prosperity 2050: is equity the superior growth model?

8/7/2019 Prosperity 2050: Is Equity the Superior Growth Model?

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1 Center for American Progress PolicyLink | Prosperity 2050

Prosperity 2050

Is Equity the Superior Growth Model?

Sarah Treuhaft and David Madland April 2011

Introduction

As our counry inches is way ou o he Grea Recession and looks oward he uure,

he need or a new policy ramework o guide our economic growh is clear. Te

economic model o he pas several decades is ailing nearly everyone, save hose a hevery op. Wih he excepion o he laer years o he Clinon adminisraion, economic

growh has been slower and less broadly shared over he pas several decades, leav-

ing more and more amilies, even enire communiies, o all urher behind and wih

diminishing prospecs or caching up.

Tis is rue no only or he poores o he poor bu also or lower- and middle-income

amilies, who have seen heir incomes sagnae and heir qualiy o lie decline. And i is

especially rue or people o color, who are rapidly becoming he majoriy populaion o

he Unied Saes and will cerainly be so by 2050.

Our counry aces a mouning economic opporuniy deci and i is he exac opposie

o he American promise ha i you work hard, you can achieve he good lie, exempli-

ed by a secure paycheck ha grows year aer year, a nice home in a sae neighborhood

wih decen schools, reiremen savings, healh care, some leisure ime o spend wih

riends and amily, and he abiliy o send your kids o college and pass along o hem a

bigger share o he American Dream.

Te long-erm economic rends o greaer inequaliy and suned upward mobiliy

clearly undermine American ideals o airness and equiy, and he noion ha prosperiy

should be broadly shared. Bu could he eclipse o he American promise also be under-

mining our economic compeiiveness? Is i possible ha he radiional assumpion

ha here is a radeo beween growh and equiy is wrong, and ha broadly shared

growh is ulimaely beter or he economy? Could a ocus on equiyhe economic

and social inclusion o hose le behindbe much more han a humaniarian or moral

ac bu acually a superior economic growh model? And i so, wha does an inclusive

and susainable growh rajecory look like?


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Now is a criical momen o begin a naional dialogue abou he growing opporuniy

deci and wha i means or our economic uure. oday, PolicyLink and he Cener or

American Progress hos a convening o discuss he proposiion ha a ocus on equiy

and economic inclusion is necessary o grow he U.S. economy. A his meeing, leading

economiss and policy expers will explore he connecions beween inequaliy, social

inclusion, and economic growh; ideniy areas or urher research; and discuss policies

ha can suppor sronger and more equiable economic growh.

Tis raming paper is inended as a saring poin or ha discussion. I highlighs key

economic and demographic rends, summarizes he lieraure on equiy and growh,

and suggess some nex seps or building an inclusive growh agenda.

Critical trends: Increasing inequity, growing diversity

Economic disparities on the rise

Over he pas several decades, longsanding inequiies in income, wealh, and opporu-

niy have seadily worsenedand are now reaching unprecedened levels. While here

is no single causal explanaion, broad economic and poliical ransormaions, including

he decline in union membership and he shi rom an economy based on manuacur-

ing o one based on services and reail, have cerainly played a role.

Enire neighborhoods, ciies, and even regionsparicularly older indusrial areas in

he Norheas and Midweshave been devasaed by deindusrializaion. And in all

places, coninued residenial segregaion by race and income, along wih he concenra-

ion o opporuniy srucures (such as high-qualiy schools, good jobs, and services) inhigher-wealh communiies, has physically separaed people rom he resources, markes,

and insiuions hey need o ge ahead. Key rends include:

Increasing income inequaliy Rising produciviy bu sagnan wagesA growing wealh gap Suned economic mobiliy More and deeper povery Persisen racial dispariies

Les examine each o hese rends briey in urn.


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Increasing income inequality

Te gap beween rich and poor has widened since 1980 and he Unied Saes now has

he hird-wors income inequaliy among advanced indusrial naions.1 Economic gains

are no being widely shared and insead are concenraing a he op. Beween 1947 and

1976 he op 10 percen o earners ook home a hird o he naions pre-ax income; by

2008 heir share had increased o 48 percen. In he same ime period, he share going

o he op 1 percen grew rom 8 percen o 18 percen.2 Income growh is disribuedeven more unevenly: Te botom 90 percen o households only capured 16 percen o

income growh beween 1989 and 2007 while he op 1 percen received 56 percen.3

Rising productivity, stagnant wages

American workers produce more oupu per hour han ever beore bu heir produciviy

gains are no ranslaing ino higher wages. In 2010 average annual produciviy rose by

3.9 percen ye labor coss (workers compensaion) ell by 1.5 percen.4 During he las

business cycle (2001 o 2007) beore he Grea Recession, worker produciviy increased

nearly 19 percen bu he real income o he median working-age household decreased by

abou 2 percen while he coss o healh care, housing, and college have increased.5

Whas more, he rend began even earlier. From 1979 o 2005 he incomes o he

middle 60 percen increased by 18 percen ($9,000) and he incomes o he botom

20 percen increased by only 1 percen ($200). Meanwhile, he incomes o he op h

increased 75 percen ($99,200). Tis is a sark deparure rom he 1947-o-1973 period

when he incomes o he poores h o amilies increased a abou he same rae as he

incomes o he wealhies h. 6

Growing wealth gap

Te wealh divide in our naion has grown even more dramaically han he incomeand wage divide. Te collapse o he housing bubble, ollowed by he oreclosure crisis,

he decline in home prices, and he glu o upside-down morgages, sripped many

lower-income amilies o heir mos signicanand oen, onlyasse. Wealh was

desroyed across he board bu lower- and middle-income households were dispropor-

ionaely aeced.

