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Economic Vulnerability in the Land of Opportunity: Confronting Economic Injustice

The COVID-19 pandemic is far more than a public health crisis or an economic crisis. It has revealed the cracks in America’s social capital - cracks that have long been visible to those caught in them, but that too many of us have largely ignored. I recently wrote about who the economy serves and how well it is serving the people of the United States. In short, the economy is not serving us well. It creates too few good jobs and does little to create opportunities for social mobility that can break generational disparity.

The Pittsburgh region’s economic profile prior to this crisis was not unique. Despite increasing confidence that the regional and national economies were in a ‘growth mode’ before the pandemic, we see now that more than half of our working residents are economically vulnerable. Our economy creates jobs that leave too many people on the precipice of disaster. For many of those impacted by this pandemic, hitting the reset button only pulls them back to the cliff’s edge.

Highlights of the Regional Economy Before the COVID-19 Crisis
Highlights of the Regional Economy Before the COVID-19 Crisis. Source: Fourth Economy Estimates April 2020.

It is true that America is still a land of opportunity, but those opportunities are available only to a few truly exceptional and lucky individuals. Those of us with privilege comfort ourselves that our success is earned, so the failure of others is likewise “earned.” There is a psychological empathy gap that causes us to assume that we would act differently or better than people suffering deprivation and hardship. We too often assume that the suffering of others is due to some failing or bad choices on their part, without understanding how scarcity and the deprivation of basic needs creates a tunnel vision of short-term thinking that inhibits finding long-term solutions to those needs.

The coronavirus does not discriminate, but our housing, economic, and health care policies do.

If we truly want to rebuild a more resilient economy, it will have to be one that is more equitable. Restoring a system of enduring and crushing inequality that traps people in cycles of scarcity is not a goal worthy of the world’s largest economy and one that claims the title of the Land of Opportunity. We can’t remain tied to the bootstrap argument, which rests on the faulty assumption that taking away safety nets and restricting people’s choices about whether and when to work will give them more motivation to put their lives at risk in order to earn barely enough for survival. On May 6, Governor Parson of Missouri instructed workers they would have to return to their jobs if their employers demand it or lose benefits, even though Missouri has insufficient testing and PPE to ensure their safety. In Parson’s view people need a negative incentive to work. We also fall prey to stories of entrepreneurs like Bedros Keuilian, CEO and Founder of Fit Body Boot Camp, who embodies the empathy gap with his personal rags to riches story of overcoming adversity and not giving in to excuses.

Governor Parson and Mr. Keuilian have no patience for excuses, and their perspectives reflect our collective lack of awareness of the role of systemic injustice and discrimination in housing, education, employment, and health care that locks people into generational poverty and struggle. In a recent Brookings article, Andre Perry, David Harshbarger, and Carl Romer clarify how past and current policy choices have reinforced the inequalities that the pandemic has now exposed:

The coronavirus does not discriminate, but our housing, economic, and health care policies do.

Policymakers created wealth inequality, incarceration disparities, a lack of affordable housing, and inadequate health care through the policies they chose to pursue. By choosing to neglect Black communities during good times, we are forced to confront these existential problems during worse times.

The safety nets expanded during this crisis are sorely needed. What is truly unfortunate is that they were needed before the pandemic and they will be needed after it is gone. This is the impact of an economy that produces too many jobs with no benefits and wages insufficient to support a family. Asset-Limited-Income-Constrained-Employed (ALICE) households are working and earning enough to be above the federal poverty level, but not enough to afford the necessities to maintain a family. We need more jobs that can sustain at least a two-child family. The sad lesson of the CARES Act and other supports is that, without them, many households will fall below a basic survival budget.

How are ALICE Households Impacted by COVID-19?
How are ALICE Households Impacted by COVID-19?

If our economy is serving all of the people, then it should enable people to meet their most basic deficiency needs according to Maslow’s hierarchy of needs. These would be food, shelter, safety, and community, for a start. Once these are even partially fulfilled, people can focus on growth needs, such as education. If enforced scarcity and personal gumption were sufficient, then we would not experience the differences in social mobility that exist across the U.S. Raj Chetty and his colleagues explored the erosion of social mobility from parents to children in America, finding that across the U.S., “high mobility areas have (1) less residential segregation, (2) less income inequality, (3) better primary schools, (4) greater social capital, and (5) greater family stability.”

