This presentation documents historical and current trends in wage and benefit disparities between women and men. It examines disparities at different points in the wage distribution, for different education levels and occupations, and by age, including workers in retirement. The main findings include the following:

• Women’s wages still lag men’s, particularly at the high end of the wage distribution, though the gap has narrowed over time. In 2013, women’s hourly wages were 83.4 percent of men’s at the median of the wage distribution.
• Women are disproportionately in low-wage and service occupations.
• Women are less likely to have workplace benefits such as employer-sponsored insurance and pensions than their male counterparts.
• A lifetime of compensation inequality means that women are more economically vulnerable in retirement: Elderly women are more than 10 percentage points more likely to be economically vulnerable than men.

There is no cost to the economy of women catching up to men. Through increasing bargaining power of workers generally, it’s possible to reduce the gender gap and increase wages.

Wage disparities between men and women

In 2013, the median hourly wage for men was $18.11 compared with $15.10 for women. At that point in the wage distribution, women make 83.4 percent of what men make—about 83 cents on the dollar. As shown in Figure A, this gap has been closing, though it’s clear that typical men’s wages have been stagnating as women’s wages are slowly increasing. In 1979, women at the middle made about 63 percent of what men made, or 63 cents on the dollar.

Figure A

Figure A

The gender wage gap occurs at all levels of the distribution. As shown in Figure B, the gender wage gap is greater at higher points of the wage distribution; women near the bottom (at the 10^thpercentile) make about 92 cents on the dollar while women at the 95^th percentile make only 76 cents on the dollar relative to men.

Figure B

Figure B

Women are concentrated in low-wage sectors

According to a recent Council of Economic Advisers presentation, “Women are concentrated in low-wage sectors of the labor force such as health care support and personal care and are underrepresented in occupations with high average wages, such as STEM occupations.”

Furthermore, the National Women’s Law Center (NWLC) finds that women make up three-fourths of workers in the 10 largest occupations that typically pay low wages (Figure C), and over one-third of these low-wage workers are women of color.

Figure C

Figure C

Low-wage job growth has fueled the recovery for women.  Between 2009 and 2013, 35 percent of women’s employment growth can be attributed to low-wage occupations, twice as large as the low-wage share of men’s employment growth (18 percent), according to NWLC. Notably, these low-wage occupations are still paying full-time working women 10 percent less than men.

As Figure D shows, women are also less likely to have workplace benefits. Among strongly attached private-sector workers, 55.8 percent of men have employer-sponsored health insurance coverage compared with only 49.9 percent of women. Women are also less likely to have employment-based pension coverage: 41.9 percent compared with 43.6 percent for men.

Figure D

Figure D

Even at the start of their careers, there is a substantial gap between wages of women and men. Figures E and F examine wages for recent high school and college graduates, respectively. Entry-level wages for men with only a high school degree were $11.73 on average in 2013 compared with only $9.98 for women. Among recent college graduates, men earn on average $22.67 an hour compared with $19.04 for women. These gaps are particularly striking given the fact that women have likely not left the labor force at this point to care for children.

Figure E

Figure E

Figure F

Figure F

Among those with advanced degrees, however, it is clear from Figure G that the gender wage gap grows throughout women’s lifetimes. Wages are similar for men and women early in their careers, however, the earnings gap widens substantially over time; by their mid-30s and approaching 40, earnings for men are more than 50 percent higher than women’s earnings.

Figure G

Figure G

A lifetime of inequality means that women are more economically vulnerable in retirement

As Figure H shows, 52.6 percent of women age 65 and older are “economically vulnerable,” compared with 41.9 percent of men age 65 and older. In fact, at every level of the distribution, the shares of men who are above the “economically vulnerable” threshold are larger than the corresponding shares of women who are above this threshold. Likewise, at every level, the shares of men below the “economically vulnerable” threshold are smaller than the corresponding shares of women.

Figure H

Figure H

It’s important to note as well that this is not a statistical artifact based on the fact that women live longer than men—although women’s longer lifespans do indeed make retirement planning that much more challenging. In fact, women are more likely to be economically vulnerable than men among both the young elderly and the older elderly (as shown in Figure I). Women age 65 to 79 are 9 percentage points more likely to be economically vulnerable than men, and women age 80 and older are 13 percentage points more likely to be economically vulnerable than men.

Figure I

Figure I

Inducing comparable pay would have real benefits for women’s living standards

If we want to reduce poverty, comparable pay is a great way to do it, as shown in Figure J.

Figure J

Figure J

According to a January 2014 report on equal pay from the Institute for Women’s Policy Research, “providing equal pay to women would have a dramatic impact on their families. The poverty rate [of working women] would be cut in half, falling to 3.9 percent from 8.1 percent.” The impact on single women and single mothers with children is particularly dramatic.

There is no cost to the economy of women catching up to men. Workers generally have failed to see gains from a growing economy; there’s plenty of room to increase bargaining power of workers generally, reducing the gender gap and increasing wages.

i.

Education Policy is Housing Policy

We cannot substantially improve the performance of the poorest African American students – the “truly disadvantaged,” in William Julius Wilson’s phrase – by school reform alone. It must be addressed primarily by improving the social and economic conditions that bring too many children to school unprepared to take advantage of what schools have to offer.

The conclusion rests on two distinct analyses:

– First, social and economic disadvantage – not only poverty, but a host of associated conditions – depresses student performance, and

– Second, concentrating students with these disadvantages in racially and economically homogenous schools depresses it further.

The schools that the most disadvantaged black children attend today are segregated because they are located in segregated neighborhoods far distant from truly middle class neighborhoods. We cannot desegregate schools without desegregating these neighborhoods, and our ability to desegregate the neighborhoods in which segregated schools are located is hobbled by historical ignorance. Too quickly forgetting twentieth century history, we’ve persuaded ourselves that the residential isolation of low-income black children is only “de facto,” the accident of economic circumstance, personal preference, and private discrimination. But unless we re-learn how residential segregation is “de jure,” resulting from racially-motivated public policy, we have little hope of remedying school segregation that flows from this neighborhood racial isolation.