From 2007 o 2009 he botom 80 percen o Americans los 25 percen o heir wealh,

on average, and he op 20 percen los 16 percen. Te share o oal wealh held by

he botom 80 percen o he populaion dropped rom 15 percen o 13 percen in

he same ime period while he share going o he op 20 percen increased rom 85

percen o 87 percen.7

Stunted economic mobility

Americans end o be oleran o economic inequaliy as long as opporuniies exis o

move up he economic ladder. Bu he acual chances ha a child born o a poor am-

ily will improve his or her lo are much lower in he Unied Saes compared o oher


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developed counries, and lower han he public perceives hem o be. Moreover, hose

opporuniies seem o be declining.

Consider hese acs. Only 6 percen o children born o poor parens (hose in he bo-

om h o income earners) grow up o become rich (enering he op h o income

earners) while nearly hal o hem (46 percen) remain jus as poor. Beyond he chal-

lenge o geting ahead, downward mobiliy is a serious risk, paricularly or AricanAmericans: 45 percen o middle-class black children end up poor, compared o 16

percen o middle-class whie children.8

More and deeper poverty

Povery has been on he rise since 2001 aer signican declines in he mid-1990s.

More han 43 million Americans now live in poveryhe larges number since he U.S.

Census Bureau began racking povery in 1959and he povery rae, a 14.3 percen, is

a is highes since 1994. Povery is much worse or communiies o color: One in our

Arican Americans, Lainos, and nonciizens are currenly living in povery, compared o

12 percen o whies.9

Povery is also deeper han ever. Nineeen million people are living in exreme povery,

which means heir incomes are less han hal o he povery hreshold (which many

expers already consider o be oo low o live on). A 44 percen o he povery popula-

ion, his is he highes exreme povery share ever recorded in his counry.10

Persistent racial disparities

People o color in America have long aced recessionary condiions and barriers o eco-

nomic opporuniy, and were hi rs and wors by he Grea Recession. Unemploymen

remains much higher or Arican Americans (15.5 percen, up rom 8.6 percen a hebeginning o he recession) and Lainos (11.9 percen, up rom 6.3 percen) compared

o whies (8.3 percen, up rom 4.3 percen) and Asians (7.1 percen, up rom 3.7 per-

cen).11 Persisen dispariies exis across oher economic indicaors, such as underem-

ploymen and discouraged workers, as well.

Changing American demographics

Tese dispariies do no bode well or he uure economic growh o our naion. Te

reason: People o color in he Unied Saes will become he majoriy o Americans by

2050 (see char on nex page).

Indeed, a key akeaway rom he Census 2010 daa is ha we are becoming a majoriy

people o color naion a an even aser clip han demographers previously hough.

People o color conribued 92 percen o our populaion growh in he pas decade


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and currenly make up 36 percen o he U.S.

populaion. Any day now he majoriy o babies

born in his counry will be nonwhie (he Census

prediced his would be rue or 2010 bu he daa

by deailed age caegories are no ye available). By

around 2019 he majoriy o youh will be non-

whie. And he Census now predics ha by 2042we will be a majoriy people-o-color naion.12

In many communiies his shi has already aken

place. Four saes (Caliornia, Hawaii, New Mexico,

exas) and he Disric o Columbia are already

majoriy people o color, along wih 49 meropoli-

an regions. Anoher nine saes and 40 regions are

nearing a ipping poin, wih beween 40 and 50

percen nonwhie residens.13

Anoher imporan rend is he growing genera-

ion gap beween a mainly whie senior populaion

and an increasingly diverse youh populaion. Te

spread beween he share o seniors ha is non-

whie and he share o youh ha is nonwhie is

wideningjus 20 percen o seniors are nonwhie

compared o 46 percen o people under age 18.

Te senior populaion will coninue o increase is

share o oal populaion over ime (rom one-

eighh oday o one-h by 2040) while he youhpopulaion is expeced o remain sable a abou a

quarer o oal populaion.14

The economic consequences of demographic change

Te rapid demographic ransiion underway will have many consequences or our econ-

omy, poliics, and culure. Te generaion gap is likely o uel poliical batles as he aging

whie populaion becomes increasingly averse o public spending and he diverse young

populaion sees educaion, healh, and oher public invesmens as key o is economic suc-

cess. Bu seniors also share a sake in he economic success o youhhe uure earnings

o hose same youh are necessary o pay or heir healh care and Social Securiy benes.

