Sunday, May 24, 2015

Turning the EITC Into A Monthly Wage Subsidy

I've stopped wading into policy details of things I don't know anything in particular about, but today I'll make an exception. Just a quick idea: why not turn the Earned Income Tax Credit into an explicit monthly wage subsidy? Alicia and I were talking about this the other day, so this week's editorial from Warren Buffett caught my eye. He calls for a more robust EITC instead of a higher minimum wage.

This makes an enormous amount of sense. The moral and practical need for redistribution of wealth is obvious to many of us, and that's the starting point for activism around the minimum wage. But the push for a $15 minimum strikes me as the wrong answer to the right question. It seems that advocates are correct that bubbles fueled by wealth inequality are economically destructive. I think they're also right that it is morally good to cultivate a society in which all work is honored and has dignity. That means structuring the market so that hard-working people have just rewards. It is not as though Jamie Dimon is some kind of hard-working phenom who has earned everything he has and people who can't make rent are doing something wrong.

But it's not at all clear to me how a $15 minimum wage is going to improve life, in the aggregate, for the working poor. It will be good for those who manage to retain their jobs, and it will boost wages up the income ladder because the floor will be so much higher. But I've seen no one explain how this would be anything but devastating to a lot of entry-level workers and teenagers. Businesses are not run as philanthropies. They will try to keep their labor costs down one way or another.

One way of looking at it is that the minimum wage and the EITC are both wage subsidies. But they are both inefficient. The former compels employers to pay workers more than they otherwise might, while the latter is hidden in the tax code and is only distributed once a year. Why not have a moderate minimum wage, indexed to inflation, paired with a revamped EITC that is explicit and consistent? If we want people to have a living wage, it seems to me that it would be less distortionary and less harmful to aggregate employment if the federal government provides the subsidy from general tax revenues rather than the employer doing it directly.

As it stands now, the EITC already makes the yearly income for my family and millions of others substantially larger than what our pay stubs throughout the year indicate. But that makes it difficult to plan and budget. It takes a lot of discipline and foresight to apply one lump sum to your expenses throughout the year. And what if tax law changes during the year? You really aren't sure if that money is going to be there in the end, and if you're living on the edge of your financial resources, this is not an academic question at all. And what if you don't know any better and get the "help" of one of the many predatory tax services companies that prey on the poor and take large chunks of their return?

So why not make the EITC explicit, a line item in your paycheck, doled out monthly? Yes, make it larger while we're at it. It seems to me that this would be extremely helpful for poor working families. It is stressful to be barely making it all year and then have a sudden cash infusion around tax time. We're already subsidizing workers, so why not do it transparently and consistently?

Friday, May 8, 2015

The Many Reasons Tamir Is Dead

A former NYPD officer had a good piece in Buzzfeed this week describing how he believes ordinary police officers are thinking and feeling in these times. He writes,
There have been many studies on the effects of poverty on communities, and rightfully so — the toll on their safety and health is vast and consequential. Less examined is what happens to officers who work 40 hours a week in abject poverty. I’m not saying it’s the same. We officers have homes to go to in places that look much different. But you can’t tell me that there’s not some effect on us. We’re not robots. And every time I’m working — dealing with the terrible things happening to unfortunate people — and someone yells “Hands up, don’t shoot,” it hardens me a little more. I back into my corner with my brothers and sisters in blue, people who understand me.
Ironically, about 5 minutes before reading this article Alicia and I were talking about how police officers are bearing the brunt of the blame for our nation's practice of White supremacy. Of course it's unfair. Of course it makes good officers feel badly. But if we were ever going to build a new movement against White supremacy, it was always likely to start here. When agents of the state are killing well over a thousand Americans every year, it's not something people should be able to accept with equanimity. When officers can murder people in broad daylight on video and not be held accountable, (as happened in the Eric Garner case and appears to be happening in the Tamir Rice case) it is right and good for people to be outraged.

And yet, this former NYPD officer's point is important. If it was necessary for the movement to begin here, at the point the trigger is pulled, it is just as necessary that it not end there. Of course policing practices in this country are unjust. But scapegoating individual officers for this misses the point. How can the state's duly constituted enforcers of the law act justly when the state itself is built to advantage Whiteness and criminalize Blackness? Police are acting on our orders!

These killings must stop. I do believe that accountability and retraining, education and reform, within police departments is important. But this movement is incredibly shortsighted if we think it can or should stop there.

Why is Tamir dead? Why is Eric dead? Why is Freddie dead?

