Forgotten americans an economic agenda for a divided nation

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Forgotten americans an economic agenda for a divided nation

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THE FORGOTTEN AMERICANS ISABEL SAWHILL The Forgotten Americans AN ECONOMIC AGENDA FOR A DIVIDED NATION Published with assistance from the foundation established in memory of Amasa Stone Mather of the Class of 1907, Yale College Copyright © 2018 by Isabel Sawhill All rights reserved This book may not be reproduced, in whole or in part, including illustrations, in any form (beyond that copying permitted by Sections 107 and 108 of the U.S Copyright Law and except by reviewers for the public press), without written permission from the publishers Yale University Press books may be purchased in quantity for educational, business, or promotional use For information, please email sales.press@yale.edu (U.S office) or sales@yaleup.co.uk (U.K office) Set in Scala type by Westchester Publishing Services Printed in the United States of America Library of Congress Control Number: 2018942605 ISBN 978-0-300-23036-9 (hardcover : alk paper) A catalogue record for this book is available from the British Library This paper meets the requirements of ANSI/NISO Z39.48-1992 (Permanence of Paper) 10 CONTENTS Preface Introduction The Forgotten Americans What Went Wrong? Why Economic Growth Is Not Enough The Limits of Redistribution A GI Bill for America’s Workers Creating Jobs and Rewarding Work A Bigger Role for the Private Sector Updating Social Insurance 10 Conclusion Notes Index PREFACE by the 2016 election I began working on this book before the election and then had to rethink it afterward Who was it that voted for Trump? What is it about their lives that caused them to vote for him? And, most importantly, what should an economic policy look like in the post-Trump era? I began to question old assumptions about what might be both effective and politically feasible in this new era, which required that I reexamine almost everything I thought I knew Can we boost the rate of long-term economic growth enough to make a lot of people better off, or is that a pipe dream? Are unprecedented levels of inequality here to stay, or can we redistribute whatever level of prosperity we have more broadly? How we achieve a broader version of prosperity in today’s toxic political environment? What might work best, given the country’s attitudes and existing institutions? This book wrestles with these questions It argues for policies that are better aligned with American values and responsive to people’s actual day-to-day needs It focuses on the value of work and the importance of jobs and wages Work is a unifying concept, something everyone understands and supports But we need a more honest accounting of what does and does not improve people’s job prospects That means getting beyond simple “trickle-down” and “trickle-up” theories and political rhetoric about their importance In late 2017, Congress enacted a giant tax bill sold to the public in trickle-down clothes On the left, there was talk of the need for a universal basic income where income would almost magically trickle up to literally everyone Those are, for the most part, fake remedies Instead, we need to better prepare people for the jobs that exist and use the tax system and a more inclusive form of private-sector–led capitalism to boost the job opportunities and wages of the bottom half Although I am a solutions-oriented economist, I like to ask basic questions, review evidence on what we know about them, and guide the nonacademic reader through the underbrush and the data to a set of hopefully reasonable conclusions In the process, I learn a lot My hope is that readers with a serious interest in such topics as growth, inequality, and the labor market will benefit from this review Whether one agrees with my ideas or not, their foundations should be transparent—the basis for a healthy dialogue On a more personal note, I have long believed that life is unpredictable and often unfair For this reason, much of my career has been devoted to studying poverty and inequality More often than not that leads to a focus on the poorest Americans But just above them is a group that believes it is playing by the rules and not getting ahead Of course, the poor deserve compassion but they have gotten plenty of scholarly attention The working and middle classes have received less All of them are part of a group I call “the forgotten Americans.” I have also focused a lot of my work on opportunity—on what