In relaion o our economic uure, he srengh o he uure workorce is a paramoun

concern. A key issue is he large and persisen educaional achievemen gap. By he

ourh grade only 17 percen o poor children score a or above procien levels in

reading and only 22 percen are procien or beter in mah.15 Jus 6 in 10 black, Laino,

The racial and ethnic composition of the United States,

19702050

Sources: Data for 1970 and 1980 from Statistical Abstract of the United States. Data for 1990, 2000, and 2010 from the

Census Bureau. Data for 2020 through 2050 from the U.S. Census Bureau Population Projections by Race and Ethnicit

83.2%79.7%

75.8%

69.1%63.7%

60.1%55.5%

50.8%46.3%

11.1%

11.5%

11.8%

12.0%

12.2%

12.3%

12.2%

12.0%

11.8%

4.5%6.5%

0.6%

0.8%1.6%0.8%

8.8%

12.5% 16.3%

19.4%

23.0%

26.7%

30.2%

2.8%3.7% 4.9% 5.5% 6.3% 7.1% 7.8%

2.7% 2.9% 2.7% 3.0% 3.4% 3.8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1970 1980 1990 2000 2010 2020 2030 2040 2050

Other and multiracial

Asian American and/or Asian Pacific Islander

Latino or Hispanic (of any race)

Black or African American

Non-Hispanic White


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and Naive-American sudens graduae rom high school, compared o 8 in 10 whie

sudens and 9 in 10 Asian and Pacic Islander sudens.16 Children o color oen atend

he wors schools and lack he qualiy eachers, curricula, classrooms, and exracurricu-

lar suppors ha help middle-class children succeed.

Unless we reverse curren rends in educaional oucomes, he American labor orce

will be less skilled as he global knowledge- and echnology-based economy demandsskilled workers. Hal o all new jobs over he nex 10 years will require possecondary

educaion, ye he share o aduls wih some advanced educaion is projeced o decline

in all bu six saes.17 Among 18-o-24-year-olds, only 44 percen o whies, 32 percen

o Arican Americans, and 26 percen o Lainos are enrolled in college. Te Educaional

esing Service calls his a perec sorm o demographic, labor marke, and educa-

ional rends ha hreaens he American dream.

Inequality is bad for sustained economic growth

Economiss have long considered he relaionship beween equiy and economic

growh. Early economic hinking was heavily shaped by Simon Kuznes, a Nobel Prize-

winning economis, who argued ha economic inequaliy increases while a counry

is developing, and hen aer a cerain average income is atained, inequaliy begins o

decrease.18 His explanaion or his patern was ha shiing rom agriculure o indusry

caused inequaliy o rise bu urher growh led o increased economic opporuniies as

well as equalizing governmen policies.

Tis argumen and is graphical represenaionhe invered U-shaped Kuznes

curvesuggesed ha inequiy was good or economic growh, a leas a he earlysages o developmen. Alas, overwhelming evidence has accumulaed ha developmen

does no quie work like Kuznes prediced.19

Many counries have no become rs less and hen more equal as hey develop.

Insead, here have been a wide variey o developmen paterns, wih some coun-

ries growing relaively equally a all poins in heir developmen and ohers grow-

ing unequally a all poins in heir developmen, and sill ohers vacillaing beween

relaively equal and unequal. Souh Korea, or example, has seen relaively equiable

economic growh hroughou he pas 60 years as i developed rom a relaively poor

counry o a middle-upper-income counry. Brazil, hisorically one o he mos inequi-

able counries, has in very recen years begun o grow more equally. And in he Unied

Saes, rom he 1940s o he 1970s, economic growh wen wih increased equaliy,

bu since he 1970s, addiional growh has reduced equiy.

Te real world has no conormed o he Kuznes curve. Sill, he idea ha here is a

radeo beween growh and equiy did no jus go away. Insead, i remained inuenial,

even or advanced counries, hough he hypohesis was largely unesed. Te hypoh-


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esis ha here was a radeo beween equiy and growh wih economiss prevailing

ideas abou incenivesinequaliy was believed o provide incenives or people o

work and inves and hus grow he economyand also was advanced by prominen

economiss such as Arhur Okun, chairman o he Council o Economic Advisers

beween 1968 and 1969.20 In more recen years researchers have begun o more closely

and direcly examine he relaionship beween equiy and growh.

Tough some empirical research suggess ha inequaliy is good or growh, a large

body o research has ound he world o be much more complicaed. One signican

srand o research nds ha here is no radeo beween equiy and growh. In heir

requenly cied hisorical analysis, Peer Linder o he Universiy o Caliornia, Davis,

and Jerey Williamson o Harvard Universiy examine he U.S. economy since colonial

imes and he Briish economy over a similarly long period and nd no patern beween

growh and equaliy.21 Insead, hey argue ha inequaliy is driven by he supply and

demand o labor and capial.

Similarly, researchers such as Oxord Universiys ony Akinson, Princeon UniversiysJonas Ponusson, and Waler Korpi o he Swedish Social Insiue have all separaely

examined wheher welare saes designed o increase equaliy harm economic growh.22

Tey all have ound srong evidence ha i does no.

Perhaps mos imporanly, a growing body o research argues ha inequaliy is acually

harmul o economic growh. Harvards Philipe Aghion nds ha inequaliy is negaively

relaed o growh and argues his is largely because o imperec credi markes ha pre-

ven he nonwealhy rom making signican economic conribuions.23 And New York

Universiys William Easerly argues ha socieies ha are no economically polarized

have higher levels o growh because hey have beter insiuions and higher levels ohuman capial accumulaion.24 Easerly analyzed daa rom 1960 o 1990 in more han

100 counries o conclude ha middle-class socieies have more income and growh.

