 Hi, welcome to the State of Working America podcast, but we seek to elevate worker stories so that their voices can be heard in the debate over economic policy in Washington and beyond. I'm Pedro Dacosta, Director of Communications at the Economic Policy Institute, and it's my pleasure today to be joined by my colleague, Valerie Wilson. Valerie is the Director of our Program on Race, Ethnicity and the Economy, and I'm really excited to have her today because the work that she does is so important, especially today, especially under an administration that has made race such a central issue in this country. Often in economic discussions, race is thought of as an afterthought and as almost a social and cultural factor that should be looked at outside of the economic realm, and Valerie has been an important voice in making sure that race is actually central to the economic debate, and so it's my pleasure to have you today. Thank you so much. It's my pleasure to be here. So I wanted to start by telling one of the stories that I've learned personally from you and from your work and the work of others, which is not so pleasant story about the direction of our economy when it comes to the gaps in wealth and income between various race groups. I think a lot of Americans tend to think of the American history as a sort of progression toward improvement and positivity and particularly racial issues as kind of ebbing over time, and many people envision the wealth gap as narrowing over time, and in fact some of the data show that it's not happening and in fact the trend may be moving in the other direction. Can you talk a little bit about what aspects of the economy strike you the most as kind of potentially red flags in that sense and some of the data that startles you the most? Sure. I think when we start to look at economic outcomes in the United States and we consider how those outcomes look differently for different racial and ethnic groups, I think the most general statement that I can make is that those racial economic disparities are large and they're persistent. It's very difficult to identify a certain statistic, whether it be wages, whether it be the unemployment rate, net worth, income, poverty, where there is not a clear disparity based on race and ethnicity, and in particular when we look at the differences between black Americans and white Americans, we see huge gaps. Those are in a lot of senses sort of the two ends of the poll. We know that a lot of the statistic for Asian Americans actually shows slightly better outcomes than whites, but in terms of the broader history of race and economics in this country, really the longstanding difference is between blacks and whites. We talk about the unemployment rate in particular, we know that the black unemployment rate is almost always double the white unemployment rate. When we look at the disparity in wages, we have seen periods where there have been improvements in what we call the wage gap and the difference between what blacks and whites earn, but in more recent years, really in the last 20 years or so, we've started to see those differences get larger when, as you said before, we'd expect to see things improving as we're progressing and as a lot of people like to say we've had a black president. Certainly things are getting better in this country, but the economic data don't bear that out. Yeah. Can you talk a little bit about the role of home ownership in sort of wealth accumulation and how different policies have kind of accentuated, if not cause, the wealth gap over time? Well, the way that we measure wealth is typically by net worth. That's the difference between the total value of your assets, the total value of your liabilities or your debts. And so in this country, the largest single asset that most people get an opportunity to own is a home. So when we look at differences in home ownership rates, they really tell us a lot about the wealth gap in this country. One, there's a significant difference in home ownership rates between blacks and whites in this country, but not only that, even when we're comparing homeowners, there's differences in equity. There's differences in the value of those homes based on where those homes are located and what the demographics of the neighborhood are. And when we consider that, that is something that can be traced historically to policy in this country. The fact that we went through a period of redlining where there were only certain communities where African Americans could live and in those communities at a point in time, they actually could not get mortgages. When we consider policies coming out of the war and the fact that there was this push to make home ownership more affordable, VA loans, the GI bill, those sorts of things that actually open doors of opportunity for whites to be able to purchase homes and build what we consider a middle class lifestyle, but African Americans were often excluded from those opportunities. So when we consider those policies and we sort of put that next to the statistics that we see today in terms of the disparity in home ownership, I believe the difference now, the average, that white home ownership rate is about 72, 75 percent somewhere in there for African Americans is right around 40 percent. So that's a significant difference. But then again, I said on top of that, we consider the difference in the value of homes. We consider the effect that the financial crisis and the great recession had on a significant number of foreclosures among African American families, not to mention the fact that there was predatory subprime lending, that again, even if you did get a mortgage, we're able to purchase a