scholars call “intergenerational social mobility.” Together with my colleague Ron Haskins, I wrote a book on Creating an Opportunity Society We developed and have jointly written about “the success sequence”—the idea that if you get an education, work fulltime, and wait to have children until you are married or in a committed relationship, you will have a good chance of escaping poverty and joining the middle class In my most recent book, Generation Unbound: Drifting into Sex and Parenthood without Marriage, I tackled the family piece of the success sequence, calling for a shift in norms and for LIKE MANY PEOPLE, I WAS DUMBFOUNDED greater use of long-acting forms of contraception to produce more responsible parenting and family formation In this book, I focus on work If I stick to the “success sequence” frame, my next book will have to be about education! I have the good fortune to have had a long career as a scholar at the Brookings Institution I work with some of the smartest and best-informed people imaginable—a rare privilege As an economist who has served in government, and been on the firing line for making difficult decisions in President Clinton’s Office of Management and Budget, I take a pragmatic approach to most problems I am no fan of President Trump but still hope that Republicans will reach out to that broader slice of America they seem to have forgotten of late, despite the president’s rhetoric Their messaging is fine; their policies are wanting As for Democrats, I admire their fighting spirit and their compassion but believe there is a risk that they will overplay their hand, pleasing their base but neglecting the moderate but quiet middle that wants stability, pragmatism, and dignity in public life, not a new swerve to the left I have many people to thank for help with this book First and foremost is Eleanor Krause She was my research assistant at Brookings through this period I have marveled at her patience, her work ethic, her ability to see long before I did the many flaws in the book (some of which, I’m sure, remain), and her willingness to tackle almost any subject and master it in short order In her spare time, she climbs cliffs and rides a bike in zero-degree weather Nothing is too hard for her Richard Reeves, Alice Rivlin, and Robert Reischauer all gave especially generously of their time to help me see ways to improve the manuscript Richard proved that it’s possible to teach an aging scholar how to write or think more clearly Other colleagues to whom I am grateful for advice on the book include Henry Aaron, Martin Baily, Ben Bernanke, Emily Bowden, Elaine Kamarck, Gary Burtless, Bill Galston, Ted Gayer, Carol Graham, Josh Gotbaum, Ron Haskins, Delaney Parrish, Jonathan Rauch, Molly Reynolds, Martha Ross, and David Wessel Outside of Brookings, I received valuable comments from Dominic Barton, Harry Holzer, Elisabeth Jacobs, Tamar Jacoby, Robert Solow, Steven Pearlstein, Christopher Schroeder, Ben Veghte, and the “Gang of 10,” my favorite group of business economists Many family members and friends have also read or suffered through interminable discussions of very early drafts of this book Among this group, I especially want to thank David Adoff, Sarah and Win Brown, Monroe and Fred Hodder, Bob and Jane Stein, Sally and Ed Supplee, Hildy Teegen, and Jamie and Evelyn Sawhill Finally, I want to thank Seth Ditchik at Yale University Press for giving me the right advice when I needed it most, and Adriana Cloud, Ann-Marie Imbornoni, and Debbie Masi for careful attention to the copyediting and production of the manuscript My goal for this book is very simple: to catalyze a new discussion about how to create a jobsbased prosperity and a less-divided nation in the coming decades Although I offer some specific ideas as fodder for that discussion, if these ideas no more than catalyze a richer debate, and some still better ideas, I will be pleased THE FORGOTTEN AMERICANS Introduction WHEN RONALD REAGAN WAS CAMPAIGNING for the presidency in the 1970s, he regularly referred to a Chicago welfare recipient who, Reagan said, had bilked the government of $150,000 “She has 80 names, 30 addresses, 12 Social Security cards and is collecting veterans’ benefits on four nonexisting deceased husbands,” he said.1 Although fact-checking showed that Reagan was exaggerating, the story resonated with the public, so he repeated it over and over again Thus was born the idea of a “welfare queen.” Bill Clinton, although far more sympathetic to the poor than Ronald Reagan, campaigned on “ending welfare as we know it.” He wanted welfare