EPI economist Valerie Wilson joins us for a conversation about the economic costs of racism, and which policies could help further racial equality.
Valerie Wilson is the Director of the Program on Race, Ethnicity, and the Economy at the Economic Policy Institute. Prior to joining EPI, she was an economist and vice president of research at the National Urban League Washington Bureau.
Twitter: @ValerieRWilson
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Racism and the Economy: https://www.epi.org/blog/racism-and-the-economy-fed/
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Ashley:
Hi, I’m Ashley, one of the producers here at Pitchfork Economics. When COVID hit a year ago, we were right in the middle of recording conversations for some episodes that were under development at the time but then we had to abandon our office and pivot to new COVID content so that meant saving those conversations we had already recorded in our archive. But now a whole year has gotten away from us so we’re excited to finally start sharing those conversations with you. The first one is with Valerie Wilson, the director of the program on race, ethnicity and the economy at the Economic Policy Institute. And please remember that this conversation with Nick and Jessyn was recorded before the Black Lives Matter movement events of last summer and of course, before the pandemic so listen to it with that lens, if you can. But overall, we think this is a timeless discussion of what policies work in the pursuit of racial equality and what racism costs the economy.
Valerie Wilson:
My name is Valerie Wilson. I’m an economist and director of the program on race, ethnicity and the economy at the Economic Policy Institute.
Nick:
Awesome.
Jessyn:
We are so glad you’re here so I’ll just jump in with some questions. Neo-liberalism promises that a rising tide will lift all boats. We think about this a lot, this myth a lot on this show, regardless of race. But we also know that that’s a lie. And when it comes to economic and racial inequality, we would love for you to help us understand a little bit about where we are now compared to where we were 40 years ago, related to wages, overall wealth disparity, any observations you have.
Valerie Wilson:
It’s interesting when we talk about economic inequality and specifically economic inequality along the lines of race, I always think there are two aspects of that, that we have to keep in mind. One, we have to consider absolute progress. Relative to 40 years ago, are people in a better position now than they were then? But the other aspect of that racial inequality is the relative difference between groups. And what we tend to find is that that relative difference is what changes very little and what has changed very little over time. Absolute progress goes up and down with the economy as it does for all racial and ethnic groups, specifically when we looked at Black white disparities in unemployment, in wages, in income, in wealth. Those inequalities have changed very little in the last 40, much less the last 50 years.
We find that in terms of median household income, Black households have about 60% of the income of white households. We know that the unemployment rate disparity is persistently two to one between Black and white workers. And that two to one also holds within education categories. For high school graduates, you’re going to see a two to one, if not a greater disparity, all the way up to college graduates. And that tends to run contrary to what we expect or at least have been taught about the role of education and increasing opportunities for all people. Again, thinking about this absolute versus relative difference. It is true that if you have higher levels of education, you’re more likely to have lower rates of unemployment, higher wages and higher income, but at the same time, that increased education has not eliminated racial disparities across any number of categories.
Jessyn:
One of the things that came out recently in Seattle was a statistic about the average family household family income by race, and it broke it down where white families in Seattle had a family income of about a $100,000 a year and African-American families in Seattle had family income of about $40,000 a year. And that really states this issue that you’re talking about, how there may be some absolute changes, but the issues of relative wealth disparity and income disparity are really a huge problem. And what do you think are some of the biggest barriers to improving those things today?
Valerie Wilson:
I think it is now as it always has been, structural. When we think about what race really means in this country, it has historically been a mechanism for deciding who would have access to wealth and income and opportunity and who wouldn’t. And even though we’ve come to the point in history where blatant, outright discrimination and racism are in theory, illegal, based on the laws, I think that the structures and the patterns that were put in place by the hundreds of years in which we did have a legally segregated racist society, continue to play themselves out because these things don’t just undo themselves. The periods in history where we have seen progress in terms of greater economic inequality or social inequality across racial lines are the times when there have been very explicit, specific and targeted steps to undo those things. And so without those very specific measures, those old patterns just continue to repeat and replicate themselves.
Nick:
What do you think as you think through the biggest structural barriers that we need to change or reform, what’s your top 10 list or top five list or top three list? Yeah, how do we think about this?
Valerie Wilson:
One, I think that it’s important to acknowledge and understand the role and significance of policy and undoing these things and really understanding that policy set these disparities in place. It’s going to take policy to undo it. The other issue that I find is very connected to a lot of these disparities has to do with segregation and residential segregation. Again, something else that legally and as far as the laws of the country are concerned is behind us, but we continue to see it for any number of reasons. Economic reasons, differences in who has access to money to move to different places, to invest in a college education, to save for retirement, to purchase a home. All of those things continue to impact disparities across any number of economic measures.
