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    Checking Privilege in the Animal Kingdom

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    Researchers say the human concepts of intergenerational wealth and inequality are useful for studying some animals’ behavior.Some North American red squirrels are born with a silver spoon in their mouths. They live in pine forests where the adults defend caches of food. Without a cache of their own, many baby squirrels won’t survive the winter. But each year, some squirrel mothers abandon their territory, bequeathing all their food to one or more babies who stay behind. These young squirrels are much more likely to survive until the spring.Across the animal kingdom, there are other examples of species that share resources such as territory, tools and shelter between generations. In a paper published last month in Behavioral Ecology, a trio of researchers argue that we should call this phenomenon the same thing we call it in humans: intergenerational wealth.Those young, pine-cone-rich squirrels, the scientists say, are children of privilege. When George Orwell wrote in “Animal Farm” that some animals were more equal than others, he was trying to shed light on the human ideological conflicts of the time. The researchers hope to use the analogy in the opposite direction. Applying a human lens, they say, can help us understand the roots of inequality in animals.Jennifer Smith, a behavioral ecologist at Mills College in Oakland, Calif., said the idea for the paper arose early in the pandemic, in conversations that she and colleagues at the University of California, Los Angeles, had over (of course) Zoom. They saw how Covid-19 was highlighting health disparities and other inequalities around the world. The scientists began to wonder if they could learn more about inequality by studying it in animals.“When we started looking for it, we found lots and lots of examples,” Dr. Smith said.Young red grouse are more likely to succeed in establishing their own territories when their fathers and other kin are nearby. Hyena daughters born to high-ranking mothers inherit their status, and get dibs on fresh meat. Some chimpanzees and capuchin monkeys crack nuts using stone tools that their parents used before them.Animal wealth may be passed down to nonrelatives, too, as in paper wasps that take over shared nests or hermit crabs that seek better real estate.Some capuchin monkeys crack nuts using stone tools that their parents used before them.T. Milse/Juniors Bildarchiv GmbH, via AlamyTo study wealth transfers between animals, scientists can ask concrete questions: Does a lizard that lives with its parents survive longer? Does a monkey with access to larger nut-cracking rocks go on to have more children and grandchildren? Biologists can explore animal privilege without tackling all of the topic’s cultural complexities in humans.By seeking similarities between privilege in people and animals, Dr. Smith hopes to unlock a greater understanding of inequality in the natural world. “For me, it’s very exciting to study the rules of inequality in nonhuman animals,” she said. “To see this across so many different species was quite surprising. And we’re just touching the surface.”Next, she’s planning to expand her survey, looking at wealth and privilege across thousands more animal species.“The use of terms like ‘privilege’ and ‘perpetuating the cycle of privilege’ is a little bit unusual” in animal research, said Jenny Tung, an evolutionary anthropologist and geneticist at Duke University who focuses on how social factors affect health in primates. “In part because they’re a bit loaded for us as humans to read.” But she thinks the idea of using a human lens to look at how animals pass down resources has promise.“That is potentially tremendously useful,” Dr. Tung said. The idea “opens up a whole tool chest of ways to understand” where inequality comes from among animals, she said.Siobhán Mattison, an evolutionary anthropologist at the University of New Mexico who has studied inequality in human societies, also thinks that combining the anthropology of privilege with animal biology has potential. “Humans are animals,” she said. “We are undoubtedly influenced by some of the same things that drive inequality in other animals.”That doesn’t mean animals can answer every question about how inequality arises in humans, Dr. Mattison added: “Humans are vastly more cooperative than most other species.” Our cultural institutions can reinforce inequality, she said, but they can also fight against it.Although Dr. Smith is primarily hoping that insights from humans can teach her more about inequality in animals, she does think the science could work in the opposite direction too. Some of the rules scientists discover in animals might apply to humans.She stresses, though, that finding inequality in nature isn’t the same as justifying it. Her research “could be misinterpreted as saying, ‘Well, it exists everywhere, so we can do nothing about it,’” Dr. Smith said.Unlike other animals, “We’re able to understand this phenomenon,” Dr. Smith said, “and then explicitly act to choose how we use that knowledge to create social change.” More

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    How Inflation Concerns May Affect Prices

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    Age, region, education and income all influence what people think consumer prices will be a few years from now. And that creates a policy puzzle.Who is worried about inflation? Older Americans, for sure; the young, not so much.

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    How different age groups think inflation will rise
    Data is monthly survey results, through Nov. 2021, of the median expected inflation rate for the next three years by demographic.Source: New York FedBy The New York TimesLow-income families are more concerned than richer ones.

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    How people at different income levels think inflation will rise
    Data is monthly survey results, through Nov. 2021, of the median expected inflation rate for the next three years by demographic.Source: New York FedBy The New York TimesPeople in the Midwest and the South foresee inflation’s impact hitting harder than residents of the West and the Northeast do.

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    How people in different regions think inflation will rise
    Data is monthly survey results, through Nov. 2021, of the median expected inflation rate for the next three years by demographic.Source: New York FedBy The New York TimesAnd those without a college degree are more apprehensive than college graduates.

