Day 2: Tuesday, May 23, 2017
12:05 pm CST | May 23, 2017
David Altig of the Atlanta Fed had some interesting observations and questions in the final wrap-up. He noted that in high-pressure periods in the economy, when unemployment shrinks below what is considered the “natural rate,” the black-white gap in employment rates shrinks. Unfortunately, he said, these periods always end in recession, and the gap comes back. Is this scenario the result of overly aggressive monetary policy? Or just bad luck?
He also suggested that the Federal Reserve System exploit the complementarities between its community development work and its research efforts. This, he said, could be extraordinarily beneficial to both communities. One example of how different parts of the system could work together is the small business survey, which is conducted by all 12 regional banks. That survey revealed that a key reason small businesses said they were investment constrained was because they can’t find or retain qualified labor. Such surveys could help researchers “look under the hood” of firms, as Greg Kaplan suggested. This would not only be a tantalizing research project, he said, but an important one.
11:20 am CST | May 23, 2017
Aysegul Sahin from the New York Fed led off a wrap-up session, tying together threads from several speakers from different panels. Among her takeaways:
- Income growth has not been inclusive. As Philip Jefferson pointed out, where someone goes to college has great influence over how much money they makeover the course of their career. Key lesson: There is definitely a role for institutions, tax policy, education and financial and labor market regulations.
- The rise in family instability creates a negative feedback loop. The rise in single mothers means that a huge number of young kids have a very unstable home life. Key lesson: Any strategy to improve mobility must include family contexts into which children are born and raised.
- Unemployment risk is higher for low-wage workers. She shared some charts that showed one reason for this—a decline in entrepreneurship. One chart showed a sharp decline in the startup rate between 1979 and 2012. This example ties in with some of what Greg Kaplan talked about regarding how firms make decisions to hire workers. If more workers are employed by mature firms, as opposed to startups, that means those firms have less competition and workers have less mobility.
10:45 am CST | May 23, 2017
Video | Panel 5: Federal Reserve System Takeaways
10:25 am CST | May 23, 2017
Myron Orfield, a professor at the University of Minnesota Law School, spoke about how schools in the Twin Cities have grown more segregated in recent decades, which has contributed to some of the highest levels of racial disparities in the nation. This is in part because of changes in law, but also the rise of charter schools and other efforts to give parents more choices. He gave the examples of a German immersion school and the Higher Ground Academy as self-segregating populations.
This increasing segregation is problematic, he said, because there is a very high correlation between concentrations of black or Latino kids and poverty. These segregated schools, which occur not only in the cities of Minneapolis and St. Paul, but also in the suburbs, he said, tend to have much lower rates of achievement.
10:15 am CST | May 23, 2017
Glenn Loury of Brown gave a personal reflection about his views on race, and how they have evolved over time. He said that the subordinate status of African-Americans persists in large part because it derives from stigma. While racial discrimination is about how people are treated, he said, stigma is about how people are perceived. He said that he once saw problems of single parents and crime as “the enemy within” black society (ref. A New American Dilemma - The New Republic - 1984), but he now says, those same statistics could be read as an indictment of American society, not just of black society.
9:20 am CST | May 23, 2017
Greg Kaplan from the University of Chicago offered a contrasting view to Darity. Most people get nearly all of their household income from the labor market, he said. Thus, barriers to economic opportunity are essentially equal to barriers to the labor market. But there is much that economists don’t understand about the labor market, he said, especially what happens inside firms. For example, we don’t know much about why firms hire workers in the first place. We also don’t understand much, he said, about the distribution of tasks and skills within firms. We have not thought hard enough, he said, about how to stimulate demand for labor.
We need better data, Kaplan said, especially more opportunities to observe workers inside firms, to understand more about what they do and how they add value. “We need to be able to go ‘under the hood’ of firms,” he said, and from then we can explore how the value that workers add changes when economic conditions change.
8:55 am CST | May 23, 2017
William Darity Jr. of Duke got the first panel of Day 2 off by pushing back on the “post-racial” narrative, in which America is said to have transcended the racial divide. This narrative, he said, obscures and denies the existence of racial discrimination and disparities in wealth. Recent studies show the persistence of discrimination: for example, he said, whites with a criminal record are more likely to get a job callback than blacks without one.