And then the other part of that, which I think is more difficult and challenging for people to address or wrap our minds around is just our whole national attitude towards race. Our unwillingness to really acknowledge the ugly racial history in this country that really isn’t so much of history as we would like it to be. I think America will continue to have a race problem as long as we largely deny that it is a problem. One it’s just that sort of reckoning and then getting to the more specific things that we can do to undo the damage.
Jessyn:
That seems like a really important point that as long as we’re not really willing to reckon and talk about explicitly the issue of race and how that then it then means that we’re not able to create targeted and specific policy supports to undo the impacts of systemic racism. And so that’s a really important point that those two things have to go together. Are there specific targeted policies that you would like to see implemented to undo some of the longterm effects of slavery? And then of course, the a 150 years of policies that supported racial caste after that?
Valerie Wilson:
Yeah. I know currently there’s been a lot of, I don’t know if I call it renewed interest, but at least renewed discussion about the idea of reparations for the descendants of slaves. That conversation alone is an important one to have. One, because I think it’s very useful in getting us to this sort of reckoning. To have the conversation, you have to identify and define what it is that we’re offering reparations for. And then in thinking about how people were impacted and how people continue to be impacted again, that contributes to what I see as a more fruitful discussion and consideration of race and the real measurable harms. It’s not just a matter of people being offended or hurt feelings. There are real economic costs to racism in this country. I think reparations is one area where we could at least have a discussion and then think about ways that we can make our society more equitable.
I know folks talk about any number of ways of doing that from outright payments to people, to thinking about maybe different ways in which we provide services or access to different opportunities in this country that may not be a direct payment, but may open doors for people to have access to wealth, to build a community wealth, to start businesses, to purchase homes, to pay for college, et cetera.
Nick:
What’s super striking to me when you start to just look hard at the circumstances of myself and every single one of my peers, all of us, myself included, we started out with such astounding advantages, which have compounded usually over generations. And then you think about folks who were born slaves and then were deliberately excluded from the economy by all sorts of policies for another 150 years. And we wonder why people are not wealthy. Seeing it from the other side sort of objectively makes it so much clearer how profound the disadvantages are of having been excluded for that long.
Valerie Wilson:
Yeah. And that’s absolutely right. I think it is so important to understand that there are two sides of this coin. We talked about racial inequality and racism in this country. We often focus on the side of disadvantage against African-Americans or other communities of color without acknowledging that the other side of that is advantage to white Americans.
Nick:
Yeah, exactly. We have another kind of racial inequality.
Valerie Wilson:
Right, it wasn’t just a one sided coin. There was advantage on one end and disadvantage on the other. It wasn’t neutral on one and then disadvantage on the other. And I think that when you think about it that way and the way that current economic inequalities get racialized in that you have this whole blaming people for not being in better circumstances without completely ignoring the history and completely ignoring the fact that folks who do have better circumstances often received a lot of benefits and privileges beyond what an average person would have had. The story just gets really distorted and really incorrect accurately, historically inaccurate.
Nick:
Right. And I live in Seattle, Washington where some of the richest people in the world live and I know Jeff Bezos and Bill Gates personally, they are astoundingly capable people, but they both came from immense privilege.
Jessyn:
And one of the really convenient stories then that perpetuate neo-liberalism is that you did it all yourself. All of that amazing privilege and work.
Nick:
And the people who didn’t do it, that’s their fault without reckoning with where everybody started and the ways in which both advantages and disadvantages compound over time.
Jessyn:
And that gets exactly to your point, Valerie, about needing to have a really explicit and honest reckoning around how race plays into that story of privilege and disadvantage and then developing the actual policies, really wrestling with things like reparations, what would that actually look like to make people whole?
Valerie Wilson:
Yeah. And even beyond that, just thinking about the whole motivation behind affirmative action policies was to take proactive steps to make sure that everyone had an opportunity to achieve and to have access to jobs and education. The other side of that, I talk about the unemployment disparity. I think well beyond, before the point that we get to discussing reparations, surely employers can consider whether their hiring practices, the way that they advertise and promote jobs and seek job candidates, filters into those disparities. Those are things that people can adjust and make adjustments for themselves that aren’t even at the level of having a national conversation on reparations. Just really being conscious and aware that there are these disparities and considering whether or not the processes that are being followed are contributing to that.
Nick:
Yeah, for sure.
Jessyn:
And how about those policies like raising the minimum wage or overtime threshold that because of these built in economic disparities that have a real nexus with race, what do you think about putting political power into an effort into doing things like that, that have a benefit to women, people of color, et cetera, who fill those low wage jobs?
