As a result of the Great Recession, state and local budgets are facing severe fiscal pressure. A recent study showed an unprecedented two-year decline in state spending, and the trend does not seem likely to end soon. Tax revenues were down 12 percent in 2009, and only slightly less in 2010. There have already been spending cuts in 46 states, including cuts to health care, education, and services to the poor, elderly, and disabled. At the same time cuts are being made, higher levels of unemployment and underemployment have increased the demand for state transfer programs.
Different tribes of economists tend to view recessions quite differently. Keynesians suggest that recessions result from economy-wide slumps in demand and do not produce a lasting change in industrial structure. An alternate view, often associated with Joseph Schumpeter, is that recessions promote “creative destruction” and help reallocate labor and other resources away from less-productive firms to more-productive competitors. Much is at stake in this debate.
During and since the Great Recession, millions of Americans have relied on government transfer and social insurance programs to make ends meet. In principle, these programs, collectively known as the ‘social safety net,’ should help replace lost income during economic downturns when unemployment is high and wages are low. But due to major restructuring in the 1990s, these programs may no longer function as well as they have in past downturns. Welfare reform, for example, created lifetime caps for receipt for welfare and made support contingent on employment.
According to recent estimates, over 60 percent of U.S. households experienced a decline in wealth during the Great Recession. High rates of unemployment meant that many families could not make mortgage payments and lost their homes, and even those able to keep their homes saw their value plummet. Other families lost assets in the stock market decline, and still others were forced to make early withdrawals from retirement accounts or rely on credit cards to pay day-to-day expenses.
The Great Recession may have had both subtle and profound effects on the organization and patterns of family life in the United States. Unemployment and the loss of family income or wealth can lead to changes in preferences and priorities for families. Previous research has found these disruptions vary by class, the level of unemployment and the gender of the parent. For example, studies have shown that fathers’ job loss has negative implications for family life and child development, but mothers’ job loss does not.
The recession may still hold the greatest consequences for older Americans, who have the least time to recover from its effects before reaching retirement. The housing market remains weak, leaving many who are dependent on the worth of their home with an uncertain asset at best. In addition, workers may have been forced to dip into their retirement savings during a period of unemployment, and employment instability reduces Social Security and pension credits.
Over 90 percent of all funding for primary and secondary public schools in the U.S. comes from state and local government. Therefore, the fiscal crisis now faced by state governments in the wake of the recession, and similar budgetary problems just beginning to surface at the local level, are likely to have profound effects on the nation’s public schools. Authoritative estimates put the aggregate state budget shortfall for the next fiscal year at about $112 billion, or 18 percent of current budgetary levels.
Even though the Great Recession officially ended in June 2009, Americans still face anemic employment prospects that, unlike the economy, show little sign of improvement. Despite recent upticks in the job growth rate, unemployment still hovers at around 9 percent, nearly 14 million workers are still unemployed, and the labor market is still 11 million jobs below the level needed to restore the prerecession unemployment rate. These trends raise questions that hold severe practical consequences for American workers: why did U.S.
Good Jobs America
About This Book
America confronts a jobs crisis that has two faces. The first is obvious when we read the newspapers or talk with our friends and neighbors: there are simply not enough jobs to go around. The second jobs crisis is more subtle but no less serious: far too many jobs fall below the standard that most Americans would consider decent work. A quarter of working adults are trapped in jobs that do not provide living wages, health insurance, or much hope of upward mobility. The problem spans all races and ethnic groups and includes both native-born Americans and immigrants. But Good Jobs America provides examples from industries ranging from food services and retail to manufacturing and hospitals to demonstrate that bad jobs can be made into good ones. Paul Osterman and Beth Shulman make a rigorous argument that by enacting policies to help employers improve job quality we can create better jobs, and futures, for all workers.
Good Jobs America dispels several myths about low-wage work and job quality. The book demonstrates that mobility out of the low-wage market is a chimera—far too many adults remain trapped in poor-quality jobs. Osterman and Shulman show that while education and training are important, policies aimed at improving earnings equality are essential to lifting workers out of poverty. The book also demolishes the myth that such policies would slow economic growth. The experiences of countries such as France, Germany, and the Netherlands, show that it is possible to mandate higher job standards while remaining competitive in international markets. Good Jobs America shows that both government and the firms that hire low-wage workers have important roles to play in improving the quality of low-wage jobs. Enforcement agencies might bolster the effectiveness of existing regulations by exerting pressure on parent companies, enabling effects to trickle down to the subsidiaries and sub-contractors where low-wage jobs are located. States like New York have already demonstrated that involving community and advocacy groups—such as immigrant rights organizations, social services agencies, and unions—in the enforcement process helps decrease workplace violations. And since better jobs reduce turnover and improve performance, career ladder programs within firms help create positions employees can aspire to. But in order for ladder programs to work, firms must also provide higher rungs—the career advancement opportunities workers need to get ahead.
