Why Workers Would Do Better with Janet Yellen as Fed Chair

Sep 17, 2013Jeff Madrick

Wall Street has responded well to Summers's withdrawal, but Main Street would also be better off without an inflation hawk leading the Federal Reserve.

Wall Street has responded well to Summers's withdrawal, but Main Street would also be better off without an inflation hawk leading the Federal Reserve.

The stock and bond markets should not be the only ones rejoicing at Larry Summers’s withdrawal from consideration to run the Federal Reserve. The nation’s workers should, too. Janet Yellen, the remaining frontrunner for the position, is no wimp on inflation. But she is the kind of economist America badly needs, one who cares about wages and employment at least as much as about appeasing bond traders. She also doesn’t think higher wages or a bit higher inflation will undo America. She is old enough to remember a pre-Clinton and pre-Reagan world. 

Right now, that means she would leave monetary policy loose far longer than Summers would have. The job market is much too weak; many people are unemployed or have left the work force, and wages are not growing. Without fiscal help from Congress, the Fed is the only protector of growth and employment around.

The Clinton boom covered up Summers’s true conservative ideological bent. He’s a tough inflation fighter underneath it all. The main policy objective of the Clinton Treasury was to focus on the budget deficit. They successfully got a tax increase passed, for which they deserve kudos. But then they restrained social spending. They did at least expand the Earned Income Tax Credit, but they neglected public investment badly, and the flaws of welfare reform are now showing. They assiduously paid down debt instead of investing, even as tax revenues poured in.

It seemed to work. Inequality stabilized, wages rose, GDP soared. But a lot of the boom depended on the high-tech stock bubble—the famed wealth effect, inducing consumers to buy because they thought they were wealthy. The increase in tax revenues was temporarily stoked by capital gains taxes on stocks. Stocks were stoked by malfeasance amid deceptive sales practices.

Would wages have continued to rise rapidly under Clintonomics? Not likely. The stock market collapse, let’s remember, occurred under Clinton. The recession George W. Bush had to cope with in his first term was a Clinton recession.

At bottom, Summers is basically an inflation targeter, converted by the double-digit inflation and higher federal deficits of the 1970s like so many of his Democratic colleagues. This defined Clintonomics. He’d rather have more unemployment than a little more inflation, which of course could spook the markets.

And frankly, Obama is a Clintonite on the deficit and inflation as well. More than anything else, this is why he wanted Summers. He wanted a Clintonite to run the Fed and sit astride inflation. With Summers by his side, he announced he would form a budget balancing commission even before he took office in 2009. His stimulus worked to stanch the Great Recession, but he hardly ever boasted about it and never came back to Congress for another one. He turned his attention to deficit fighting.

Here is a key paragraph from a Yellen speech earlier this year. It sets her apart from Summers, I think.

I believe the policy steps we have taken recently are in accord with this balanced approach. With employment so far from its maximum level and with inflation currently running, and expected to continue to run, at or below the Committee's 2 percent longer-term objective, it is entirely appropriate for progress in attaining maximum employment to take center stage in determining the Committee's policy stance.

Yellen predates Clintonomics. She can remember a time when you could get rapid wage growth, modest inflation, and a well-regulated financial sector at the same time. Summers got on famously with Greenspan. Yellen had her disagreements.

My guess is she’d tighten policy before many progressives think she should anyway, including this writer. She will worry about new speculative bubbles, which Summers and Greenspan did not. She is a mainstream economist, but a thoughtful and compassionate one.

Yellen would also reject the argument that unemployment is basically structural. Some say we have lots of jobs that American’s don’t have the skills for. She had it researched and found, as did others, that there were no increases in demand for workers or resulting increases in wages in the sectors of the economy where workers were supposed to be scarce. So unemployment is cyclical, not structural. We don’t know what Summers believes about structural unemployment, but he almost surely believes the rate cannot fall as far as Yellen thinks. 

Yellen is not part of the old boy network, so Obama may still not appoint her. She is not a backslapper. She’s likely to be more impressed by economists who do very good scholarship than by hedge fund managers.

She is quiet woman. She is personally low-key, which disguises firm, well-developed opinions. But she’s battled before at the Fed, so she’s not afraid of a fight.

Workers should rejoice. Wages may go up handsomely again under her reign. The unemployment rate could fall below 6 percent, where it belongs. That is, if Obama has the stuff to give a pre-Clintonite who seems to dislike Washington networking the job. 