to be a way station and not a way of life His stance was so popular that when I joined his administration in 1993, my top assignment was to help craft a plan to reform welfare It became a bipartisan issue, and in 1996, Congress voted to turn the old unconditional cash welfare program into a new and temporary program that required recipients to work But welfare is not just for the poor The rich get welfare as well When someone dies and gives a large bequest to his or her children, the inheritance is a windfall, an often large and unearned gift for the recipient The tax bill enacted in 2017 only taxes such bequests if an individual decedent has more than $11 million and a couple has more than $22 million.2 That bill ballooned the nation’s debt and provided most of its benefits to corporations Some commentators looked at the new law and labeled it a reward for wealthy donors and special interest groups There is nothing new about corporate welfare Oil companies and ethanol producers receive large and mostly unwarranted subsidies.3 Big Wall Street banks were rescued while equity in people’s homes was wiped out during the financial crisis Corporate tax reductions fatten profits earned from past, not future, investments Rising rates of concentration are limiting competition and increasing control over prices in many industries, leading to supernormal profits.4 Government welfare, in whatever form, and whoever the recipients are, makes a lot of people mad Hand-Ups, Not Handouts The problem with welfare, whether for the rich or the poor, is that it is incompatible with the principle that individuals should earn their money Americans not like freeloading They expect to work unless they are disabled or elderly And they don’t want their taxes going to pay for those getting something for nothing—whether they are welfare recipients or corporations that avoid taxation by exploiting various loopholes The Clinton-era welfare reform may have saved some money, but it was a pittance compared to what we gave up when we stopped taxing all but a tiny number of estates and a large portion of business profits And because these tax cuts were put on the national credit card, it is the middle class that will ultimately have to pay for them This book is about returning to a system in which work is rewarded over welfare, hand-ups over handouts, wages over windfall profits It is about improving the lives of those who are neither rich nor poor but somewhere in the middle And it is about policies linked to mainstream values such as family, education, and work A Focus on Middle- and Working-Class Families In recent decades, experts, advocates, and elected officials have paid a lot of attention to relatively narrow groups, whether rich or poor They have neglected the middle and working classes —a very large group Many in this group have been affected by the economic disruptions caused by changes in trade and technology, and are struggling with a lack of jobs and stagnant earnings Economists have long argued that trade and technology create winners and losers, with net benefits for society as a whole, but unless the political system creates mechanisms for sharing the benefits more widely, there is bound to be pushback or alienation on the part of the losers Throughout this book, I focus on these forgotten Americans There is no precise definition that captures exactly who they are, but to set some broad parameters, I assume they are working-age adults (twenty-five to sixty-four) without four-year college degrees whose family incomes put them in the bottom half of the income distribution Defined this way, they have annual family incomes below about $70,000 and they represent 38 percent of the working-age population Not all of this group is in trouble, but many need help—a hand-up if not a handout It would be relatively simple to devise an agenda that addresses their needs, but there are two big constraints: the country is more divided than ever, and trust in government is at a low ebb A Divided Country The country is not just divided economically, it is divided culturally and politically as well Income inequality, to be sure, is at an all-time high But the population is also sorting itself into communities of like-minded people About half of partisan Democrats and Republicans don’t want their children to marry someone who supports the opposite party.5 We live in information bubbles that shield us from understanding other people and other points of view Many people don’t trust the mainstream media and are increasingly turning to family, friends, and self-selected