Ten here is he work o Harvard economiss Albero Alesina and Dani Rodrik, who

sudied economic growh in he period beween 1960 and 1985 in advanced and devel-

oping counries. Tey nd ha counries wih high inequaliy have lower subsequen

levels o growh and argue his is because he poor in unequal counries promoe poli-

cies ha sun growh.25 A hos o oher researchers have similar ndings and argumens.

While mos o his research is based largely on analyses o developing counries, a small

bu growing lieraure specically ocusing on he Unied Saes is nding ha equal-

iy is good or growh. Te Universiy o Genevas Ugo Panizzas economeric analysis

o economic growh among U.S. saes rom 1940 o 1980 shows ha equaliy leads o

growh.26 Similarly, in an economeric sudy o U.S. economic growh a he sae level

beween 1960 o 2000, Ohio Sae Universiys Mark Parridge ound ha a greaer

share o income going o he middle-income quiniles wihin saes leads o higher


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levels o growh.27 And aer analyzing he growh o 74 U.S. meropolian regions in he

1980s, Manuel Pasor a he Universiy o Souhern Caliornia ound ha greaer equal-

iy wihin regions (measured by povery reducions in cenral ciies) corresponds wih

sronger regional economic growh (measured by growh in per capia income).28

In a paper published by he Cleveland Federal Reserve Bank, Randall Ebers o he W.E.

Upjohn Insiue or Employmen Research and colleagues analyzed growh in 118regions in he 19942004 period and ound ha racial inclusion and income equaliy were

posiively correlaed wih economic growh measures including employmen, oupu,

produciviy, and per capia income.29 A laer analysis by Pasor and Chris Benner a he

Universiy o Caliornia, Davis, ound ha concenraed povery, income inequaliy, and

racial segregaion exered a signicanly sronger drag on growh in older indusrial ciies

he same places where growh is mos neededhan on ciies wih sronger markes.30

Alhough he new lieraure arguing ha equaliy is good or economic growh is sill

in he early sages, i is clear ha he old view o inequaliy being unambiguously good

or economic growh is inaccurae. Tere is no need o choose beween growh andequaliy. Furher, i is possible ha he old view was compleely backward and inequal-

iy acually harms growh. More research is needed o undersand how and why equiy

and growh are relaed.

Promoting growth through equity

Te implicaions o his new economic hinking or policy and pracice are enormous.

When policymakers and privae-secor leaders hink abou how o promoe economic

growh and developmen, equiy ends o be a las consideraionsomehing disanrom immediae concerns abou atracing, growing, and susaining businesses. Te

assumpion is ha growh will rickle down o hose a he botom o he income disri-

buion. Bu while a rising-ide economy does creae more economic opporuniies in an

absolue sense, growh in and o isel does no auomaically bene he poor or reduce

economic dispariies. Even during our las period o economic growh, or example, he

racial income gap grew raher han shrank.31 Growh migh be a necessarybut insucient

condiion or increased equiy.

In conras, i equiy is in ac good or economic growh, hen he inclusion o hose

ha have been le behind canno be seen as an aerhough or a separae policy realm

bu raher as a goal o be pursued in andem wih economic growh sraegies. Leaders

seeking o oser economic growh and compeiiveness will need o develop a new

ocus on equiy, no o gain recogniion or social responsibiliy or communiy-minded-

ness bu o achieve heir primary goals o growh and compeiiveness in he long run.

o secure our economic uure, we need o begin developing a robus economic growh

and compeiiveness agenda ha incorporaes equiy and achieves equiable oucomes.


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For he policy communiy, his means building poliical and public will, expanding our

knowledge base, culivaing new leadership and insiuional inrasrucure, and aricula-

ing a se o public- and privae-secor sraegies o achieve equiable growh. Some key

seps o building his agenda include:

Reraming he naional conversaion abou equiy and economic prosperiy Craing a policy plaorm or equiable economic growh Disseminaing local innovaions ha advance economic equiy Culivaing equiy leadership in he economy Prioriizing, measuring, and racking equiy goals

Les look a each o hese recommendaions in urn.

Reframe the national conversation about equity and economic prosperity

As a rs sep, we need o change our collecive undersanding abou wha, why, andhow economic and social inclusion maters. A new naional narraive abou inclusion is

neededone ha posiions equiy as a pursui ha is essenial o our economic prosperiy

and inseparable rom our srengh as a naion.

Tis should be a broad and open discussion ha seeks o bridge divides o race, ehniciy,

and age, and build a diverse, muligeneraional coaliion or change. Te conversaion mus

engage new voicesparicularly rom unexpeced sources such as privae-secor leaders and

moderae and even conservaive poliiciansas well as rom progressive hough leaders.

Craft a policy platform for equitable growth

Te progressive advocacy communiy needs o dene a se o prioriy policy sraegies

a he ederal, sae, and local levels ha link disconneced people and places o he

economy and rebuild he middle class. Tis policy plaorm should cover he realms

o economic developmen, educaion, workorce developmen, inrasrucure, and ax

policy. Sraegies should ocus on wo goals: increasing and improving employmen

opporuniies and earnings or he unemployed, underemployed, and working poor;

and ensuring economic growh is more broadly shared, wih reduced income inequaliy

and greaer reurns accruing o hose a he botom o he income specrum.