It would be a return to an older Democratic tradition and be damned good for America.

Jeff Madrick is a Senior Fellow at the Roosevelt Institute and Director of the Bernard L. Schwartz Rediscovering Government Initiative.

 

Federal Reserve image via Shutterstock.com

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Why New York is Home to So Many of the Working Poor, in Graphs

Sep 16, 2013Nell Abernathy

The Bernard L. Schwartz Rediscovering Government Initiative is trying to understand how New York got so unequal. And we're looking for solutions.

The Bernard L. Schwartz Rediscovering Government Initiative is trying to understand how New York got so unequal. And we're looking for solutions.

So what is behind this big shift toward income inequality in New York? Income trends in the city represent an amplified version of our national problems: low-wage jobs without benefits are replacing middle-wage jobs that could support families. Nationwide, middle-wage jobs constituted 60 percent of the jobs lost during the Great Recession and only 22 percent of those regained during recovery, according to analysis from Roosevelt Institute’s Annette Bernhardt at NELP. Meanwhile, low-wage jobs made up only 21 percent of recession job losses and 58 percent of jobs gained since.

The national trend started well before the Great Recession.

And in New York, it’s been the same, but worse. A 2012 report from the Federal Reserve found that middle-income jobs comprised 67 percent of employment in downstate New York in the 1980s, but by 2010, that number fell to 55.8 percent.

Top that off with the fact that for the last decade, wages have risen for the top 5 percent and stagnated or fallen for middle- and low-income workers, and you begin to see the currents driving our inequality crisis.

Why is this happening? Technology? Wall Street? Policy? Education?

We’ll explore those questions and potential solutions at our upcoming panel, "Inequality in New York: The Next Mayor’s Challenge."

Nell Abernathy is the Program Manager for the Roosevelt Institute's Bernard L. Schwartz Rediscovering Government Initiative.

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Three Graphs That Show Why Inequality Matters in the New York City Mayoral Race

Sep 11, 2013Nell Abernathy

The New York City primary results show that the issue of rising inequality is striking a chord with voters. Here's why.

The results are in and two (or three) candidates are one step closer to Gracie Mansion. What we know for certain is that along with winning international attention and prime seats at Yankee Stadium, New York’s next mayor will inherit a city that is more unequal in terms of income than any other major city in America.

The increasing polarization of wealth in New York has been a hot topic and served as the campaign centerpiece for one of yesterday’s big winners, Bill de Blasio. We are trying to resist pointing out that experts like our own Jeff Madrick were talking about this problem even before the drum circles of Zuccotti Park, but we’re happy that the city’s Sierra Leone-like inequality is at last making headlines.

Because we know that we can do better, and we hope our next mayor will at least try, the Roosevelt Institute’s Bernard L. Schwartz Rediscovering Government Initiative is taking a look back at some of the most compelling charts and graphs to surface on the long road to Election Day.

From James Parrott, at the Fiscal Policy Institute, who will be a panelist at our upcoming forum on inequality:

The top 1 percent are capturing a growing portion of the nation’s economy, and nowhere is that trend more pronounced than in New York.

The top 1 percent, in fact, pay less than their fair share of the tax burden:

Meanwhile, the poverty rate in New York City continues to rise: 

We will be back tomorrow with more infographics. To learn more about potential solutions to our growing wealth gap, join us for our panel discussion on Tuesday, September 24:

Inequality in New York: The Next Mayor’s Challenge

September 24, 2013

6:00 p.m. cocktail reception

6:30 – 8:00 p.m. panel discussion

Roosevelt House, Public Policy Institute at Hunter College

49 East 65th Street

New York, NY 10065

Nell Abernathy is the Program Manager for the Roosevelt Institute's Bernard L. Schwartz Rediscovering Government Initiative.

The New York City primary results show that the issue of rising inequality is striking a chord with voters. Here's why.

The results are in and two (or three) candidates are one step closer to Gracie Mansion. What we know for certain is that along with winning international attention and prime seats at Yankee Stadium, New York’s next mayor will inherit a city that is more unequal in terms of income than any other major city in America.

The increasing polarization of wealth in New York has been a hot topic and served as the campaign centerpiece for one of yesterday’s big winners, Bill de Blasio. We are trying to resist pointing out that experts like our own Jeff Madrick were talking about this problem even before the drum circles of Zuccotti Park, but we’re happy that the city’s Sierra Leone-like inequality is at last making headlines.

