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The Economy Reimagined, Part 2: Jobs, Education and Poverty

David Brancaccio and Kimberly Adams Aug 7, 2020
Heard on: Marketplace Morning Report
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Pictured: Members of the Service Employees International Union (SEIU) hold a rally on Feb. 26, 2018 in Chicago, Illinois. Scott Olson/Getty Images
Specials

The Economy Reimagined, Part 2: Jobs, Education and Poverty

David Brancaccio and Kimberly Adams Aug 7, 2020
Pictured: Members of the Service Employees International Union (SEIU) hold a rally on Feb. 26, 2018 in Chicago, Illinois. Scott Olson/Getty Images
HTML EMBED:
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The following is a transcript of “The Economy Reimagined,” a Marketplace special report.

Click here to read and listen to Part 1 on inequality.

Click here to read and listen to Part 3 on the climate and technology.


Kimberly Adams: There are systems and policies in place that widen inequality. This comes into sharper focus when you watch what can happen within a family. Take Jasson Perez, whom we met earlier. He dropped out of high school, got mixed up with drugs and ended up in prison. When he got out at 19, he wanted to make a fresh start.

Jasson Perez: I was living in a halfway house. I was on parole. I was getting rejected job after job. And at that point, I was kind of like, man, I should go back to to selling drugs, even though I was a terrible drug dealer at that point, hence getting caught and being locked up. But I was just like, you know, I needed real money and a real job.

Adams: This was 20 years ago, and Jasson says he ran into employer after employer who shunned people with criminal records, something that’s now illegal in Illinois. A pivot point for him was when he finally landed a steady job at the American Civil Liberties Union. It was a living wage, he maintained sobriety and got back to his education. Now he works at a nonprofit called the Action Center for Race and the Economy in Chicago.

Perez: Most of the friends that I have that I know from back then, the breaking point was whether they got a meaningful job — not a job that barely pays you a living wage and you can’t get by, but people who had access to meaningful employment that paid them a fair wage, they usually ended up doing way better than a lot of my homies.


David Brancaccio: As we reimagine ways to create more meaningful jobs, there’s one approach that’s right in front of us, tantalizing like a set of crown jewels in a locked viewing case: infrastructure.

Liberals and conservatives both tend to be all for it. I’m just going to call it the “Big I.” It’s one of the first things that comes to mind for a daughter of a coal miner, who shapes policy to reduce inequality in urban and rural communities in Ohio and Appalachia. Hannah Halbert is executive director of the nonprofit Policy Matters Ohio. She imagines a world where people stop talking and start building.

Hannah Halbert: We can’t just train for training’s sake. And, you know, we have a multitude of problems that need to be solved. That if we can connect public investment to something like making our electric grid more efficient, more able to withstand sort of the the challenges of a changing climate, that investment not only would put us on a path for greater security, but would get people employed. And if those jobs are good jobs, if those jobs are union jobs, building apprenticeship programs around that investment, it can lift an entire region.

Hannah Halbert (Courtesy of Halbert)

Brancaccio: This “Big I” infrastructure is about the outcome to society of all of the building and fixing. Others focus on the outcome for the well-being of the people who get the work. It’s an idea with roots in the Great Depression-era New Deal: proposing the government should hire anyone who wants a job and can’t find a good one in the private sector. Here’s Pavlina Tcherneva, the author of a new book called “The Case for a Job Guarantee.”

Pavlina Tcherneva: So if we’re rethinking the post-COVID world of work, I think it is important to ask, why should we tolerate 2%, 3%, 5%? Whatever economists might call the natural rate of unemployment. And when you think about how we design other policies, we don’t talk about 2%, 3%, 5% of illiteracy rate. And so the job guarantee does the same for the labor market.

Brancaccio: Tcherneva is with the Levy Economics Institute at Bard College. I pointed out this would mean these government jobs would compete for workers, driving up the cost of labor for private employers.

Tcherneva: Now, if the argument is that we should have permanent unemployment so that private firms should have the right to pay below living wages or maybe even poverty wages, then maybe that’s the world we need to leave behind.

Pavlina Tcherneva (Courtesy of Tcherneva)

Brancaccio: Same with the minimum wage debate: Private companies say if labor costs more, they’ll hire fewer people, but in this system the government is the backstop.


Adams: And in that world the professor wants to leave behind, even following the traditional path to get a job that pays a living wage doesn’t work for many. Frances Cox from Chicago, whom we heard from earlier, says she did really well in school, even finished a four-year degree in anthropology, but found she couldn’t do much with it unless she took on more debt to get an advanced degree.

Cox: And I love anthropology. And I thought to myself, you know, it really sucks that I live in a place where something as valuable as the study of culture is undervalued and not appreciated. And I feel hurt sometimes that I have to consider that a bad decision, a bad economic decision.