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    How people with different education levels think inflation will rise
    Data is monthly survey results, through Nov. 2021, of the median expected inflation rate for the next three years by demographic.Source: New York FedBy The New York TimesThese idiosyncratic patterns could have an effect on how much inflation we get.The Federal Reserve’s approach to controlling inflation depends on ordinary Americans’ expectations. If people expect inflation to remain low into the future, the Fed may do nothing even if prices spike momentarily, because of supply chain constraints or other factors. If inflation expectations rise, though, the Fed will probably bring down the hammer, worried that they will get baked into everyday decisions.“If I were at the Fed right now, I would be concerned” about inflation readings above 6 percent, said Narayana Kocherlakota, a former president of the Federal Reserve Bank of Minneapolis who is now a professor of economics at the University of Rochester. “What will this do to the inflationary zeitgeist?”A tricky challenge for the Fed’s approach, though, is that people’s inflation expectations do not necessarily flow from an analytical reading of prices and wages. They are influenced by many things that often have little to do with the economy.It is natural for the poor to be more preoccupied by rising prices, because prices tend to hit the poor harder. Low-income families spend most of their earnings on necessities. They are immediately hit by rising prices of gas, food, rent and the like. The Consumer Price Index for November showed an overall increase in prices of 6.8 percent from a year earlier, the fastest pace since 1982. Energy prices — which are historically volatile — rose at nearly five times that rate.Moreover, the poor don’t have the financial tools that the rich can use to protect the value of their savings.What to Know About Inflation in the U.S.Fastest Inflation in Decades: The Consumer Price Index — a measure of the average change over time in prices — rose 6.8 percent in November from a year earlier, its sharpest increase since 1982.Why Washington Is Worried: Policymakers are starting to acknowledge that price increases have been proving more persistent than expected.Who’s to Blame for Rising Prices?: Here are the most obvious candidates — and where the evidence looks strongest.What the Experts Say: Most agree the spike in prices is linked to the economic recovery. When it will fade, and by how much, are less clear.The Psychology of Inflation: Americans are flush with cash and jobs, but they also think the economy is awful.But people’s attitudes about inflation are also shaped by other influences. For instance, in a Gallup poll in November, 53 percent of Republicans reported that recent price increases were causing personal hardship, but only 37 percent of Democrats did.That’s not because inflation necessarily hurts Republicans more than Democrats, or because the G.O.P. may have a stronger ideological aversion to rising prices. A recent study by economists in Germany and Switzerland found that when Barack Obama was in the White House, inflation expectations in Republican states ran almost half a percentage point higher than in Democratic states. But they dropped three-quarters of a point when Donald J. Trump became president.That is, as with impressions of the overall state of the economy, perceptions of inflation may be shaped by who’s in power. This could be part of the reason that the Federal Reserve Bank of New York finds that inflation expectations in the South and the Midwest — where the overwhelming majority of Republican voters live — have jumped far more than in the West and the Northeast, home to most Democrats. But the inflation rates in the South and the Midwest have, in fact, been somewhat higher than elsewhere.People’s expectations are also influenced by time.Older people have particular reasons to be concerned about rising prices. They often rely on fixed incomes, which are eroded by inflation. They are out of the labor market, so care less about unemployment. Given their high voter participation and outsized political power, it is hardly surprising that governments in countries with older populations tend to follow more strict monetary policies and deliver lower inflation.But time also has other, hard-to-measure influences on people’s attitudes. Many Americans have forgotten that inflation once got very high. Others might never have known this. People under 40 have no experience of the so-called Great Inflation from the mid-1960s to the early 1980s. They may have a harder time believing it matters.Research by Ulrike Malmendier from the University of California, Berkeley, and Stefan Nagel of the University of Chicago concluded that people’s beliefs about future inflation are shaped by their experience of it. This “explains the substantial disagreement between young and old individuals in periods of high inflation.”People who experienced the Great Inflation are more likely to fear high inflation around the corner than the young, who have lived mostly in an era in which inflation has rarely exceeded 2 percent. The young’s experience of economic stagnation during their formative years, after the housing bubble burst in 2008, is more likely to convince them that inflation can be too low, as it was back then, stymieing efforts by the Fed to reinvigorate the economy.Americans under 40 expect inflation to hit about 3.5 percent in three years, according to the most recent reading of the New York Fed’s survey. People over 60, by contrast, expect 4.7 percent. “Younger and older people tend to differ depending on the path inflation took in their past,” Mr. Nagel said.Even the experts — the members of the Federal Open Market Committee, the Fed’s policymaking group, who pore through sophisticated economic models fed with reams of data — are influenced by youthful memories. “Whether and at what age they experienced the Great Inflation or other inflation realizations affects their stated beliefs about future inflation, their monetary-policy decisions, and the tone of their speeches,” according to another paper by Ms. Malmendier, Mr. Nagel and Zhen Yan from Cornerstone Research in Boston.The researchers do not have insight into the current view of committee members. Individual forecasts from the semiannual Monetary Policy Report to Congress, on which they based their analysis, are made available to the public only with a 10-year lag, starting in 1992. But their research helps explain a longstanding puzzle.The puzzle came in a study by the economists David and Christina Romer of the University of California, Berkeley, in the middle of the last recession, in 2008. They found that over time, forecasts from the members of the Federal Open Market Committee were less accurate than the collective forecast of the staff economists at the Federal Reserve. The deviation, according to Ms. Malmendier, Mr. Nagel and Mr. Yan is “explained by reliance on personal inflation experiences.”People not schooled in economics may have little clue about how inflation and monetary policy work. One study by economists at the Federal Reserve Bank of Cleveland; the University of California, Berkeley; the University of Texas at Austin, and Brandeis University found that the Fed’s momentous switch announced in August of last year to a flexible inflation target, which would allow the Fed to let inflation rise above its long-term target of 2 percent, was greeted by a collective “huh?”Corporate executives do little better. “Like households, U.S. managers are largely uninformed about recent aggregate inflation dynamics or monetary policy,” wrote another group of economists in a separate study. “Inattention to inflation and monetary policy is pervasive among U.S. firms as well.”Fed officials acknowledge that their understanding of inflation psychology is, at best, imperfect. “We don’t know as a profession as much as we would like about how wage-price cycles get started,” Mr. Kocherlakota said. “How data on inflation translates into expectations is not well understood.”Given that knowledge gap, it is fair to ask whether the inflation expectations of ordinary Americans should play such a large role in shaping monetary policy.One study by economists at the International Monetary Fund, for instance, concluded that a tenet held dear by central bankers across the industrialized world since the 1980s — that moderating inflation expectations is central to taming inflation — was overstated. Rather, they suggested, inflation simply followed demography: Baby boomers contributed to inflation between 1955 and 1975, when they were young, consuming but not working. They reduced inflation between 1975 and 1990, when they joined the labor force. And they will drive it up again as they retire.Jeremy B. Rudd, an economist at the Federal Reserve Board, also worries that the proposition that managing expectations is critical to managing inflation is hogwash, with no solid theoretical or empirical underpinning.For instance, Mr. Rudd argues, the idea that workers who expect higher inflation in the future will try to stay ahead by negotiating higher wages with employers does not fit a country where only 6 percent of workers in the private sector are unionized and where there is little collective bargaining for wages.It would be foolhardy, for sure, to ignore people’s views on rising prices. Whatever the overall economic cost of higher inflation — and this is a contested question — people don’t like it.Lawrence H. Summers, who was an economic adviser to President Bill Clinton and to Mr. Obama, has been warning that a burst in inflation could help deliver the presidency to the Republican Party, as it did in 1968 and 1980.Richard Curtin, a professor of economics at the University of Michigan who runs its surveys of consumers, notes that three presidents in the 1960s and ’70s thought they had recipes to bring inflation down: Lyndon B. Johnson imposed a surtax on income, Richard Nixon resorted to wage and price controls, and Jimmy Carter went on TV to ask Americans to consume less. “Governments always think it is in their ability to quickly stop inflation and they never can,” Mr. Curtin said.Since then, central bankers became convinced that their job was first and foremost to anchor people’s expectations to the belief that inflation would remain low. They are unlikely to let go of the idea that they believe has served them so well for four decades.Mr. Kocherlakota has little personal experience of high inflation. He was a toddler when prices started coming unstuck in the 1960s. But he remembers an assignment in his first semester in college: “This is what Paul Volcker did. Comment.” The takeaway was that the pain inflicted on the economy by the central banker who finally crushed runaway inflation by cranking up interest rates in the late 1970s and early 1980s is to be avoided at all costs.“We let inflation expectations get unanchored,” Mr. Kocherlakota noted. As inflation hits 6 percent and people’s expectations of future inflation rise in tandem, he added, it would be foolhardy to let that happen again. “An honest way to play it now,” he said, “is that unanchoring is a risk we have to be cognizant of.” More