home, the terms of that loan often were predatory. So it stripped any wealth that a family may have had an opportunity to build. The most striking detail that I remember reading about predatory lending in in black communities in particular was that I can't remember the name, which which investment bank, but a major investment bank had an emerging markets unit targeting black communities in the United States. You know, in other words, they were literally thinking of inner cities as developing countries to be, you know, to be milked out of that last last little bit of juice. Well, so can you talk about the role of education? Because that's another story that, you know, another myth, if you will, that you've helped kind of push back against the notion that the, you know, wage and wealth gap is really just due to an education gap. And as soon as you close that education gap, we're going to get sort of more equal outcomes. Yeah, and that that whole relationship is sort of interesting because there are two things to keep in mind. One, we know that with higher levels of education, you, you do earn higher wages, you do have a lower unemployment rate. You know, there, there are certain opportunities that open up with more education. And so education is effective and important when we consider mobility and being able to ascend the economic scale. However, what we find is that education does not eliminate or even narrow in many cases, the racial disparity, the difference between whites and blacks, even at a given level of education. We see this in the unemployment rate that even among college graduates, black college graduates are going to have a higher unemployment rate than white college graduates. And certainly when we look at what's happened with the wage gap in particular over the last 40 years or so, the wage gap has actually grown the most among college graduates and that is sort of counterintuitive to what we think should be happening. So what we find is that when we look over the longer span of history, say over the last 50 years, we see significant gains in educational attainment among African Americans, both in terms of people completing high school, there are actually very few folks now who are not high school graduates, as well as the share who have a college degree. So given those gains, we would expect to see some more narrowing and closing of those economic gaps. I mentioned unemployment and wages in particular, but wealth as well. Colleagues of mine, Sandy Darity and Derek Hamilton have done work specifically looking at the role of education and closing the wealth gap because they've done tons of research on the wealth gap and they find similar findings there that I see with wages that even with higher levels of education, those differences between races are not narrowing. And in fact, you find that African Americans who have a college education actually have less wealth than whites without even a high school diploma. And there was a student debt factor differential in that in that dynamic as well, right? I've read that that black students end up burdened with more loans on average than white students. Is that? Yes, that that is a fact as well, because we mentioned before net worth considers your assets as well as your debts. So, yes, student debt in particular, and the fact that as a country, we have not continued to invest in public education so that students don't have to take out those loans says a lot. I think another thing that that says is that, you know, when people want to make the argument that, well, you should get more education and that will improve your outcomes, I think the fact that there's a significant amount of debt among African American college graduates shows that that people are making the effort to do what they think they should do to be able to have a decent standard of living. But again, because our policies aren't really working for the typical or average American family, we find these disparities that just sort of replicate differences that we know already exist in terms of wealth gaps and income gaps, wage gaps and unemployment gaps, and we can go on down the line. Could you talk a little bit about the kinds of the policy direction that the country is headed in now and the kinds of policies that might be able to begin to ameliorate disparities as sort of vast and as as deeply embedded in our country as as as they are. Of course, there's there's a range of things that we talk about at EPI. We talk about Fed policy. It seems like Fed officials are increasingly listening to the notion that, you know, easy monetary policy can actually help lower and middle income individuals maybe reenter the labor force and gain higher wages, et cetera. But there's also the other range of policies, including raising the minimum wage and sort of kind of more pro worker policies generally. And could you talk about those and what policies could be specifically targeted, you know, to the racial issue itself? So, you know, you've mentioned a couple of the policies that are important on improving outcomes, absolutely. So in terms of reducing unemployment rates, we know that the Fed policy is important in in in terms of their willingness to keep interest rates low in allowing the unemployment rate to continue to fall because the African American unemployment rate is typically double the white rate, nearly double the average rate, the lower that average number goes. We know that those who are typically left out of opportunities have more of a chance of getting employment. Also, we know that as the unemployment rate gets lower, there's a greater chance for wage growth. We haven't seen as much of that in this round. But again, it's, you