media to create their own versions of reality In my concluding chapter I liken us to the boys who were stranded on an island in the novel Lord of the Flies They broke into warring tribes, began to believe in illusory beasts, abandoned civilized norms, and eventually turned violent Granted, we are not at that stage but it’s a cautionary tale Lack of Trust in Government Not only are we divided but trust in government is at rock-bottom levels Many people believe that government doesn’t work, that it is spending their tax dollars unwisely, and that elected officials are self-interested if not corrupt Because government hasn’t addressed the problems they see every day —a lack of jobs, crumbling infrastructure, inadequate schools, an opioid epidemic—they have lost faith in it Congress and the president have rarely been less popular Listen Liberal (Frank), 24 Litan, Robert, 119 Long, Russell, 153 Longevity, uneven distribution of greater, 167–168 See also Life expectancy Long-term investment, evaluation of, 142–145 Lord of the Flies (Golding), 3, 182, 183, 191 Loss aversion, 83, 99, 208n21 Lowrey, Annie, 30 Luck, political leanings and view of role of, 211n11 Lump of labor fallacy, 127–128 Maag, Elaine, 133 Maddow, Rachel, 40 Madison, James, 153 Mann, Thomas, 183 Manufacturing jobs, economic growth and return of, 83, 86–87 Market, allocation of wealth and, 98–99 Market concentration, increase in across most industries, 226n26 Market incomes of working class, 51–52 Marriage: among white working class, 20 effect on economic prospects, 66, 67–68 EITC and, 133 Marshall, Alfred, 143 Massachusetts Workforce Training Fund, 157 Maternal education, children’s social mobility and, 64–65 Mayer, Jane, 100 McAfee, Andrew, 49, 56 McCain, John, 110 McChrystal, Stanley, 6, 111 McKinsey and Company, 143, 145, 189 McKinsey Global Institute, on automation of jobs, 56–57 McMurrer, Daniel P., 63 MDRC, 121 Means-tested welfare programs, 172 Media: attempts to discredit, 40 news shaped for voters, 39 part played in polarizing country, 27, 184 portrayal of white working class in, 27 Medicaid: life expectancy gap and, 231n19 valuation of benefit, 200n16 See also Social insurance Medicare: cost of, 172 decline in redistributive nature of, 171 popularity of, 4, 15, 37 valuation of benefit, 200n16 See also Social insurance Medicare tax, 178, 233n40 Men: average retirement age for, 231n16 decline in labor participation rate among, 18, 30–31, 61–62 effect of automation on male employment, 57 gender issues in joblessness among, 124–125 increase in leisure time for, 230n7 Merit, American public belief in, 97 Meritocracy in the United States, belief in, 63, 134 Middle class: constitutional democracy and strong, 199n1 neglect of, 2–3 stagnant incomes for, 184–185 women’s employment and, 169 Middle-skill jobs, 112, 203n44 Military: ability to pass qualifying exam, 72 public confidence in, 36–37 Milken Review (journal), 65 Miller, Claire Cain, 124 Minimum wage: lack of support for raising among white working class, 21, 22 public support for higher, 15 raising, 130, 131–132 reduction in hours and increase in, 221n15 Mobility, white working class wariness about idea of moving, 33–34 Molyneux, Guy, 12 Money, relation to happiness, 74, 82–83, 185 Moore’s Law, 49 Moral agency, 45 Moral hazard, private accounts and reduction in, 229n2 Mortality, effect of trade liberalization on, 202n37 MSNBC, 39, 40 Munnell, Alicia, 179 Muro, Mark, 30, 107, 119 Murphy, Stephanie, 138 Murray, Charles, 93 National Academies of Sciences, Engineering, and Medicine, 89 National Compensation Survey, 175 National service, 109–111 annual social investment in, 214n4 NBC News/Wall Street Journal poll, pessimism about children’s upward mobility, 46 Negative income tax, 94 A New Deal for Old Age: Toward a Progressive Retirement (Alstott), 236n63 News, sources of, 39, 40–41, 198n69 New York City: Customized Training Program, 157 sectoral training programs, 121 New Yorker (magazine), 40 New York State Employee Training Incentive Program, 157 New York Times (newspaper), 39, 40, 54, 60, 87, 100, 106, 124, 133 NPR, 40 Obama, Barack: efforts to curtail tax deductions or exclusions, 100, 101 expanded EITC and, 132 support for national service programs, 110 wage insurance program and, 119 white working class and, 26 Occupational Information Network (O*NET), 228n52 Old age and survivors insurance (OASI), 172 See also Social Security Older workers, wage insurance and, 118–119 One Nation after Trump (Dionne, Mann, and Ornstein), 183 Online learning, 116–117 Opportunity, determinants of, 63–72 education, 69–72 family, 