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Race, Gender, and Economic Security in the 21st Century: Entrepreneurship, Employment, and Retirement

Paper Session

Sunday, Jan. 5, 2020 8:00 AM - 10:00 AM (PDT)

Manchester Grand Hyatt, La Jolla B
Hosted By: Union for Radical Political Economics
  • Chair: Martha Jaimes, New School for Social Research

Homeownership, home equity, and black-owned business starts: examining the impact of racial disparities in housing assets on firm creation

Rachel Marie Brooks Atkins
,
New York University

Abstract

In this article, I examine the ways in which housing wealth explains observed differences in the probability of starting a business for blacks as compared with whites. A growing body of empirical work on the housing collateral channel shows a positive relationship between increases in housing assets and the likelihood of entering entrepreneurship. It is well documented that blacks possess less housing wealth than whites on average in the US. Though the literature identifies racial differences in access to financial capital generally as a leading driver of black-white disparities in entrepreneurship, it is virtually silent on the extent to which black-white disparities in housing wealth, in particular, may explain racial differences in firm starts.

Using non-linear decomposition techniques, I estimate that the differences in average levels of home equity account for approximately 13 percent of the black-white gap in firm starts among homeowners. I also estimate entrepreneurial choice models on panel data from 2003 through 2013, a time frame that includes a housing boom and subsequent bust. I exploit the variation in home-based assets during this period to examine whether there is a differential effect of these assets on firm starts by race. I find no relationship between homeownership and starting a business, however; conditional on owning a home, an increase in home equity is positively related to the probability of starting a business for whites but not for blacks. Thus, while deficits in home assets contribute to black-white gaps in entrepreneurship, blacks who do own home assets are less able than similarly situated whites to access the housing collateral channel.

Black Workers and the Rise of Vulnerable Employment in the U.S.

Ofronama Biu
,
New School
Darrick Hamilton
,
Ohio State University

Abstract

Workers in alternative employment arrangements--those that are on-call, temporary, or contract-based--are more susceptible to poverty. These arrangements offer fewer employment protections, lower pay, and are less likely to provide benefits such as health insurance and retirement coverage. The purported growth in alternative work has grave implications for workers who are already in the most vulnerable positions in the labor market. American jobs have been mostly segregated since the middle of the 20th century. Black women and men have been systematically crowded into low wage occupations (such as sales) and crowded out of high wage occupations (such as management), even when they have the requisite educational requirements for the jobs (Hamilton 2013). Given that occupational crowding exists based on wages, this work tests the hypothesis that Black workers are also overrepresented in various forms of vulnerable employment. Occupational crowding measures the degree to which a group is over-, under-, or proportionally represented in an occupation given their educational attainment and the educational requirement for the job. The occupational crowding index used in this paper is based on Gibson, Darity, and Myers’ (1998) adaptation of Bergman’s (1971) model. Vulnerable jobs include those that have a larger percentage of workers in alternative arrangements (e.g on call, temporary, contract-based), contingent work, and part-time work. This research uses U.S. Census American Community Survey (ACS) data to demonstrate ways that Black women and Black men may be susceptible to the changing nature of work. This work also expands the occupational crowding methodology to include women and generates crowding measures across dimensions of race and gender. The paper will also explore the relationship between crowding and employer-sponsored benefits and how these relationships vary by race and gender.

Labor Policy Considering Stratification: An Alternative Framing for Employment Disparities

Jordan Ayala
,
University of Missouri-Kansas City
Matthew Robinson
,
University of Missouri-Kansas City

Abstract

Public policy aimed at addressing labor underutilization could benefit from further engagement with stratification economics. If unemployment is so low, is the U.S. at full employment? Specifically, do all labor force indicators show a recovery from the 2007-2008 recession? Labor policy design and implementation necessarily requires decisions on how we operationalize definitions and measurements of unemployment and underemployment. In this paper we consider proposals for a federal jobs guarantee or public service employment program. A properly designed and implemented federal jobs guarantee has the potential to reform employment policy and address injustices in the economy. Injustices which have led to racial wealth inequality and impeded the social provisioning process. The anemic recovery from the Great Recession further revealed the need for extensive reform. Employment gains and losses are unequally shared or suffered across gender, race-ethnicity, and space. However, a one-size-fits-all approach to the design and implementation of a federal jobs guarantee may only reinforce existing disparities. The often referenced “locally administered” aspects of the program deserve further attention to ensure the program works within regional and local ecological capacity and to address historical injustices. Employment outcomes reflect the social and political settings within which they operate. The stratified nature of employment outcomes are a product of the discrimination, segregation, and political and cultural norms of societies. Ignoring this landscape will result in suboptimal outcomes and insufficient redresses of persistent income and wealth disparities.

In this paper we evaluate measures of unemployment and underemployment through the lens of post-Keynesian economics and stratification economics, and the intersection between these two prominent heterodox approaches. A decomposition and demographic analysis of aggregate labor force transition rates and gross flows allows us to better understand stratification in employment outcomes. We build upon recent work using the U.S. Current Population Survey to calculate transition rates and gross flows between various labor force states from 1998 until the present. We extend recent work on alternative indicators of unemployment using labor force transition rates and gross flows to investigate (un)employment through the lens of stratification economics. A just implementation of a federal jobs guarantee will require a critical approach to planning and implementation. Issues of gender, race, class, culture, and space will need to be addressed. Prevailing mainstream economic frameworks are insufficient to govern the task; an interdisciplinary approach is necessary.

Is the Social Security's Actuarial Adjustment Schedule Regressive? The Effect of Differential Mortality Rates

Martha Jaimes
,
New School for Social Research

Abstract

The combined effect of changes in Social Security’s Full Retirement Age (FRA) and actuarial adjustments
according to claim age disproportionately affect low income workers and undermines the program´s
progressive retired worker benefits formula. Workers can claim Social Security retirement benefits at
any age from 62 to 70, with actuarial adjustments that reduce benefits for early claimers and increase
benefits for those claiming at older ages. Assuming population average mortality and a three percent
real interest rate, the adjustment factors used by the Social Security are approximately actuarially fair in
the sense that the expected present discounted value of lifetime benefits varies little with claim age.
However, benefits are not necessarily actuarially fair for everyone. For example, persons with higher
mortality will benefit from claiming earlier (in expected present value terms), and those with lower than
average mortality will benefit from delaying. This study shows that claim age is negatively correlated
with mortality, making the actuarial adjustments more than actuarially fair for populations with lower
mortality rates.
The study explores the relationship between claiming and socioeconomic status characteristics of
workers. Through this analysis this study finds that Social Security Delayed Retirement Credit is
regressive because it is more than actuarially fair to the high socioeconomic status and low mortality
population that delays claiming. In contrast, the adjustment schedule reduces total lifetime Social
Security benefits of low socioeconomic status and high mortality workers who claim early retired worker
benefits. Early claimers are most likely single women, blacks, and workers with less than high school
education.
Using Health and Retirement Study (HRS) data linked to administrative Social Security records, this study
investigates the relationship between claim age and subsequent mortality, and the impact of the trend
towards greater dispersion in claim ages on Social Security finances. To answer this question, this
research uses a hazard model to examine
Discussant(s)
Fadhel Kaboub
,
Denison University
Ozgur Orhangazi
,
Kadir Has University-Instanbul
JEL Classifications
  • J7 - Labor Discrimination