December 10, 2014
Thomas Edsall has as interesting piece this morning discussing the changing plight of working class whites in the United States and their increasing estrangement from the Democratic Party. He gets much of the story right. Certainly they can no longer be assured of a comfortable middle class existence. And, if they do manage to get middle class jobs, they certainly cannot guarantee that their children will be as lucky.
However some of the argument is misplaced. Edsall notes the sharp growth in single mothers among women without college degrees. He then refers to research showing worse outcomes for children of single parents, implying that the problems for children stem from the increasing ability of parents to get divorced. This does not follow.
To take the simplest story, imagine a world in which no one is allowed to get divorced. Some children grow up in happy families with two committed parents. These children are likely on average to do well in life. On the other hand, some children grow up in dysfunctional families where parents regularly fight and a father may be abusive, alcoholic, or have other serious issues. These children will probably on average do less well in life.
Now suppose we allow couples to divorce. Presumably the happy couples stay together and the unhappy ones get divorced. If we compare outcomes of the children we would likely find that the children raised by two parents do better than the children raised by single mothers. However, it would be wrong to conclude that the problems for the children of single mothers stemmed from the fact that they are divorced, it would stem from the fact that they had been in bad relationships.
Given that divorce and single parents are a reality, the obvious policy response is to ensure that children get the education and support they need regardless of their family background. Good public child care, access to pre-K education, and affordable college education seem like obvious policy responses to these circumstances, along with laws that guarantee family friendly workplaces (e.g. paid sick days and paid family leave). These are policies that the Democrats have typically advocated.
The other set of policies for the white working class that the Democrats could (and sometimes have) advocate have to do with full employment. As Jared Bernstein and I argued in our book, Getting Back to Full Employment (download is free), full employment disproportionately benefits those at the middle and bottom of the wage distribution. The only period in the last four decades where these workers enjoyed sustained real wage gains was in the period of low unemployment from 1996 to 2000. Barring other changes in the economy, we will have to return to unemployment rates below 5.0 percent before most workers will again see substantial real wage gains.
There are three policies that the Democrats can push to again get the unemployment rate down to these low levels. The first involves additional government spending which would boost demand, growth, and employment. Unfortunately, superstitions about budget deficits makes this unlikely in the foreseeable future.
The second route is through a dollar that has a lower value against other currencies. There is a direct link between the value of the dollar and the size of the trade deficit. A higher valued dollar make U.S. goods and services more expensive relative to goods and services produced in other countries. This means fewer exports and more imports.
Unfortunately, the Obama administration and the Democratic leadership do not seem to have an interest in pushing down the value of the dollar. Currency values are not an issue in the trade deals currently being pursued. Instead they are largely pursuing a corporate agenda, pursuing items like stronger patent and copyright protection, corporate friendly regulations, and increased market access for Wall Street.
The third way the Democrats can push for full employment is by stopping the Federal Reserve Board from putting the breaks on growth and employment. The Federal Reserve Board’s plan to raise interest rates next year is intended to slow growth and keep the economy from creating jobs. Ostensibly the purpose of the rate hikes is to prevent inflation, but with no real prospect of inflation anywhere in sight. It is difficult to see why it should raise rates. (If the Fed had followed the same course in the 1990s we never would have seen the low unemployment and strong wage growth in the second half of the decade.) The Democrats could make opposition to Fed rate hikes a major policy issue. But this would mean that they care more about the jobs and wages of the white, black, and Hispanic working class than the inflationary concerns of the largely white financial sector.
Finally, the family friendly policies mentioned earlier, coupled with work sharing and paid vacations, should also help to increase employment. The simple logic is that if we can’t increase demand, fewer average hours of work will mean more people working. To put it another way, if we have some people working more hours than they want and others working less than they want, then there is a simple way to make them both better off.
Anyhow, Edsall is right that the white working class, like the working class in general, has been poorly served by the Democrats in recent decades. It is not difficult to think of policies that would change this story. The question is whether the Democrats will buck their wealthy donors to pursue them.
Note: Edsall was not focused on divorce, his point is that more children are raised by single parents. Divorce is one factor, but obviously many parents never marry in the first place. I was simply using the example to make the more general point as to why we might expect to find that children raised by single parents do worse than children raised by couples without there being a causal link.
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