The individual predictors of low achievement are well documented:

• With less access to routine and preventive health care, disadvantaged children have greater absenteeism, and they can’t benefit from good schools if they are not present.
• With less literate parents, they are read to less frequently when young, and are exposed to less complex language at home.
• With less adequate housing, they rarely have quiet places to study and may move more frequently, changing schools and teachers.
• With fewer opportunities for enriching after-school and summer activities, their background knowledge and organizational skills are less developed.
• With fewer family resources, their college ambitions are constrained.

As these and many other disadvantages accumulate, lower social class children inevitably have lower average achievement than middle class children, even with the highest quality instruction.

When a school’s proportion of students at risk of failure grows, the consequences of disadvantage are exacerbated.

In schools with high proportions of disadvantaged children,

• Remediation becomes the norm, and teachers have little time to challenge those exceptional students who can overcome personal, family, and community hardships that typically interfere with learning.
• In schools with high student mobility, teachers spend more time repeating lessons for newcomers, and have fewer opportunities to adapt instruction to students’ individual strengths and weaknesses.
• When classrooms fill with students who come to school less ready to learn, teachers must focus more on discipline and less on learning.
• Children in impoverished neighborhoods are surrounded by more crime and violence and suffer from greater stress that interferes with learning.
• Children with less exposure to mainstream society are less familiar with the standard English that’s necessary for their future success.
• When few parents have strong educations themselves, schools cannot benefit from parental pressure for higher quality curriculum,
• Children have few college-educated role models to emulate, and
• They have few classroom peers whose own families set higher academic standards.

Nationwide, low-income black children’s isolation has increased. It’s a problem not only of poverty but of race.

• The share of black students attending schools that are more than 90 percent minority has grown in the last twenty years from about 34 percent to about 40 percent.
• Twenty years ago, black students typically attended schools in which about 40 percent of their fellow students were low-income; it is now about 60 percent.
• In cities with the most struggling students, the isolation is even more extreme. The most recent data show, for example, that in Detroit, the typical black student attends a school where 2 percent of students are white, and 85 percent are low income.

It is inconceivable that significant gains can be made in the achievement of black children who are so severely isolated.

As I mentioned, this school segregation mostly reflects neighborhood segregation. In urban areas, low-income white students are more likely to be integrated into middle-class neighborhoods and less likely to attend school predominantly with other disadvantaged students. Although immigrant low-income Hispanic students are also concentrated in schools, by the third generation their families are more likely to settle in more middle-class neighborhoods.

The racial segregation of schools has been intensifying because the segregation of neighborhoods has been intensifying. Analysis of Census data by Rutgers University Professor Paul Jargowsky has found that in 2011, 7 percent of poor whites lived in high poverty neighborhoods, where more than 40 percent of the residents are poor, up from 4 percent in 2000; 15 percent of poor Hispanics lived in such high poverty neighborhoods in 2011, up from 14 percent in 2000; and a breathtaking 23 percent of poor blacks lived in high poverty neighborhoods in 2011, up from 19 percent in 2000.

In his 2013 book, Stuck in Place, the New York University sociologist Patrick Sharkey defines a poor neighborhood as one where 20 percent of the residents are poor, not 40 percent as in Paul Jargowsky’s work. A 20-percent-poor neighborhood is still severely disadvantaged. In such a neighborhood, many, if not most other residents are likely to have very low incomes, although not so low as to be below the official poverty line.

Sharkey finds that young African Americans (from 13 to 28 years old) are now ten times as likely to live in poor neighborhoods, defined in this way, as young whites—66 percent of African Americans, compared to 6 percent of whites. What’s more, for black families, mobility out of such neighborhoods is much more limited than for whites. Sharkey shows that 67 percent of African American families hailing from the poorest quarter of neighborhoods a generation ago continue to live in such neighborhoods today. But only 40 percent of white families who lived in the poorest quarter of neighborhoods a generation ago still do so.

Considering all black families, 48 percent have lived in poor neighborhoods over at least two generations, compared to 7 percent of white families. If a child grows up in a poor neighborhood, moving up and out to a middle-class area is typical for whites but an aberration for blacks. Black neighborhood poverty is thus more multigenerational, while white neighborhood poverty is more episodic.

From the perspective of children, think of it this way: black children in low-income neighborhoods are more likely to have parents who also grew up in low-income neighborhoods than white or Hispanic children in low-income neighborhoods. The implications for children’s chances of success are dramatic: Sharkey calculates that “living in poor neighborhoods over two consecutive generations reduces children’s cognitive skills by roughly eight or nine points … roughly equivalent to missing two to four years of schooling.”

And Sharkey has a final finding in this regard that is most startling of all: Children in poor neighborhoods whose mothers grew up in middle-class neighborhoods score only slightly below, on average, the average scores of children whose families lived in middle-class neighborhoods for two generations. But children who live in middle-class neighborhoods yet whose mothers grew up in poor neighborhoods score much lower. Sharkey concludes that “the parent’s environment during [her own] childhood may be more important than the child’s own environment.”

Integrating disadvantaged black students into schools where more privileged students predominate can narrow the black-white achievement gap. But the conventional wisdom of contemporary education policy notwithstanding, segregated schools with poorly performing students cannot be “turned around” while remaining racially isolated. And the racial isolation of schools cannot be remedied without undoing the racial isolation of the neighborhoods in which they are located.

ii.

The Myth of De Facto Segregation

In 2007, the Supreme Court made integration more difficult when it prohibited the Louisville and Seattle school districts from making racial balance a factor in assigning students to schools, in cases where applicant numbers exceeded available seats.