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    Biden's Stimulus Is Stoking Inflation, Fed Analysis Suggests

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    Inflation is likely getting a temporary boost from the $1.9 trillion coronavirus relief package that the Biden administration ushered in early this year, new Federal Reserve Bank of San Francisco research released on Monday suggested.The analysis may add fuel to a hot debate in Washington over whether the administration’s policies are contributing to a spike in prices. Critics of the government spending package that was signed into law in March, including former Treasury Secretary Lawrence H. Summers, have said it was poorly targeted and risked overheating the economy. Supporters of the relief program have said it provided critical aid to workers and businesses still struggling through the pandemic.The new paper comes down somewhere in the middle, finding that the spending had some effect on inflation but suggesting that it is most likely to be temporary. The economists estimated that it would add 0.3 percentage points to the core Personal Consumption Expenditures inflation index in 2021 and “a bit more” than 0.2 percentage points in 2022. Core inflation strips out volatile items like food and fuel.While those numbers are significant, they are not what most people would consider “overheating” — the Fed aims for 2 percent inflation on average over time, and a few tenths of a percent here or there are not a reason for much alarm.But the result is only a rough estimate, one the researchers came up with to help inform an continuing political and economic debate.Both the Trump and Biden administrations signed trillions of dollars in virus relief spending into law. The packages included two bipartisan bills in 2020 that pumped more than $3 trillion into the economy, including direct checks to individuals and generous unemployment benefits. Another $1.9 trillion — called the American Rescue Plan — was passed this year by Democrats after they took control of both Congress and the White House.“The later timing and large size of the A.R.P. stirred debate about whether it is causing an overheating of the economy and fueling a sustained increase in inflation,” the San Francisco Fed researchers noted.The economists tried to answer that question by looking at how much spare capacity is in the economy using a labor market measure — the ratio of job openings to unemployment. The logic is that inflation tends to pick up when there is very little labor market slack, because businesses raise wages to attract workers and then raise prices to cover their climbing labor costs.Government stimulus can push up the number of job openings in the economy as it fuels demand while constraining the number of available workers because it gives would-be employees a financial cushion, allowing them to take their time as they search for a new job.Based on the package’s size and using historical evidence on how fiscal spending affects the labor market, the researchers found that the American Rescue Plan might raise the vacancy-to-unemployment ratio close to its historical peak in 1968, fueling some inflation — but that the price impact would be small and short-lived.U.S. Inflation & Supply Chain ProblemsCard 1 of 6Covid’s impact on supply continues. More

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    Cutting off jobless benefits early may have hurt state economies.