Inequality in the United States is fueled by compounding failures to address basic needs and invest in growth needs. For sake of brevity, we will only highlight one example of basic needs and one example of growth needs to show how well our economy is serving people.

Basic needs: Food Insecurity

We are failing at one of the most basic needs - feeding the people - in a land of abundance. According to the USDA Food Security and Nutrition Assistance program, 14.4 million households - more than one out of every ten - were food insecure at least some time during 2018, at a moment when our economy was historically strong. Within that group are 5.6 million households with very low food security, which means they experience multiple occasions without enough food. Food insecurity has decreased since 2011, but if the lines at the nation’s food banks are any indication the current pandemic is sure to kick off a wave of food insecurity. It should come as no surprise that the burden of food insecurity falls more heavily on single-parent households and households with incomes below the poverty line. If you want to explore these gaps at a state and local level, check out Map the Meal Gap: Hunger & Poverty in the United States. Then ask yourself whether the policies in your state are helping or hurting.

Growth Needs: Education

Few things reflect the patchwork of inequality in the U.S. as well as our primary and secondary education system. With a strong emphasis on local control and funding, the disparities in access to a quality education are far too common. Even though anecdotes are most often misleading, in this case the story of the Midland Borough School District in Pennsylvania vividly illustrates our tolerance for inequality and disparity.

In 1985, as steel mills and other factories in the region closed, Midland raised taxes more than 70 percent but still was unable to keep its high school open. Initially those students were bused to Beaver Area High School about ten miles away, with Midland paying tuition to Beaver. When a new school board in Beaver ended that agreement in 1990, the only place that agreed to take the Midland students was the East Liverpool City School District in Ohio. The East Liverpool school is only about seven miles away, but it is across state lines. East Liverpool ended that agreement in 2015. Midland students now have a choice of the Pennsylvania Cyber Charter School founded in 2000, the Lincoln Park Performing Arts Charter School, founded in 2006, or, once again, the Beaver Area High School. None of this should excuse the fact that the cross-state busing arrangement endured for 25 years.

At the time, Midland seemed to be an exception: the unheralded shame of Pennsylvania. Blinded by our notions of individualism and local control, we forced children to seek an education out of state. State law could not force a merger and the legislature declined to create a fix. What happened in Midland occurred during a severe regional economic crisis, but the underlying injustice was never resolved when the regional and state economies improved. It is highly likely that the COVID-19 crisis will reveal many more Midlands all across the United States, but this time there may be nowhere to bus them.

Already during this pandemic, many students are left behind as education has moved online. The Pittsburgh School District, unable to provide sufficient computers for its students, had to rely on a newly formed public-private partnership to start filling the gap of 7,000 computers. These partners are to be commended, but this effort will have to be replicated across the region and the country or more kids will be left further behind. It is one of the ironies of this current crisis, that these stories of coming together, as heartwarming as they are, should not be necessary in a nation of such wealth and power.

How do we confront economic injustice?

It is too easy and convenient to see this current crisis as unique. The disproportionate impact it has had on the United States, despite our wealth and power, should be a wake up call for us all. In the short term, we need to ensure that everyone has access to sufficient food. If we can at least find some common ground on that most basic of human needs, then we can start to progress along the path to provide shelter, security, community and growth.

When we talk about hitting the reset button, we need to understand that a return to normal leaves many people in a state of vulnerability. We need to be more aware of how our economy fails many of our essential workers - people in health care, food supply, child care, and public safety. We need an honest conversation about the quality of jobs and the risks that many workers face. Workers earning greater than the 75th percentile are almost 7 times more likely to be able to work from home than workers earning less than the 25th percentile. These income gaps explain the persistent inequality and wealth gaps in our society.

Many Pittsburgh Workers Will Face Exposure Risk because of their Line of Work

Beyond low wages, nearly 98,000 people in the region are uninsured. Many of them work low-paying jobs that also expose them to health and safety risks that are heightened by, but not limited to, COVID-19. African Americans are uninsured at more than two times the rate of Whites. Hispanic/Latinos (of any race) are uninsured at almost three times the rate of White, Non-Hispanics. When they get sick in normal times, the lack of insurance and adequate health care creates a spiraling debt trap. We need to advocate for more and better access to health care not just during these months of the pandemic, but for all the months and years that follow. It is time that we recognize that who is “essential” is not simply a matter of how much you make, and we need to treat everyone as essential, not expendable.


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