The plurality opinion by Chief Justice John Roberts called student categorization by race unconstitutional unless designed to reverse effects of explicit rules that segregated students by race. Desegregation efforts, he ruled, are impermissible if students are racially isolated, not as the result of government policy but because of societal discrimination, economic characteristics, or what Justice Clarence Thomas, in his concurring opinion, termed “any number of innocent private decisions, including voluntary housing choices.”

In Roberts’ terminology, commonly accepted by policymakers from across the political spectrum, constitutionally forbidden segregation established by federal, state or local government action is de jure, while racial isolation independent of state action, as, in Roberts’ view, like that in Louisville and Seattle, is de facto.

It is generally accepted today, even by sophisticated policymakers, that black students’ racial isolation is now de facto, not only in Louisville and Seattle, but in all metropolitan areas, North and South.

Even the liberal dissenters in the Louisville-Seattle case, led by Justice Stephen Breyer, agreed with this characterization. Breyer argued that school districts should be permitted voluntarily to address de facto racial homogeneity, even if not constitutionally required to do so. But he accepted that for the most part, Louisville and Seattle schools were not segregated by state action and thus not constitutionally required to desegregate.

This is a dubious proposition. Certainly, Northern schools have not been segregated by policies assigning blacks to some schools and whites to others; they are segregated because their neighborhoods are racially homogenous.

But neighborhoods did not get that way from “innocent private decisions” or, as the late Justice Potter Stewart once put it, from “unknown and perhaps unknowable factors such as in-migration, birth rates, economic changes, or cumulative acts of private racial fears.”

In truth, residential segregation’s causes are both knowable and known – twentieth century federal, state and local policies explicitly designed to separate the races and whose effects endure today. In any meaningful sense, neighborhoods and in consequence, schools, have been segregated de jure.

Massey and Denton’s American Apartheid is the title of one book describing only a few of these many public policies. The title is no exaggeration. The notion of de facto segregation is a myth, although widely accepted in a national consensus that wants to avoid confronting our racial history.

iii.

De Jure Residential Segregation by Federal, State, and Local Government

The federal government led in the establishment and maintenance of residential segregation in metropolitan areas.

• From its New Deal inception and especially during and after World War II, federally funded public housing was explicitly racially segregated, both by federal and local governments. Not only in the South, but in the Northeast, Midwest, and West, projects were officially and publicly designated either for whites or for blacks. Some projects were “integrated” with separate buildings designated for whites or for blacks. Later, as white families left the projects for the suburbs, public housing became overwhelmingly black and in most cities was placed only in black neighborhoods, explicitly so. This policy continued one originating in the New Deal, when Harold Ickes, President Roosevelt’s first public housing director, established the “neighborhood composition rule” that public housing should not disturb the pre-existing racial composition of neighborhoods where it was placed.

This was de jure segregation.

• Once the housing shortage eased and material was freed for post-World War II civilian purposes, the federal government subsidized relocation of whites to suburbs and prohibited similar relocation of blacks. Again, this was not implicit, not mere “disparate impact,” but racially explicit policy. The Federal Housing and Veterans Administrations recruited a nationwide cadre of mass-production builders who constructed developments on the East Coast like the Levittowns in Long Island, Pennsylvania, New Jersey, and Delaware; on the West Coast like Lakeview and Panorama City in the Los Angeles area, Westlake (Daly City) in the San Francisco Bay Area, and several Seattle suburbs developed by William and Bertha Boeing; and in numerous other metropolises in between. These builders received federal loan guarantees on explicit condition that no sales be made to blacks and that each individual deed include a prohibition on re-sales to blacks, or to what the FHA described as an “incompatible racial element.”

This was de jure segregation.

• In addition to guaranteeing construction loans taken out by mass production suburban developers, the FHA, as a matter of explicit policy, also refused to insure individual mortgages for African Americans in white neighborhoods, or even to whites in neighborhoods that the FHA considered subject to possible integration in the future.

This was de jure segregation.

• Although a 1948 Supreme Court ruling barred courts from enforcing racial deed restrictions, the restrictions themselves were deemed lawful for another 30 years and the FHA knowingly continued, until the Fair Housing Act was passed in 1968, to finance developers who constructed suburban developments that were closed to African-Americans.

This was de jure segregation.

• Bank regulators from the Federal Reserve, Comptroller of the Currency, Office of Thrift Supervision, and other agencies knowingly approved “redlining” policies by which banks and savings institutions refused loans to black families in white suburbs and even, in most cases, to black families in black neighborhoods – leading to the deterioration and ghettoization of those neighborhoods.

This was de jure segregation.

• Although specific zoning rules assigning blacks to some neighborhoods and whites to others were banned by the Supreme Court in 1917, racial zoning in some cities was enforced until the 1960s. The Court’s 1917 decision was not based on equal protection but on the property rights of white owners to sell to whomever they pleased. Several large cities interpreted the ruling as inapplicable to their zoning laws because their laws prohibited only residence of blacks in white neighborhoods, not ownership. Some cities, Miami the most conspicuous example, continued to include racial zones in their master plans and issued development permits accordingly, even though neighborhoods themselves were not explicitly zoned for racial groups.

This was de jure segregation.

• In other cities, following the 1917 Supreme Court decision, mayors and other public officials took the lead in organizing homeowners associations for the purpose of enacting racial deed restrictions. Baltimore is one example where the mayor organized a municipal Committee on Segregation to maintain racial zones without an explicit ordinance that would violate the 1917 decision.

This was de jure segregation.

• You may recall that in the 1980s, the Internal Revenue Service revoked the tax-exemption of Bob Jones University because it prohibited interracial dating. The IRS believed it was constitutionally required to refuse a tax subsidy to a university with racist practices. Yet the IRS never challenged the pervasive use of tax-favoritism by universities, churches, and other non-profit organizations and institutions to enforce racial segregation. The IRS extended tax exemptions not only to churches where such associations were frequently based and whose clergy were their officers, but to the associations themselves, although their racial purposes were explicit and well-known.

