Times remain hard, especially for low-wage workers

The current economic crisis has hit workers hard.  Unemployment rates remain high, with total weekly initial claims for unemployment insurance benefits continuing to grow.  Recent reports of a sharp rise in median earnings for full-time workers appear to complicate the picture.  However, a more detailed examination of worker earnings and employment not only helps to sharpen our understanding of the devastating nature of the current crisis for working people, but makes clear that low wage workers are the hardest hit.

Earnings growth

The labor department recently published data showing wages skyrocketing.  As Federal Reserve Bank of San Francisco researchers reported in a recent Economic Letter:

Recent data show that median usual weekly earnings of full-time workers have grown 10.4 percent over the four quarters preceding the second quarter of 2020. This is a 6.4 percentage point acceleration compared with the fourth quarter of 2019. The median usual weekly earnings measure that we focus on here is not an exception. Other measures of wage growth—like average hourly earnings and compensation per hour—show similar spikes.

The spike can be seen in the movement in the blue line in the figure below (which is taken from the Economic Letter).  As we can see, nominal average weekly earnings for full-time employees grew by 10.4 percent between spring of 2019 and spring of 2020, the fastest rate of growth in nearly 40 years.

While this earnings trend suggests a strong labor market, it is, as the researchers correctly note, highly misleading.  The reason is that this measure has been distorted by the massive loss of jobs disproportionally suffered by low wage full-time workers.  The decline in the number of full-time low wage workers has been large enough to change the earnings distribution, leading to a steadily growing value for the median earnings of the remaining full-time workers.

In other words, the spike in median earnings is not the result of currently employed workers enjoying significant wage gains.  This becomes clear when we adjust for the decline in employment by only considering the nominal median earnings of those workers that remained employed full-time throughout the past year.  As the downward movement in the green line in the above figure shows, the gains in medium earnings for those continuously employed has been small and falling.

Disproportionate job losses for full-time low-wage workers

The researchers confirmed that it was low-wage workers that have disproportionately suffered job losses by calculating the earnings distribution of the full-time workers forced to exit to, in the words of the researchers, “nonemployment” – by which they mean either unemployment or nonparticipation — each month over the past two decades.

They began by estimating the yearly share of full-time worker exits to unemployment and nonparticipation.  As we see in the figure above, in non-recession years, about 7 percent of those with full-time jobs become nonemployed each year—2 percent become unemployed and 5 percent leave the labor force.  During the Great Recession, nonemployment peaked in August 2009 at 11 percent, with most of the increase driven by a sharp rise in unemployment (as shown by the big bump in green area).  There was little change in the rate at which full-time workers dropped out of the labor force.

The severity of our current crisis is captured by the dramatic rise in the share of workers exiting full-time employment beginning in March 2020.  Exits to nonemployment peaked in May 2020 at 17 percent, with 9 percent moving to unemployment and 8 percent to nonparticipation. Not only is this almost twice as high as during the Great Recession, the extremely challenging state of the labor market is underscored by the fact that the share of nonemployed who chose nonparticipation and thus exit from the labor market was almost as great as the share who remained part of the labor force and classified as unemployed.

The next figure shows the share of workers exiting to nonemployment by their position in the wage distribution. The three areas depict exits by workers in the lowest quarter of the earnings distribution, the second lowest quarter, and the top half, respectively.

As the researchers explain,

In the months following the onset of COVID-19, workers in the bottom 25 percent of the earnings distribution made up about half of the exits to nonemployment. In contrast, the top half of the distribution only accounted for about a third of the exits. . . .

Therefore, the recent spike in aggregate nominal wage growth does not reflect the benefits of pay raises and a strong labor market for workers. Instead, it is the result of the high levels of job loss among low-income workers since the start of the pandemic.

Tragically, low wage workers have not only suffered disproportional job losses during this pandemic. Those who remain employed are increasingly being victimized by wage theft.  As Igor Derysh, writing in Salon, notes: “A paper released this week by the . . . Washington Center for Equitable Growth found that minimum wage violations have roughly doubled compared to the period before the pandemic.”

These are indeed hard times for almost all working people but, perhaps not surprisingly, those at the bottom of the wage distribution are suffering the most.

Big tech support for racial justice is more talk than action

In the month following the May 25th death of George Floyd, the largest technology companies collectively pledged more than a billion dollars in support of racial justice.  Sounds like a lot of money, but for these companies it is pocket change.  And, despite the accompanying corporate statements of support for structural change to fight racism, there is little indication that they plan to back up their words with meaningful action.

Big tech is riding high

In early June Apple announced the launch of a $100 million Racial Equity and Justice Initiative to “promote racial equality for people of color with a focus on ‘education, economic equality, and criminal justice reform.’”  But, as Jay Peters, writing in The Verge, makes clear, the amount doesn’t sound so impressive when you consider Apple’s earnings.

Apple is now the world’s most valuable company.  Apple made $6.3 million in profit every single hour in 2019, which means that its initiative cost it about 16 hours of business on one day of the year.

And despite the current recession, big tech appears set to earn more this year than last. “Right now, it’s big tech’s world and everyone else is paying rent,” said Wedbush Securities analyst Dan Ives. “They are consumer staples now and this crisis has bought their growth forward by about two years.”

Combined, Amazon, Apple, Alphabet and Facebook reported revenue of $206 billion and net income of $29 billion in the three months ending in late June 2020.  As the New York Times summarized:

Amazon’s sales were up 40 percent from a year ago and its profit doubled. Facebook’s profit jumped 98 percent. Even though the pandemic shuttered many of its stores, Apple increased sales of all its products in every part of the world and posted $11.25 billion in profit. Advertising revenue dropped for Alphabet, the laggard of the bunch, but it still did better than Wall Street had expected.

Very modest giving

To put tech company racial justice donations in perspective, Peters calculated what the equivalent giving would be for person earning the median U.S. salary of $63,179.  The calculation was based on the size of the corporate donation relative to company revenue, not profits, since the $63,179 is the median worker’s salary and not disposable income.  As the following figure shows, recent corporate donations are indeed quite modest.

If someone earning the median U.S. salary donated the same percentage of their salary to racial justice as Amazon, that person would be contributing a yearly amount of just $4.17.  The median salary annual equivalent donation would also be under $5 for Dell, Intel, Disney, and Verizon. Even for Facebook, the biggest giver, the equivalent would only be $100.  It would take Dell 6 minutes to recuperate its pledge, Intel 35 minutes, and Disney and Verizon less than 5 hours.

And as highlighted above, the reason for such modest giving is not low profits.  The figure below shows the pledged amount for racial justice by major U.S. tech companies and their annual profit.

As Peters commented:

Frankly, a lot of these contributions seem even tinier when you consider how much these companies tend to spend on other things. AT&T reportedly spent $73 million on a single campaign to advertise its fake 5G network, which is more than three times its commitment to Black lives. At $7 to $11 million per episode, Amazon would have been hard-pressed to produce three episodes of its alternate reality Nazi-fighting show The Man in the High Castle with the money it’s pledged since Floyd’s death. Microsoft spent over $100 million trying to reinvent the Xbox gamepad only to wind up nearly all the way back where it started.

Money isn’t everything

Of course, there are other things companies can do to promote racial equality. One is to change their hiring policies.  For example, the share of Black employees is just 3 percent at Google and 9 percent at Apple.  And beyond increasing numbers, it is essential that tech companies also reconsider how they organize and compensate the work of their Black employees.