67–69 family and, 63–64 social genome model, 64–66 success sequence, 66–67 Opportunity, public belief in importance of equal, 96–97 Opportunity America, 117 Optimism about future in Beattyville (Kentucky), 33 The O’Reilly Factor (television program), 41 Ornstein, Norman, 16, 183 Orszag, Peter, 101 Osborne, Michael, 56 Out-group, changing perceptions of, 43 Out Kids: The American Dream in Crisis (Putnam), 63 PACE Act (2017), 138 Paid leave: fear of abuse of, 180, 237n66 improved recruitment, retention, and motivation and, 234n46 lack of support for among white working class, 21, 22 legislation supporting, 234–235n52 parental, 175–176 popularity of, 15 Paid leave account, 174–176, 187, 190 Parenting programs, 65 Parilla, Joseph, 107, 119 Partisanship, worsening of, 42–43 Party labels, as shortcuts for voters, 12–13, 39 Patagonia, 146 Pathways: to career and college, 118 training programs linked to, 115 Pay, shifting social norms and practices about, 51 See also Wages Paying: for reskilling the workforce, 121–123 for worker credit, 134–136 Payroll taxes, 163 low-income families and, 51 Medicare tax, 178, 233n40 paying for Social Security, 233n40 raising, to pay for social insurance programs, 178 regressive nature of vs progressive nature of benefits, 232n31 Peace Corps, 109 Pearlstein, Steven, 146, 147 Pell grants, 71, 113, 174, 215–216n17 Perkins Act, 111 Per Scholas, 121 Personal responsibility: policy formulation and, 5, social insurance and reduction of, 179–180 strength among working class, 28 Pessimism of white working class, 18, 19–20 Phishing for Phools: The Economics of Manipulation and Deception (Akerlof and Shiller), 38 Piketty, Thomas, 50, 51 Political campaigns, profiling people’s beliefs and attitudes and swaying voters, 40 Political populism, 12 Political power of most affluent Americans, 99–101 Political system, belief is “rigged,” 15 Political tribalism, 42–43 slowing economic growth and, 207n9 Political views and attitudes: role of luck and, 211n11 of white working class, 21–22 Politics and current events, American public’s knowledge of, 40–41 Polman, Paul, 145 Poor: programs and policies for, 34–35 white working class resentment of, 29 Populism: economic, 12 political, 12 social insurance model and, 173 threat to American political system, 183 Postsecondary education, as necessity in contemporary economy, 70–71 See also Career and technical education (CTE) Community colleges Colleges Prasad, Monica, 28 Price, Dan, 148 Price inflation, adjustments to GDP and, 81 Private accounts, system of, 229–230n2 Private sector: economic growth and, 144–145 emphasis on short term in, 189–190 inclusive capitalism and, 187 investing for long term and, 142–145 investing in training, 154–159 job growth and, 139 profit sharing and, 149–150 role in rebuilding skills of work force, 6, 109, 189 shared capitalism and, 149–154 sharing gains with workers, 6, 109, 145–154 short-term profits and, 142, 143–144, 189–190 Private-sector jobs, number of, 224n1 Proctor and Gamble, 150 Productivity: compared to compensation, 140 decline in manufacturing employment and, 86–87 economic growth and growth in, 62 increased wages and increased, 147–148 innovation and, 49 paid leave and enhanced long-term, 234n46 shared capitalism and, 151 total factor, 75 Profits: tying compensation to, 149–151 use of corporate, 142–143 Profit sharing, 149–150, 151, 152 tax treatment of, 153–154 Progressive labor policies, criticism of, 146 Project QUEST, 219n46 PRRI, 18 Public policy, as vehicle for improving lives of forgotten Americans, 35–41 Public support: for paid family leave, 15, 176 for social insurance programs, 4, 15, 37 Publix Super Markets, 146, 150 Putnam, Robert, 63 Quality of life, in France vs United States, 79–80 “Race to the Top” fund, 122 Racism, white working class and, 29 Raff, Daniel, 147–148 Reading and socio-emotional learning program, effectiveness of, 65 Reagan, Ronald, 1, 52, 84, 85, 132, 140, 184 Red Cross, 110 Redistribution, limits of, 92–107 children’s allowance, 95 importance of work, 105–107 universal basic income, 93–95 See also Income redistribution Redistribution, political infeasability of, 185 Reeves, Richard, 53, 65, 100, 123 Registered apprenticeships, 217n27, 219n43 See also Apprenticeships Reich, Robert, 145—146 Relocation assistance, 118, 167 Rents: market concentration and, 226n26 unionized workers and, 149 Rent seeking, government and, 78 Republican Party: alliance with Trump, 17 Fox News and, 39 wealthy and, 100 Republicans: candidate choice in 2016 election, 12–13 expanding their base, 16 focus on tax cuts to create