Saturday, April 12, 2008

The Hourglass Is Upon Us

"..(W)ell over half of respondents said they are either losing ground economically or are stuck in the same place, according to the report released yesterday by the Pew Research Center. Only four in 10 said they have moved forward in the past few years -- a new low..., and far off the record 57 percent who in 1997 said they had moved forward in the previous five years...The squeeze is particularly tight for those who have low incomes and for the 53 percent of Americans who classify themselves as middle class.'
Michael A. Fletcher, Washington Post, April 10, D1

I attended a conference on the Hourglass Economy at the Chicago Fed on April 2-3 that documented the dimensions, causes, and consequences of economic inequality and the u-shaped or hourglass pattern of jobs and wages -- growth at the top and bottom, loss of middle-wage jobs in the middle. Construction and FIRE (i.e. finance, etc.) held up growth of middle wage jobs until stumbling with our current housing crisis and economic downturn.

Two papers centered on the political fall out. Benjamin Friedman reprised the argument of his recent book, The Moral Consequences of Economic Growth, which linked the absence or deterioraton of broadly distributed economic growth with the onset of bad political movements like nativism and anti-immigration. Conversely, economic growth creates preconditions for advancing tolerance and opportunity. In other words, if the hourglass pattern of growth perists over 10-15 years we may face new political demons. But we don't have to wait, just look at the anti-immigration policies of states today.

Benjamin Page and Lawrence Jacobs presented some results from their 2007 Survey of Inequality, now being assembled into a book, and analyzed their findings in relation to similar surveys and questions of the past. In general, they found trending across political divides towards government intervention on behalf of providing a safety net resources and opportunities for all Americans.

"The government in Washington ought to see that everyone who wants to work can find a job. 67% Pro. 32% Con."

"Everyone in America should have equal opportunities to get ahead. 98% Pro. 2% Con."

"The federal government should make sure that everyone who wants to go to college can do so. 77% Pro. 22% Con.

So, most people think we should do something before really bad things start to happen. One of my takeaways from this conference and set of presentations is that these strong, emergent opinions about a new government role in the economy will get lost if doing something is left to the politicians alone. We need new mechanisms at the ground level to translate citizen preferences into policies and accountability. How about community organizing?

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