An even more important action tech companies could take would be to listen to their workers and BIPOC leaders and reconsider the nature of the goods and services they choose to develop and sell.  Johana Bhuiyan, writing in the LA Times, highlights the contrast between corporate statements in opposition to racism and corporate profit-driven production priorities to illustrate what is at stake.  Here is her portrait of Amazon:

What [Amazon] said: “The inequitable and brutal treatment of black people in our country must stop. Together we stand in solidarity with the black community — our employees, customers, and partners — in the fight against systemic racism and injustice.”

What the record shows: At the center of the protests demanding justice for Floyd are calls for police reform and an end to racist policing. Amazon has several contracts with law enforcement agencies. Of particular note, Ring, Amazon’s home surveillance company, has partnerships with at least 200 police departments across the country, as Motherboard has reported. As part of its contract with some police departments, Ring incentivized police to encourage citizens to adopt the company’s neighborhood watch app — which has reported issues with racial profiling. After reviewing more than 100 posts on the app, Motherboard found that the majority of people who users deemed “suspicious” were people of color.

“Given the reality of police violence, with impunity, impacting primarily people of color in the United States, these kinds of acts threaten the lives of third parties who are simply, in some cases, doing their jobs or living in their own neighborhoods,” Shahid Buttar, director of grass-roots advocacy for the Electronic Frontier Foundation, told Motherboard.

Amazon also licenses facial-recognition software, called Rekognition, to law enforcement agencies. A study by the MIT Media Lab found that the software performed worse at identifying the gender of individuals with dark faces, although Amazon contested the validity of the findings. Other facial-recognition algorithms have struggled to accurately identify non-white faces.

 

We shouldn’t forget that it is the strength of the Black Lives Matter movement that pushed corporations to project themselves as supporters of racial justice and make their well-publicized donations.  And it is better to have them promoting racial equality than opposing it.  But to this point, corporate actions remain largely limited to public relations statements.  Since real change will require a fundamental rethinking of the organization and aims of corporate production, we shouldn’t count on CEOs going beyond that in any meaningful sense in the near future.  At the same time, as the movement for change grows both inside leading tech companies and in the broader community, we shouldn’t discount the possibility of winning meaningful shifts in corporate policy.

 

Defunding police and challenging militarism, a necessary response to their “battle space”

The excessive use of force and killings of unarmed Black Americans by police has fueled a popular movement for slashing police budgets, reimagining policing, and directing freed funds to community-based programs that provide medical and mental health care, housing, and employment support to those in need.  This is a long overdue development.

Police are not the answer

Police budgets rose steadily from the 1990s to the Great Recession and, despite the economic stagnation that followed, have remained largely unchanged.  This trend is highlighted in the figure below, which shows real median per capita spending on police in the 150 largest U.S. cities.  That spending grew, adjusted for inflation, from $359 in 2007 to $374 in 2017.  The contrast with state and local government spending on social programs is dramatic.  From 2007 to 2017, median per capita spending on housing and community development fell from $217 to $173, while spending on public welfare programs fell from $70 to $47.

Thus, as economic developments over the last three decades left working people confronting weak job growth, growing inequality, stagnant wages, declining real wealth, and rising rates of mortality, funding priorities meant that the resulting social consequences would increasingly be treated as policing problems.  And, in line with other powerful trends that shaped this period–especially globalization, privatization, and militarization–police departments were encouraged to meet their new responsibilities by transforming themselves into small, heavily equipped armies whose purpose was to wage war against those they were supposed to protect and serve. 

The military-to-police pipeline

The massive, unchecked militarization of the country and its associated military-to-police pipeline was one of the more powerful factors promoting this transformation.  The Pentagon, overflowing with military hardware and eager to justify a further modernization of its weaponry, initiated a program in the early 1990s that allowed it to provide surplus military equipment free to law enforcement agencies, allegedly to support their “war on drugs.”  As a Forbes article explains:

Since the early 1990s, more than $7 billion worth of excess U.S. military equipment has been transferred from the Department of Defense to federal, state and local law enforcement agencies, free of charge, as part of its so-called 1033 program. As of June [2020], there are some 8,200 law enforcement agencies from 49 states and four U.S. territories participating. 

The program grew dramatically after September 11, 2001, justified by government claims that the police needed to strengthen their ability to combat domestic terrorism.  As an example of the resulting excesses, the Los Angeles Times reported in 2014 that the Los Angeles Unified School District and its police officers were in possession of three grenade launchers, 61 automatic military rifles and a Mine Resistant Ambush Protected armored vehicle. Finally, in 2015, President Obama took steps to place limits on the items that could be transferred; tracked armored vehicles, grenade launchers, and bayonets were among the items that were to be returned to the military.

President Trump removed those limits in 2017, and the supplies are again flowing freely, including armored vehicles, riot gear, explosives, battering rams, and yes, once again bayonets.  According to the New York Times, “Trump administration officials said that the police believed bayonets were handy, for instance, in cutting seatbelts in an emergency.”

Outfitting police departments for war also encouraged different criteria for recruiting and training. For example, as Forbes notes, “The average police department spends 168 hours training new recruits on firearms, self-defense, and use of force tactics. It spends just nine hours on conflict management and mediation.”  Arming and training police for military action leads naturally to the militarization of police relations with community members, especially Black, Indigeous and other people of color, who come to play the role of the enemy that needs to be controlled or, if conditions warrant, destroyed.

In fact, the military has become a major cheerleader for domestic military action.  President Trump, on a call with governors after the start of demonstrations protesting the May 25, 2020 killing of George Floyd while in police custody, exhorted them to “dominate” the street protests.

As the Washington Examiner reports:

“You’ve got a big National Guard out there that’s ready to come and fight like hell,” Trump told governors on the Monday call, which was leaked to the press.

[Secretary of Defense] Esper lamented that only two states called up more than 1,000 Guard members of the 23 states that have called up the Guard in response to street protests. The National Guard said Monday that 17,015 Guard members have been activated for civil unrest.

“I agree, we need to dominate the battle space,” Esper said after Trump’s initial remarks. “We have deep resources in the Guard. I stand ready, the chairman stands ready, the head of the National Guard stands ready to fully support you in terms of helping mobilize the Guard and doing what they need to do.”

The militarization of the federal budget

The same squeeze of social spending and support for militarization is being played out at the federal level.  As the National Priorities Project highlights in the following figure, the United States has a military budget greater than the next ten countries combined.

Yet, this dominance has done little to slow the military’s growing hold over federal discretionary spending.  At $730 billion, military spending accounts for more than 53 percent of the federal discretionary budget.  A slightly broader notion, what the National Priorities Project calls the militarized budget, actually accounts for almost two-thirds of the discretionary budget.  The militarized budget:

includes discretionary spending on the traditional military budget, as well as veterans’ affairs, homeland security, and law enforcement and incarceration. In 2019, the militarized budget totaled $887.8 billion – amounting to 64.5 percent of discretionary spending. . . . This count does not include forms of militarized spending allocated outside the discretionary budget, include mandatory spending related to veterans’ benefits, intelligence agencies, and interest on militarized spending.

The militarized budget has been larger than the non-militarized budget every year since 1976.  But the gap between the two has grown dramatically over the last two decades. 

In sum, the critical ongoing struggle to slash police budgets and reimagine policing needs to be joined to a larger movement against militarism more generally if we are to make meaningful improvements in majority living and working conditions.