This was de jure segregation

• Churches were not alone in benefitting from unconstitutional tax exemptions. Consider this example: Robert Hutchins, known to educators for reforms elevating the liberal arts in higher education, was president and chancellor of the tax-exempt University of Chicago from 1929 to 1951. He directed the University to sponsor neighborhood associations to enforce racially restrictive deeds in its nearby Hyde Park and Kenwood neighborhoods, and employed the University’s legal department to evict black families who moved nearby in defiance of his policy, all while the University was subsidized by the federal government by means of its tax-deductible and tax-exempt status.

This was de jure segregation.

• Urban renewal programs of the mid-twentieth century often had similarly undisguised purposes: to force low-income black residents away from universities, hospital complexes, or business districts and into new ghettos. Relocation to stable and integrated neighborhoods was not provided; in most cases, housing quality for those whose homes were razed was diminished by making public housing high-rises or overcrowded ghettos the only relocation option.

This was de jure segregation.

• Where integrated or mostly-black neighborhoods were too close to white communities or central business districts, interstate highways were routed by federal and local officials to raze those neighborhoods for the explicit purpose of relocating black populations to more distant ghettos or of creating barriers between white and black neighborhoods. Euphemisms were thought less necessary then than today: according to the director of the American Association of State Highway Officials whose lobbying heavily influenced the interstate program, “some city officials expressed the view in the mid-1950’s that the urban Interstates would give them a good opportunity to get rid of the local ‘niggertown.’”

This was de jure segregation.

State policy contributed in other ways.

• Real estate is a highly regulated industry. State governments require brokers to take courses in ethics and exams to keep their licenses. State commissions suspend or even lift licenses for professional and personal infractions – from mishandling escrow accounts to failing to pay personal child support. But although real estate agents openly enforced segregation, state authorities did not punish brokers for racial discrimination, and rarely do so even today when racial steering and discriminatory practices remain.

This misuse of regulatory authority was, and is, de jure segregation.

Local officials have played roles as well.

• Public police and prosecutorial power was used nationwide to enforce racial boundaries. Illustrations are legion. In the Chicago area, police forcibly evicted blacks who moved into an apartment in a white neighborhood; in Louisville, the locus of Parents Involved, the state prosecuted and jailed a white seller for sedition after he sold his home in his white neighborhood to a black family. Everywhere, North, South, East, and West, police stood by while thousands (not an exaggeration) of mobs set fire to and stoned homes purchased by blacks in white neighborhoods, and prosecutors almost never (if ever) charged well-known and easily identifiable mob leaders.

This officially sanctioned abuse of the police power also constituted de jure segregation.

• An example from Culver City, a suburb of Los Angeles, illustrates how purposeful state action to promote racial segregation could be. During World War II, the local state’s attorney instructed the municipality’s air raid wardens, when they went door-to-door advising residents to turn off their lights to avoid providing guidance to Japanese bombers, also to solicit homeowners to sign restrictive covenants barring blacks from residence in the community.

This was de jure segregation.

Other forms abound of racially explicit state action to segregate the urban landscape, in violation of the Fifth, Thirteenth, and Fourteenth Amendments. Yet the term “de facto segregation,” describing a never-existent reality, persists among otherwise well-informed advocates and scholars. The term, and its implied theory of private causation, hobbles our motivation to address de jure segregation as explicitly as Jim Crow was addressed in the South or apartheid was addressed in South Africa.

Private prejudice certainly played a very large role. But even here, unconstitutional government action not only reflected but helped to create and sustain private prejudice. In part, white homeowners’ resistance to black neighbors was fed by deteriorating ghetto conditions, so that white homeowners had a reasonable fear that if African Americans moved into their neighborhoods, these refugees from urban slums would bring the slum conditions with them.

Yet these slum conditions were supported by state action, by overcrowding caused almost entirely by the refusal of the federal government to permit African Americans to expand their housing supply by moving to the suburbs, and by municipalities’ discriminatory denial of adequate public services. In the ghetto,

• garbage was collected less frequently,
• predominantly African American neighborhoods were re-zoned for mixed (i.e., industrial, or even toxic) use,
• streets remained unpaved,
• even water, power, and sewer services were less often provided.

This was de jure segregation, but white homeowners came to see these conditions as characteristics of black residents themselves, not as the results of racially motivated municipal policy.

iv.

The Continuing Effects of State Sponsored Residential Segregation

Even those who understand this dramatic history of de jure segregation may think that because these policies are those of the past there is no longer a public policy bar that prevents African Americans from moving to white neighborhoods. Thus, they say, although these policies were unfortunate, we no longer have de jure segregation. Rather, they believe, the reason we don’t have integration today is not because of government policy but because most African Americans cannot afford to live in middle class neighborhoods.

This unaffordability was also created by federal, state, and local policy that prevented African Americans in the mid-twentieth century from accumulating the capital needed to invest in home ownership in middle-class neighborhoods, and then from benefiting from the equity appreciation that followed in the ensuing decades.

Federal labor market and income policies were racially discriminatory until only a few decades ago. In consequence, most black families, who in the mid-twentieth century could have joined their white peers in the suburbs, can no longer afford to do so.

• The federal civil service was first segregated in the twentieth century, by the administration of President Woodrow Wilson. Under the rules then adopted, no black civil servant could be in a position of authority over white civil servants, and in consequence, African Americans were restricted and demoted to the most poorly paid jobs.

• The federal government recognized separate black and white government employee unions well into the second half of the twentieth century. For example, black letter carriers were not admitted to membership in the white postal service union. Black letter carriers had their own union, but the Postal Service would only hear grievances from the white organization.