Disseminate local innovations that advance equity

Across our counry, a cadre o praciioners and advocaes working or economic

jusice and inclusion have developed mehodologies o undersand how policy choices

aec poor communiies and communiies o color, and have advanced programs and


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policies linking growh and invesmen wih concree benes or he mos vulnerable,

providing he needed lis and ladders or upward mobiliy.

Career pahways approaches ha connec vulnerable people o jobs ha pay good wages

and provide opporuniies or advancemen, or example, can address he workorce needs

o employers while reducing povery and srenghening regional indusry secors. Case

in poin: Aer Caliornias larges uiliy company, PG&E, recognized ha a wave o BabyBoomer reiremens was creaing a shorage o new employees, i eamed up wih local

communiy colleges o pilo a raining program ha prepares young people or enry-level

uiliy jobs. Launched in 2008, he PG&E PowerPahway program has graduaed 200 su-

dens, more han hal o whom have been women or people o color. A majoriy o hese

graduaes have aken uiliies jobs ha pay beween $19 and $29 per hour.32

Oher innovaive equiable growh pracices and policies ha have aken roo in local

communiies include local hiring, living wage policies, communiy workorce agreemens,

inclusionary zoning, local procuremen, and minoriy conracing. Tese innovaions

should be shared more widely and lied up o inorm naional policy. Several new ederaliniiaives, including he Promise Neighborhoods eor (based on he Harlem Childrens

Zone) and he Healhy Food Financing Iniiaive (based on he Pennsylvania Fresh Food

Financing Iniiaive) exempliy how such scaling up can occur.

Cultivate equity leadership in the economic growth arena

o begin inegraing equiy concerns ino sraegies or growh and compeiiveness

and producing more equiable growhwe will need o ap ino he wisdom and experi-

ence o local equiy leaders. Tese leaders should be recruied o si on he policy bodies(such as commissions and ask orces) ha are deliberaing abou he economic uure

o our regions and naion and developing sraegies o srenghen compeiiveness.

Tis is already happening in many places. In Deroi, several o he 16 board members

who will join oundaion execuives o guide he New Economy Iniiaives $100 million

philanhropic invesmen in he regions economic revival are enrepreneurs o color

who are long-ime advocaes on behal o heir communiies. Communiy develop-

men and anipovery leaders in he win Ciies have recenly been appoined o he

governing boards o he regions agencies ha are deciding how o inves in he regions

ransporaion, housing, park, and waer sysems.

Equiy advocaes are also helping o govern he regional ransporaion agency in

New Orleans and have resrucured he agencys minoriy conracing and local hiring

programs o increase economic inclusion. And in Los Angeles and he Bay Area, equiy

leaders are now on he board or sa o agencies and commissions in charge o redevel-

opmen, pors, and public uiliies.


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As equiy leaders, who are oen people o color, join such policy bodies, hey no only

bring criical experise o he able bu also begin o bridge he racial gap beween hese

insiuions and he consiuencies hey represen.

Prioritize, measure, and track equity goals

I greaer equiy should be pursued wihin economic growh and compeiiveness eors,

hen equiy goals need o have he same saus as radiional economic developmen

goals such as increased GDP. Some regional groups concerned wih economic develop-

men have begun o do his. Bosons Meropolian Area Planning Council, or example,

launched an equiy indicaors projec earlier his monh. And Clevelands Fund or Our

Economic Fuure, a philanhropic collaboraive ocused on regional economic compei-

iveness, has been racking equiy indicaors alongside business growh, alen develop-

men, and governmen efciency and collaboraion since 2006aer learning ha racial

inclusion and income equaliy were highly associaed wih regional economic growh

(rom he analysis o growh acors in 118 meros described above). Te Fund is nowallocaing resources oward hese inclusion goals as well, wih some payo. One program

hey developed, he Minoriy Business Acceleraor 2.5+, has assised 17 minoriy-owned

businesses since 2008, creaing 250 jobs and generaing $131.6 million in new revenue.

Conclusion

More han ever, our uure depends on inegraing everyonebu paricularly hose

who are currenly isolaedino he mainsream economy. We should do so no only

because equal opporuniy is a undamenal American value (hough i is) or becauseexcessive inequaliy could hreaen civil sociey (hough i migh), bu because our

uure prosperiy as a naion will depend on he people and places ha have been le

behind. o ruly do his we mus begin o embed sraegies ha inegrae he poor ino

he economy a every urn.

Doing so would have a ripple eec. Dispariies in lie oucomes such as healh and

well-being based on race/ehniciy, class, and neighborhood would begin o disappear.

A childs zip code would no longer predic heir healh, success a school, or adul class

sanding. More people would paricipae in rebuilding he economy and more would

prosper. And we would be much closer o ataining he ideal o American prosperiy.

Sarah Treuhaf is an associate director at PolicyLink, a national research and action insti-

tute advancing economic and social equity by Lifing Up What Works. David Madland is

Director o the American Worker Project at the Center or American Progress.