Valerie Wilson:
Well, I think there are definitely policies that on their face are racially neutral but have disproportionate benefits for different communities simply because life in this country is not race neutral. And I would argue that there are no race neutral policies because of that fact. That any policy that we implement, even if we’re not naming race in the policy or naming gender as an objective within the policy, is going to have different outcomes on different communities, just because of the way that our society is structured. And minimum wage in particular is one of those. Because when we look at the income and the wage distribution and the way that people are distributed across occupations, we do find that people of color and women are more likely to benefit from an increase in the minimum wage than would white males.
Jessyn:
Are there some policies that you’re particularly excited about? One of the fun things is that we get to really geek out on this show, are there some things that are happening at the local level or something that may be a presidential candidate is proposing that you are really excited about and that we should get excited about too?
Valerie Wilson:
Oh, that’s a good question. Oh boy. One thing that I will say in terms of, for me, sort of my foundational thing that I think is important for a healthy economy, as well as economic inequality, is full employment. For me, any policy or choice, decision that’s being made to maximize employment opportunities across the board, I think is really essential because as we know, the majority of households in this country get income through work. The better opportunities there are for people to be employed and better opportunities there are for people to be able to move into higher paying occupations and to get the kind of wage growth that they need is just absolutely essential to me. And so for anyone who’s got policies around creating jobs and creating good, well paying jobs, those are the kinds of things that I get excited about.
But beyond that, in directly addressing the issue of racial inequality, I know that there are some cities that have taken some steps to really center and consider racial equity in their policymaking, whether that be deciding to collect data on pay by race, ethnicity and gender, so that there is some documentation and tracking of trends. But also I know the county in which I live, Montgomery County, Maryland recently decided to have a racial equity note to be a part of any new legislation. Any new legislation that they’re going to pass, they’re going to evaluate and consider the racial equity implications of that particular law.
Jessyn:
What gets measured is what we end up talking about and if we’re just looking at things like the narrow fiscal impact, particularly in a system that is already not neutral about race, you’re never going to get to that more pointed policy conversation. Those are great, great things.
Nick:
As you know, we work on economic stuff and economic policy, but I don’t know how to make my approach more race first.
Valerie Wilson:
I think it starts first with acknowledging, like I said, that there really is no race neutral policy. Any policy that you’re advocating for or implementing is going to hit different communities in different ways. And so I think it requires the work to consider how that’s going to play out in different communities based on people’s social and economic position, status in this country. And it takes some effort, it takes some work, it takes some data and some understanding of how things will affect people based on their circumstances and situations and history. And then at the next step beyond that is thinking about ways that you can tweak things so that you’re not perpetuating, at least you’re not making things worse, but also that you’re not perpetuating existing inequalities. And then the best case scenario would be to actually improve or narrow those disparities.
I think sometimes when we consider the kinds of policy changes that will do that, people get caught up in the what they consider to be the political feasibility of it. In thinking that we can’t do something or shouldn’t do something that’s going to obviously or explicitly favor one group over another. But we have to remember again, that we got to this place by policies that did that very thing so we can’t think we’re going to undo it by not doing that thing in reverse. That’s just my sort of two cents on it that we really have to do the work and really think through what the implications are going to be and not be okay with sort of the neutral, no harm done sort of position. Let’s think about how we can actually make things better.
Nick:
Yeah, and I just wanted to add that our conversation today has centered, I think mostly around the issues of justice and inclusion, but I think it’s really important to acknowledge that there’s a much more practical and cold blooded reason. Nobody benefits if people are excluded, it’s not just dollars and cents good for everybody, but the whole society will thrive. The democracy will be stable and secure and so on and so forth. Anyway, these are such complicated and difficult issues, but we really appreciate you helping us think them through.
Jessyn:
And we have one final question for you, which is given the obstacles and given how hard systemic change is, why do you do this work?
Valerie Wilson:
Because I believe that we can change it. I don’t think that anything that we have experienced and are seeing is a universal law of the universe, just the way things have to be. And so I believe it’s definitely possible to change it. And I know that the life that I live is so much different than the lives that my grandparents, great grandparents, great great grandparents lived in this country. And because of the things that have happened through the generations to give me the life that I have, it’s my responsibility to do what I can to give my children and grandchildren a better life than I have.
Jessyn:
Well we are so grateful that you joined us today and so grateful for your insights and time.
Valerie Wilson:
Thank you. It’s been a pleasure.
Speaker 5:
Pitchfork Economics is produced by Civic Ventures. If you like the show, make sure to subscribe, rate and review us wherever you get your podcasts. Find us on Twitter and Facebook @civicaction and Nick Hanauer. Follow our writing on Medium at Civic Skunk Works and peek behind the podcast scenes on Instagram @pitchforkeconomics. As always from our team at Civic Ventures, thanks for listening. See you next week.