Racism, COVID-19, and the fight for economic justice

While the Black Lives Matter protests sweeping the United States were triggered by recent police murders of unarmed African Americans, they are also helping to encourage popular recognition that racism has a long history with punishing consequences for black people that extend beyond policing.  Among the consequences are enormous disparities between black and white well-being and security.  This post seeks to draw attention to some of these disparities by highlighting black-white trends in unemployment, wages, income, wealth, and security. 

A common refrain during this pandemic is that “We are all in it together.”  Although this is true in the sense that almost all of us find our lives transformed for the worst because of COVID-19, it is also not true in some very important ways.  For example, African Americans are disproportionally dying from the virus.  They account for 22.4 percent of all COVID-19 deaths despite making up only 12.5 percent of the population. 

One reason is that African Americans also disproportionally suffer from serious preexisting health conditions, a lack of health insurance, and inadequate housing, all of which increased their vulnerability to the virus.  Another reason is that black workers are far more likely than white workers to work in “front-line” jobs, especially low-wage ones, forcing them to risk their health and that of their families.  While black workers comprise 11.9 percent of the labor force, they make up 17 percent of all front-line workers.  They represent an even higher percentage in some key front-line industries: 26 percent of public transit workers; 19.3 percent of child care and social service workers; and 18.2 percent of trucking, warehouse and postal service workers.

African Americans have also disproportionately lost jobs during this pandemic.  The black employment to adult population ratio fell from 59.4 percent before the start of the pandemic to a record low of 48.8 percent in April.  Not surprisingly, recent surveys find, as the Washington Post reports, that:

More than 1 in 5 black families now report they often or sometimes do not have enough food — more than three times the rate for white families. Black families are also almost four times as likely as whites to report they missed a mortgage payment during the crisis — numbers that do not bode well for the already low black homeownership rate.

This pandemic has hit African Americans especially hard precisely because they were forced to confront it from a position of economic and social vulnerability as the following trends help to demonstrate.

Unemployment

The Bureau of Labor Statistics began collecting separate data on African American unemployment in January 1972.  Since then, as the figure below shows, the African American unemployment rate has largely stayed at or above twice the white unemployment rate. 

As Olugbenga Ajilore explains

Between strides in civil rights legislation, desegregation of government, and increases in educational attainment, employment gaps should have narrowed by now, if not completely closed. Yet as [the figure above] shows, this has not been the case.

Wages

The figure below from an Economic Policy Institute study, shows the black-white wage gap for workers in different earning percentiles, by education level, and regression-adjusted (to control for age, gender, education and regional differences).  As we can see, the wage gap has grown over time regardless of measure. 

Elise Gould summarizes some important take-aways from this study:

The black–white wage gap is smallest at the bottom of the wage distribution, where the minimum wage serves as a wage floor. The largest black–white wage gap as well as the one with the most growth since the Great Recession, is found at the top of the wage distribution, explained in part by the pulling away of top earners generally as well as continued occupational segregation, the disproportionate likelihood for white workers to occupy positions in the highest-wage professions.

It’s clear from the figure that education is not a panacea for closing these wage gaps. Again, this should not be shocking, as increased equality of educational access—as laudable a goal as it is—has been shown to have only small effects on class-based wage inequality, and racial wealth gaps have been almost entirely unmoved by a narrowing of the black–white college attainment gap . . . . And after controlling for age, gender, education, and region, black workers are paid 14.9% less than white workers.

Income

The next figure shows that while median household income has generally stagnated for all races/ethnicities over the period 2000 to 2017, only blacks have suffered an actual decline.  The median income for black households actually fell from $42,348 to $40,258 over this period.  As a consequence, the black-white income gap has grown.  The median black household in 2017 earned just 59 cents for every dollar of income earned by the white median household, down from 65 cents in 2000.

Moreover, as Valerie Wilson, points out, “Based on [Economic Policy Institute] imputed historical income values, 10 years after the start of the Great Recession in 2007, only African American and Asian households have not recovered their pre-recession median income.“  Median household income for African American households fell 1.9 percent or $781 over the period 2007 to 2017.  While the decline was greater for Asian households (3.8 percent), they continued to have the highest median income.

Wealth

The wealth gap between black and white households also remains large.  In 1968, median black household wealth was $6,674 compared with median white household wealth of $70,768.  In 2016, as the figure below shows, it was $13,024 compared with $149,703.

As the Washington Post summarizes:

“The historical data reveal that no progress has been made in reducing income and wealth inequalities between black and white households over the past 70 years,” wrote economists Moritz Kuhn, Moritz Schularick and Ulrike I. Steins in their analysis of U.S. incomes and wealth since World War II.

As of 2016, the most recent year for which data is available, you would have to combine the net worth of 11.5 black households to get the net worth of a typical white U.S. household.

The self-reinforcing nature of racial discrimination is well illustrated in the next figure.  It shows the median household wealth by education level as defined by the education level of the head of household. 

As we see, black median household wealth is below white median household wealth at every education level, with the gap growing with the level of education.  In fact, the median black household headed by someone with an advanced degree has less wealth than the median white household headed by someone with only a high school diploma.  The primary reason for this is that wealth is passed on from generation to generation, and the history of racism has made it difficult for black families to accumulate wealth much less pass it on to future generations. 

Security

The dollar value of household ownership of liquid assets is one measure of economic security.  The greater the value, the easier it is for a household to weather difficult times not to mention unexpected crises, such as today’s pandemic.  And as one might expect in light of the above income and wealth trends, black households have far less security than do white households.

As we can see in the following figure, the median black household held only $8,762 in liquid assets (as defined as the sum of all cash, checking and savings accounts, and directly held stocks, bonds, and mutual funds).  In comparison, the median white household held $49,529 in liquid assets.  And the black-white gap is dramatically larger for households headed by someone with a bachelors degree or higher. 

Hopeful possibilities

The fight against police violence against African Americans, now being advanced in the streets, will eventually have to be expanded and the struggle for racial justice joined to a struggle for economic justice.  Ending the disparities highlighted above will require nothing less than a transformational change in the organization and workings of our economy.

One hopeful sign is the widespread popular support for and growing participation in the Black Lives Matter-led movement that is challenging not only racist policing but the idea of policing itself and is demanding that the country acknowledge and confront its racist past.  Perhaps the ways in which our current economic system has allowed corporations to so quickly shift the dangers and costs of the pandemic on to working people, following years of steady decline in majority working and living conditions, is helping whites better understand the destructive consequences of racism and encouraging this political awakening. 

If so, perhaps we have arrived at a moment where it will be possible to build a multi-racial working class-led movement for structural change that is rooted in and guided by a commitment to achieving economic justice for all people of color. One can only hope that is true for all our sakes.

The economy: we are still in big trouble

The announcement by the Bureau of Labor Statistics that the federal unemployment rate declined to 13.3 percent in May, from 14.7 percent in April, took most analysts by surprise.  The economy added 2.5 million jobs in May, the first increase in employment since February.  Most economists had predicted further job losses and a rise in the unemployment rate to as high as 20 percent.

This employment gain has encouraged some analysts, especially those close to the Trump administration, to proclaim that their predicted V-shaped economic recovery had begun.  But there are strong reasons to believe that the US economy is far from recovery.

Long term trends and the coronavirus

Predictions for a V-shaped recovery rest to a considerable degree on the belief that our current economic collapse was caused by state mandated business closures to battle the coronavirus which unsurprisingly choked off our long expansion.  Now that a growing number of states are ending their forced lockdowns it is only natural that the economy would resume growing.  Certainly, the stock market’s recent rise suggests that many investors agree. 