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12 C t f A i P P li Li k | P it 2050

Endnotes

1 Alan Gilbert, Inequality and Why it Matters, Geography Compass 1 (3)(2007): 422; Bruce Einhorn, Countries with the Biggest Gaps BetweenRich and Poor, BusinessWeek, October 16, 2009, available at http://nance.yahoo.com/banking-budgeting/article/107980/countries-with-the-biggest-gaps-between-rich-and-poor.

2 Thomas Piketty and Emmanuel Saez, Striking it Richer: The Evolution ofTop Incomes in the United States (Updated with 2008 Estimates) (2010).

3 Lawrence Mishel and Heidi Shierholz, The Sad But True Story of Wagesin America (Washington: Economic Policy Institute, 2011), available athttp://epi.3cdn.net/3b7a1c34747d141327_4dm6bx8ni.pdf.

4 Bureau of Labor Statistics, Productivity and Costs, Fourth Quarter andAnnual Averages 2010, Revised, News release, March 3, 2011, available athttp://www.bls.gov/news.release/prod2.nr0.htm.

5 Ethan Pollack, Stagnant Wages, Rising Inequality, (Washington: EPI PolicyCenter, 2008), available at http://www.epipolicycenter.org/blm-stagnant_wages_and_rising_inequality.pdf; Economics and Statistics Administra-tion, Middle Class in America (Department of Commerce, 2010), availableat http://2001-2009.commerce.gov/s/groups/public/@doc/@os/@opa/documents/content/prod01_008833.pdf. See Table 5: Price Changesin Key Middle Class I tems: 1990-2008. Health care costs increased 155percent, four-year public college costs increased 60 percent, and four-year private college costs increased 43 percent. Nationwide, home pricesincreased 56 percent, but there is wide variation in housing marketsacross the country and the foreclosure crisis has contributed to homeprice declines in many places.

6 Economic Policy Institute, The State of Working America. Analysis of Con-gressional Budget Oce data.

7 Sylvia A. Allegretto, The State of Working Americas Wealth, 2011 (Wash-ington: Economic Policy Institute, 2011), available at http://www.epi.org/publications/entry/the_state_of_working_americas_wealth_2011.

8 Ron Haskins, Julia Isaacs, and Isabel Sawhill, Getting Ahead or LosingGround: Economic Mobility in America (Washington: The BrookingsInstitution, 2008). Analysis of Panel Study of I ncome Dynamics data.Comparable data is not available for racial/ethnic groups other thanCaucasian and African American.

9 Poverty data are from 2009. The poverty line is $21,954 for a family of four.See: Carmen DeNavas-Walt, Bernadette D. Proctor, and Jessica C. Smith,Income, Poverty, and Health Insurance Coverage in the United States: 2009(Department of Commerce, 2010).

10 Growing share in deep poverty, available at http://www.stateofwork-

ingamerica.org/charts/view/168.

11 Bureau of Labor Statistics, Current Population Survey, Employment statusby race and Hispanic ethnicity, not seasonally adjusted, December 2007and March 2011.

12 Youth estimate from William Frey, Brookings Institution, personalcommunication. Total population projection from U.S. Census Bureau,2008 National Population Projections, available at http://www.census.gov/population/www/projections/2008projections.html.

13 PolicyLink analysis of 2010 Census data for metropolitan areas, availableatwww.censusscope.org. The tipping point states are Nevada, Maryland,Georgia, Arizona, Florida, Mississippi, New York, New Jersey, and Louisiana(in descending order of percent non-Hispanic white).

14 Ronald Brownstein, The Gray And The Brown: The Generational Mismatch,National Journal, July 24, 2010, available at http://www.nationaljour-nal.com/magazine/the-gray-and-the-brown-the-generational-mis-match-20100724.

15 National Assessment of Educational Progress, available at http://www.nces.ed.gov.

16 Civic Enterprises, Everyone Graduates Center at Johns Hopkins University,and Americas Promise Alliance, Building a Grad Nation: Progress andChallenge in Ending the High School Dropout Epidemi c (2010), availableat http://www.americaspromise.org/Our-Work/Grad-Nation/~/media/Files/Our%20Work/Grad%20Nation/Building%20a%20Grad%20Nation/Building%20a%20Grad%20Nation%20Executive%20Summary_FI-NAL_11-30-10.ashx.

17 Patrick J. Kelly, As America Becomes More Diverse: The Impact of StateHigher Education Inequality (Boulder, CO: National Center for HigherEducation Management Systems, 2005), available at http://www.high-eredinfo.org/raceethnicity/InequalityPaperNov2005.pdf.

18 Simon Kuznets, Economic growth and income inequality,AmericanEconomic Review45 (1) (1955): 128

19 Gary S. Fields, Distribution and Development: A New Look at the DevelopingWorld(New York: Russell Sage Foundation, 2001).

20 Arthur M. Okun, Equality and Eciency: The Big Tradeo (Washington:The Brookings Institute, 1975).

21 Peter H. Lindhert and Jerey G. Williamson, Growth, equality, and history,Explorations in Economic History22 (4) (1985): 341377.

22 A.B. Atkinson, Is the Welfare State necessarily an obstacle to economicgrowth?European Economic Review39 (1995): 723730; Jonas Pontusson,Inequality and Prosperity: Social Europe vs. Liberal America(Ithaca, NY:Cornell University Press, 2005); Walter Korpi, Economic growth and the

welfare state: leaky bucket or irrigation system?, European SociologicalReview1 (2) (1985): 97118.