growth and jobs, 14 news sources of, 39, 198n69 policies of, reasons for differences with Democratic voters, 15 view on economic growth, 83–86 Resentment: among white working class, 28–29 income inequality and, 53 Restrepo, Pascual, 57 Retirement age: adjustment of benefits for earlier and later, 232n33, 236n63 average, 231n16 greater longevity and, 167–168 raising, 178–179, 236n61 Social Security benefits and, 170–171, 236n63, 322n33 Revenue, decline in from estate and gift tax, 135–136 The Rise and Fall of American Growth (Gordon), 128 Robinson, John, 166 Robots, job losses and, 57 Romney, Mitt, 28, 110 Roosevelt, Franklin D., 136, 173 Rubio, Marco, 95 Ryan, Paul, 132 Saez, Emmanuel, 50, 51 Safety-net programs, threats to, 34–35 Sallet, Jonathan, 31 Samwick, Andrew, 84, 85 “Save Our Social Security Act of 2016,” 236n61 Savings: lack of among youngest generation, 165 value-added tax and encouraging, 104 Say’s Law, 76 Schatz, Brian, 105 Scheidel, Walter, 42 Scheve, Kenneth, 98 Schools, collaboration with government and employers, 118 See also High school Scientific American (journal), 166 Seattle, effect of increase in minimum wage, 132 The Second Machine Age (Brynjolfsson and McAfee), 49 Sectoral employment, pathways linked to, 115 Sectoral training programs, 121 Secular stagnation, 206n5 Self-reliance, white working class and belief in, 28 Services Employees International Union (SEIU), 93 Shared capitalism: findings on, 151–152 forms of, 149–151 Shareholders: corporate responsibility to, 146–147 rights of, 147 Shiller, Robert, 38 Short-term profits, corporate focus on, 142, 143–144, 189–190 Siemens, 69, 71 Simpson-Bowles Commission, 78, 206n8 Simpson-Bowles Deficit Reduction Plan, 235n55 Single-parent families: increase in child poverty rates, 204n56 increase in number of, 168–169 work-life balance and, 169–170 Skill building: paying for reskilling the workforce, 121–123 private sector role in rebuilding skills of workforce, 6, 109, 189 rebuilding skills of work force, 108–109, 188–189 See also GI Bill for American workers Small Schools of Choice (New York City), 69 Smith, Noah, 105–106 Social change, white working class and, 22–23 Social contract, 4, rights and duties and, Social democratic model, 91 Social genome model, 64–66 Social insurance: current system, 172–174 less redistributive than in past, 170, 171 need for social insurance, 161–163 support for, welfare assistance vs., 233n42 See also Medicare Social Security Unemployment insurance (UI) Social insurance, challenges to reform, 177–181 administrative issues, 180–181 affordability, 177–179 misuse of new benefits, 179–180 Social insurance, reasons to reform, 160–161, 164–172 greater affluence, 164–166 greater longevity, 167–168 growing inequality, 170–171 more employed women and single-parent families, 168–170 new economy, 166–167 Social insurance, reforming, 6, lifelong learning account, 174 paid leave account, 174–176 Social media, bubbles of opinion and, 39 Social mobility: alienation and failure to experience, 92 decline in, 45–46, 59, 184–185 disadvantaged children and, 63–64, 64–65 job loss and declining, 59 rates for younger generations, 20 success sequence and, 66–67 Social norms: around responsible parenthood, 68 effect on labor markets, 125 Social programs: changing children’s trajectories and, 65 conditional nature of, 94–95 Social Security, cost of, 172 decline in redistributive nature of, 170, 171 funding via payroll taxes, 233n40 government task forces on reform of, 235n55 needs not covered by, 172–173 popularity of, 4, 15, 37 Roosevelt and, 233n42 spousal benefit, 177–178, 235n56 “trust fund,” 163 underfunding of, 177, 179, 235n54 Social Security benefits: adjustment of for earlier and later retirement, 232n33, 236n63 delayed retirement credit and, 170–171, 232n33 full retirement age and, 168 Social security disability insurance (SSDI), 172 growth of, 233n37, 233n40, 237–238n67 life expectancy gap and, 231n19 reform of, 180–181 Socioeconomic class, adjustment of Social Security benefits and, 232n33, 236n63 Solow, Robert, 75 Solow model, 75 South Carolina apprenticeship program, 120–121 Southwest Airlines, 146, 150 Spending on active labor market policies, 112–113 Spillover effect, 227–228n51 Spousal benefit, Social Security, 177–178, 235n56 Stakeholder capitalism See Inclusive capitalism Stanley, T D., 131 Stasavage, David, 98 State government: paying for worker training, 121–122, 229n58, 229n60 policies to encourage employer-based training, 157–158 See also Government State-level tax cuts, effect on economic growth, 84–85 Stein, Herbert, 81 Stern, Andrew, 