The post-racial narrative also obscures and denies disparities in wealth, he said. Wealth is more important than income in determining financial security, he said, because it insulates families from medical and financial emergencies and helps provide better opportunities, such as choosing to live in neighborhoods with more amenities.
8:30 am CST | May 23, 2017
Video | Panel 4: Distributional Consequences of Public Policy
8:00 am CST | May 23, 2017
MP3 Audio from morning media scrum
Day 1: Monday, May 22, 2017
6:30 pm CST | May 22, 2017
Dinner Keynote
5:35 pm CST | May 22, 2017
Rob Warren from the Minnesota Population Center at the University of Minnesota talked about the new frontiers of data integration. In the present, there’s IPUMS, the Integrated Public Use Microdata Series, which is bringing together Census data from 89 countries (so far), as well as health, environmental, and many other data series and making them easier to compare. Data silos are crumbling, he said, and within five years, he said, additional linkages, including other federal surveys and administrative records, will provide longitudinal data on almost everyone (at least in the United States) from 1850 on.
5:20 pm CST | May 22, 2017
Economists love data. Wilbert van der Klaauw of the New York Fed talked about two more sources of data: the Survey of Consumer Expectations and the NYFed Consumer Credit Panel. The SCE was launched in 2013 and allows researchers to monitor the public’s expectations on a monthly basis and understand the link between expectations and decisions, which can be useful for formulating monetary policy. Some examples of topics explored included expectations about finding a job and people’s financial expectations pre- and post-election. The CCP is a quarterly panel, following the same people over time, and can be used to track shifts in mortgage borrowing by credit score, for example, and student debt repayment and defaults for different cohorts over time.
4:35 pm CST | May 22, 2017
John Sabelhaus, also from the Federal Reserve Board of Governors, talked about the Survey of Consumer Finances, which is sometimes called the “wealth survey,” because it includes data on high-wealth families (in part by using data from tax returns), which are difficult to reach by other means. The SCF is about 6,000 households, a small sample size which makes it possible to review every case. Some questions that could be explored using this data: What are obstacles to homeownership? What are the barriers to access for higher education? What is holding back business formation?
4:15 pm CST | May 22, 2017
Jeff Larrimore, of Federal Reserve Board of Governors led off the last panel of the day, “Data: New Frontiers of Collection & Analysis.” He talked about an annual Fed survey, the Survey of Household Economics and Decisionmaking, or SHED. It helps monitor trends in consumer behavior, especially among low- and moderate-income households, on a wide range of financial issues. For example, the survey revealed that 23 percent of those surveyed said they would have difficulty paying all their bills in full in the current month. But when respondents were asked what would happen if they had an unexpected financial emergency and had to come up with an additional $400, the number that said they would have difficulty paying the current month’s bills rose to 35 percent. The survey found big differences in the ability to handle such emergencies, based on education and race or ethnicity.
3:45 pm CST | May 22, 2017
Video | Panel 3: Data: New Frontiers of Collection & Analysis
3:15 pm CST | May 22, 2017
Kathryn Edin of Johns Hopkins continued the discussion about unmarried parents. The sociologist and author of several books talked about the circumstances that result in such births. Most are unplanned, ill-timed (the partners often don’t know each other very well, and don’t consider themselves to be in a “real relationship”), and the parents are still trying to find their life path.
One program that she said has had a dramatic impact on interrupting this pattern is SPARKS, or Supported Pathways through the Arts, Recreation, Knowledge and Schools. “Kids may be picking up on societal signals that they’re worth something,” she said.
2:51 pm CST | May 22, 2017
Sara McLanahan of Princeton spoke about the consequences of the growing number of children born to unmarried mothers, including instability and economic insecurity. One big one is that these children are much more likely to have behavioral problems. This is especially true for boys, and in turn leads to the kids skipping school and not being as engaged in school, which leads to lower educational attainment. She added that poor kids (as children of single moms tend to be) are more likely to go to schools with a high rate of expelling and suspending kids, and black boys are more likely to be expelled, even very early in their school experience.
2:29 pm CST | May 22, 2017
Philip Jefferson of Swarthmore College spoke about salary data from Payscale, which basically indicates that it really does matter where you go to college. The salary you get early in your career explains 63 percent of your mid-career salary. “On average, there is no catching up,” he said.