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    When states began cutting off federal unemployment benefits this summer, their governors argued that the move would push people to return to work.New research suggests that ending the benefits did indeed lead some people to get jobs, but that far more people did not, leaving them — and perhaps also their states’ economies — worse off.A total of 26 states, all but one with Republican governors, have moved to end the expanded unemployment benefits that have been in place since the pandemic began. Many business owners blame the benefits for discouraging people from returning to work, while supporters argue they have provided a lifeline to people who lost jobs in the pandemic.The extra benefits are set to expire nationwide next month, although President Biden on Thursday encouraged states with high unemployment rates to use separate federal funds to continue the programs.To study the policies’ effect, a team of economists used data from Earnin, a financial services company, to review anonymized banking records from more than 18,000 low-income workers who were receiving unemployment benefits in late April.A Small Rise in EmploymentShare of workers on unemployment in late April who later began working.

    Note: Chart reflects data in 19 states that have cut off benefits, and 23 that have retained them. Source: Earnin via Coombs, et al.By The New York TimesThe researchers found that ending the benefits did have an effect on employment: In states that cut off benefits, about 26 percent of people in the study were working in early August, compared with about 22 percent of people in states that continued the benefits.But far more people did not find jobs. In the 19 states ending the programs for which researchers had data, about two million people lost their benefits entirely, and a million had their payments reduced. Of those, only about 145,000 people found jobs because of the cutoff. (The researchers argue the true number is probably even lower, because the workers they were studying were the people most likely to be severely affected by the loss of income, and therefore may not have been representative of everyone receiving benefits.)A Big Drop in BenefitsShare of workers on unemployment in late April who continued to receive benefits in some form.

    Note: Chart reflects data in 19 states that have cut off benefits, and 23 that have retained them. Source: Earnin via Coombs, et al.By The New York TimesCutting off the benefits left unemployed workers worse off on average. The researchers estimate that workers lost an average of $278 a week in benefits because of the change, and gained just $14 a week in earnings (not $14 an hour, as previously reported here). They compensated by cutting spending by $145 a week — a roughly 20 percent reduction — and thus put less money into their local economies.“The labor market didn’t pop after you kicked these people off,” said Michael Stepner, a University of Toronto economist who was one of the study’s authors. “Most of these people are not finding jobs, and it’s going to take them a long time to get their earnings back.”Less Income, Less SpendingAverage impact of ending federal programs on weekly unemployment benefits, earnings and spending, among people who were on unemployment in late April.

    Notes: Data is as of Aug. 6 and includes 19 states that have cut off benefits. Source: Earnin via Coombs, et al.By The New York TimesThe findings are consistent with other recent research that has found that the extra unemployment benefits have had a measurable but small effect on the number of people working and looking for work. The next piece of evidence will come Friday morning, when the Labor Department will release state-level data on employment in July.Coral Murphy Marcos More

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    Who Discriminates in Hiring? A New Study Can Tell.