Because we know that we can do better, and we hope our next mayor will at least try, the Roosevelt Institute’s Bernard L. Schwartz Rediscovering Government Initiative is taking a look back at some of the most compelling charts and graphs to surface on the long road to Election Day.

From James Parrott, at the Fiscal Policy Institute, who will be a panelist at our upcoming forum on inequality:

The top 1 percent are capturing a growing portion of the nation’s economy, and nowhere is that trend more pronounced than in New York.

The top 1 percent, in fact, pay less than their fair share of the tax burden:

Meanwhile, the poverty rate in New York City continues to rise: 

We will be back tomorrow with more infographics. To learn more about potential solutions to our growing wealth gap, join us for our panel discussion on Tuesday, September 24:

Inequality in New York: The Next Mayor’s Challenge



September 24, 2013



6:00 p.m. cocktail reception



6:30 – 8:00 p.m. panel discussion



Roosevelt House, Public Policy Institute at Hunter College



49 East 65th Street



New York, NY 10065

Nell Abernathy is the Program Manager for the Roosevelt Institute's Bernard L. Schwartz Rediscovering Government Initiative.

 

New York City skyline image via Shutterstock.com

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Daily Digest - September 9: Economic Inequality and the Fed Chair

Sep 9, 2013Rachel Goldfarb

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Why Janet Yellen, Not Larry Summers, Should Lead the Fed (NYT)

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Why Janet Yellen, Not Larry Summers, Should Lead the Fed (NYT)

Roosevelt Institute Chief Economist Joseph Stiglitz argues that Summers's role in deregulation in the 1990s led to today's economic issues. He'd much prefer a Fed chair with proven judgement and expertise who didn't help to create the inequality we deal with now.

  • Roosevelt Take: Roosevelt Institute Senior Fellow and Director of the Bernard L. Schwartz Rediscovering Government Initiative Jeff Madrick and Roosevelt Institute Fellow Mike Konczal agree with Stiglitiz's pick for Fed chair.

Why Keynes Wouldn’t Have Too Rosy a View of our Economic Future (WaPo)

Roosevelt Institute Fellow Mike Konczal breaks down Keynesian theory to explain why employment might not bounce back on its own. If that's the case, it would be nice to see policy that actually reflects the need to create jobs.

This Chart Shows The Real Problem With The August Jobs Report (Business Insider)

Josh Barro's big issue? The August jobs report is proof that the economy isn't actually improving as much as it was thought all summer. Job creation is stagnant at about 2 million new jobs per year, and the Fed seems to think that slow and steady is just right.

Did the White House’s Trial Balloon for Larry Summers Just Pop? (Quartz)

Tim Fernholz suggests that without the support of three liberal Democrats on the Senate banking committee, it may not matter if the President wants Summers for Fed chair. The administration would need to attempt the impossible: securing Republican votes.

A.F.L.-C.I.O. Has Plan to Add Millions of Nonunion Members (NYT)

Steven Greenhouse examines the A.F.L.-C.I.O.'s new plan to reinvigorate the labor movement. It's based on a simple question: if 49 percent of employees in a workplace vote for a union, why doesn't the union welcome that 49 percent?

Walmart Workers Plan 'Widespread, Massive Strikes and Protests' for Black Friday 2013 (The Nation)

Josh Eidelson reports on continued momentum in the OUR Walmart strikes as workers begin to think about retail's busiest day. Walmart still claims that none of their employees are actually involved in the strikes: apparently, it's all a union-backed stunt.

A Different Type of Poverty (U.S. News & World Report)

Happy Carlock interviews Sasha Abramsky about his new book, The American Way of Poverty: How the Other Half Still Lives. American poverty is about economic insecurity, and it's made worse, he says, by increasing inequality.

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Daily Digest - September 4: No Jobs, Lots of Problems

Sep 4, 2013Rachel Goldfarb

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America’s Jobless Generation (NYRB)

Roosevelt Institute Senior Fellow and Director of the Bernard L. Schwartz Rediscovering Government Initiative Jeff Madrick argues that policy, not technology, is keeping unemployment high. He's particularly concerned about the effect of these policies on young people.

Click here to receive the Daily Digest via email.