• At the behest of Southern segregationist Senators and Congressmen, New Deal labor standards laws, like the National Labor Relations Act and the minimum wage law, excluded from coverage, for undisguised racial purposes, occupations in which black workers predominated.

• The National Labor Relations Board certified segregated private sector unions, and unions that entirely excluded African Americans from their trades, into the 1970s.

• State and local governments maintained separate, and lower, salary schedules for black public employees through the 1960s.

In these and other ways, government played an important and direct role in depressing the income levels of African American workers below the income levels of comparable white workers. This, too, contributed to the inability of black workers to accumulate the wealth needed to move to equity-appreciating white suburbs.

Segregation is now locked in place by exclusionary zoning laws in suburbs where black families once could have afforded to move in the absence of official segregation, but can afford to do so no longer with property values appreciated.

Mid-twentieth century policies of de jure racial segregation continue to have impact in other ways, as well. A history of state-sponsored violence to keep African Americans in their ghettos cannot help but influence the present-day reluctance of many black families to integrate.

Today, when facially race-neutral housing or redevelopment policies have a disparate impact on African Americans, that impact is inextricably intertwined with the state-sponsored system of residential segregation that we established.

v.

Miseducating Our Youth

Reacquainting ourselves with that history is a step towards confronting it. When knowledge of that history becomes commonplace, we will conclude that Louisville, Seattle and other racially segregated metropolitan areas not only have permission, but a constitutional obligation to integrate.

But this obligation cannot be fulfilled by school districts alone. In some small cities, and in some racial border areas, some racial school integration can be accomplished by adjusting attendance zones, establishing magnet schools, or offering more parent-student choice. This is especially true – but only temporarily – where neighborhoods are in transition, either from gradual urban gentrification, or in first-ring suburbs to which urban ghetto populations are being displaced. These school integration policies are worth pursuing, but generally, our most distressed ghettos are too far distant from truly middle-class communities for school integration to occur without racially explicit policies of residential desegregation. Many ghettos are now so geographically isolated from white suburbs that voluntary choice, magnet schools, or fiddling with school attendance zones can no longer enable many low-income black children to attend predominantly middle class schools.

Instead, narrowing the achievement gap will also require housing desegregation, which history also shows is not a voluntary matter but constitutional necessity – involving policies like voiding exclusionary zoning, placing scattered low and moderate income housing in predominantly white suburbs, prohibiting landlord discrimination against housing voucher holders, and ending federal subsidies for communities that fail to reverse policies that led to racial exclusion.

We will never develop the support needed to enact such policies if policymakers and the public are unaware of the history of state-sponsored residential segregation. And we are not doing the job of telling young people this story, so that they will support more integration-friendly policies in the future. Elementary and secondary school curricula typically ignore, or worse, mis-state this story. For example, in over 1,200 pages of McDougal Littell’s widely used high school textbook, The Americans, a single paragraph is devoted to 20th century “Discrimination in the North.” It devotes one passive-voice sentence to residential segregation, stating that “African Americans found themselves forced into segregated neighborhoods,” with no further explanation of how public policy was responsible. Another widely used textbook, Prentice Hall’s United States History, also attributes segregation to mysterious forces: “In the North, too, African Americans faced segregation and discrimination. Even where there were no explicit laws, de facto segregation, or segregation by unwritten custom or tradition, was a fact of life. African Americans in the North were denied housing in many neighborhoods.” History Alive!, a popular textbook published by the Teachers Curriculum Institute, teaches that segregation was only a Southern problem: “Even New Deal agencies practiced racial segregation, especially in the South,” failing to make any reference to what Ira Katznelson, in his 2013 Fear Itself, describes as FDR’s embrace of residential segregation nationwide in return for Southern support of his economic policies.

Avoidance of our racial history is pervasive and we are ensuring the persistence of that avoidance for subsequent generations. For the public and policymakers, re-learning our racial history is a necessary step because remembering this history is the foundation for an understanding that aggressive policies to desegregate metropolitan areas are not only desirable, but a constitutional obligation.

vi.

Documentation

In published work, I have documented much of what I have described, citing many previous historians who have recounted this story. Full citations for the evidence I have described and to other scholars who have recounted it, can be found, for example, at
http://www.ascd.org/publications/educational-leadership/may13/vol70/num08/Why-Our-Schools-Are-Segregated.aspx, or at
http://prrac.org/newsletters/novdec2012.pdf, or at
http://www.epi.org/files/2012/Different_Kind_Of_Choice.pdf. For source citations regarding the pathways by which social and economic disadvantages affect student performance, see Class and Schools (http://www.epi.org/publication/books_class_and_schools/). Or, if you e-mail me at riroth@epi.org, I’d be glad to send you documentation of any of the claims I make here today. The segregation history I have described to you was once well known, but has now been dropped from policymakers’ and the public’s consciousness.

About the author

Richard Rothstein (riroth@epi.org) is a Research Associate of the Economic Policy Institute and a Senior Fellow at the Chief Justice Earl Warren Institute on Law and Social Policy, University of California (Berkeley) School of Law.

African American men have the highest unemployment rate by race and gender. So far in 2012, the black male unemployment rate has averaged 15 percent. This is the overall national rate, but in some metropolitan areas the black male unemployment rate has been even higher.

The figure shows the average metropolitan unemployment rates for non-Hispanic black and white males since the technical end of the recession in June 2009. From July 2009 to May 2012, in many of the nation’s largest metro areas, the black male unemployment rate has averaged close to or above 20 percent. Much needs to be done to end the “economic depression” black men are facing. Transportation investments provide one promising avenue for improving the employment situation of black men.

Transportation infrastructure

Although African American men are underrepresented in the construction industry, they do hold jobs in construction and lost jobs when the industry took a hit during the recession. Roughly one-quarter of the decline in employment for black men from 2007 to 2011 was due to their loss of jobs in construction. Investing in transportation infrastructure is a good mechanism to improve labor market conditions for black male construction workers.