However, there are many reasons to challenge this upbeat story of impending recovery.  One of the most important is that the pre-coronavirus period of expansion (June 2009 to February 2020), although the longest on record, was also one of the weakest. It was marked by slow growth, weak job creation, deteriorating job quality, declining investment, rising debt, declining life expectancy, and narrowing corporate profit margins. In other words, the economy was heading toward recession even before the start of state mandated lockdowns.  For example, the manufacturing sector spent much of 2019 in recession.   

Another reason is that the downturn in economic activity that marks the start of our current recession predates lockdown orders.  It was driven by health concerns.  As Emily Badger and Alicia Parlapiano explain in their New York Times article, and as illustrated in the following graphic taken from the article:

In the weeks before states around the country issued lockdown orders this spring, Americans were already hunkering down. They were spending less, traveling less, dining out less. Small businesses were already cutting employment. Some were even closing shop.

People were behaving this way — effectively winding down the economy — before the government told them to. And that pattern, apparent in a range of data looking back over the past two months, suggests in the weeks ahead that official pronouncements will have limited power to open the economy back up.

In some states that have already begun that process, like Georgia, South Carolina, Oklahoma and Alaska, the same daily economic data shows only meager signs so far that businesses, workers and consumers have returned to their old routines.

Thus, while some rebound in economic growth is to be expected given the severity of the downturn to this point, it is unlikely that the May employment jump signals the start of a powerful economic recovery.  Weak underlying economic conditions and health worries remain significant obstacles.

In fact, even the optimistic US Congressional Budget Office predicts at best a long, slow recovery.  As Michael Roberts describes:

It now expects US nominal GDP to fall 14.2% in the first half of 2020, from the trend it forecast in January before the COVID-19 pandemic broke. Then it expects the various fiscal and monetary injections by the authorities and the end of the lockdowns to reduce this loss from the January figure to 9.4% by end 2020. The CBO still expects a sort of V-shaped recovery in US GDP in 2021 but does not expect the pre-pandemic crisis trend in US economic growth (already reduced in the Long Depression since 2009) to be reached until 2029 and may not even return to the previous trend growth forecast until after 2030! So there will be a permanent loss of 5.3% in nominal GDP compared to pre-COVID forecasts – $16trn in value lost forever. In real GDP terms, the loss will be about 3% cumulatively, or $8trn in 2019 money.  And this assumes no second wave in the pandemic and no financial collapse as companies go bust.

Depression level unemployment

Although President Trump has celebrated the May employment gains, the fact is we continue to suffer depression level unemployment.  The following figure from the Washington Post provides some historical perspective.  The current official unemployment rate of 13.3 percent is more than a third higher than the highest level of unemployment reached during the Great Recession. 

But even the Bureau of Labor Statistics acknowledges that because of the unique nature of the current crisis the official announced unemployment rate for each of the last three months is flawed.  The unemployment rate is based on household surveys.  For the past three months, in an attempt to better understand the impact of the coronavirus, interviewers were supposed to classify people not working because of the virus as “unemployed on temporary layoff.” However, as the Bureau of Labor Statistics acknowledges, many of those people were incorrectly classified as “employed but absent at work,” which is the classification used when a person isn’t coming to work because of vacation, illness, bad weather, a labor dispute, or other reasons.  People in this latter category are not counted as unemployed.

The BLS has determined that correcting the classification error would boost the official April unemployment rate to 19.7 percent and the May rate to 16.3 percent.  And, it is important to note that this unemployment rate does not include those workers who have stopped looking for work and those who are involuntarily working part-time.  Including them would push the May rate close to 25 percent.  

Stephen Moore, an economic adviser to President Trump, has stated that the May job numbers take “a lot of the wind out of the sails of any phase 4 [stimulus bill] — we don’t need it now. There’s no reason to have a major spending bill. The sense of urgent crisis is very greatly dissipated by the report.”  This is crazy.

Danger signs ahead

There are three reasons to fear that without substantial new federal action May employment gains will be short-lived. 

First, it has been relatively low-wage production and nonsupervisory workers who have suffered the greatest number of job losses.  That has left many businesses relatively top-heavy with managers and high-income professionals. A number of business analysts are now predicting a new wave of layoffs or firings of higher-income and management personal to bring staffing levels back into pre-coronavirus balance.

The following figure shows that almost 90 percent of the jobs lost from mid-February to mid-April were in the six lowest paid supersectors as defined by the Bureau of Labor Statistics. The May employment gains were also in these six sectors.

Economists with Bloomberg Economics are now warning of a second wave of job losses that will include “higher-paid supervisors in sectors where frontline workers were hit first, such as restaurants and hotels. It also includes the knock on-effects to connected industries such as professional services, finance and real estate.”

As Bloomberg explains:

The pandemic isn’t finished with the U.S. labor market, threatening a second wave of job cuts—this time among white-collar workers. . . .

For the analysis, [Bloomberg Economics economists] looked at job losses by sector in March and April—with affected industries dominated by blue-collar, hospitality and production workers—and determined how those layoffs would move to supervisory positions, since management cuts tend to lag the frontline workers.

The economists then took government data on relations between industries to compute the ones most reliant on demand from the most-affected sectors. Combining that information with the hit to employment in the most affected sectors they extrapolated to other jobs at risk, most of which were higher-skilled, white-collar roles.

The second reason to downplay the significance of the May employment gains is that critically important stimulus measures–in particular the one-time grant of $1200 for individuals and the $600 a week additional unemployment benefit (which expires at the end of July)–appear unlikely to be renewed.  If that boost to earnings is withdrawn, economic demand and employment will likely fall again.

As Ben Casselman, writing in the New York Times, points out:

Research routinely finds that unemployment insurance is one of the most effective parts of the safety net, both in cushioning the effects of job loss on families and in lifting the economy. In economists’ parlance, the program is “well targeted” — it goes to people who need the money and who will spend it. Various studies have found that in the last recession, the system helped prevent 1.4 million foreclosures, saved two million jobs and kept five million people out of poverty.

The impact could be greater in this crisis because the program is reaching more people and giving them more money. The government paid $48 billion in benefits in April and has reached $86 billion in May, according to the Treasury Department.

As the following figure shows, almost all workers have suffered significant declines in employment income with low income workers taking the biggest hit.

Yet, the increase in food insecurity has been relatively small, especially for low income workers.

It is, as highlighted in the next figure, the massive individual benefit boosts included in the March stimulus package that has so far kept the decline in employment income from translating into dramatic spikes in food insecurity. If Congress refuses to pass a new stimulus that includes direct aid to the unemployed, the odds are great that the economic recovery will stall and unemployment will grow again.

The last reason for pessimism is the likely further contraction in state and local government spending and, by extension, employment and services, as a result of declining revenue.  State and local government employment fell by 1 million from February to April, and by an additional 600 million in May.  Looking just at state budgets, the Center for Budget and Policy Priorities estimates a shortfall in state budgets of $765 billion over fiscal years 2020-22, “much deeper than in the Great Recession of about a decade ago” (see the figure below).

And unfortunately, as the Center for Budget and Policy Priorities also notes, the federal government has, up to now, been unwilling to do much to help state governments manage their ballooning deficits:

Federal aid that policymakers provided in earlier COVID-19 packages isn’t nearly enough. Only about $65 billion is readily available to narrow state budget shortfalls. Treasury Department guidance now says that states may use some of the aid in the CARES Act of March to cover payroll costs for public safety and public health workers, but it’s unclear how much of state shortfalls that might cover; existing aid likely won’t cover much more than $100 billion of state shortfalls, leaving nearly $665 billion unaddressed. States hold $75 billion in their rainy-day funds, a historically high amount but far too little to meet the unprecedented challenge they face. And, even if states use all of it to cover their shortfalls, that still leaves them about $600 billion short.