America’s Jobless Generation (NYRB)

Roosevelt Institute Senior Fellow and Director of the Bernard L. Schwartz Rediscovering Government Initiative Jeff Madrick argues that policy, not technology, is keeping unemployment high. He's particularly concerned about the effect of these policies on young people.

Why This Particular Recovery Is So Bad at Creating New Jobs (Pacific Standard)

Timothy Noah looks at various reasons that our recovery isn't solving unemployment. He suggests that the economy is following Walmart, which doesn't seem to want to hire anyone in a permanent position these days, preferring "flexible" temporary workers.

401(k)s are Replacing Pensions. That’s Making Inequality Worse. (WaPo)

Lydia DePillis argues that the growth of 401(k)s is going to increase inequality among the elderly. Pensions aren't perfect, but at least they didn't require low-income workers to decide between today's bills and tomorrow's retirement.

Justice Department Tackles Quality Of Defense For The Poor (All Things Considered)

Carrie Johnson reports on a Department of Justice filling in a case on the quality of public defense in two cities in Northern Washington. Overburdened defense attorneys agree that an independent monitor's oversight would help.

In Budget Cuts, Low-Income Students Suffer More Than Wealthy Ones (MSNBC)

Suzy Khimm explains why poorer school districts are being hit harder by sequesteration then wealthier districts that could presumably absorb some cuts. With straight cuts across the board, the more federal funds a district typically needs, the more it loses this year.

What's Killing Poor White Women? (TAP)

Monica Potts examines the decreasing life expectancy of uneducated white women. Weaving facts about the demographic into the story of one such woman's early death, she tells a harrowing tale about how much these factors effect a life.

New on Next New Deal

How Ronald Coase Demolished Current Libertarian Ideas About Property

Roosevelt Institute Fellow Mike Konczal argues that Ronald Coase's work helps to prove that "self-ownership" can't solve all our problems. Property rights overlap, and social arrangements (like government) must prioritize one owner over others.

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Daily Digest - September 3: Labor Takes Center Stage

Sep 3, 2013Rachel Goldfarb

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A Dramatic Display of Labor's Power (Melissa Harris-Perry)

Roosevelt Institute Fellow Dorian Warren points out the differences in how stakeholders discuss the fast food strikes. The restaurant industry talks about digging into the pockets of small business owners; the workers want a fair share of massive corporate profits.

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A Dramatic Display of Labor's Power (Melissa Harris-Perry)

Roosevelt Institute Fellow Dorian Warren points out the differences in how stakeholders discuss the fast food strikes. The restaurant industry talks about digging into the pockets of small business owners; the workers want a fair share of massive corporate profits.

Politics, Race, and the Future of the U.S. Labor Movement (Democracy)

Dorian Warren considers the ways that race and region fit into the labor economy of the U.S., where workers of color make lower wages and union power is focused in Democrat-leaning states. The limits of labor's power are more apparent within these boundaries.

'No one should have to work for free': Is This the End of the Unpaid Internship? (NBC News)

Roosevelt Institute | Pipeline Fellow Nona Willis Aronowitz suggests that recent lawsuits against employers by unpaid interns could signal the beginning of the end of this practice. As unpaid internships get more media attention, companies are taking notice.

How America's Minimum Wage Really Stacks Up Globally (The Atlantic)

Jordan Weissmann compares various minimum wages using "purchasing power parity," which takes into account differences in local prices. PPP makes the U.S. minimum wage look a little better compared to other wealthy nations, but not great.

Why Isn't Every Monday Like Labor Day? (HuffPo)

Arthur Delaney looks at the historical trend of shortening work days and work weeks, and wonders why that progression has stalled. Shorter work weeks or work sharing could be ways to reduce unemployment, but aren't being seriously considered.

  • Roosevelt Take: Work sharing was one of the ideas discussed at the Bernard L. Schwartz Rediscovering Government Initiative's conference, "A Bold Approach to the Jobs Emergency," back in June. Transcripts and video from all the sessions are now available.

Love for Labor Lost (NYT)

Paul Krugman questions why Republicans cannot bring themselves to acknowledge the worker on Labor Day. As he sees it, they refuse to respect those who work for a living, but aren't wealthy, because without wealth everyone's a "taker."

How the Fed Chair Race Became a Public Circus, and Why it Matters (WaPo)

Neil Irwin says that shifts in political media and White House mismanagement have contributed to the arguments over the next Fed chair. The far more public role of the position in recent years makes this appointment even more politically charged.