EPI estimates that African Americans could obtain as much as 14 percent of all jobs created by large public transit investment projects.1 Blacks are only about 11 percent of the labor force, so these projects bring a slightly disproportionate benefit to black workers. About three-quarters of the jobs created from infrastructure investments go to males, and most of the jobs pay medium-to-high wages. Projects such as addressing the backlog of repair work in all of our public transit systems would bring a tremendous benefit to the nation as a whole and provide opportunities for blacks to obtain about 160,000 jobs.2

African Americans could gain an even larger share of the jobs from transportation infrastructure projects if they were designed with local-hire provisions, and if there were stronger commitments to include minority businesses as recommended by PolicyLink. PolicyLink lifts up the Gamaliel Foundation’s “Missouri Model” as an example. The Missouri Model, as Anita Hairston of PolicyLink detailed, “used apprentice programs, project labor agreements, and contractor incentives in the reconstruction of several bridges, interchanges, and highway lanes on Interstate 64 in St. Louis, Missouri. 27 percent of work hours were completed, performed by people of color and women.”

The transportation industry

Transportation infrastructure projects also help to grow the transportation industry. The transportation industry is one of the few industries where black men are overrepresented. The Community Service Society of New York reports that in New York City, for example, although 8.5 percent of all men work in transportation, 15.5 percent of black men are employed in this sector. Thus, expanding this sector would likely expand black mens’ employment opportunities in relatively good-paying jobs.

The Transportation Learning Center notes that the transportation industry is projected to grow significantly in the coming years while experiencing a great number of retirements. This presents a great opportunity for increasing the employment of black men in good jobs. But it must be noted that although black men are overrepresented in transportation, they are still underrepresented in the more highly-skilled and higher-paying technical and repair positions.

The Transportation Leaning Center has been working with unions to establish apprenticeships and career ladders to bring blacks into transportation and into the more highly-skilled positions. However, the Center points out that given the magnitude of the coming wave of retirements, the transportation industry needs significantly greater investments in human capital development.

Public transit

While African Americans benefit from all types of transportation infrastructure investments, it seems that public transit infrastructure investments deliver the biggest jobs benefits for blacks. In the analyses that EPI has conducted of infrastructure projects, public transit infrastructure projects produce a greater share of African American jobs than projects that are more focused on highways, freight rail, and even the “green economy.”

After public transit systems are built, they need workers to operate and maintain them. This is a second jobs benefit for African Americans from public transit infrastructure investments. As the Community Service Society of New York and Transportation Leaning Center have highlighted, public transit systems have historically provided good jobs for blacks, and particularly for black men. However, as both of these organizations note, blacks are still underrepresented in the more highly-paid positions.

Public transit systems deliver a third jobs benefit to African Americans. African Americans have the lowest rate of car ownership by race.3 As our metropolitan areas have become more sprawling, more jobs have become geographically inaccessible to blacks. Good public transportation systems can improve African Americans’ employment opportunities by increasing their access to jobs. For these three reasons, public transit investments are an important part of a good jobs agenda for blacks, and particularly for black men.

Presentation materials

Moderator

Linda Harris, Director of Youth Policy, CLASP:  Remarks

Presenters

Algernon Austin, Director of the Program on Race, Ethnicity, and the Economy, Economic Policy Institute:  Notes

Presentation:

Michelle Holder, Senior Labor Market Analyst, Community Service Society of New York:  Slides | Notes

Anita M. Hairston, Senior Associate for Transportation Policy, PolicyLink:  Notes

Brian Turner, Executive Director, Transportation Learning Center:  Slides

Jeff Brooks, Administrative Vice President and Director of the Transit Division, Transport Workers Union of America

Endnotes

1. Josh Bivens and Ethan Pollack, “The labor market impact of targeted investments in transportation infrastructure—An analysis of Transportation for America’s Jobs Proposals,” EPI Issue Brief #271 (Washington D.C.: Economic Policy Institute, 2010), p. 8; http://www.epi.org/publication/ib271/.

2. Ethan Pollack and Rebecca Thiess, “Impact of alternate public transit and rail investment scenarios on the labor market,” EPI Issue Brief #285 (Washington D.C.: Economic Policy Institute, 2010); http://www.epi.org/publication/ib285/. EPI’s revised estimate for the transit backlog repair plan is that it would create about 160,000 jobs for blacks.

3. U.S. Census Bureau, “Table 2. Asset Ownership Rates for Households, by Selected Characteristics: 2010,” Detailed Tables on Wealth and Asset Ownership (Washington D.C.: U.S. Department of Commerce, 2012); http://www.census.gov/people/wealth/data/dtables.html.

1. The real gap in the labor market is now around 11 million jobs.
2. Job growth this recovery outpaces that following the 2001 recession, but is still too slow.
3. The loss of public-sector jobs is a huge obstacle to growth in this recovery.
4. Most of the improvement seen this recovery consists of a decline in layoffs, not an increase in hiring.
5. The current problem is not that we lack the right workers, it’s that we lack enough job openings.
6. The share of the working-age population with a job has not yet improved.
7. “Underemployment” has also improved very little in the recovery.
8. Unemployed workers continue to face near-record spells of unemployment.
9. Racial and ethnic minorities have fared worse than whites in both the recession and the recovery.
10. Wage growth remains extremely low.

Details on these 10 facts are provided in the text and figures that follow.

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Note: For figures referenced below, please see the PDF version of this paper.