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    Applications seemingly from Black candidates got fewer replies than those evidently from white candidates. The method could point to specific companies.Twenty years ago, Kalisha White performed an experiment. A Marquette University graduate who is Black, she suspected that her application for a job as executive team leader at a Target in Wisconsin was being ignored because of her race. So she sent in another one, with a name (Sarah Brucker) more likely to make the candidate appear white.Though the fake résumé was not quite as accomplished as Ms. White’s, the alter ego scored an interview. Target ultimately paid over half a million dollars to settle a class-action lawsuit brought by the Equal Employment Opportunity Commission on behalf of Ms. White and a handful of other Black job applicants.Now a variation on her strategy could help expose racial discrimination in employment across the corporate landscape.Economists at the University of California, Berkeley, and the University of Chicago this week unveiled a vast discrimination audit of some of the largest U.S. companies. Starting in late 2019, they sent 83,000 fake job applications for entry-level positions at 108 companies — most of them in the top 100 of the Fortune 500 list, and some of their subsidiaries.Their insights can provide valuable evidence about violations of Black workers’ civil rights.The researchers — Patrick Kline and Christopher Walters of Berkeley and Evan K. Rose of Chicago — are not ready to reveal the names of companies on their list. But they plan to, once they expose the data to more statistical tests. Labor lawyers, the E.E.O.C. and maybe the companies themselves could do a lot with this information. (Dr. Kline said they had briefed the U.S. Labor Department on the general findings.)In the study, applicants’ characteristics — like age, sexual orientation, or work and school experience — varied at random. Names, however, were chosen purposefully to ensure applications came in pairs: one with a more distinctive white name — Jake or Molly, say — and the other with a similar background but a more distinctive Black name, like DeShawn or Imani.What the researchers found would probably not surprise Ms. White: On average, applications from candidates with a “Black name” get fewer callbacks than similar applications bearing a “white name.”This aligns with a paper published by two economists from the University of Chicago a couple of years after Ms. White’s tussle with Target: Respondents to help-wanted ads in Boston and Chicago had much better luck if their name was Emily or Greg than if it was Lakisha or Jamal. (Marianne Bertrand, one of the authors, testified as an expert witness in the trial over Ms. White’s discrimination claim.)This experimental approach with paired applications, some economists argue, offers a closer representation of racial discrimination in the work force than studies that seek to relate employment and wage gaps to other characteristics — such as educational attainment and skill — and treat discrimination as a residual, or what’s left after other differences are accounted for.The Berkeley and Chicago researchers found that discrimination isn’t uniform across the corporate landscape. Some companies discriminate little, responding similarly to applications by Molly and Latifa. Others show a measurable bias.All told, for every 1,000 applications received, the researchers found, white candidates got about 250 responses, compared with about 230 for Black candidates. But among one-fifth of companies, the average gap grew to 50 callbacks. Even allowing that some patterns of discrimination could be random, rather than the result of racism, they concluded that 23 companies from their selection were “very likely to be engaged in systemic discrimination against Black applicants.”There are 13 companies in automotive retailing and services in the Fortune 500 list. Five are among the 10 most discriminatory companies on the researchers’ list. Of the companies very likely to discriminate based on race, according to the findings, eight are federal contractors, which are bound by particularly stringent anti-discrimination rules and could lose their government contracts as a consequence.“Discriminatory behavior is clustered in particular firms,” the researchers wrote. “The identity of many of these firms can be deduced with high confidence.”The researchers also identified some overall patterns. For starters, discriminating companies tend to be less profitable, a finding consistent with the proposition by Gary Becker, who first studied discrimination in the workplace in the 1950s, that it is costly for firms to discriminate against productive workers.The study found no strong link between discrimination and geography: Applications for jobs in the South fared no worse than anywhere else. Retailers and restaurants and bars discriminate more than average. And employers with more centralized personnel operations handling job applications tend to discriminate less, suggesting that uniform rules and procedures across a company can help reduce racial biases.An early precedent for the paper published this week is a 1978 study that sent pairs of fake applications with similar qualifications but different photos, showing a white or a Black applicant. Interestingly, that study found some evidence of “reverse” discrimination against white applicants.More fake-résumé studies have followed in recent years. One found that recent Black college graduates get fewer callbacks from potential employers than white candidates with identical resumes. Another found that prospective employers treat Black graduates from elite universities about the same as white graduates of less selective institutions.One study reported that when employers in New York and New Jersey were barred from asking about job candidates’ criminal records, callbacks to Black candidates dropped significantly, relative to white job seekers, suggesting employers assumed Black candidates were more likely to have a record.What makes the new research valuable is that it shows regulators, courts and labor lawyers how large-scale auditing of hiring practices offers a method to monitor and police bias. “Our findings demonstrate that it is possible to identify individual firms responsible for a substantial share of racial discrimination while maintaining a tight limit on the expected number of false positives encountered,” the researchers wrote.Individual companies might even use the findings to reform their hiring practices.Dr. Kline of Berkeley said Jenny R. Yang, a former chief commissioner of the E.E.O.C. and the current director of the Office of Federal Contract Compliance Programs, which has jurisdiction over federal contractors, had been apprised of the findings and had expressed interest in the researchers’ technique. (A representative of the agency declined to comment or to make Ms. Yang available.)Similar tests have been performed since the 1980s to detect discrimination in housing by real estate agents and rental property owners. Tests in which white and nonwhite people inquire about the availability of housing suggest discrimination remains rampant.Deploying this approach in the labor market has proved a bit tougher. Last year, the New York City Commission on Human Rights performed tests to detect employment discrimination — whether by race, gender, age or any other protected class — at 2,356 shops. Still, “employment is always harder than housing,” said Sapna Raj, deputy commissioner of the law enforcement bureau at the agency, which enforces anti-discrimination regulations.“This could give us a deeper understanding,” Ms. Raj said of the study by the Berkeley and Chicago researchers. “What we would do is evaluate the information and look proactively at ways to address it.”The commission, she noted, could not take action based on the kind of statistics in the new study on their own. “There are so many things you have to look at before you can determine that it is discrimination,” she argued. Still, she suggested, statistical analysis could alert her to which employers it makes sense to look at.And that could ultimately convince corporations that discrimination is costly. “This is actionable evidence of illegal behavior by huge firms,” Dr. Walters of Berkeley said on Twitter in connection with the study’s release. “Modern statistical methods have the potential to help detect and redress civil rights violations.” More

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    Senate Passes Bill to Bolster Competitiveness With China

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    The wide margin of support reflected a sense of urgency among lawmakers in both parties about shoring up the technological and industrial capacity of the United States to counter Beijing.WASHINGTON — The Senate overwhelmingly passed legislation on Tuesday that would pour nearly a quarter-trillion dollars over the next five years into scientific research and development to bolster competitiveness against China. More

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    Stimulus Checks Substantially Reduced Hardship, Study Shows