It is not only, or even primarily, because renegade officers acted poorly. We must broaden our view to take in the full spectrum of White supremacy that structures all of our lives. How do we get to the point where the trigger is pulled? Every municipality in the country that has exclusionary zoning is culpable. Every big bank is culpable. Did you know that during the housing bubble the banks gave junk loans to people based on their skin color? Employers (who are less likely to hire equally qualified Black candidates) are culpable. City governments that place toxic waste facilities in poor communities are culpable. Landlords who do not bother getting rid of lead paint are culpable. (Did you know Freddie Gray was poisoned so badly as a child he had no chance at a normal life, barring a miracle?) Most realty companies are culpable (on average, they steer people of color away from White communities and show them fewer homes). The chief justice of the Supreme Court of the United States, who has worked to undo school desegregation, is culpable! Every member of congress who refuses to even consider John Conyers' bill for the study of reparations is culpable.

The White evangelical church is deeply implicated in the pulling of the trigger. Its theological heresy devalues Black life and makes an idol out of Whiteness. Of all religious groups in the United States, the tradition from which I come and which I love is the most ignorant of how the American justice system works. White evangelicalism, because of its exceptional ignorance and unconscious racism, aids and abets injustice. Our norms about how we describe our past and present also help to pull the trigger. When we refuse to acknowledge that American policy has deliberately created White wealth and Black poverty, we naturalize injustice. It is wrong to talk about crime without admitting that American policy has always criminalized Blackness and made "black crime" a self-fulfilling prophecy. (See here, here, here, here, and here!)

All of this is reason to think that the greatest contribution of the Black Lives Matter movement thus far is not specific policy gains--though there have been some--but a general rise in consciousness. More people are realizing that the rule of law in this country is ruptured by the color line. More people (I hope) are realizing that to implicate the police is to implicate ourselves. This is a good time to return to Dr. King's last Sunday sermon, delivered less than a week before he died. Years after the passage of civil rights legislation, Dr. King was still not satisfied:
It is an unhappy truth that racism is a way of life for the vast majority of white Americans, spoken and unspoken, acknowledged and denied, subtle and sometimes not so subtle—the disease of racism permeates and poisons a whole body politic. And I can see nothing more urgent than for America to work passionately and unrelentingly—to get rid of the disease of racism.
Something positive must be done. Everyone must share in the guilt as individuals and as institutions. The government must certainly share the guilt; individuals must share the guilt; even the church must share the guilt...
The hour has come for everybody, for all institutions of the public sector and the private sector to work to get rid of racism. 

Monday, May 4, 2015

American Slavery Shapes Life Chances in 2015

The New York Times has a great visualization of some new research on economic mobility from some Harvard researchers. Here's the map. Red is bad, blue is good:

The language the Times uses here is clunky, but basically here's what's being measured: the average yearly income of a 26-year-old who grew up poor. If you grew up poor in a red county, your average income as an adult is much lower; if you grew up poor in a blue county, your average income is much higher. One of the main takeaways, of course, is that place matters a great deal to life opportunities. (It also matters at the neighborhood level). The South and Southwest, and many urban centers, are not very good places to grow up poor. But if place matters, it is important to remember that history conditions space. There's nothing natural about poor kids in one county having less chance of success than poor kids in another. It's a historically contingent outcome. With that in mind, let's look at another map:

This map shows the percentage of the population that was enslaved according to the last census before the Civil War.  Look familiar? It turns out there is a strong correlation between enslavement 150 years ago and economic mobility now. It's important to understand that the lack of mobility in the South is not mysterious. For centuries White southern elites have pursued cheap labor as their foremost economic priority. They have succeeded! It just doesn't work very well for the poor.

This gets at a frequent misunderstanding people have about racism. They think of it as fundamentally irrational and bigoted, and therefore assume that they are free from its pull. Moreover, they often don't recognize something as racism unless it is very obviously and essentially racist, with no other factors at play. But of course, nearly nothing works like that. As with any other force, racism does not exist in a vacuum. It interacts with other variables in complex ways. And so, after the Civil War, White southerners did not try to institute Black Codes out of an irrational hatred for Black skin. They did so with the very rational desire to make a profit. Racism is profitable, and it is almost always tied economics. As one southern elite wrote after the Civil War, "You will find that this question of the control of labor underlies every other question of state interest." The fact that White southern elites were ultimately able to impose an oppressive system of sharecropping through the first half of the twentieth century goes a long way toward explaining the research the Times published today.

There's a broader point to be made here about structural racism as well. Notice that the areas of highest mobility tend to be in the upper Midwest and plains states where the population is almost entirely White. The White poor are simply not as stigmatized, segregated, policed, and isolated as are poor people of color. White children almost never grow up in neighborhoods of concentrated poverty, while poor children of color frequently do. Because the White poor are more likely to have social and economic connections to the middle class, they have higher mobility.

As we continue to learn more about the structures of opportunity in our society, moralistic appeals to culture as the cause of poverty are increasingly becoming intellectually lazy and morally troubling. Yet such appeals are likely to remain popular, because they absolve the powerful and blame the weak.