1 The real gap in the labor market is now around 11 million jobs.

The economy currently has 6.9 million fewer jobs than when the recession started. But because the working-age population is naturally increasing all the time, in the three years and five months since the recession started we should have added around 4.1 million jobs to keep pace with population growth. This means the current gap in the labor market is roughly 11 million jobs (Figure 1). To close that gap within three years, we would have to add around 400,000 jobs every single month for 36 months. By comparison, over the last three months we added just 160,000 jobs per month on average. At that rate, it will take well over a decade to get back to the pre-recession unemployment rate. Two years out, this recovery is not yet producing close to the rate of jobs growth needed to dig out of the hole we are in any time soon.

2  Job growth this recovery outpaces that following the 2001 recession, but is still too slow.

Figure 2 shows payroll employment in the Great Recession (labeled 2007) and the prior three recessions (indexed to 100 at the official end of each recession for ease of comparing their respective recoveries). In the 23 months since the official end of the Great Recession, payroll employment has grown by 550,000 jobs.  Twenty-three months after the end of the 2001 recession, payroll employment was down an additional 773,000 jobs. However, as Figure 2 also demonstrates, the length and severity of the Great Recession means that we are in a much deeper hole. In fact, three years and five months from the official start of the Great Recession, we are still down a larger percentage of jobs (5%) as a share of pre-recession employment than at any single point of  these or any other post-WWII recessions.

3 The loss of public-sector jobs is a huge obstacle to growth in this recovery.

The public sector is now shedding around 25,000 jobs per month, largely due to budget cuts at the state and local level. Since the official end of the recession, the public sector has lost 430,000 net jobs, while the private sector has added 980,000 net jobs (Figure 3). In other words, more than 40% of the private-sector job gains in this recovery have been canceled out by job losses in the public sector. And the loss of public-sector spending also hurts the private sector: For each dollar of state and local budget cuts, more than  half of the jobs and economic activity lost are likely to be in the private sector.¹ By comparison, in the 23 months following the end of the 2001 recession, the public sector added 232,000 jobs, while the private sector lost one million jobs. For more on the decline of public-sector jobs in this recovery, see the EPI issue brief, Historically Deep Job Loss, But Not an Unusual Recovery.

4 Most of the improvement seen this recovery consists of a decline in layoffs, not an increase in hiring.

As shown in Figure 4, layoffs spiked dramatically during the recession, but have substantially slowed in the recovery. At this point workers are no more likely to get laid off than they were before the recession started.² That is a very positive sign, but has a flip side in the trend in hiring. We have seen very little improvement in hiring, which is still roughly 25% below its 2007 average. It is extremely good news that at this point people with jobs no longer face an elevated risk of getting laid off, but the nearly 14 million unemployed workers in this country—including all new entrants to the labor market, such as the new crop of graduates this spring—need a pick up in hiring, which has barely gotten off the ground.

5 The current problem is not that we lack the right workers, it’s that we lack enough job openings.

Some have claimed that hiring has not picked up substantially because employers can’t find workers with the needed skills. Figure 5 shows the number of unemployed workers and the number of job openings, by industry. If it were the case that employers couldn’t find the right workers, we would expect some sectors to have more job openings than unemployed workers, or at least to have much more balance, as employers in those sectors struggle to find the workers they need. But there are no major sectors where that is happening. On the contrary, unemployed workers dramatically outnumber job openings in every industry. The data show that the problem in this recovery isn’t a lack of the right workers, but rather an across-the-board lack of job openings.

6 The share of the working-age population with a job has not yet improved.

The fact that layoffs have abated but hiring has improved very little means that unemployment also  has not improved substantially. The unemployment rate, of course, has dropped somewhat: It has fallen from its peak of 10.1% in October 2009 to 9.1% in May 2011. However, an improvement in the unemployment rate is only good news if a larger share of the potential workforce actually finds work, and that is not happening—the entire improvement in the unemployment rate over that period was due to would-be workers deciding to sit out the job search altogether (and thus not be counted among the officially unemployed). Figure 6 shows that the share of the working-age population with a job (also known as the employment-to-population ratio) has not yet  improved. So far in this recovery, we are still treading water near the bottom of a very deep hole.³

7 “Underemployment” has also improved very little in the recovery.

The number of “involuntary” part-time workers (those who want a full-time job but have had to settle for part-time hours) shot up from 4.3 million in the first half of 2007 to 9 million by the spring of 2009. But as Figure 7 shows, this indicator has made very little progress in the recovery. The number of involuntary part-time workers hovered around the 9 million mark until the end of 2010, and has not improved much this year. Importantly, the fact that there has been so little improvement in the number of involuntary part-time workers belies the claim that businesses aren’t hiring because they are wary of the potential burdens of laws like health care or regulatory reform. If businesses had work to be done but were wary of making new hires, then they would ramp up the hours of their existing workers. Instead, the number of involuntary part-time workers now stands at 8.5 million, still up nearly double from the first half of 2007. The number of “marginally attached” workers—those who want a job, are available to work, but have given up actively seeking work so are not counted as officially unemployed—has also seen very little improvement: At the end of the recession there were 2.3 million marginally attached workers, and now there are 2.2 million. In the 23 months since the end of the recession, the total number of un- or underemployed workers has decreased from 26.1 million to 24.6 million, a decline of only 1.5 million.

8 Unemployed workers continue to face near-record spells of unemployment.

The record length and severity of this downturn (as shown in Figure 2) means that it has shattered all records since the Great Depression for length of unemployment spells (Figure 8). The share of unemployed workers who had been jobless for more than six months shot up from 17.6% in the first half of 2007 to 29.3% at the official end of the recession to over 45.6% by the spring of 2010, an all-time record. It has bounced around 45% since then, and is currently 45.1%. The fact that layoffs have abated in the recovery provides little relief to the already unemployed—because hiring has not yet improved substantially, unemployed workers are continuing to remain unemployed for extremely long periods.