States must balance their budgets every year, even in recessions. Without substantial federal help during this crisis, they very likely will deeply cut areas such as education and health care, lay off teachers and other workers in large numbers, and cancel contracts with many businesses. . . . That would worsen the recession, delay the recovery, and further harm families and communities.

Without a new stimulus measure that also includes support for state and local governments, their forced reduction in spending and cuts in employment can only add to the existing pressures working against recovery.

In sum, the crisis is real.  A new stimulus that included a renewal of special unemployment payments as well as direct support for state and local governments and other critical services like the postal service could help stabilize the economy.  But real progress will require a major effort on the part of the federal government to ensure adequate production of COVID-19 test kits and PPE as well as nationwide testing and contact tracing programs and then, most importantly, a fundamental reorganization of our economy.

Coronavirus: a return to normal is not good enough

We shouldn’t be satisfied with a return to normalcy. We need a “new normal.”

We are now in a recession, one triggered by government ordered closures of businesses producing nonessential goods and services, an action taken to limit the spread of the coronavirus. In response, Congress has approved three stimulus measures which legislators hope will keep the economy afloat until the virus is contained and companies can resume business as usual.

Many people, rightly criticizing the size, speed, and aims of these measures, have called for a new, improved stimulus package.  But what is getting far less attention, and may be the most important thing to criticize, is the notion that we should view a return to normalcy as our desired goal.  The fact is we also need a new economy.

The old normal only benefited a few

The media, even those critical of the Trump administration, all too often showcase economic experts who, while acknowledging the severity of the current crisis, reassure us that economic activity will return to normal before too long.  But since our economy increasingly worked to benefit a small minority, that is no cause for celebration.

Rarely mentioned is the fact that our economy was heading into a recession before the coronavirus hit. Or that living and working conditions for the majority of Americans were declining even during the past years of expansion. Or that the share of workers in low-wage jobs was growing over the last fifteen years.  Or that Americans are facing a retirement crisis.  Or that life expectancy fell from 2014 to 2017 because of the rise in mortality among young and middle-aged adults of all racial groups due to drug overdoses, suicides, and alcoholism.  If existing patterns of ownership and production remain largely unchanged, we face a future of ever greater instability, inequality, and poverty.

The economic crisis

The failings of our current system are only accentuated by the crisis. Many analysts are predicting an unprecedented one-quarter decline in GDP of 8 percent to 10 percent in the second quarter of this year.   The overall yearly decline may well be in the 5-7 percent range, the steepest annual drop in growth since 1946.

The unemployment rate is soaring and may reach 20 percent before the year is out.  A recent national survey found that 52 percent of workers under the age of 45 have already lost their job, been placed on leave, or had their hours cut because of the pandemic-caused downturn.

As a consequence, many people are finding it difficult to pay rent.  Survey results show that only 69 percent of renters paid their rent during the first week of April compared with over 80 percent during the first week of March.  And this includes renters who made partial payments.  Homeowners are not in much better shape.

Our unemployment insurance system has long been deficient: benefits are inadequate, last for only short period of time, and eligibility restrictions leave many workers uncovered. As of year-end 2019, the average unemployment insurance check was only $378 a week, the average duration of benefits was less than 15 weeks, and fewer than one-third of those unemployed were drawing benefits.

Now, the system is overwhelmed by people seeking to file new claims, leaving millions unable to even start their application process.  Although recent federal legislation allows states to expand their unemployment insurance eligibility and benefits, a very large share of those losing their jobs will find this part of our safety net not up to its assigned job.

A better crafted stimulus is needed

In response to the crisis, policy-makers have struggled to approve three so-called stimulus measures, the March 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act being the largest and most recent.  Unfortunately, these efforts have been disappointing.  For example, most of the provisions in the CARES Act include set termination dates untied to economic or health conditions. Approved spending amounts for individuals are also insufficient, despite the fact that Treasury Secretary Mnuchin believes the $1200 provided to most Americans as part of the CARES Act will be enough to tide them over for 10 weeks.

Also problematic is that not all CARE funds are directed to where they are most needed.  For example, no money was allocated to help states maintain their existing Medicaid program eligibility and benefit standards or expand health care coverage to uninsured immigrants and those who lose their job-based insurance.  And no money was allocated to state and local governments to help them maintain existing services in the face of declining tax revenues. Perhaps not surprisingly, the largest share of CARES approved spending is earmarked for corporate rescues without any requirement that the funds be used for saving jobs or wages.  In sum, we need another, better stimulus measure if we hope to minimize the social costs of our current crisis.

Creating a new normal

Even a better stimulus measure leaves our economy largely unchanged.  Yet, ironically, our perilous situation has encouraged countless expressions of social trust and solidarity that reveal ways to move forward to a more humane, egalitarian, and sustainable economy.  This starts with the growing recognition by many Americans that social solidarity, not competitive individualism, should shape our policies. People have demonstrated strong support for free and universal access to health care during this crisis, and we can build on that to push for an expansive Medicare for All health care system.  People also have shown great solidarity with the increasingly organized struggles of mail carriers, health care workers, bus drivers, grocery shoppers, cashiers, and warehouse workers to keep themselves safe while they brave the virus for our benefit.  We can build on that solidarity to push for new labor laws that strengthen the ability of all workers to form strong, democratic unions.

There is also growing support for putting social well-being before the pursuit of profit.  Many people have welcomed government action mandating that private corporations convert their production to meet social needs, such as the production of ventilators and masks.  We can build on this development to encourage the establishment of publicly owned and operated industries to ensure the timely and affordable production of critical goods like pharmaceuticals and health care equipment. And many people are coming to appreciate the importance of planning for future crises.  This appreciation can be deepened to encourage support for the needed transformation of our economy to minimize the negative consequences of the growing climate crisis.

We should not discount our ability to shape the future we want.

The Green New Deal and the State: Lessons from World War II—Part II

There is growing interest in a Green New Deal, but far too little discussion among supporters about the challenging nature of the required economic transformation, the necessary role of public planning and ownership in shaping it, or the strategies necessary to institutionalize a strong worker-community voice in the process and final outcome. In this two-part series I draw on the experience of World War II, when the state was forced to direct a rapid transformation from civilian to military production, to help encourage and concretize that discussion.

In Part I, I first discussed the need for a rapid Green New Deal-inspired transformation and the value of studying the U.S. experience during World War II to help us achieve it. Then, I examined the evolution, challenges, and central role of state planning in the wartime conversion to alert us to the kind of state agencies and capacities we will need to develop. Finally, I highlighted two problematic aspects of the wartime conversion and postwar reconversion which we must guard against: the ability of corporations to strengthen their dominance and the marginalization of working people from any decision-making role in conversion planning.

Here in Part II, I discuss the efforts of labor activists to democratize the process of transformation during the war period in order to sharpen our thinking about how best to organize a labor-community movement for a Green New Deal.  During this period, many labor activists struggled against powerful political forces to open up space for new forms of economic planning with institutionalized worker-community involvement.  The organizing and movement building efforts of District 8 leaders of the United Electrical, Radio & Machine Workers of America (UE), as described by Rosemary Feuer in her book Radical Unionism in the Midwest, 1900-1950, stand out in this regard.  Although their success was limited, there is much that we can learn from their efforts.

