Driving Targeted Policies to Address the Wealth Gap

This October 23, 2014, photo shows downtown Danville, Illinois, where many young people have moved away as manufacturers that provided thousands of well-paying, middle-class jobs have closed.

In last week’s column, I wrote despairingly of the persistent wealth gap that exists between white Americans and their neighbors from communities of color—in particular, black Americans. My concerns extended to a dubious hope that our national leaders have the political will to propose and promulgate federal policies targeted to help those most in need.

The column provoked an articulate and thoughtful response from my colleague Christian E. Weller, a Senior Fellow at the Center for American Progress, or CAP, and a professor of public policy at the University of Massachusetts, Boston. Weller challenged my pessimism, noting that his studies of the racial wealth gap have led him to some very promising, albeit targeted, policy prescriptions to assist black households.

In his email response, Weller outlined his ideas. “Boosting manufacturing employment, for instance, has a disproportionate effect on African American men, boosting construction has a disproportionate effect on Latino men, strengthening the minimum wage helps women of color, improving state and local government finances improves employment effects for African American women,” he wrote. “I think it is possible to fine tune these recommendations to be even more efficient in helping both communities of color and the economy.”

Weller knows what he’s talking about, and I respect his scholarship on this matter immensely. To be perfectly honest, I was flattered he wrote, as it suggested he took my opinions seriously despite the fact that he’s far more informed and knowledgeable about economic issues than I am.

Indeed, Weller and Jaryn Fields’ 2011 CAP issue brief described how long-running labor-market inequality helped produce the persistent wealth gap. In the brief, Weller and Fields made a convincing case for targeted solutions to close the gap and improve the U.S. economy:

Policymakers should obviously address the overarching problem of unemployment in whatever plan comes together to raise the federal debt limit … but there are unique structural obstacles that prevent African Americans from fully benefiting from economic and labor market growth—obstacles that deserve particular attention when unemployment rates for African Americans stand at the highest levels since 1984.

In his email, Weller continued to call for a targeted approach but acknowledged that it might be more politically expedient to frame it differently. “Policies that can help communities of color can happen if politicians also see a good upside for their constituents,” he wrote. In response to my assertion about politicians’ unwillingness to address inequality, Weller wrote, “I know that this seems to contradict your statement, but I think that yours is true for the federal level, while mine holds at the state level.”

In other words, federal lawmakers are unable or unwilling to act on wealth inequality, but local leaders might understand the problem in a more fundamental way because they are closer to the pain it produces.

“I am a little more sanguine, though, about the racial aspects of some of these policy interventions,” Weller continued. “A number of them actually move at the state level, e.g. the minimum wage, even when Republicans are in control. Support for public infrastructure is often also bipartisan, even though the disproportionate benefits for communities of color are well known.”

He’s got a point. Last year, the Washington legislature raised the state’s minimum wage to $9.47 per hour—the nation’s highest level—and lawmakers recently packed a state capitol hearing room with supporters to call for another boost to $12 per hour. Other states set to see an increase in their minimum wages this year include the conservative states of Alaska and Nebraska.

The Atlantic recently surveyed minimum-wage requirements across the nation, discovering wide state-to-state variances and, sometimes, buying-power inequalities within states. These inequalities have prompted some municipal officials to raise minimum wages at the city or county level. “The idea of municipalities determining their own minimum wages isn’t new, Santa Fe and San Francisco enacted theirs in 2003,” The Atlantic reported. “But the trend has certainly picked up steam, with five local minimum-wage ordinances passed in 2013. That number more than doubled in 2014.”

Weller told me that such proposals work best when political leaders choose the proper framework for their progressive proposals: “Policies are likely more successful in the current environment if they are framed as helping the middle class than helping the poor,” he wrote in his email. “I would prefer that we portray the range of policies that could help communities of color as helping poor and struggling middle-class families alike, rather than equating communities of color with the poor.”

That sounds familiar. Where have we heard that before? Announcing his fiscal year 2016 budget proposal at the U.S. Department of Defense on Monday, President Barack Obama called for similar action, saying, “We need to put politics aside, pass a budget that funds our national security priorities at home and abroad and gives middle class families the security they need to get ahead in the new economy.”

Of course, the partisan response was as predictable as it was oppositional. “It’s dead on arrival,” Sen. John McCain (R-AZ) told The Washington Post. Other Republicans were just as dismissive; House Speaker John Boehner (R-OH) and Senate Majority Leader Mitch McConnell (R-KY) both condemned the president’s goal as it was announced.

Aware of such pigheadedness in Washington, Weller conceded that targeted programs to help black, Latino, and other economically distressed groups are not likely to succeed—and that inaction isn’t helping either.

“The problem is that we have these persistent racial gaps on the income side, so that communities of color fall ever further behind on the wealth side as well,” he said. “Even if the relative wealth gap stays constant, things are getting worse in absolute terms as total white wealth is going up. And the wealth gap has not stayed constant.”

But Weller is not willing to give up the fight, arguing that it is just moving from one battleground to a more promising, progressive field: “I realize that there is no room in Washington right now to make these arguments for targeted economic policies. I can only offer one small silver lining: Things may be different at the state level.”

On that point, Weller and I are in total agreement. Driving progressive policies cannot be harder anywhere else than it is in Washington.

Sam Fulwood III is a Senior Fellow at the Center for American Progress and Director of the CAP Leadership Institute. His work with the Center’s Progress 2050 project examines the impact of policies on the nation when there will be no clear racial or ethnic majority by the year 2050.