know, the best thing to do, I think, is to leave those rates lower. The other things that we can do are more specific to, for example, wages. We talk about raising the minimum wage. That's an interesting one because, you know, we don't necessarily expect that raising the minimum wages is going to make people wealthy. However, the importance of that is we have so, or our Congress has so infrequently raised the minimum wage that it is actually not kept up with rising cost of living. So in raising the minimum wage, we're just sort of playing catch up with inflation. But the other thing that's important with that is we see that African Americans are more likely to be in the kinds of jobs that get paid a minimum wage. So when that gets increased, then you have a disproportionate benefit for African Americans. But the other reason that that policy is important is in terms of regional differences in state policy. States and localities can set a minimum wage that is higher than a federal minimum wage. But it just so happens that in the region of the country and in states that have a larger share of the black population, this is less, this is done less or more infrequently than it is in other places. So unless the federal minimum wage is increased, people who live in typically the southern region of the United States don't get an increase as a result of the minimum wage. I think the other thing that's important that we overlook because it's maybe more of an indirect effect when we want to talk about specifically and narrowing the differences between groups is that we really need greater transparency in terms of hiring wages, promotions, and all of those things that serve to widen the wage gap, particularly among the college educated folks. And under the Obama administration, there was a proposal to do that, to require that companies, I believe with 100 employees or more, report wages by race, ethnicity, and gender and job category. But the Trump administration has decided to roll that back so that that is not going forward. And so I think that when we don't have that level of transparency, that makes it very difficult first for individuals to identify when they are being discriminated against in terms of pay or job opportunities. But also I think that transparency sort of puts more pressure on employers to recognize and to really have to justify the differences that do exist within their organizations. That's great. Thank you so much. So I wanted to take a step back a little bit and talk about pre and your work there and a little bit about the workshop that you're doing. First of all, could you tell us a little bit about how the idea of pre came about, when it came about, and what the intention behind our program on race, ethnicity, and the economy is? Sure. So I'm proud to say that pre has been in existence for 10 years. And I say I'm proud of that because, you know, I've had a lot of discussions recently with folks at other Washington based think tanks that are just now sort of getting behind the idea that we should focus on race. We're talking about economic policy when we're doing analysis, when we're doing research. So the fact that EPI has been doing this for 10 years, sort of, you know, gives us a bit of a head start as far as that's concerned. But the motivation for pre really came from the fact that, you know, EPI is well known for the work that we do on workers, on low and moderate income families and making sure that their issues are a part of economic policy discussions and economic policy debates. But, you know, a few years ago, we had a rather vocal board member who really challenged the leadership of EPI in saying that, you know, if we're doing all this work to improve outcomes for low and moderate income families, if we're focusing on class inequality, you're really only telling part of the story if you're not also addressing race in that. We know that racial inequality is embedded within class inequality because your quote unquote class, which we really measure by what part of the income distribution you fall in is influenced and largely determined by race because of the history of race in this country. But it's also true that within classes, there are racial disparities. And I think that's the part that gets missed in a lot of the discussion. And so PRE was established to talk about both the intersection of race and class inequality when we, you know, talk about the broader issue of inequality, but also to really get down to that direct racial disparity that we see even within class. That's great. And can you talk a little bit about this workshop series? I feel like it's such an important time to be having this discussion and it's being done in such a thoughtful and sensitive manner. So I'd love to put in a plug for it right here. We're going to be posting the videos of these workshops on our website. So if you could talk a little bit about the idea behind that and who you're getting to this week. Sure. So the idea for the workshops on race really came out of, I mentioned before that, you know, a lot of different groups in DC now, which I'm happy to see, are getting more engaged on issues of race or at least are wanting to be more engaged in issues of race. Both in terms of turning that spotlight internally and really sort of evaluating what their staff looks like, what their work environment in office culture looks like, but also in terms of the work that they produce and the research and the policy analysis and things that are done. So I had a few of these different conversations and would get requests to be on calls or come to meetings to talk about how we can do a better job of incorporating race in our work. And I