Expanding Opportunity by Narrowing Inequalities

The thoughts expressed in this Guest Opinion are those of the writer and do not necessarily reflect the views of S&P Global.

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As we highlighted in Entrepreneurial Leaders, growing income disparities at the individual household and between regions are powered by fundamental forces in our economy. Researchers have identified technological change that favors skilled workers over those with lesser skills as being the most important of these causes, but also the declining share of workers belonging to unions, and increased share of imported goods in the economy have contributed to downward pressure on wages of workers in the middle and lower parts of the income distribution.

These forces can only be reversed by a major shift in the balance of the workforce that has the skills to keep up with changes in technology will be required. We begin with one such initiative in a state, Mississippi, where the education challenges have been especially strong, led by one remarkable individual, Rachel Canter, who has been working tirelessly through Mississippi First, the non-profit she founded in 2008 to improve K-12 education throughout the state.

Upgrading America’s educational system, broadly defined, to include skills training throughout life is, of course, a major endeavor, has long been an object of public policy, and will continue to be a work in progress for decades. In the meantime, there are pockets of the economy where simple organizing can achieve some surprising income gains. One of those pockets – heretofore unpaid internships – is the subject of our second profile in this section, Mark Vera, who has led efforts to rectify this injustice first in a surprising place, the U.S. Congress, and since then has expanded his efforts in a growing number of places in the rest of the country.

Enabling young people to get paid for their internship labors illustrates how incomes at the very bottom of the income distribution, for young people, can be lifted through the courageous action of one organization. Another idea with potentially much broader application is for government to guarantee at least some minimum level of income for everyone. That concept received national attention during the 2020 Democratic presidential primaries because it was one of the main planks of Andrew Yang’s campaign.

But the concept of a guaranteed income has longer, deeper intellectual roots in the U.S., and from surprising quarters. Today, it is a concept most associated with Yang and other progressive Democrats, including the late Senator George McGovern, who included a variation of the idea as a plank in his 1972 presidential campaign. But the concept – implemented as a “negative” income tax – was supported earlier by at least two prominent Republicans, former President Richard Nixon, who in turn was inspired by one of the concept’s most famous conservative advocates, Nobel-prizing economist Milton Friedman. Among economists associated with the Democratic party, another Nobel-prize winner, James Tobin was a leading advocate of a similar idea.

A guaranteed income has drawn two main critiques. One objection relates to its universality. Some advocates of the concept have supported it only as a targeted measure, meant to provide those without enough wage income to reach at least some measure of poverty, with a guarantee that would get them to that point. Targeting income support is likely to be substantially less expensive than a universal income guarantee. A second critique argues that an income guarantee of any type discourages people from working. Our third profile in this section features two enterprising mayors, Michael Tubbs in Stockton, California and Sumbul Siddiqui of Cambridge, Massachusetts, who have tested that critique, by running local experiments on families with limited means (incomes below $46,000 in Stockton and single parents in Cambridge), to see if that is the case. The early results are in from Stockton and though limited in sample size, they suggest that the criticism has not been borne out. As one account of the experiment concluded: “The best way to get people out of poverty is just to get them out of poverty; the best way to offer families more resources is just to offer them more resources.” [Lowrey]. At this writing, the Cambridge experiment is currently underway and will be evaluated by a consortium of researchers from prestigious universities. At this writing, other experiments with a guaranteed income are under way in multiple cities around the country [Zeitlin].

These experiments will provide important and valuable information regarding the impact of a guaranteed income on incentives to work, which should inform policy making at the federal level, the only level of government that has the financial means to implement the idea at the national level on a sustained basis. Since the Stockton and Cambridge experiments, the COVID pandemic has induced the federal government to provide time-limited variations of a guaranteed income, with three universal payments to households earning under $150,000. In addition, a one year $3,600 child credit, also universal for all households below a threshold income level, was included in the pandemic-related economic rescue package championed by President Biden and approved by Congress in early 2021. As in the 1970s, the child credit version of a guaranteed income has bipartisan support, at least in principle, with Senators Mitt Romney and Marco Rubio having backed different versions of the child credit idea.

Local experiments with a guaranteed income, given the fiscal constraints, are likely to be limited in scope, even if they “work,” although they are useful in providing data. Another approach to improving the fortunes of local economies, and thus potentially narrowing regional and perhaps individual income disparities, is to induce skilled young people to return to their hometowns, to work for local businesses and ideally even form some of their own. This is the ambition of Benya Kraus, the subject of the fourth profile in this section, who wants to expand on that idea, one which was gaining traction even before the pandemic began encouraging talent migration away from popular, high-cost superstar cities. It will be interesting to see if Kraus’ Lead for America will be able capitalize on this trend on a more permanent basis.

Our fifth profile features Andrew Chen, who has championed the use of innovative financing techniques for narrowing income inequalities, including “Social Impact Bonds” and “Career Impact Bonds.” Inequality in America is evident not only in incomes and wealth, but even with the Affordable Care Act in place, in access to health care. As the pandemic has highlighted, the availability of quality health care also remains highly uneven for seniors living in care facilities, who were most immediately exposed to the COVID virus at the outset of the pandemic, and who died in disproportionate numbers – until the vaccines became available and were administered to senior residents of care facilities.

One enterprising effort pioneered by Dr. Si Francis, the sixth profile in this section, shows how even for-profit enterprises can help address the inequities in health care affecting this nation’s most vulnerable populations. Just as significant, the organization he founded, WelbeHealth, is showing how its innovative care model can be scaled, as highlighted in the accompanying box.

Finally, as horrible the impact of the pandemic has been for so many American families, it has had an unprecedented traumatic effect on the physicians, nurses, and other health care workers on the front lines who have had deal with the mounting deaths and grief in ways they could never have imagined. And yet they have persevered, though surely no without great difficulty and anguish.

Enter the Emotional PPE Project, the last profile in this “opportunity” section, which is providing a ray of hope for some health care workers in Massachusetts, enabling health care professionals to obtain counseling services to help them cope with emotional fallout of being on the front lines of this viral war. Emotional PPE is one of several similar efforts under way throughout the country, and more can certainly be learned from its example.