2:19 pm CST | May 22, 2017
David Autor of MIT was unable to attend, so Emmanuel Saez of UC-Berkeley started off the second panel on Human Capital and Mobility. He presented research that showed increasing income inequality in recent decades. For example, although average national income grew 61 percent between 1980 and 2014, almost none of that growth was experienced by the bottom 50 percent of income. He said that globalization and technological change can’t be the sole explanation, and that institutions and policies likely play a big role in this concentration. Some possible factors: the increasing importance of the financial sector as a share of top earners, increased market concentration, and more contract work (the Uber effect).
2:00 pm CST | May 22, 2017
Lunch keynote was Sondra Samuels of the Northside Achievement Zone (@NAZMpls), in Q & A with Neel Kashkari. Modeled on the Harlem Children’s Zone, NAZ is a place-based strategy which treats all children as scholars while offering whole-family support. After five years they have 1,000 families involved and 2,300 scholars. She said they call all babies “scholars” because there is a belief gap as serious as the achievement gap. The data show that while only 18 percent of children in the Zone were ready for kindergarten when the program started, with each layer of added involvement, such as a child attending a high-quality preschool, or parental coaching, that percentage increased, up to 50 percent being ready for kindergarten. The program is helping stabilize families, she said, which leads to less absenteeism by children, and more success in school.
Similar to Art Rolnick and Rob Grunewald’s research on early childhood education, which showed great economic returns for that investment, she said that there is a strong return for this kind of investment in children and families, a 14 percent ROI. While some politicians say the program is good, but too expensive, she asks, Compared to what? We’ll pay quadruple that on the other end, she said, if children don’t succeed.
1:30 pm CST | May 22, 2017
Video | Panel 2: Human Capital & Mobility
12:15 pm CST | May 22, 2017
William Spriggs, a labor economist at Howard University and the AFL-CIO, and Edward Lazear of Stanford wrapped up the first panel on segregation and inequality. Spriggs said that when the labor market is really tight, discouraged workers and others who have been out of the labor market get back in. He said that higher unemployment for blacks has nothing to do with education or test scores; white high school dropouts have lower unemployment rates.
Lazear noted that concerns about inflation and unemployment are completely consistent with the Fed’s mission. “If you do your job and do it well, you’re doing 90 percent of the work” in combating inequality.
12:15 pm CST | May 22, 2017
Lunch Keynote
10:52 am CST | May 22, 2017
Ebonya Washington of Yale spoke about voting rights and inequality. One big area of disenfranchisement is of felons who have served out their time and completed parole, partly because of misinformation, both from corrections officials and election officials. One interesting experiment involved an intervention in Connecticut, where 23 percent of felons had been registered to vote before they were incarcerated, but only 6 percent registered afterward. When the eligible felons were mailed letters telling them that they could register, registration increased 30 percent.
10:40 am CST | May 22, 2017
Janet Currie of Princeton presented research that showed a strong reduction in child mortality among poor children. Possible factors include large recent increases in Medicaid spending, as well as fewer people smoking and reductions in pollution.
10:30 am CST | May 22, 2017
Robert Putnam, Harvard professor and author of “Bowling Alone,” spoke first. Not an economist, he looked at a number of social trends over the 20th century, from a 30,000 foot perspective. On average, he said, people were getting healthier and wealthier every decade. However, many measures of social participation (Scouts, men’s clubs like Elks, Lions, etc.), personal philanthropy, family formation (percent of women ever married), union membership peaked in the mid-60s, around the time Putnam first voted in 1964. A review of digitized literature over the century shows changes in the frequency of the word “I” to “We,” with “We” peaking around the time of John F. Kennedy’s inauguration speech, with his famous call to “Ask not what your country can do for you, but what you can do for your country.”
10:00 am CST | May 22, 2017
Neel Kashkari, President, Federal Reserve Bank of Minneapolis
Genesis of Opportunity & Inclusive Growth Institute: “One of the big surprises for me coming to this region was the extent of the disparities….Minnesota has one of the greatest disparities in the nation.” He asked, “Why do these disparities exist? What are the structural factors? We probably can’t solve them with monetary policy, but we can target our huge research capability.”
Kashkari questioned, “Where are the research gaps? Where is the comparative advantage that the Fed has?” He learned who the best researchers in the world were, called them up, and they all agreed to be on the Institute’s Board of Advisors. "All would be keynote speakers at any other conference," he said.