Organizing for a worker-community planned conversion process

District 8 covered Missouri, Iowa, Kansas, Arkansas, southern Indiana and southern and western Illinois, and UE contracts in that area were heavily weighted towards small and medium sized firms producing mechanical and electrical products.  As the government began its war time economic conversion in 1941, its policy of suppressing civilian goods and rewarding big corporations with defense contracts hit the firms that employed UE members hard.

The UE response was to build a labor and community-based effort to gain control over the conversion process. In Evansville, Indiana, the UE organized a community campaign titled “Prevent Evansville from Becoming a Ghost Town.”  As Feurer explains,

District 8’s tentative proposal called upon union and civic and business leaders to request the establishment of a federal program that would “be administered through joint and bona fide union-management-government cooperation” at the local level. It would ensure that before reductions in the production of consumer goods were instituted, government must give enough primary war contracts and subcontracts to “take up the slack” of unemployment caused in cities such as Evansville. It also proposed that laid-off workers would get “first claim on jobs with other companies in the community,” while excessive overtime would be eliminated until unemployment was reduced.

District 8 organizers pressed Evansville’s mayor to gather community, labor, and business representatives from all over the Midwest to discuss how to manage the conversion to save jobs.  They organized mass petition drives and won endorsements for their campaign from many community groups and small businesses.  Persuaded, Evansville’s mayor contacted some 500 mayors from cities with populations under 250,000 in eleven midwestern states, requesting that they send delegations of “city officials, labor leaders, managers of industry and other civic leaders” to a gathering in Chicago.  Some 1500 delegates attended the September meeting.

The conference endorsed the UE’s call for a significant role for labor in conversion planning, specifically “equal participation of management and labor in determining a proper and adequate retraining program and allocation of primary and sub-contracts. . . [And that] all possible steps be taken to avoid serious dislocations in non-defense industries.”  A committee of seven, with two labor representatives, was chosen to draw up a more concrete program of action.

One result was that Evansville and Newton, Iowa (another city with a strong UE presence) were named “Priority Unemployment Plan” areas, and allowed to conduct “an experiment for community-based solving of unemployment and dislocations caused by war priorities.”  The plan restricted new plant construction if existing production capacity was considered sufficient, encouraged industry-wide and geographical-based pooling of production facilities to boost efficiency and stabilize employment, required companies to provide training to help workers upgrade their skills, and supported industry-wide studies to determine how to best adapt existing facilities for military production.

William Sentner, the head of District 8, called for labor to take a leading role in organizing community gatherings in other regions and creating regional planning councils. Unfortunately, CIO leaders did little to support the idea. Moreover, once the war started, unemployment stopped being a serious problem and the federal government took direct control over the conversion process.

Organizing for a worker-community planned reconversion process

As the war began to wind down, District 8 leaders once again took up the issue of conversion, this time conversion back to a peacetime economy.  In 1943, they got the mayor of St. Louis to create a community planning committee, with strong labor participation, to discuss future economic possibilities for the city.  In 1944, they organized a series of union conferences with elected worker representatives from each factory department in plants under UE contract throughout the district, along with selected guests, to discuss reconversion and postwar employment issues.

At these conferences District 8 leaders emphasized the importance of continued government planning to guarantee full employment, but also stressed that the new jobs should be interesting and fulfilling and the workweek should be reduced to 30 hours to allow more time for study, recreation, and family life.  They also discussed the importance of other goals: an expansion of workers’ rights in production; labor-management collaboration to develop and produce new products responsive to new needs; support for women who wanted to continue working, in part by the provision of nurseries; and the need to end employment discrimination against African Americans.

While these conferences were taking place, the Missouri River flooded, covering many thousands of acres of farmland with dirt and sand, and leaving thousands of people homeless.  The US Army Corps of Engineers rushed to take advantage of the situation, proposing a major dredging operation to deepen the lower Missouri River channel, an effort strongly supported by big shipping interests.  It became known as the Pick Plan. Not long after, the Bureau of Reclamation proposed a competing plan that involved building a series of dams and reservoirs in the upper river valley, a plan strongly supported by big agricultural interests. It became known as the Sloan Plan.

While lower river and upper river business interests battled, a grassroots movement grew across the region opposing both plans, seeing them, each in their own way, as highly destructive.  For example, building the dams and reservoirs would destroy the environment and require the flooding of hundreds of thousands of acres, much of it owned by small farmers, and leave tens of thousands of families without homes.

Influenced by the growing public anger, newspapers in St. Louis began calling for the creation of a new public authority, a Missouri Valley Authority (MVA), to implement a unified plan for flood control and development that was responsive to popular needs.  Their interest in an MVA reflected the popularity of the Tennessee Valley Authority (TVA), an agency created in 1933 and tasked with providing cheap electricity to homes and businesses and addressing many of the region’s other development challenges, such as flooding, land erosion, and population out-migration.  In fact, during the 1930s, several bills were submitted to Congress to establish other river-based regional authorities.  Roosevelt endorsed seven of them, but they all died in committee as the Congress grew more conservative and war planning took center stage in Washington DC.

District 8, building on its desire to promote postwar regional public planning, eagerly took up the idea of an MVA.  It issued a pamphlet titled “One River, One Plan” that laid out its vision for the agency.  As a public agency, it was to be responsive to a broad community steering committee; have the authority to engage in economic and environmental planning for the region; and, like the TVA, directly employ unionized workers to carry out much of its work.  Its primary tasks would be the electrification of rural areas and flood control through soil and water conservation projects and reforestation.  The pamphlet estimated that five hundred thousand jobs could be created within five years as a result of these activities and the greater demand for goods and services flowing from electrification and the revitalization of small farms and their communities.

District 8 used its pamphlet to launch a community-based grassroots campaign for its MVA, which received strong support from many unions, environmentalists, and farm groups.  And, in August 1944, Senator James Murray from Montana submitted legislation to establish an MVA, written largely with the help of District 8 representatives.  A similar bill was submitted in the House.  Both versions called for a two-year planning period with the final plan to be voted on by Congress.

District 8 began planning for a bigger campaign to win Congressional approval.  However, their efforts were dealt a major blow when rival supporters of the Pick and Sloan plans settled their differences and coalesced around a compromise plan.  Congress quickly approved the Pick-Sloan Flood Control Act late December 1944 but, giving MVA supporters some hope that they could still prevail, Senator Murray succeeded in removing the act’s anti-MVA provisions.

District 8 leaders persuaded their national union to assign staff to help them establish a St. Louis committee, a nine-state committee, and a national committee to support the MVA. The St. Louis committee was formed in January 1945 with a diverse community-based steering committee.  Its strong outreach effort was remarkably successful, even winning support from the St. Louis Chamber of Commerce.  Feurer provides a good picture of the breadth and success of the effort:

By early 1945, other city-based committees were organizing in the nine-state region. A new national CIO committee for an MVA laid plans for “reaching every CIO member in the nine-state region on the importance of regionally administered MVA.  In addition, other state CIO federations pledged to organize for an MVA and to disseminate material on the MVA through local unions to individual members.  Further the seeds planted in 1944 among AFL unions were beginning to develop into a real coalition.  In Kansas City, the AFL was “circulating all the building trades unions in the nine states for support” to establish a nine-state buildings trades MVA committee. Both the AFL and CIO held valley wide conferences on the MVA to promote and organize for it.