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    Researchers found that sharp declines in food shortages, financial instability and anxiety coincided with the two most recent rounds of payments.WASHINGTON — Julesa Webb resumed an old habit: serving her children three meals a day. Corrine Young paid the water bill and stopped bathing at her neighbor’s apartment. Chenetta Ray cried, thanked Jesus and rushed to spend the money on a medical test to treat her cancer.In offering most Americans two more rounds of stimulus checks in the past six months, totaling $2,000 a person, the federal government effectively conducted a huge experiment in safety net policy. Supporters said a quick, broad outpouring of cash would ease the economic hardships caused by the coronavirus pandemic. Skeptics called the policy wasteful and expensive.The aid followed an earlier round of stimulus checks, sent a year ago, and the results are being scrutinized for lessons on how to help the needy in less extraordinary times.A new analysis of Census Bureau surveys argues that the two latest rounds of aid significantly improved Americans’ ability to buy food and pay household bills and reduced anxiety and depression, with the largest benefits going to the poorest households and those with children. The analysis offers the fullest look at hardship reduction under the stimulus aid.Among households with children, reports of food shortages fell 42 percent from January through April. A broader gauge of financial instability fell 43 percent. Among all households, frequent anxiety and depression fell by more than 20 percent.While the economic rebound and other forms of aid no doubt also helped, the largest declines in measures of hardship coincided with the $600 checks that reached most people in January and the $1,400 checks mostly distributed in April.“We see an immediate decline among multiple lines of hardship concentrated among the most disadvantaged families,” said H. Luke Shaefer, a professor at the University of Michigan who co-authored the study with a colleague, Patrick Cooney.Given the scale of the stimulus aid — a total of $585 billion — a reduction in hardship may seem like a given, and there is no clear way to measure whether the benefits were worth the costs.The study does not address the critics’ main complaints, that the spending swelled the deficit, that much of the money went to economically stable families who did not really need it and that the checks were part of a pattern of aid over the last year that left some people with less incentive to find jobs. Some analysts say hardship would have fallen anyway as a result of job growth and other safety net programs.Still, the aggressive use of stimulus checks coincides with growing interest in broad cash payments as a tool in social policy, and the evidence that they can have an immediate effect on the economic strains afflicting many households could influence that debate.Starting in July, the government will mail up to $300 a month per child to all but the most affluent families in a yearlong expansion of the child tax credit that Democrats want to make permanent.Ms. Ray had to contribute $600 to the cost of a CT scan for her cancer diagnosis. The stimulus check in April allowed her to afford it.Callaghan O’Hare for The New York TimesWhile the ability of cash payments to reduce hardship might seem obvious, Mr. Shaefer pointed out that critics of such aid often warn that the needy might waste it. He argued that the size, speed and variety of the hardship reductions vindicated the use of broad cash relief. While other forms of pandemic aid have been better targeted, some have taken many months to distribute and can be used only for dedicated purposes like food or housing.“Cash aid offers families great flexibility to address their most pressing problems, and getting it out quickly is something the government knows how to do,” Mr. Shaefer said. Extrapolating from the survey data, he concluded that 5.2 million children had escaped food insufficiency since the start of the year, a figure he called dramatic.The experience of Ms. Ray, a warehouse worker at a recycling company in Houston, captures the hardships that the pandemic imposed and the varied ways that struggling families have used stimulus checks to address them. Earning $13 an hour, Ms. Ray had an unforgiving budget even before business closures reduced trash collection and cut her hours by a third.Her car insurance lapsed. Her lights were shut off. She skipped meals, even with food pantry aid, and re-wore dirty work clothes to save on laundromat costs. When her daughter discovered that they owed thousands in rent, she offered to quit high school and work, which Ms. Ray forbid. A stimulus payment in January — $1,200 for the two of them — let her pay small parts of multiple bills and restock the freezer.“It bridged a gap,” Ms. Ray said, while she waited for slower forms of assistance, like rental aid.Then she got cancer. To confirm the diagnosis and guide her treatment, she had to contribute $600 to the cost of a CT scan, which she did with the help of a payment in April totaling $2,800.In addition to providing for the test, Ms. Ray said, the checks brought hope. “I really got down and depressed,” she said. “Part of the benefit of the stimulus to me was God saying, ‘I got you.’ Spiritual and emotional reassurance. It took a lot of stress off me.”Scott Winship, who studies poverty at the American Enterprise Institute, questioned the reliability of the census data used in the University of Michigan study, noting that fewer than one in 10 of the households the government contacts answer the biweekly surveys.He also argued that hardship would have fallen anyway, since the last round of stimulus checks coincided with tax season, which sends large sums to low-wage workers through tax credits. Between the earned-income tax credit and the child tax credit, a single parent with two children can receive up to nearly $8,500 a year.Researchers at Columbia University estimate that poverty fell sharply in March, but Zachary Parolin, a member of the Columbia team, said that about half the decline would have occurred without the pandemic relief, primarily because of the tax credits.Noting that the stimulus checks allocated as much to households with incomes above $100,000 as they did to those below $30,000, Mr. Winship called them inefficient and a poor model for future policy. “It’s not sustainable to just give people enough cash to eliminate poverty,” he said. “And in the long run it can have negative consequences by reducing the incentives to work and marry.”Analysts have long debated the merits of cash versus targeted assistance like food stamps or housing subsidies. Cash is easy to send and flexible to use. But targeted benefits offer more assurance that the aid is used as intended, and they attract political support from related businesses like grocers and landlords.Throughout the pandemic, policymakers have employed both approaches. The first round of stimulus checks, $1200 per adult and $500 per child last year, started before the Census Bureau surveys began, so it is harder to gauge its effect.With full eligibility extending to families with incomes of up to $150,000, the stimulus checks could reach nearly 300 million Americans. While that greatly increased the cost, Mr. Shaefer said it reduced the resentment that could accompany aid to the chronically needy and noted that hardships have expanded up the income ladder.Even among households that had prepandemic incomes of $50,000 to $75,000, more than 11 percent of those with children sometimes or often lacked food at the start of the year — a figure that has since fallen in half, according to the Census data.Ms. Ray said she had skipped meals and reworn dirty work clothes to save on laundry costs during the economic downturn.Callaghan O’Hare for The New York TimesWhen some people heard the latest checks were coming, they considered the news too good to be true. Ms. Webb, a St. Louis nursing aide with three young children, lost about two-thirds of her earnings when the pandemic left fewer patients seeking in-home care. She found another job but lost it after catching Covid. Food was the first casualty.“We’d have breakfast a little later than normal, and then dinner — no lunch,” she said. “Sometimes the kids would have dry cereal because we didn’t have milk.”Despite her skepticism, Ms. Webb received $8,000 for her four-person family between the two rounds. She used the money to pay back family loans and reduce her overdue rent, and she started serving lunch and an afternoon snack “to make sure the kids were full-full.”“I was like, ‘Woo!’ This is the most money I ever seen in my bank account,” she said. “I’m still in a hole, but I’m starting to see more sunlight now.”Mr. Shaefer acknowledged that other aid and an improving economy might have helped reduce hardship, but he said the timing pointed toward the stimulus checks. Among families with children, nearly 90 percent of the improvement in food sufficiency this year occurred in the two weeks after each round of payments.The study cited another direct link between cash aid and hardship: after the government stopped supplementing jobless benefits last fall, food insufficiency among families with children rose nearly 25 percent.“Throughout the crisis, the level of hardship faced by U.S. households can be directly linked to the federal government’s response,” Mr. Shaefer and Mr. Cooney wrote.Low-income families often emphasize the stress that economic uncertainty brings, especially when it threatens needs as basic as shelter and food. At the start of this year, 73 percent of households with children reported spending at least several days a week feeling anxious. That figure has since fallen to 57 percent, according to the census data.“I really got down and depressed,” Ms. Ray said. “Part of the benefit of the stimulus to me was God saying, ‘I got you.’ Spiritual and emotional reassurance. It took a lot of stress off me.”Callaghan O’Hare for The New York TimesBut mental health might have improved for many reasons, Mr. Winship said, including increasing vaccinations, falling disease rates and the socialization that has accompanied the reopening of businesses and schools. “I would really question whether that’s the stimulus checks,” he said.Still, research in recent decades has emphasized the debilitating effect that stress can have on children raised in low-income households. And recipients of the stimulus payments often describe them as an emotional balm.For Ms. Young, 40, the problems of poverty and poor mental health are deeply entwined. A Chicago woman with schizophrenia, she is raising a teenager and a baby on food stamps and disability checks. Extra help from adult children lapsed during the pandemic when they lost work. The result was a disconnected water line and two weeks of toting jugs from her neighbor’s apartment.“It’s really depressing, having to worry about losing your lights and water,” Ms. Young said. “Very stressful. It was a very, very dark path.”She did not receive the stimulus payment that most people got at the start of the year, for reasons she does not understand. She checked her bank account in April, to see if she could buy a loaf a bread, when she found it swollen with a $1,400 stimulus check.Ms. Young bought the bread — two loaves — and paid down her utility bills to avoid more outages. “I did it that day,” she said. “You just don’t know — it was such a relief.” More