thought, you know, this is good. I'm glad people are engaged. And even at EPI to a certain extent, but it almost felt a little clumsy in terms of the discussions as if, you know, there's a format or formula to follow to talk about race. And so I wanted to put together a workshop series and the title of the workshop series is Turning Good Intentions into Constructive Engagement on Race. And so that really says it all. I wanted to sort of get beyond this. Hey, we know this is important. We want to do this to have a broader conversation among organizations to invite people who are really thought leaders and writers and researchers who have focused their careers really on race to come in and to help us really think about how we do this. That is not some formula checklist formula that we can follow to incorporate race, but it's really about thinking about things and thinking about things in a different way. And so we have a series of seven workshops that we've planned. The first one just sort of talked about some basic principles for having discussions about race. And that was led by author Ijeoma Aluo. It was outstanding. She's written a book So You Want to Talk About Race that, you know, I thought was a great opening and a great sort of guy to sort of stimulate some different kinds of thinking about race. But then we also go into some of the more technical aspects of what we do in terms of how we really measure race in regressions as economists. And then what the interpretation of those variables really means, really thinking about what are we measuring? What are we trying to answer? And how do we explain those differences? Beyond that, we're also talking, going to have a workshop that focuses on how we as researchers and policy analysts can be more effective in the kinds of partnerships we build with organizations that are more focused on direct organizing and grassroots efforts. And then we're going to do four workshops that focus specifically on the experiences of the four largest racial and ethnic groups in this country in terms of historical patterns and trends, contrasting the facts against stereotypes and misconceptions, and really framing those discussions within contemporary talk about issues such as reparations, immigration reform, criminal justice reform, all the things that we hear now, as we're in the midst of a presidential candidate cycle, you know, how do we really situate those conversations in a way that is constructive, is factual, and will lead to good policy. And what kind of resistance do you face both in the policy realm and in the academic world? Because it seems like economics still does to this day, despite your leadership and despite 10 years of pre, still see race as kind of a sideshow and they have trouble modeling it. Therefore, it doesn't fit into the equations. What kind of resistance have you faced in recent years or even over the course of your career to making sure race is seen as an important aspect of economic debates? Yeah, so, you know, in economics, the idea is that, you know, at least in the United States, this is a, we have competitive markets, capitalism. So in theory, racial discrimination, racial disparities, the market should work those things out because they would be ineffective or inefficient in a competitive market. But, again, when we get to the facts and what the data show, we have a variable in an equation, a race variable, and we control for all of these other things that should affect an outcome, wages, for example, for controlling for education, experience, region of the country, sometimes even occupation, industry, but we still get a significant coefficient on that race variable, which is telling us that there is a significant average difference between blacks and whites in what they earn, even when all of these other things are the same. That really is not explained by this competitive model. Why should that still exist? And so I think that's one of the challenges that we face. Of course, with that difference, there are all sorts of explanations that come in to explain that, that this is just a residual difference. It could be something else that we're not measuring, whether that be differences in soft skills that people bring that we don't necessarily measure by education or experience, whether that's a difference in the quality of the education that people receive that's not necessarily reflected in just measuring the level of education. There are all sorts of explanations. People come up with for why we would get significant racial differences even after controlling for all of these other factors. But I quite frankly just find it difficult to explain or understand beyond just flat out racial discrimination. And I think largely the economics profession is not ready or willing to have a conversation about that because I think that's a larger issue. It's a social issue. It's a historical issue. It's something that doesn't fit neatly into an economic model or a mathematical equation. I've also seen the stats that show that there's a particular lack of diversity within the economics profession that might explain its lack of openness. That could have a little bit to do with it as well. Yeah, yeah, yeah. Because it's pretty startling even compared to other social sciences just how white and how male the profession is. Yeah, absolutely. Well, this has been really elucidating. Thank you so much for your time, Valerie. I really appreciate it. And thank you our listeners for joining into the State of Working America podcast. You can get this podcast on iTunes or Stitcher or wherever you get your podcast or you can watch it on our YouTube channel. Thank you very much for joining us. Thanks.