of the state government in determining the progressiveness or regressiveness of the state’s taxes. This conclusion holds up at the global level, according to a recent International Monetary Fund study showing that lower unionization rates were associated with an increase in the share of income going to the top 10 percent of the population.

Political actors

The importance of these studies is clear: Unions are the most important institution in the fight against inequality. But for too long, many liberals seemed happy to watch unions disappear. Part of the problem is that they misunderstood unions as primarily economic institutions, interested in parochially negotiating wages and benefits for their members. In reality, unions are far more important as political actors promoting policies that benefit the working class and middle class as a whole. As legendary United Auto Workers leader Walter Reuther put it in 1970:

“There’s a direct relationship between the ballot box and the breadbox, and what the union fights for and wins at the bargaining table can be taken away in the legislative halls.”

It’s nice that the Kristofs and Summerses of the world have finally caught up with Reuther. We can only hope it is not too late.


This piece originally appeared on Al Jazeera.

Education alone can’t solve America’s racial wealth gap

Earlier this month, the United States marked the 50th anniversary of the Selma voting rights marches. While much has changed since, racial wealth gaps have persisted over the past 30 years and even grown since the Great Recession. Today the richest 10 percent of white families own 65.1 percent of the nation’s wealth.

In a new report (PDF), Brandeis University’s Institute for Assets and Social Policy (IASP) and Demos, a progressive think tank where I work as a researcher, investigate what it would take to close this gap. The report concludes that racial disparities in wealth are driven by public policy decisions and calls for “racially aware policies” that could help reduce America’s rising wealth inequality. This includes eliminating disparities in homeownership rates, college graduation and the return on a college degree as well as the wealth return on income.


Conservatives and centrist commentators often present college education as a near panacea to reduce the racial wealth gap. But the Demos/IASP report challenges this claim. It found that increasing graduation rates would reduce the wealth disparity between black and white people by only 1 percent and between Latinos and whites by 3 percent. There are many possible reasons for this. For one, students of color take out more in student loans than white students. The debt burden detracts from wealth-building opportunities over a graduate’s lifetime. In addition, people of color are less likely to get into the most selective schools and face discrimination in labor markets after graduation. As a result, black and Latino students do not reap the same gains from a college education as their white counterparts.

In fact, race is a far greater determiner of wealth than education. As Demos blogger Matt Bruenig pointed out last year, black college graduates have less wealth than white high school dropouts. Using a new model called the racial wealth audit, Demos/IASP researchers found that the racial wealth gap between white and black families would be reduced 10 percent if the returns on college education could be equalized. But that’s not nearly enough to close the divide.



Bruenig’s previous research found that blacks and Latinos in the same income brackets have less wealth than whites. The Demos/IASP report confirms these findings: Black and Latino households with similar income distribution as whites would still face a substantial wealth gap. Eliminating income gaps would reduce the wealth gap by only 11 percent for black people and 9 percent for Latinos. Among black households, the average family would own $92,545 less wealth than an average white family. The average Latino family would own $94,033 less wealth than the average white family. This is because income distribution only tells part of the story. The remaining gap can be explained, in part, by the differences in opportunities to turn wages and salaries into wealth.

Controlling for the differential returns on every dollar of income shows a far greater effect on wealth disparity. In fact, for every $1 that accrues to black families with an increase in income, white families earn $4.06. For every $1 in wealth for additional income to Latinos, white families earn $5.37. The racial wealth audit shows that equalizing the return on income could reduce the wealth gap with white households by 43 percent for black households and by 50 percent for Latino households. But black and Latino families earning the same incomes as white families will still have only half the wealth.


It may be surprising to those who think that racial equity depends on equal opportunities in the labor market alone. But it’s important to remember that income is a flow, while wealth is a stock. White families have been building up wealth for centuries, thanks in part to the enslavement of black people and discrimination against blacks and Latinos, who were excluded from those gains.

A 2004 paper from economists Maury Gittleman and Edward Wolff provides some hint as to why income equity cannot solve the racial wealth gap. After controlling for income and with a similar return on capital, the authors found that black families save at the same rate as whites. Previous IASP research corroborates their findings (PDF). Differences in wealth outcomes are explained by factors such as inheritance, home ownership and unemployment.


As shown in the chart above, in another study (PDF), Wolff and Gittleman demonstrate that black and Latino families are far less likely to receive wealth transfers and that when they do, they tend to be smaller. Wealth transfers include inheritances and tax reductions, which disproportionately benefit white people. In fact, wealth transfers are the most unequal aspect of the wealth disparity. The Gini coefficient, the most common measure of inequality, runs from 0 (in which all wealth transfers are equal) to 1 (in which one household receives all wealth transfers). In 2007 the Gini of wealth transfers (primarily inheritances) was 0.961, compared with a 0.489 posttax and transfer Gini of income in the same year (PDF). That is, the distribution of wealth transfers is twice as unequal as the distribution of income. Even when households that did not receive a wealth transfer are excluded from the analysis, the Gini is still at 0.814. That means nearly all the wealth transfers in the U.S. go to a small group of people at the top.


The Demos/IASP report also shows the deficiency in the way millennials understand race in the United States. This is worrying given the fact that the millennial generation is often said to be postracial. Millennials are more likely to believe that racial disparities should be allowed to correct themselves than their parents are. In many ways, their views align with those of conservative Supreme Court Chief Justice John Roberts, who in 2007 argued, “The way to stop discrimination on the basis of race is to stop discriminating on the basis of race.” However, it ignores the effects of history and how wealth replicates itself. In his pioneering book “The Son Also Rises,” historian Gregory Clark notes that:

Groups that seem to persist in low or high status, such as the black and the Jewish populations in the United States, are not exceptions to a general rule of higher intergenerational mobility. They are experiencing the same universal rates of slow intergenerational mobility as the rest of the population. Their visibility, combined with a mistaken impression of rapid social mobility in the majority population, makes them seem like an exception to a rule. They are instead the exemplary of the rule of low rates of social mobility.

Clark found that the residual effects of family wealth remain for 10 to 15 generations. A family’s wealth cache simply won’t go away without dramatic changes.

Even more concerning, the notion that racial inequality can take care of itself is not only embraced by white millennials but also by millennials of color (though to a lesser extent). This means that the institutionalized structural barriers to racial equity are not receiving enough attention. Many Americans fail to understand how much more unequally wealth and financial assets are distributed than income.


To parrot Roberts, the best way to reduce the racial wealth gap is to reduce the racial wealth gap — not simply to increase access to education or income. Policies that bolster home ownership — the leading wealth asset for most middle-class families — and those that reduce neighborhood segregation will do far more to close the wealth gap than changes in education. Other progressive ideas such as a baby bond program, which establishes wealth-building opportunities for those who have been excluded from them in the past, could substantially reduce wealth gaps.

Deeply entrenched wealth disparity is the product of history. Eliminating it entails reckoning with history as well as robust public policy reform. Ideological commitments to equality of opportunity without policy action won’t be enough.

This piece originally appeared on Al Jazeera

If everyone voted, progressives would win

















This piece originally appeared on Al Jazeera.

Republican policies don’t help people of color













Last place aversion






This piece originally appeared on Al Jazeera.