23 Phillipe Aghion, Eve Caroli, and Cecilia Garcia-Penalosa, Inequality andEconomic Growth: The Perspective of the New Growth Theories,Journalof Economic Literature 37 (4) (1999): 16151660.

24 William Easterly, The Middle Class Consensus and Economic Develop-ment,Journal of Economic Growth 6 (4) (2001): 317335.

25 Alberto Alesina and Dani Rodrik, Distributive Politics and EconomicGrowth, The Quarterly Journal of Economics109 (2) (1994): 465490.

26 Ugo Panizza, Income Inequality and Economic Growth: Evidence fromAmerican Data,Journal of Economic Growth 7 (1) (2002): 2541.

27 Mark D. Partridge, Does Income Distribution Aect U.S. State EconomicGrowth?,Journal of Regional Science45 (2) (2005): 363394.

28 Manuel Pastor and others, Regions That Work: How Cities and Suburbs Can

Grow Together(Minneapolis: University of Minnesota Press, 2000).

29 Randall Eberts, George Erickcek, and Jack Kleinhenz, Dashboard Indicatorsfor the Northeast Ohio Economy: Prepared for the Fund for Our EconomicFuture. Working Paper 06-05 (Federal Reserve Bank of Cleveland, 2006),available at http://www.clevelandfed.org/Research/workpaper/2006/wp06-05.pdf.

30 Manuel Pastor and Chris Benner, Been Down So Long: Weak-MarketCities and Regional Equity. In Richard M. McGahey and Jennifer S. Vey,eds., Retooling for Growth (New York: American Assembly and ColumbiaUniversity, 2008).

31 Christian Weller and Amanda Logan, Leveling the Playing Field: How toEnsure Minorities Share Equitably in the Economic Recovery and Beyond(Washington: Center for American Progress, 2009), available at http://www.americanprogress.org/issues/2009/09/pdf/minorities.pdf.