This Week in Poverty: John Lewis, Barack Obama and the New March (The Nation)

Greg Kaufmann says that it isn't enough when President Obama talks about wages and working conditions. Executive order could ensure workers under federal contracts get a living wage and extend minimum wage protections to home care workers.

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Daily Digest - August 30: More Labor Organizing for the Holiday

Aug 30, 2013Rachel Goldfarb

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A New Dawn for Labor Day (BeyondChron)

Roosevelt Institute Fellow Annette Bernhardt considers the importance and significance of the August 29 fast food strikes. The growth of these strikes and other labor organizing shows a new hunger for worker representation on the job.

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A New Dawn for Labor Day (BeyondChron)

Roosevelt Institute Fellow Annette Bernhardt considers the importance and significance of the August 29 fast food strikes. The growth of these strikes and other labor organizing shows a new hunger for worker representation on the job.

Economic Justice to the Fore (ACSblog)

Roosevelt Institute | Campus Network Senior Fellow for Equal Justice Erik Lampmann reflects on the March on Washington. He's particularly excited by the energy that youth movements like Dream Defenders and the Black Youth Project bring to the modern fight for civil rights.

National Fast Food Strike Hits Dozens of Cities (MSNBC)

Ned Resnikoff reports on the importance of the fast food strikes' growth into Southern cities. He quotes Roosevelt Institute Fellow Dorian Warren, who says that the involvement of Southern workers is proof that this movement is truly national now.

Feminism's Sticky Fast-Food Floor (The Daily Beast)

Sally Kohn thinks that as great as it is that some women are breaking through the glass ceiling, feminists can't forget about the women stuck in low-wage jobs. Leaning in against economic inequality helps far more women then leaning in on Wall Street.

Why I'm on Strike Today: I Can't Support Myself on $7.85 at Burger King (The Guardian)

Willietta Dukes writes that in her fifteen years of working in fast food, she's never missed a shift or arrived late, until yesterday's strike. Between low wages, limited hours, and erratic scheduling, she can't pay for basic necessities - like her mortgage.

New on Next New Deal

Why Unions are Essential to Tackling the Technology Challenge to Good Jobs

Roosevelt Institute Senior Fellow Richard Kirsch says that technology isn't eliminating more "abstract" intellectual jobs, but it is keeping people in low-wage low-skill work. That makes labor organizing essential to ensure those jobs retain dignity and fair pay.

What Works: Roosevelt Institute Recommendations for Labor Day Weekend

Looking for something to read or watch this Labor Day weekend? The Roosevelt Institute staff and Fellows provide their suggestions for books, films, poems, and more with a compelling take on labor issues. Enjoy the holiday weekend!

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Why Unions are Essential to Tackling the Technology Challenge to Good Jobs

Aug 29, 2013Richard Kirsch

New technology is keeping more and more workers stuck in low-wage jobs, and it's society's responsibility to make sure those jobs still have dignity and fair wages.

New technology is keeping more and more workers stuck in low-wage jobs, and it's society's responsibility to make sure those jobs still have dignity and fair wages.

With robots taking over factories and warehouses, toll collectors and cashiers increasingly being replaced by automation and even legal researchers being replaced by computers, the age-old question of whether technology is a threat to jobs is back with us big time. Technological change has been seen as a threat to jobs for centuries, but the history tells that while technology has destroyed some jobs, the overall impact has been to create new jobs, often in new industries. Will that be true after the information revolution as it was in the industrial revolution?

In an article in The New York Times, David Autor and David Dorn, who have just published research on this question, argue that the basic history remains the same: while many jobs are being disrupted, new jobs are being created and many jobs will not be replaceable by computers. While there is good news in their analysis for some in the middle-class, their findings reinforce the need to organize workers in lower-skilled jobs to demand decent wages.

The authors’ research found that while routine jobs are being replaced by computers, the number of both “abstract” and “manually intensive” jobs increased. In their article in the Times, the authors describe the new jobs:

At one end are so-called abstract tasks that require problem-solving, intuition, persuasion and creativity. These tasks are characteristic of professional, managerial, technical and creative occupations, like law, medicine, science, engineering, advertising and design. People in these jobs typically have high levels of education and analytical capability, and they benefit from computers that facilitate the transmission, organization and processing of information.