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    When Amazon Raises Wages, Local Companies Follow Suit

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    #masthead-section-label, #masthead-bar-one { display: none }The Jobs CrisisCurrent Unemployment RateWhen the Checks Run OutThe Economy in 9 ChartsThe First 6 MonthsAdvertisementContinue reading the main storySupported byContinue reading the main storyWhen Amazon Raises Wages, Local Companies Follow SuitNew research suggests that when big companies increase wages, they drive up pay in the places where they operate — without a notable loss in jobs.An Amazon fulfillment center in Kent, Wash. The company lifted starting pay to $15 an hour three years ago.Credit…Ruth Fremson/The New York TimesBen Casselman and March 5, 2021, 5:00 a.m. ETAmazon has embarked on an advertising blitz this winter, urging Congress to follow the company’s lead and raise the federal minimum wage to $15 an hour. American workers “simply can’t wait” for higher pay, the company said in a recent blog post.In the areas where Amazon operates, though, low-wage workers at other businesses have seen significant wage growth since 2018, beyond what they otherwise might have expected, and not because of new minimum-wage laws. The gains are a direct result of Amazon’s corporate decision to increase starting pay to $15 an hour three years ago, which appears to have lifted pay for low-wage workers in other local companies as well, according to new research from economists at the University of California, Berkeley, and Brandeis University.The findings have broad implications for the battle over the federal minimum wage, which has stayed at $7.25 an hour for more than a decade, and which Democrats are trying to raise to $15 by 2025. For one, the research illustrates how difficult it can be for low-wage workers to command higher pay in the modern American economy — until a powerful outside actor, like a large employer or a government, intervenes.Most directly, there is little evidence in the paper that raising the minimum wage would lead to significant job loss, even in low-cost rural areas, a finding consistent with several recent studies. Other research, including a recent report from the Congressional Budget Office, has found a larger negative effect on jobs, although still smaller than many economists believed in the past.The authors of the latest study — Ellora Derenoncourt of Berkeley and Clemens Noelke and David Weil of Brandeis — studied Amazon, Walmart and Target, which operate in areas where wages tend to be low. But even in those places, the researchers found, wage increases by the large corporate employers appear to drive up wages without driving down employment.“When you have major changes in the wage policies of large actors in the labor market, this has ripple effects,” Dr. Derenoncourt said in an interview.At the same time, Dr. Weil added, “the sky doesn’t fall.”The researchers used the federal government’s Current Population Survey, supplemented by evidence from the online job posting site Glassdoor, to estimate what happened in communities where Amazon, Target or Walmart operate after those companies increased entry-level wages in recent years. What they found in many ways confounds traditional economic models: Raising pay did not put the large companies at a disadvantage. Instead, it gave local workers a reason to push their own employers for a raise.At Mooyah Burgers, Fries and Shakes, a chain with 87 locations in 21 states, the Amazon effect is clear. Employees routinely go to their managers and point out that Amazon is hiring at a significant pay increase.“When you have those corporations paying that much, it just puts pressure on the smaller business owners,” said Tony Darden, Mooyah’s president. Franchisees can try to have good relationships with their employees, he said, but there is only so far that can go.“At some point, it always comes down to money,” he said. “And so if there’s an employee who has the ability to make two or three or four or five bucks an hour more at another location, they go directly to the owner or to their manager.”Many restaurants will grant the pay increase, Mr. Darden said, but at the cost of giving workers fewer hours or hiring fewer employees — a common contention among small-business owners. But while that may be true in individual cases, the Berkeley and Brandeis researchers found little evidence of broad-based job cuts as wages rose. A 10 percent increase in the base wage at a company like Amazon, they found, translated into a 1.7 percent loss in local jobs — and a 0.4 percent loss in jobs for low-wage workers.On raising wages, an Amazon executive said, “We knew that by doing it, we would encourage other employers to do the same.”Credit…Gabriella Demczuk for The New York TimesA mounting body of research in recent years suggests that labor markets don’t work in practice the way they do in some economic models. Employees often have less information about their worth than employers, or face greater risks to changing jobs, or can’t readily move between employers the way a pure market assumes. These “frictions,” in economic jargon, often benefit employers over employees, pushing down wages below where supply and demand suggest they should be.But that leaves room for other forces — in the form of political pressure, organized bargaining or a minimum wage — to push wages up.“In a very simple supply-and-demand, competitive market, firms are just paying the market wage,” said Arindrajit Dube, a University of Massachusetts economist who has studied the minimum wage. In reality, he said, wages “are shaped by market forces but also by norms, pressure as well as policies.”Dr. Dube said that in the 1980s, the spread of Walmart and other national retailers helped push down wages, as they displaced smaller, often unionized local chains. Now big national retailers seem to be helping to push wages up.Many small-business owners do not welcome the pressure.Tad Mollnhauer, who runs two printing and shipping retail stores near Orlando, Fla., said entry-level workers typically earned about $10 to $12 an hour. But these days, anyone paying that rate risks losing workers to Amazon. (The state’s minimum wage is under $9 an hour but will rise to $10 this year under a referendum approved by voters in November. The minimum will rise a dollar a year after that, hitting $15 an hour in 2026.)Mr. Mollnhauer said it was hard for small companies like his to match Amazon’s pay.“Their network and their resources are spread out around the country,” allowing Amazon to pay above-market wages in some places, he said. “For me, as two stores, I can’t do that.”Jay Carney, a senior vice president for Amazon, said the company was conscious of the impact its policy might have on other employers. “We knew that by doing it, we would encourage other employers to do the same, and if that happened then it would put upward pressure on wages in general, which would be good,” he said.But he rejected suggestions that Amazon is using its political power to hurt its rivals. “We have no power to force anybody to do this, only Congress does,” he said.Jared Bernstein, a member of the White House Council of Economic Advisers, said the paper showed both the potential spillover effects for workers from raising the federal minimum wage — which studies suggest would help workers who earn more than the minimum also get raises — and the limits of private company efforts.“There’s just no way to be sure to reach the tens of millions of hardworking but poorly paid workers without significantly raising the national minimum wage,” he said.No Republican senator supports the $15-an-hour bill that Amazon has endorsed, and several Democrats have reservations about it. Given those headwinds and an adverse ruling from the Senate parliamentarian, the provision will almost certainly not make it into the final version of President Biden’s relief package.But the researchers’ findings suggest that there are other ways to raise pay for low-wage workers. Political pressure on big companies can lift pay not just for their direct employees but also for other workers in the same area. Other policies could mimic that effect: If the federal government requires its contractors to pay more, as Mr. Biden has directed by executive order, it could help increase wages throughout the private sector.Many people are skeptical of Amazon’s motives in pushing the federal $15-an-hour effort, noting that the company faces scrutiny from Democrats over its treatment of workers, accusations that it has stifled competition and its moves to fight unionization.Other business groups accused Amazon of using its scale and political influence to squeeze smaller competitors.A Walmart in Charlottesville, Va. Minimum-wage increases in major cities have spread to other areas through companies like Walmart.Credit…Eze Amos for The New York Times“Amazon is clearly doing very well in the current economy,” said Misty Chally, executive director of the Coalition of Franchisee Associations, which represents franchise owners. But gyms, hair salons and many other businesses that compete with Amazon are “all struggling to stay in business right now,” she said.Mr. Dube said he had concerns about the power of companies like Amazon and Walmart. But the upward pressure they put on wages, he said, wasn’t one of them.The “Amazon effect” on wages comes as no surprise to organizers of the Fight for $15 campaign. From its start in 2012, the movement sought to put pressure on private employers, not just elected officials.The two fed each other, said Mary Kay Henry, president of the Service Employees International Union, which has backed the campaign: Minimum-wage increases in big cities encouraged companies like Walmart and Target to raise pay nationwide, which in turn prompted more minimum-wage increases and helped fuel the effort to raise the federal wage floor.Policies like Amazon’s are particularly significant in places where the minimum-wage argument has never gained much of a foothold, like the South.“It shifts the politics of minimum wage in those corners of the country,” Ms. Henry said. “It busts the myth it can’t happen here.”AdvertisementContinue reading the main story More