93 Steuerle, Eugene, 164 Stock options, 150, 154 Stout, Lynn, 147 Strangers in Their Own Land (Hochschild), 24, 25–26, 27–28 Strong, Ed, 116 Strong Families Act, 234–235n52 Student debt, 114 Student loans, 174 Substance abuse, among white working class, 21 Success: as cumulative process, 65 values as determinants of, Success for All reading program, 69 Success sequence, 66–67 white working class support for, 97 Summers, Lawrence (Larry), 76, 148 Supplemental Nutrition Assistance Program (SNAP), 94 Supply, relation to demand, 76–77 Supply-side tax cuts and deregulation, 84–86, 208–209n23 Survey of Income and Program Participation (SIPP), 156 Sympathy fatigue, in white working-class communities, 26 Talent planning, 227n43 Talk radio, 39 Tariffs, effect of raising, 88 Taxation: carbon tax, 188 growth-enhancing deficit reduction package and, 78 rise in income inequality and, 52 on top incomes, 51 value-added tax, 103–104, 188 white working class and support for raising on incomes over $250,000, 23 See also Estate tax Payroll taxes Tax credits: for apprenticeship programs in South Carolina, 121 broad-based, child, 95 child care, 137 to encourage employer-based training, 157, 158 See also Worker tax credit Tax cuts: corporate, as drag on long-term economic growth, 185 economic growth and, 79 favoring wealthy, 52 Republican view of economic growth and, 14, 83, 84–86 Tax Cuts and Jobs Act (2017), 85, 99, 100 beneficiaries of, 100 child care tax credit and, 138 estate tax and, 103, 134–135, 228n28 executive pay and, 153 job creation and, 139–140 need to modify, 189 paid leave and, 176 Tax deductions: income redistribution and elimination or capping of, 102 Obama’s effort to curtail those on incomes exceeding $250,000/year, 101 Tax Policy Center: on benefits of Tax Cuts and Job Act, 100 on child care tax credit, 137 on increasing marginal tax rates, 101 on increasing value of EITC, 133 Tax policy exacerbating income inequality, 96 Tax rates: American public desire to raise corporate, 99 American public opinion on top marginal, 23, 97–98, 99 income redistribution and increase in marginal rates for top income brackets, 101–102 Tax subsidies for top 20 percent, 53 Teachers, improving education and quality of, 70 Teach for America, 110 Tea Party, white working class and, 27 Technology: economic growth and, 75, 77, 78–79 increase in demand and, 57–58 job loss and, 54–59 Teles, Steven, 78 Thank You for Being Late (Friedman), 155 Time: allocating lifetime hours over life span, 171–172 as ultimate scarcity and equalizer, 166 Time (magazine), 55–56 Total factor productivity, 75 Trade: economic growth and restrictions on, 83, 87–89 job loss and, 59–60 Trade Adjustment Assistance (TAA) program, 119, 229n58 Trade deficits, reasons for U.S., 88–89 Trade liberalization, effect on mortality, 202n37 Trader Joe’s, 146 Trade shocks, job loss and China, 59 Training: economic growth and investment in, 86 federal government investment in, 215n9 state subsidies for, 229n58, 229n60 See also Employer-based training Treasury Department, on proposed carbon tax revenue, 105 Trump, Donald: attempts to discredit media, 40 change in Republican agenda and, 16–17 demographic characteristics of voters for, 31 election of, 11–13, 16–17, 30, 184 Koch brothers and, 100 norm violations as president, 14 political Trump, Donald (cont.) populism of, 12 position on immigration, 22, 89–90 premature mortality in county and vote for, 21 reasons for election of, 41 social insurance and, 173 trade and immigration restrictions and, 14 tweets, 41 on unemployment rate, 30–31 Trumpism, on economic growth, 83–84 “Trust fund,” Social Security, 163 Tversky, Amos, 99 Unemployment insurance (UI), 172 cost of, 172 misuse of benefit, 179–180 reform of, 122–123 See also Social insurance Unemployment insurance (UI) taxes, to fund incentives for employer-based training, 158 Unilever, 145 Unions, inclusive capitalism and, 145–146, 149 United States, quality of life in France vs in, 79–80 Universal basic adjustment benefit, 107, 119 Universal basic income (UBI), 93–95 Universal jobs guarantee, 129 Upward mobility See Social mobility USA Today (newspaper), 41 Value-added tax (VAT), 103–104, 188 Values: importance of, 4–6 white working class, 28 Vance, J D., 24, 25 Vavreck, Lynn, 12–13 VISTA (Volunteers in Service to America), 109 Vocational education, cultural stigma surrounding, 117–118 white working class and, 33 See also Career and technical education (CTE) Wage insurance, 167, 218n37 for older workers, 118–119 Wages: efficiency, 148 employer-sponsored training and increased, 228n57 gap in