Adams: Jasson, her ex-husband, told me that while education was considered important in his home growing up, it was only one ingredient of a decent livelihood.

Perez: I grew up in a family that just stressed, you know, working-class, middle-class values of, work hard, but also try to work in an industry or do the type of work that values you and pays you a fair wage and a living wage. Usually, that’s related to some sort of union job or a job where you’re protected as a worker.

Brancaccio: You hear Jasson say “union job” as part that vision of the American dream. And it’s been noted that inequality went up in the decades that the prevalence of union membership decreased, even controlling for globalization. Javier Morillo spent 14 years as president of a Minnesota local of the Service Employees International Union.

Javier Morillo (Courtesy of Morillo)

Javier Morillo: Today, what we’re looking at is an economy that is increasingly made up of temporary laborers, temp agencies, that sort of work. Employers have figured out, through those mechanisms, ways of making it difficult to impossible for workers to organize, right? How do you organize a temp agency? And so the challenge facing the labor movement today, and in the last decades, has been to adjust to an economy that is no longer industrial.

Brancaccio: Morillo is now a fellow for the Center for Innovation in Worker Organization at Rutgers University. He’s thinking about non-union workers who recently banded together during the pandemic to call attention to what they saw as health and safety problems at Amazon warehouses.

Morillo: So I think that’s the moment we are in. Many people are rising to the challenge. And the labor movement, I think, as a whole has to sort of broaden its scope to be really a worker movement, where traditional labor is just one part of what we do.

Branccacio: A key part of what’s called this “contingent” workforce, gig economy jobs, often the ones where customers book labor using a mobile app. Juliet Schor at Boston College finds this gig world is increasingly a tough one.

Juliet Schor: People are having to work a lot more, spend a lot more time trying to get gigs, many more people looking for work than work is available. And the other very precarious dimension of this is that these workers have none of the protections that employees have.

Juliet Schor (Courtesy of Schor)

Brancaccio: There’s a clash of titans over this with Uber and others fighting a new California law classifying many gig workers not as contractors but as employees entitled to benefits. Schor’s forthcoming book is called “After the Gig: How the Sharing Economy Got Hijacked and How to Win It Back.” One approach she’s studied is the banding together of contract workers who form their own company with its own rules. She studied photographers who license out their pictures. Think of this as a gig co-op.

Schor: There are things that some of these cooperatives do, either offering discounted health care, or, if the cooperative can afford it, financing health care for its members.

Brancaccio: It gets complicated, she says, because co-ops have to deal with whether to provide full benefits to casual members compared to those who contribute a lot.


Another way to take on inequality is to consider the rules for entering an occupation. Back in the 1950s, just 5% of occupations required a license. Now it’s 23%. It can take three years’ training to get an optician’s license in Nevada, but no time at all in California. Johns Hopkins professor Steven Teles thinks licenses sometimes help with health, safety and fraud but can also unfairly favor existing players, hurt competition and make inequality worse.

Teles: The consequence of that is, first of all, that we don’t get lots of new models that might serve people better, we often have to pay more for those services and we end up driving up the incomes of the people who are behind those regulatory schemes.

Steven Teles (Screenshot via YouTube)

Brancaccio: Teles, along with a former Cato Institute guy, Brink Lindsey, wrote about this in “The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality.” Kimberly?

Adams: One example of that, David, is our friend Roland in Texas. He ran into licensing barriers. Roland wanted to be a physical therapist, which would have set him on a path for higher-paying jobs. But …

Roland: I tried to get into physical therapy programs. They were too stringent and difficult to get into. So I came to Texas and got a license in massage, and I’ve been doing therapeutic bodywork ever since.

Brancaccio: If there are unnecessary barriers to entry into an occupation, what is the proposed fix? There is a wild amount of money in lobbying by existing players to keep the rules as they are. Teles reimagines a world where members of Congress and state legislators get a much bigger subsidy to hire more experienced staff that can arm themselves with the data to stop industry from bulldozing efforts to unwind self-serving rules.


Brancaccio: As of last year, everybody in the U.S. together owed $1.7 trillion on their student loans. That’s huge, like 8% of the entire U.S. economy. Can Europe’s experience funding higher education inform our reimagining? Here’s my Marketplace colleague, the BBC’s Victoria Craig in London.

Victoria Craig: No matter what country you’re from, walking across the stage at graduation is a big moment.

Abigail Butler poses on graduation day at Bangor University in North Wales. (Courtesy of Butler)

For 23-year old Abigail Butler, it was a relief. She graduated from Bangor University in North Wales two years ago with a degree in psychology and $54,000 in debt.

Abigail Butler: It’s quite scary. And I think maybe I will pay it back, but I very well might not.

Craig: That’s because many students in the U.K. pay tuition and living expenses using government loans. They only start repaying them once they make more than $34,000 a year. Even then, only 9% of earnings above that threshold go toward repayments, and if the debt is not paid off within 30 years, it’s totally forgiven.