Low-wage employment occupies a significant share of the American labor market, but most of these jobs offer little and lead nowhere. Good Jobs America reappraises what we know about job quality and low-wage employment and makes a powerful argument for our obligation to help the most vulnerable workers. A core principle of U.S. society is that good jobs be made accessible to all. This book proposes that such a goal is possible if we are committed to realizing it.
PAUL OSTERMAN is NTU Professor at the MIT Sloan School of Management as well as a member of the Department of Urban Planning at MIT.
BETH SHULMAN was senior fellow at Demos, chair of the Board of the National Employment Law Project, and co-chair of the Fairness Initiative on Low-Wage Work.
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Persistence, Privilege, and Parenting
About This Book
Americans like to believe that theirs is the land of opportunity, but the hard facts are that children born into poor families in the United States tend to stay poor and children born into wealthy families generally stay rich. Other countries have shown more success at lessening the effects of inequality on mobility—possibly by making public investments in education, health, and family well-being that offset the private advantages of the wealthy. What can the United States learn from these other countries about how to provide children from disadvantaged backgrounds an equal chance in life? Making comparisons across ten countries, Persistence, Privilege, and Parenting brings together a team of eminent international scholars to examine why advantage and disadvantage persist across generations. The book sheds light on how the social and economic mobility of children differs within and across countries and the impact private family resources, public policies, and social institutions may have on mobility.
In what ways do parents pass advantage or disadvantage on to their children? Persistence, Privilege, and Parenting is an expansive exploration of the relationship between parental socioeconomic status and background and the outcomes of their grown children. The authors also address the impact of education and parental financial assistance on mobility. Contributors Miles Corak, Lori Curtis, and Shelley Phipps look at how family economic background influences the outcomes of adult children in the United States and Canada. They find that, despite many cultural similarities between the two countries, Canada has three times the rate of intergenerational mobility as the United States—possibly because Canada makes more public investments in its labor market, health care, and family programs. Jo Blanden and her colleagues explore a number of factors affecting how advantage is transmitted between parents and children in the United States and the United Kingdom, including education, occupation, marriage, and health. They find that despite the two nations having similar rates of intergenerational mobility and social inequality, lack of educational opportunity plays a greater role in limiting U.S. mobility, while the United Kingdom’s deeply rooted social class structure makes it difficult for the disadvantaged to transcend their circumstances. Jane Waldfogel and Elizabeth Washbrook examine cognitive and behavioral school readiness across income groups and find that pre-school age children in both the United States and Britain show substantial income-related gaps in school readiness—driven in part by poorly developed parenting skills among overburdened, low-income families. The authors suggest that the most encouraging policies focus on both school and home interventions, including such measures as increases in federal funding for Head Start programs in the United States, raising pre-school staff qualifications in Britain, and parenting programs in both countries.
A significant step forward in the study of intergenerational mobility, Persistence, Privilege, and Parenting demonstrates that the transmission of advantage or disadvantage from one generation to the next varies widely from country to country. This striking finding is a particular cause for concern in the United States, where the persistence of disadvantage remains stubbornly high. But, it provides a reason to hope that by better understanding mobility across the generations abroad, we can find ways to do better at home.
TIMOTHY M. SMEEDING is director of the Institute for Research on Poverty and Distinguished Professor of Public Affairs at the University of Wisconsin–Madison.
ROBERT ERIKSON is professor of sociology at the Swedish Institute for Social Research, Stockholm University.
MARKUS JANTTI is professor of economics at the Swedish Institute for Social Research, Stockholm University.
CONTRIBUTORS: Jo Blanden, Miles Corak, Lori J. Curtis, Matthew Di Carlo, Greg J. Duncan, Robert Erikson, John Ermisch, Gøsta Epsing-Andersen, David B. Grusky, Robert Haveman, Markus Jäntti, John Jerrim, Jan O. Jonsson, Ariel Kalil, Bertrand Maître, John Micklewright, Carina Mood, Brian Nolan, Fabian T. Pfeffer, Shelley Phipps, Reinhard Pollak, Chiara Pronzato, Timothy M. Smeeding, James P. Smith, Kjetil Telle, Sander Wagner, Jane Waldfogel, Elizabeth Washbrook, Christopher T. Whelan, Kathryn Wilson, Kathleen M. Ziol-Guest, Julie M. Zissimopoulos
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