On the other end are so-called manual tasks, which require situational adaptability, visual and language recognition, and in-person interaction. Preparing a meal, driving a truck through city traffic or cleaning a hotel room present mind-bogglingly complex challenges for computers. But they are straightforward for humans, requiring primarily innate abilities like dexterity, sightedness and language recognition, as well as modest training. These workers can’t be replaced by robots, but their skills are not scarce, so they usually make low wages.

As the authors conclude, “This bifurcation of job opportunities has contributed to the historic rise in income inequality.”

When it comes to addressing this attack on the middle-class, the authors offer some hope, but not for those low-wage workers. They argue that a large number of skilled jobs, requiring specialized training – although not necessarily a college education –will not be replaceable by computers. These include people who care for our health like medical paraprofessionals, people who care for our buildings like plumbers, people who help us use technology (I was on chatting on-line just yesterday to get tech support), and many others. Because these jobs do require higher levels of skills, they should be able to demand middle-class wages.

But what about those housekeepers, delivery truck drivers and fast food workers, like those who are taking actions around the country today against fast food chains to demand better pay. The authors do not offer a path to the middle-class for them.

If history is an example here as well, we should remember that lower-skilled work does not have to come with low pay. The workers who stood on assembly lines in the 1930s did not have a college education or years of specialized training; they fought for the right to organize unions and demanded high enough wages to support their families.

This Labor Day, as more and more workers are stuck in the growing number of low-wage jobs, causing enormous stress for their families while keeping the economy sluggish, we need to look to the examples of new ways of organizing workers who can not be replaced by technology. There’s the New York Taxi Workers Alliance, who organized drivers to successfully win living wages and a health and disability fund. Or the successful boycott of Hyatt Hotels, leading to an agreement with UNITE HERE to not fight organizing campaigns in their hotels.

We need to support organizing by modernizing our labor laws to account for the large number of workers not currently or adequately protected, the new ways that work is organized, and the global economy.

The lesson from the Autor-Dorn research is that technology doesn’t have to destroy the middle-class. What will destroy the middle-class is our failure as a society to provide dignity to all workers. That’s what fast-food workers and their community-labor supporters are fighting for across the country.

Richard Kirsch is a Senior Fellow at the Roosevelt Institute, a Senior Adviser to USAction, and the author of Fighting for Our Health. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.

 

Robotic arms in factory banner image via Shutterstock.com 

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Fifty Years After the March on Washington, Equality Remains a Dream

Aug 28, 2013Jim Carr

We've made progress on addressing many blatant injustices since 1963, but people of color still don't have an equal opportunity to succeed.

We've made progress on addressing many blatant injustices since 1963, but people of color still don't have an equal opportunity to succeed.

This week marks the 50th anniversary of the March on Washington. The Reverend Dr. Martin Luther King Jr.’s electrifying speech at that event was inspiring and unforgettable. Those remarks, combined with hundreds of thousands of people on the National Mall marching for jobs and freedom, seemed to electrify American society to its core. As President Bill Clinton recently remarked, “I remember thinking that, when it was over, my country would never be the same.”

Over the five decades since the March on Washington, much has changed. No longer do black students require National Guard escorts to enter the school of their choice. No longer are protesters for civil or human rights at risk of being beaten or attacked by dogs for exercising their constitutional right to challenge unfair or otherwise unwise laws.

No longer are jobs and opportunity blatantly denied on the basis of an individual’s race or ethnicity, gender, physical appearance, or sexual preference. No longer are America’s cities burning. And perhaps most significantly, no longer is the office of the President of the United States off-limits to an African American.

Yet in spite of these and many other successes that have been achieved over the past five decades, much of the forward momentum seems unsustainable, or old problems are replaced with new ones that continue to deny opportunities disproportionately to people of color.

Take, for example, the fact that our cities are no longer burning in protest to blatant acts of discrimination and denial of civil rights. While that’s true, the city of Detroit has never recovered from the tumultuous days of the 1960s. In fact, Detroit has continued to decay, literally, into bankruptcy. The city’s official unemployment rate was a staggering 16 percent in April 2013, with a black unemployment rate over 20 percent. And Detroit is not alone among cities with exceptionally high black unemployment rates.