between white elites and white working-class men, 19 impact of immigration on, 89 increased productivity and increased, 147–148 increasing, 189 wage-setting norms, 149 See also Minimum wage Wage stagnation, 60–62, 140–142 employer-based training and reversing, 158–159 “Walking the Line: The White Working Class and the Economic Consequences of Morality” (Prasad, et al.), 28 Wall Street Journal (newspaper), 40 Walmart, 88 hourly wages at, 145–146 Wang, Wendy, 67 Washington, George, 153 Washington Post (newspaper), 146 Wealth inequality, estate tax and, 134–136 The Wealth of Humans (Avent), 91 Welfare: means-tested, 172 white working class skepticism of, 23 who receives, 1–2 “Welfare queen,” Welfare reform, 1, 2, 52–53 Welfare state, industrialization and creation of, 202n35 West, Darrell, 100 What’s the Matter with Kansas? (Frank), 24 “When Growth Is Not Enough” (Bernanke), 74 White elites: defined, 17 gap in wages and income between white working-class men and, 19 labor force participation rates for men, 18 Whitehouse, Sheldon, 105 White working class, 17–34 culture of, 24–30 defined, 17–18, 195n16 Democrats and, 14 distressed communities, 30–34 distrust of government and, 13 election of 2016 and, 11–17, 41, 184 family formation and, 20 as forgotten Americans, 11 gap in wage and salary workers incomes, 19 on government spending, 23 labor force participation rates for white working-class men, 18, 30–31 lack of optimism among, 18, 19–20 opposition to welfare programs, 97 political views and attitudes, 21–23 portraits of white working-class communities, 24 rise in early deaths among, 21 social and cultural change and, 22–23 voting against own self-interest, 41–42 See also Forgotten Americans WikiLeaks, 15 Wilcox, W Bradford, 67 Williams, Joan, 29 Women: average retirement age for, 231n16 gender gap in education and, 124 income gap, 19 increase in leisure time for, 230n7 labor force participation by, 49, 80, 169, 175–176, 203n42, 207n14, 232n26 paid leave and labor force participation, 175–176 as primary breadwinners in America, 168, 169 traditional female jobs, 124–125 work and working-class, 18 work for pay and unpaid work in home, 164–165, 232n28 Work: greater longevity and retirement age, 167–168 importance of, 105–107 intrinsic value of, 4–5, 6, 165–166 new gender norms and, 123–126 receipt of large inheritances and incentive to, 229n36 success and, 66, 67 See also Labor force participation Work, rewarding, 130–138 child care subsidies, 136–138 expanded EITC or worker credit, 132–134 higher minimum wage, 131–132 paying for worker credit, 134–136 WorkAdvance, 121 Work-based learning, 116 increasing, 189 See also Apprenticeships Workers, sharing gains in private sector with, 145–154 Worker tax credit, 167, 186 aid for workers in low-paid jobs and, 130, 186, 188, 189 based on individual income, 133–134 older workers and, 167 paying for, 134–136 Workforce, reskilling, 108–109, 121–123, 188–189 See also GI Bill for American workers Workforce Innovation and Opportunity Act, 111 Workforce Investment Act, 229n58 “Workforce 2020” program (AT&T), 155 Working class: market income of, 51–52 neglect of, 2–3 Working time, allocation of over life cycle, Work-life balance, 166, 172 dual-earner families and single-parent families and, 169–170 Works Progress Administration (WPA), 129 World Trade Organization, China’s entry into, 59, 60 Y Combinator, 93 Yellen, Janet, 76–77 Yoder, Kevin, 138 Youth Build, 110 Zuckerberg, Mark, 79, 125 ...THE FORGOTTEN AMERICANS ISABEL SAWHILL The Forgotten Americans AN ECONOMIC AGENDA FOR A DIVIDED NATION Published with assistance from the foundation established in memory of Amasa Stone Mather... ban Muslims, focus on law and order, repeal and replace Obamacare, cut taxes and regulation, and drain the swamp in the nation s capital Trump voters had many concerns, but the candidates’ stances... economy but also our democracy—even our right to call America great again This is the agenda the forgotten Americans want—and deserve 2 The Forgotten Americans IT’S DECEMBER 2016, just before the

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Mục lục

  • Cover

  • Title Page

  • Copyright Page

  • Contents

  • Preface

  • 1 Introduction

  • 2 The Forgotten Americans

  • 3 What Went Wrong?

  • 4 Why Economic Growth Is Not Enough

  • 5 The Limits of Redistribution

  • 6 A GI Bill for America’s Workers

  • 7 Creating Jobs and Rewarding Work

  • 8 A Bigger Role for the Private Sector

  • 9 Updating Social Insurance

  • 10 Conclusion

  • Notes

  • Index

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