Murray submitted a new bill in February 1945, which included new measures on soil conversation and the protection of wild game, water conservation, and forest renewal. It also gave the MVA responsibility for the “disposal of war and defense factories to encourage industrial and business expansion.”

But the political tide had turned.  The economy was in expansion, the Democratic Party was moving rightward, and powerful forces were promoting a growing fear of communism.  Murray’s new bill was shunted to a hostile committee and big business mounted an unrelenting and successful campaign to kill it, arguing that the MVA would establish an undemocratic “super-government,” was a step toward “state socialism,” and was now unnecessary given passage of the Pick-Sloan Flood Control Act.

Drawing lessons

A careful study of District 8’s efforts, especially its campaign for an MVA, can help us think more creatively and effectively about how to build a labor-community coalition in support of a Green New Deal.  In terms of policy, there are many reasons to consider following District 8 in advocating for regionally based public entities empowered to plan and direct economic activity as a way to begin the national process of transformation.  For example, many of the consequences of climate change are experienced differently depending on region, which makes it far more effective to plan regional responses.  And many of the energy and natural resources that need to be managed during a period of transformation are shared by neighboring states.  Moreover, state governments, unions, and community groups are more likely to have established relations with their regional counterparts, making conversation and coordination easier to achieve.  Also, regionally organized action would make it much harder for corporations to use inter-state competition to weaken initiatives.

Jonathan Kissam, UE’s Communication Director and editor of the UE News, advocates just such an approach:

UE District 8’s Missouri Valley Authority proposal could easily be revived and modernized, and combined with elements of the British proposal for a National Climate Service. A network of regional Just Transition Authorities, publicly owned and accountable to communities and workers, could be set up to address the specific carbon-reduction and employment needs of different regions of the country.

The political lessons are perhaps the most important.  District 8’s success in building significant labor-community alliances around innovative plans for war conversion and then peacetime reconversion highlights the pivotal role unions can, or perhaps must, play in a progressive transformation process.  Underpinning this success was District 8’s commitment to sustained internal organizing and engagement with community partners.  Union members embraced the campaigns because they could see how a planned transformation of regional economic activity was the only way to secure meaningful improvements in workplace conditions, and such a transformation could only be won in alliance with the broader community.  And community allies, and eventually even political leaders, were drawn to the campaigns because they recognized that joining with organized labor gave them the best chance to win structural changes that also benefited them.

We face enormous challenges in attempting to build a similar kind of working class-anchored movement for a Green New Deal-inspired economic transformation.  Among them: weakened unions; popular distrust of the effectiveness of public planning and production; and weak ties between labor, environmental, and other community groups.  Overcoming these challenges will require our own sustained conversations and organizing to strengthen the capacities of, and connections between, our organizations and to develop a shared and grounded vision of a Green New Deal, one that can unite and empower the broader movement for change we so desperately need.

Climate Change, The Green New Deal, and the Struggle for Climate Justice

Most calls for a Green New Deal correctly emphasize that it must include a meaningful commitment to climate justice.  That is because climate change—for reasons of racism and capitalist profit-making—disproportionately punishes frontline communities, especially communities of color and low-income.

A 2020 published study on redlining (“the historical practice of refusing home loans or insurance to whole neighborhoods based on a racially motivated perception of safety for investment”) and urban heat islands helps to shed light on the process.  The authors of the study, Jeremy S. Hoffman, Vivek Shandas, and Nicholas Pendleton, examined temperature patterns in 108 US urban areas and found that 94 percent of them displayed “consistent city-scale patterns of elevated land surface temperatures in formerly redlined areas relative to their non-redlined neighbors by as much as 7 degrees Celsius (or 13 degrees Fahrenheit).”

As one of the authors explained in an interview:

“We found that those urban neighborhoods that were denied municipal services and support for home ownership during the mid-20th century now contain the hottest areas in almost every one of the 108 cities we studied,” Shandas said. “Our concern is that this systemic pattern suggests a woefully negligent planning system that hyper-privileged richer and whiter communities. As climate change brings hotter, more frequent and longer heat waves, the same historically underserved neighborhoods — often where lower-income households and communities of color still live — will, as a result, face the greatest impact.”

Urban heat islands

Climate scientists have long been aware of the existence of urban heat islands, localized areas of excessive land surface heat.  The urban heat island effect can cause temperatures to vary by as much as 10 degrees C within a single urban area.  As heat extremes become more common, and last longer, the number of associated illnesses and even deaths can be expected to rise.  Already, as Hoffman, Shandas, and Pendleton note,

extreme heat is the leading cause of summertime morbidity and has specific impacts on those communities with pre-existing health conditions (e.g., chronic obstructive pulmonary disease, asthma, cardiovascular disease, etc.), limited access to resources, and the elderly. Excess heat limits the human body’s ability to regulate its internal temperature, which can result in increased cases of heat cramps, heat exhaustion, and heatstroke and may exacerbate other nervous system, respiratory, cardiovascular, genitourinary, and diabetes-related conditions.

Studies have identified some clear causes for urban heat extremes—one is the density of impervious surface area; the greater the density, the hotter the land surface temperature.  The other is the tree canopy; the greater the canopy, the cooler the land surface temperature.  And as the three authors observe, “emerging research suggests that many of the hottest urban areas also tend to be inhabited by resource-limited residents and communities of color, underscoring the emerging lens of environmental justice as it relates to urban climate change and adaptation.” What their study helps us understand is that the process by which communities of color and poor came to live in areas with more impervious surface area and fewer green spaces was to a large degree the “result of racism and market forces.”

Racism and redlining

Racism in housing has a long history.  Kale Williams, writing in the Oregonian newspaper, highlights the Portland, Oregon history:

Exclusionary covenants, legal clauses written into property deeds, prohibited people of certain races, specifically African Americans and people of Asian descent, from purchasing homes. In 1919, the Portland Realty Board adopted a rule declaring it unethical to sell a home in a white neighborhood to an African American or Chinese person. The rules stayed in place until 1956.

In 1924, Portland voters approved the city’s first zoning policies. More than a dozen upscale neighborhoods were zoned for single-family homes. The policy, pushed by homeowners under the guise of protecting their property values, kept apartment buildings and multi-family homes, housing options more attainable for low-income residents, in less-desirable areas.

Portland was no isolated case; racism shaped national housing policy as well.  In 1933, Congress, as part of the New Deal, passed the Home Owners’ Loan Act, which established the Home Owners’ Loan Corporation (HOLC).  The purpose of the HOLC was to help homeowners refinance mortgages currently in default to prevent foreclosure and, of course, reduce stress on the financial system. It did that by issuing bonds, using the funds to purchase housing loans from lenders, and then refinancing the original mortgages, offering homeowners easier terms.

Between 1935 and 1940, the HOLC drew residential “security” maps for 239 cities across the United States.  These maps were made to access the long-term value of real estate now owned by the Federal Government and the health of the banking industry. They were based on input from local appraisers and neighborhood surveys, and neighborhood demographics.

As Hoffman, Shandas, and Pendleton describe, the HOLC:

created color-coded residential maps of 239 individual US cities with populations over 40,000. HOLC maps distinguished neighborhoods that were considered “best” and “hazardous” for real estate investments (largely based on racial makeup), the latter of which was outlined in red, leading to the term “redlining.” These “Residential Security” maps reflect one of four categories ranging from “Best” (A, outlined in green), “Still Desirable” (B, outlined in blue), “Definitely Declining” (C, outlined in yellow), to “Hazardous” (D, outlined in red).

