A Social Work Grand Challenge: Reducing Extreme Economic Inequality Science for Action Kickoff University of Denver October 25, 2018 Dr. Trina R. Shanks University of Michigan School of Social Work

Overview Extreme Economic Inequality in the United States A theoretical framework for thinking about economic security and child outcomes Potential Policy Considerations

A Social Work Grand Challenge: Reducing Extreme Economic Inequality http://aaswsw.org/grand-challenges-initiative/12-challenges/reduce-extreme-economic-inequality/

Income Inequality Source: Emmanuel Saez, UC Berkeley

Income Inequality Source: Emmanuel Saez, UC Berkeley

Income Inequality Source: Congressional Budget Office

Earnings Inequality Source: Bureau of Labor Statistics

Source: Institute for Policy Studies and AFL-CIO

Source: Economic Policy Institute

Median Income by Race/Ethnicity

Wealth Inequality Top .1%Wealth Share in the United States, 1913 - 2012 The figure plots the share of total household wealth owned by the richest .1% of families in the United States from 1913 to 2012. The unit is the family (either a single person aged 20 or above or a married couple, in both cases with children dependents if any). The top .1% is defined relative to the total number of families in the population. In 2012, the top .1% included about 160,000 families with a net wealth above $20.6 million. Source: Online Appendix Table B1 . From: Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data * Q J Econ. 2016;131(2):519-578. doi:10.1093/qje/qjw004 11

Wealth Inequality

The Racial Wealth Gap is Not Improving “The Road to Zero Wealth: How the Racial Wealth Divide is Hollowing out America’s Middle Class” (Prosperity Now and Institute for Policy Studies)

Economic Inequality and Implications for Children

Source: ECLS-B, when children were 9-months Percentages of Children Born in 2001 who Live in Advantaged and Disadvantaged Households by Race Advantaged Disadvantaged Source: ECLS-B, when children were 9-months Taken from: Shanks, T. & Simonton, S. (2011). Diverging Pathways: How Wealth Shapes Opportunity for Children. Oakland, CA: Insight Center for Community Economic Development.

What better predicts long-term outcomes for children: a developmentally appropriate assessment of ability as a young child or their economic and social advantage?

Aspects of social and economic advantage Financial security Secure Family Safe Neighborhood Quality School System

Shanks, T. R. & Robinson, C. (2013) Shanks, T.R. & Robinson, C. (2013). Assets, economic opportunity and toxic stress: A framework for understanding child and educational outcomes. Economics of Education Review

Shanks, T. R. & Robinson, C. (2013) Shanks, T.R. & Robinson, C. (2013). Assets, economic opportunity and toxic stress: A framework for understanding child and educational outcomes. Economics of Education Review

Shanks, T. R. & Robinson, C. (2013) Shanks, T.R. & Robinson, C. (2013). Assets, economic opportunity and toxic stress: A framework for understanding child and educational outcomes. Economics of Education Review

Key Takeaway While claiming the mantra of ‘land of opportunity’, we have drifted from a collective infrastructure that serves all to segregated spaces with distinct opportunity sets where families and individuals are expected to fend for themselves. Consider: Education, Health Care, Child Care, Housing, Access to Food and Transportation

Potential Policy Considerations

Possibilities for Change -- Income Increased earnings (minimum wage, UBI, child allowances) Make part-time, shift and variable work more stable and humane Expand the Earned Income Tax Credit Expand child care to enable stable employment Expand active employment creation Strengthen unemployment insurance

Possibilities for Change -- Wealth Reduce the role of wealth and income in building human capital Stop privileging income from capital over income from labor Re-deploy wealth-building subsidies in retirement Re-deploy wealth-building subsidies for shelter Create a new lifelong policy of inclusive and progressive wealth-building (starting with CDAs)

You can reach me at trwilli@umich.edu

Types of Policies and Programs Individual Level (matching, incentives) Low-Income Households Middle-Income Households Upper-Income Households Collective Level (modeling, infrastructure) Faith-based Institutions Neighborhood Resident Associations Civic Organizations Sororities and Fraternities or HBCUs

Institutional Continuum Working Model for a Continuum of Asset-Building Activity Trina Shanks and Stephanie Boddie Institutional Continuum Faith-based Neighborhood Resident Civic Sororities/Fraternities Institutions Associations Organizations HBCUs Community Level Shared Risk Pools for Insurance Housing Co-ops Investment Clubs Micro-enterprise Co-ops Community Development Corporations ( CDC) Limited Liability Corporation (LLC) Venture Capital Partnerships Foundations Household Individual Development Accounts (IDAs) Investing EITC Refunds Homeownership Employer-based Programs (401K, 403B) State College IRAs 529 plans Real Estate Trust Funds Estate Planning Family Endowments Low-Income Middle-Income High-Income Households Households Households Income Continuum