According to the College Board, the average 2018 graduate in the United States took out $29,000 in loans to pay for their undergraduate studies. And data from the Federal Reserve shows paying that back requires fixed mortgage-like monthly repayments.

Professor Gill Wyness from University College London says a move to the more progressive, sliding-scale British system could help American students.

Gill Wyness: The repayment burden is minimized. So you don’t have a situation where a student graduates, doesn’t have a job and then has to start finding ways to repay their loan. That just doesn’t happen here. They’re protected from risk, and I think that’s an extremely important sort of safety net.

Craig: In the U.K., the average yearly costs are around $11,000. Prior to 1998, college students here had been able attend any public university for free, like in Germany and France.

But professor Nick Barr at the London School of Economics says free education in England didn’t guarantee equal participation.

Nick Barr: Of 100 students from a middle-class background, 85 went to university. And of 100 students from working-class backgrounds, 15 went to university. The problem in Germany and France, particularly in France, is it’s free and anyone can go, so you’ve got huge classes and a high dropout rate.

Craig: He says the free system works further north in …

Barr: Sweden, Norway, Finland. Those are countries where people are prepared to pay high taxes in return for high-quality public services. Those countries have very good nursery education and therefore the class gradient in participation in higher education is much less pronounced than in most European countries or the U.S.

Craig: In Norway, public spending on higher education clocks in at around 1.7% of economic output. In the U.S., it’s less than 1%.

Back in the U.K., Abigail Butler has just started repaying her loans at a cost of around $50 a month.

Butler: It doesn’t worry me, because the debt is not the same as if I had 42,000 pounds out on a credit card.

Craig: Higher education reform is one lever to pull when thinking about how to rebuild a battered U.S. economy. But what blueprint policymakers use could come down to this choice: higher public spending for a fully-funded system like the Scandis, or, one like the British have, which splits the burden more evenly between higher-income earners and the government.


Brancaccio: Let’s talk to the mayor of Chicago Lori Lightfoot, a Democrat who says she won’t let a pandemic stop her plans to end poverty in her city. It’s about access to credit to help people build wealth. It’s about linking more people who’ve done prison time to jobs and a minimum wage that will go up to $15 an hour by next year, plus fixing health care with wide disparities in infant mortality depending on neighborhood. Mayor Lightfoot, welcome.

Chicago Mayor Lori Lightfoot arrives at Wrigley Field on April 16, 2020 in Chicago, Illinois. (Jonathan Daniel/Getty Images)

Mayor Lori Lightfoot: It’s my pleasure, David.

Brancaccio: It didn’t take protests that followed the police killing of George Floyd to get you focused on economic inequality.

Lightfoot: No, the absence of — which is how we think of poverty — really has a number of cascading problems that flow from that. At the end of February, we launched our first ever poverty summit and outlined steps to end poverty in a generation. But the COVID crisis, I think, has really brought those measures into stark relief. When we think about the disproportion impact that COVID-19 has had on Black and brown communities, stemming a lot from the unequal access to health care, we know that we need to accelerate the things that we had planned step by step and really build them up much more expeditiously.

Brancaccio: And it’s lots of things your team is thinking about. I mean, just one of them is a very practical thing. The cost, often the high cost, of just connecting your address to gas, water and power.

Lightfoot: We saw, prior to the start of my administration, people really, literally, being disconnected from water services. I regard water as a basic human right, so we stopped that, even before I officially took office. And we started a process now to bring people back into connection and give them the opportunity, after a year of making payments, to get rid of any preexisting debt.

Brancaccio: But on the fines and fees and the licenses — I mean, the city of Chicago helps run itself with the money you get from those. The idea is to rethink that?

Lightfoot: We have to rethink it, and here’s why. Yes, the city has historically relied heavily, but we also have literally debt going back to the 1990s that we’re absolutely never going to be able to collect. But the larger problem is, when you put people in a position where they’re literally driven into bankruptcy, where they can’t get access to basic city services, you’re taking those people out of the economy. We need people contributing. We need people to feel like they’ve got a stake in their future here in Chicago, and not that the city is basically putting up a stop sign and saying we don’t want you, you don’t belong here unless you pay up.

Brancaccio: Lori Lightfoot is an attorney and the mayor of Chicago since 2019. Thank you very much for this.

Lightfoot: It’s my pleasure.

You can read more insights from the experts below:

And you can find their books here:


“The Economy Reimagined” was produced by Candace Manriquez Wrenn, Rose Conlon, Victoria Craig, Meredith Garretson, Daniel Shin and Erika Soderstrom. Alex Schroeder produced the digital elements. Engineering by Brian Allison and Jay Siebold. Our theme music was composed and recorded by Daniel Ramirez and Ben Tolliday. Our executive producer Nicole Childers oversaw the project.

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