This identification of problem neighborhoods with the racial makeup of the neighborhood was no accident.  And because the maps were widely distributed to other government bodies and private financial institutions, they served to guide private mortgage lending as well as government urban planning in the years that followed.  Areas outlined in red were almost always majority African-American.  And as a consequence of the rating system, those who lived in them had more difficulty getting home loans or upgrading their existing homes. Redlined neighborhoods were also targeted as prime locations for development of multi-unit buildings, industrial use, and freeway construction.

As expected, a 2019 paper by three researchers with the Chicago Federal Reserve Bank found:

a significant and persistent causal effect of the HOLC maps on the racial composition and housing development of urban neighborhoods. These patterns are consistent with the hypothesis that the maps led to reduced credit access and higher borrowing costs which, in turn, contributed to disinvestment in poor urban American neighborhoods with long-run repercussions.

What Hoffman, Shandas, and Pendleton establish in their paper is that this racially influenced mapping has also had real climate consequences.  Urban heat islands are not just randomly distributed through an urban area—they are more often than not located in redlined areas.  And those extra degrees of heat have real health and financial consequences. As Hoffman explains, the impact on residents of those heat islands is serious and wide-ranging:

“They are not only experiencing hotter heat waves with their associated health risks but also potentially suffering from higher energy bills, limited access to green spaces that alleviate stress and limited economic mobility at the same time,” Hoffman said. “Our study is just the first step in identifying a roadmap toward equitable climate resilience by addressing these systemic patterns in our cities.”

Redlining and climate change

Hoffman, Shandas, and Pendleton condensed the 239 HOLC maps into a database of 108 US cities.  They excluded cities that were not mapped with all four HOLC security rating categories and in some cases had to remove overlapping security rating boundaries, or merge them because they were drawn in different years.  The map below shows the location of the 108 cities.

They then used land surface temperature (LST) maps generated in summer months between 2014 and 2017 to estimate land surface temperatures in all four color-coded neighborhoods in each of these 108 cities to determine whether there was a relationship between LST and neighborhood rating in each city.

They found that present-day temperatures were noticeably higher in D-rated areas relative to A-rated areas in approximately 94 percent of the 108 cities.  The results are illustrated below. Figure a shows the LST difference between ranked neighborhoods for the country as a whole.  The four other figures do the same for each designated region of the country.

Portland, Oregon and Denver, Colorado had the greatest D to A temperature differences, with their D-rated areas some 7 degrees Celsius warmer than their A-rated areas (or some 13 degrees warmer in Fahrenheit).  For the nation as a whole, D-rated areas are now on average 2.6 degrees Celsius warmer than A-rated areas. Thus, as the authors note, “current maps of intra-urban heat echo the legacy of past planning policies.”   Moreover,

indicators of and/or higher intra-urban LSTs have been shown to correlate with higher summertime energy use, and excess mortality and morbidity. The fact that residents living in formerly redlined areas may face higher financial burdens due to higher energy and more frequent health bills further exacerbates the long-term and historical inequities of present and future climate change.

As this study so clearly shows, we are not all in the same boat when it comes to climate change; racial and class dimensions matter.  The poor and people of color are disproportionately suffering the most from global warming largely because of the way racism and profit-making combined to shape urbanization in the United States.  But this is only one example.  A transformative Green New Deal must bring to light the ways in which this dynamic has shaped countless other processes and embrace and support the struggles of frontline communities, economic and climate.

When it comes to pay, US business leaders are world champs

US CEOs not only draw the highest salaries (including bonuses and equity awards, etc.), but they are king of the hill when it comes to lording it over their employees, as illustrated by the high ratio of CEO to worker earnings.

And this record-breaking performance is no one-off.  The share of net wealth held by the top 0.1 percent has been steadily climbing and now rivals that of the bottom 90 percent.

Who cares that wages stagnate, life expectancy falls, economic insecurity grows, social services are gutted in favor of militarism, and climate-generated crises multiply?  Not those at the top, who are doing just fine.

Another sign of the deepening social crisis: The decline in US life expectancy

US life expectancy is on the decline, falling from 2014 to 2017—the first years of decline in life expectancy in over twenty years.  And according to Steven H. Woolf and Heidi Schoomaker, authors of the recently published “Life Expectancy and Mortality Rates in the United States, 1959-2017” in the Journal of the American Medical Association, “A major contributor has been an increase in mortality from specific causes (e.g., drug overdoses, suicides, organ system diseases) among young and middle-aged adults of all racial groups, with an onset as early as the 1990s and with the largest relative increases occurring in the Ohio Valley and New England.”

Declining life expectancy

In 1960, the US had the highest life expectancy of any country in the world.  By 2017 US life expectancy significantly trailed that of other comparable countries, as illustrated below.

In 1980, the difference between average life expectancy in the US and that of comparable countries was not large–73.7 years versus 74.5 years.  However, as we can see in the next figure, the gap steadily grew over the following years.  The US gained 4.9 years in average life expectancy from 1980 to 2017; comparable countries gained 7.8 years on average.

As researchers for the Kaiser Family Foundation point out, “The U.S. and most comparable countries experienced a slight decline in life expectancy in 2015. By 2016, life expectancy for these comparable countries rebounded to pre-2015 numbers, but in the US, such a bounce back did not occur.”  After averaging 78.9 years in 2014, averaged life expectancy in the US fell to 78.7 years in both 2015 and 2016, and then dropped again in 2017 to 78.6 years. These declines mark the first decreases in US life expectancy in more than 20 years.

Moreover, this growing gap and outright decline in average life expectancy holds for both US males and females, as we see from the following figure.

The growing social crisis

Woolf and Schoomaker drew upon 50 years’ worth of data from the US Mortality Database and the US Centers for Disease Control and Prevention’s WONDER database in an attempt to explain why US life expectancy has not kept pace with that of other wealthy countries and is now falling.  Their primary finding, as noted above, is that US life expectancy is being dragged down by “an increase in mortality from specific causes (eg, drug overdoses, suicides, organ system diseases) among young and middle-aged adults of all racial groups.”

More specifically, while over the period 1999-2017, infant mortality, mortality rates among children and early adolescents (1-14 years of age), and age-adjusted mortality rates among adults 65-84 all declined, individuals aged 25-64 “experienced retrogression” beginning in 2010, as we can see in the following figures taken from their article.  Between 2010 and 2017, these midlife adults experienced a 6 percent total increase in mortality rate. This increase overwhelmed gains experienced by the other age cohorts, dragging down overall US average life expectancy.

Woolf and Schoomaker concluded that there were multiple causes for this rise in mortality rates among individuals 25-64.  However, they highlighted drug overdose, alcohol abuse and suicide as among the most important.  This age cohort experienced a nearly four-fold increase in fatal drug overdoses between 1999 and 2017.  Their suicide rates went up nearly 40 percent over the same period. The rate of alcohol-related disease deaths soared by almost 160 percent for those 25-34 years.

In an interview with BusinessInsider, Woolf wrestled with why the country is experiencing such a dramatic rise in mortality rates among young and middle aged adults. “It’s a quandary of why this is happening when we spend so much on healthcare,” Woolf said, adding: “But my betting money is on the economy.”

That seems like a pretty safe answer.  It also raises the question: how do we help working people understand the increasingly toxic nature of the workings of the US economy and build the ties of solidarity necessary to advance the struggle for system transformation.