32 Victor Rubin and others, Pathways Out of Poverty for Vulnerable Califor-nians: Policies that Prepare the Workforce for Middle-Skill InfrastructureJobs (Oakland: PolicyLink, 2010), available at http://www.policylink.org/atf/cf/%7B97c6d565-bb43-406d-a6d5-eca3bbf35af0%7D/PATHWAYS_WEB.PDF.
http://finance.yahoo.com/banking-budgeting/article/107980/countries-with-the-biggest-gaps-between-rich-and-poorhttp://finance.yahoo.com/banking-budgeting/article/107980/countries-with-the-biggest-gaps-between-rich-and-poorhttp://finance.yahoo.com/banking-budgeting/article/107980/countries-with-the-biggest-gaps-between-rich-and-poorhttp://epi.3cdn.net/3b7a1c34747d141327_4dm6bx8ni.pdfhttp://www.bls.gov/news.release/prod2.nr0.htmhttp://www.bls.gov/news.release/prod2.nr0.htmhttp://www.epipolicycenter.org/blm-stagnant_wages_and_rising_inequality.pdfhttp://www.epipolicycenter.org/blm-stagnant_wages_and_rising_inequality.pdfhttp://2001-2009.commerce.gov/s/groups/public/@doc/@os/@opa/documents/content/prod01_008833.pdfhttp://2001-2009.commerce.gov/s/groups/public/@doc/@os/@opa/documents/content/prod01_008833.pdfhttp://www.epi.org/publications/entry/the_state_of_working_americas_wealth_2011http://www.epi.org/publications/entry/the_state_of_working_americas_wealth_2011http://www.epi.org/publications/entry/the_state_of_working_americas_wealth_2011http://www.stateofworkingamerica.org/charts/view/168http://www.stateofworkingamerica.org/charts/view/168http://www.census.gov/population/www/projections/2008projections.htmlhttp://www.census.gov/population/www/projections/2008projections.htmlhttp://www.censusscope.org/http://www.censusscope.org/http://www.nationaljournal.com/magazine/the-gray-and-the-brown-the-generational-mismatch-20100724http://www.nationaljournal.com/magazine/the-gray-and-the-brown-the-generational-mismatch-20100724http://www.nationaljournal.com/magazine/the-gray-and-the-brown-the-generational-mismatch-20100724http://www.nces.ed.gov/http://www.nces.ed.gov/http://www.americaspromise.org/Our-Work/Grad-Nation/~/media/Files/Our%20Work/Grad%20Nation/Building%20a%20Grad%20Nation/Building%20a%20Grad%20Nation%20Executive%20Summary_FINAL_11-30-10.ashxhttp://www.americaspromise.org/Our-Work/Grad-Nation/~/media/Files/Our%20Work/Grad%20Nation/Building%20a%20Grad%20Nation/Building%20a%20Grad%20Nation%20Executive%20Summary_FINAL_11-30-10.ashxhttp://www.americaspromise.org/Our-Work/Grad-Nation/~/media/Files/Our%20Work/Grad%20Nation/Building%20a%20Grad%20Nation/Building%20a%20Grad%20Nation%20Executive%20Summary_FINAL_11-30-10.ashxhttp://www.americaspromise.org/Our-Work/Grad-Nation/~/media/Files/Our%20Work/Grad%20Nation/Building%20a%20Grad%20Nation/Building%20a%20Grad%20Nation%20Executive%20Summary_FINAL_11-30-10.ashxhttp://www.higheredinfo.org/raceethnicity/InequalityPaperNov2005.pdfhttp://www.higheredinfo.org/raceethnicity/InequalityPaperNov2005.pdfhttp://www.clevelandfed.org/Research/workpaper/2006/wp06-05.pdfhttp://www.clevelandfed.org/Research/workpaper/2006/wp06-05.pdfhttp://www.americanprogress.org/issues/2009/09/pdf/minorities.pdfhttp://www.americanprogress.org/issues/2009/09/pdf/minorities.pdfhttp://www.policylink.org/atf/cf/%7B97c6d565-bb43-406d-a6d5-eca3bbf35af0%7D/PATHWAYS_WEB.PDFhttp://www.policylink.org/atf/cf/%7B97c6d565-bb43-406d-a6d5-eca3bbf35af0%7D/PATHWAYS_WEB.PDFhttp://www.policylink.org/atf/cf/%7B97c6d565-bb43-406d-a6d5-eca3bbf35af0%7D/PATHWAYS_WEB.PDFhttp://www.policylink.org/atf/cf/%7B97c6d565-bb43-406d-a6d5-eca3bbf35af0%7D/PATHWAYS_WEB.PDFhttp://www.policylink.org/atf/cf/%7B97c6d565-bb43-406d-a6d5-eca3bbf35af0%7D/PATHWAYS_WEB.PDFhttp://www.policylink.org/atf/cf/%7B97c6d565-bb43-406d-a6d5-eca3bbf35af0%7D/PATHWAYS_WEB.PDFhttp://www.americanprogress.org/issues/2009/09/pdf/minorities.pdfhttp://www.americanprogress.org/issues/2009/09/pdf/minorities.pdfhttp://www.clevelandfed.org/Research/workpaper/2006/wp06-05.pdfhttp://www.clevelandfed.org/Research/workpaper/2006/wp06-05.pdfhttp://www.higheredinfo.org/raceethnicity/InequalityPaperNov2005.pdfhttp://www.higheredinfo.org/raceethnicity/InequalityPaperNov2005.pdfhttp://www.americaspromise.org/Our-Work/Grad-Nation/~/media/Files/Our%20Work/Grad%20Nation/Building%20a%20Grad%20Nation/Building%20a%20Grad%20Nation%20Executive%20Summary_FINAL_11-30-10.ashxhttp://www.americaspromise.org/Our-Work/Grad-Nation/~/media/Files/Our%20Work/Grad%20Nation/Building%20a%20Grad%20Nation/Building%20a%20Grad%20Nation%20Executive%20Summary_FINAL_11-30-10.ashxhttp://www.americaspromise.org/Our-Work/Grad-Nation/~/media/Files/Our%20Work/Grad%20Nation/Building%20a%20Grad%20Nation/Building%20a%20Grad%20Nation%20Executive%20Summary_FINAL_11-30-10.ashxhttp://www.americaspromise.org/Our-Work/Grad-Nation/~/media/Files/Our%20Work/Grad%20Nation/Building%20a%20Grad%20Nation/Building%20a%20Grad%20Nation%20Executive%20Summary_FINAL_11-30-10.ashxhttp://www.nces.ed.gov/http://www.nces.ed.gov/http://www.nationaljournal.com/magazine/the-gray-and-the-brown-the-generational-mismatch-20100724http://www.nationaljournal.com/magazine/the-gray-and-the-brown-the-generational-mismatch-20100724http://www.nationaljournal.com/magazine/the-gray-and-the-brown-the-generational-mismatch-20100724http://www.censusscope.org/http://www.census.gov/population/www/projections/2008projections.htmlhttp://www.census.gov/population/www/projections/2008projections.htmlhttp://www.stateofworkingamerica.org/charts/view/168http://www.stateofworkingamerica.org/charts/view/168http://www.epi.org/publications/entry/the_state_of_working_americas_wealth_2011http://www.epi.org/publications/entry/the_state_of_working_americas_wealth_2011http://2001-2009.commerce.gov/s/groups/public/@doc/@os/@opa/documents/content/prod01_008833.pdfhttp://2001-2009.commerce.gov/s/groups/public/@doc/@os/@opa/documents/content/prod01_008833.pdfhttp://www.epipolicycenter.org/blm-stagnant_wages_and_rising_inequality.pdfhttp://www.epipolicycenter.org/blm-stagnant_wages_and_rising_inequality.pdfhttp://www.bls.gov/news.release/prod2.nr0.htmhttp://epi.3cdn.net/3b7a1c34747d141327_4dm6bx8ni.pdfhttp://finance.yahoo.com/banking-budgeting/article/107980/countries-with-the-biggest-gaps-between-rich-and-poorhttp://finance.yahoo.com/banking-budgeting/article/107980/countries-with-the-biggest-gaps-between-rich-and-poorhttp://finance.yahoo.com/banking-budgeting/article/107980/countries-with-the-biggest-gaps-between-rich-and-poor

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