The acceleration of the exodus of non-Hispanic white families from the nation’s inner cities, in part to avoid integration after passage of the major Civil Rights laws, combined with the relocation of manufacturing jobs first to the suburbs and later overseas, has created urban economic deserts that deny opportunities as powerfully as any segregationist policies.

National Guard troops no longer stand in front of school houses to block admission—they do not have to. Racial and ethnic residential segregation in many of the nation’s largest cities is so high that black and Latino students do not live within physical proximity of isolated non-Hispanic white suburban enclaves in sufficient numbers to achieve meaningful school integration.

Furthermore, the cost of college tuition is so high these days that no armed presence is needed to prevent young African Americans or Latinos from entering. The majority of African American and Latino students cannot afford access the nation’s major universities even where they meet the academic standards.

In fact, economic deprivation is so great among blacks and Latinos that race is used as a reliable proxy for exploitation by financial firms. Leading up to the recent collapse of the housing market, subprime lenders disproportionately targeted African American and Latino communities for their reckless and irresponsible high-cost loans. They generated huge profits while originating loans that were designed to fail.

The subsequent loss of homeownership among African Americans and Latinos has been the largest contributor to a staggering loss of wealth for African American and Latino households during the Great Recession. Latino and black households have lost two-thirds and more than half of their net wealth, respectively. The result is that today, the racial wealth gap between blacks and non-Hispanic whites, and Latinos and non-Hispanic whites, is greater than it was two decades ago.

Over the next decade, seven of ten new households will be headed by a person of color. In fact, already, the majority of babies born in America are of color. Yet the majority of their economic futures are not promising.

This dramatic shift in the composition of the nation’s population gives even greater impetus now than was the case a half century ago for America to become a more economically inclusive society. Today, economic equality is as much an issue of economic competitiveness and national security, for example, as it is social justice. After all, how can America maintain its economic and military leadership role in the world if the fastest growing segments of the population, i.e., people of color, remain economically marginalized?

In spite of the success we have achieved as a nation in breaking down the barriers to opportunities based on racial or ethnic bias, we remain far from Dr. King’s dream and vision of a just and equitable society.

Jim Carr is a Distinguished Scholar with The Opportunity Agenda and Senior Fellow with the Center for American Progress. He is also co-editor of Segregation: The Rising Costs for America.

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Daily Digest - August 26: Unemployment Here or There?

Aug 26, 2013Rachel Goldfarb

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Helping the Unemployed Move Might Not Help Them Find a Job (WaPo)

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Helping the Unemployed Move Might Not Help Them Find a Job (WaPo)

Roosevelt Institute Fellow Mike Konczal thinks that relocating the long-term unemployed to areas with lower unemployment will result in their being unemployed in a new place. It would be better to concentrate on improving the economy as a whole.

Cable Monopolies Hurt Consumers and the Nation (LA Times)

Michael Hiltzik speaks to Roosevelt Institute Fellow Susan Crawford about how much the lack of competition is harming Americans' access to high speed Internet. She suggests that genuine oversight is needed, by treating Internet access as a utility rather than a luxury product.

Full Time, Part Time, Good Jobs, Bad (NYT)

Nancy Folbre suggests that part-time work needs to include jobs of the same quality as full-time work. Part-time jobs that pay the same hourly wage and offer pro-rated benefits could increase gender equity in our economy.

Who Are the Long-Term Unemployed? (The Atlantic)

Matthew O'Brien examines data from the Urban Institute comparing the long-term unemployed, newly unemployed, and discouraged workers. The long-term unemployed are generally older, and are primarily out of work due to lay-offs.

This Week in Poverty: '90 Percent of Workers Aren’t Getting Bupkis' (The Nation)

Greg Kauffman looks at a report from the Economic Policy Institute, which finds that wage stagnation has the same causes from minimum wage workers all the way up. An economy that is geared toward corporate profits isn't going to lift people out of poverty.

Wal-Mart’s Newest Scheme to Ruin the Middle Class (Salon)

Stacy Mitchell says that Wal-Mart's new plan to increase their purchases of U.S.-made goods is a hollow marketing campaign. Most of that increase will be in their growing takeover of the grocery industry, and won't create new jobs.

New on Next New Deal

Can President Obama's New Metrics Curb College Costs?

Roosevelt Institute Fellow Mike Konczal thinks that the new rankings will be helpful if they can reduce the costs of private schools, expose administrative bloat, and bring accountability to for-profit schools. Otherwise, they could just be a waste.

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