9 Racial and ethnic minorities have fared worse than whites in both the recession and the recovery.

During the recession, unemployment rose faster for racial and ethnic minorities, and in the recovery, they have seen less improvement (Figure 9). At the official end of the recession, the unemployment rate for whites was 8.7%, which has declined somewhat to 8.0%. The unemployment rate for Hispanics at the end of the recession was 12.2%, which has declined by a lesser extent, to 11.9%. Black workers have been hit the hardest: At the end of the recession the black unemployment rate was 14.9%, and it has since increased to 16.2%. Black workers in this country have faced an unemployment rate of 15% or more for the last 22 months.

10 Wage growth remains extremely low.

Persistent high unemployment also hurts wage growth for workers with jobs. The reason is
straightforward—employers don’t have to pay substantial wage increases to keep their workers when they know their workers don’t have good outside options. Nominal average hourly wages (i.e., wages not adjusted for inflation) have grown 1.8% over the last year, well below the growth rate of 2.6% at the end of the recession and about half the growth in the period before the recession started (Figure 10). Furthermore, with inflation growing faster on average than wages since the end of the recession, real wages are lower now than they were when the recession ended. The lack of hiring in this recovery hurts not just the unemployed and their families; it also means the paychecks of those with jobs take a substantial hit. Without substantial additional policy interventions to stimulate the economy, it will likely be at least five years before we get back to the pre-recession unemployment rate. This means that wage growth will likely be subdued for a very long time.

Where to go from here

These 10 facts show that, while we have now officially been in a recovery for two years, the labor market has actually made little improvement since the depth of the downturn. Given this situation, it is extremely premature for policymakers to place their focus on deficits instead of jobs. It must be our top priority to do everything we can to stimulate demand and generate jobs. Critical actions would include providing fiscal relief to states; expanding the safety net (which, by getting money into the hands of people who will spend it, stimulates demand and generates jobs); approving additional spending on infrastructure; implementing direct job creation programs in particularly hard-hit communities; supporting work-sharing to avoid layoffs; having the Federal Reserve do more quantitative easing and/or target a somewhat higher inflation rate (e.g., 3-4%) to both reduce real interest rates and erode debt; and lowering the price of the dollar to boost net exports.

Endnotes

1. See “Dire states: State and local budget relief needed to prevent job losses and ensure a robust recovery,” Ethan Pollack, Economic Policy Institute Briefing Paper #252, Washington, D.C.: EPI.
2. The general upward trend in initial unemployment insurance claims since late February is cause for concern that layoffs are again heading in the wrong direction, but so far this has not shown up in the Job Openings and Labor Turnover Survey data used here.
3. The lack of improvement in the employment-to-population ratio is also found among only prime-age workers (workers age 25–54), and therefore it is not, for example, the aging of the workforce that is driving this result; rather it is the lack of hiring.

American workers are more productive than ever before, but they are less secure in their ability to provide for their families. Workers without paid sick days—nearly 40% of the private-sector workforce—are among the least economically secure, and an illness forces them to take time away from work without pay and puts them at risk of losing their job. Lack of paid sick time means that an illness can potentially cost a family thousands of dollars in income and jeopardize their ability to afford food, rent, health insurance, and many of the other basic goods that are essential to well-being. Just three and a half days of missed work because of illness is equivalent to an entire month’s groceries for the average family.

This paper looks at economic security for working families, and shows how a national paid sick days policy—providing a few federally protected paid days off each year that workers can use to recover from illness, care for sick family members, or seek medical care—would promote workers’ financial stability and the economic security of their families. The paper explores in detail the following major findings:

• Nearly 40 million private-sector workers do not have paid sick time.
• Employees without paid sick time are likely to go to work sick, where they will have reduced productivity, at a significant cost both to their employer and to their possibility for professional advancement.
• Without paid sick leave, parents are forced to send sick children to school, which could potentially impact their long-term health and educational performance.
• A two-child family with two workers earning the average wage for workers without paid sick time would lose the family’s entire health care budget after just three days of missed work.
• A two-child family with a single working parent earning the average wage for workers without paid sick time ($10/hour) cannot miss more than three days of work in a month without falling below the federal poverty line.
• Taking unpaid sick time leaves workers vulnerable to losing their jobs in an economy with a stubbornly high long-term unemployment rate.

Despite the obvious need for paid sick time for workers and their families, there is currently no federal law that ensures all workers are able to earn such paid leave. As a result, only about 62% of private-sector workers have paid sick time, leaving almost 40 million workers without this basic protection (U.S. DOL 2010b). Furthermore, access to paid sick time is not evenly distributed throughout the workplace—workers in some occupations and industries are much more likely to have it than others (Levine 2010). As Figure A shows, the disparity by wages is very large: 86% of workers in the highest wage decile (top 10%) have access to paid sick time, compared to just 19% of those in the lowest wage decile and 32% in the lowest quartile (bottom 25%). The general trend is that workers who have the fewest economic resources are also the least likely to have access to paid sick time.

Figure A

In this paper, we primarily make two major points. First, we define economic security and show how, for most working families, it has declined over the past 30 years, a time when changing family and workplace demographics require updated workplace standards that take these changes into account. Second, we show why access to paid sick time is critically important for family financial security and well-being by outlining the consequences that the lack of access to paid sick time has on basic family budgets and the ability of working families to make ends meet.

The decline of family economic security

The Great Recession showed how quickly millions of workers can lose their jobs and their incomes, with unemployment often lasting for months or even years. The recession and its aftermath have been fraught with economic insecurity and job loss, in many cases leading to downward mobility, declining living standards, and a growing inability to pay for basic needs. Although there is no technical definition for “economic security,” most people know intuitively that it means the ability to provide for your family, and the confidence that you will continue to be able to provide for them in the near future and beyond. Economic security can also help the overall economy—families who are more confident in their finances are more likely to make investments, like buying or fixing a home (Hacker 2007). They may also be more likely to help pay for their children’s
education, leading to better incomes for the next generation.

Many recent studies examine the issue of economic security. Hacker and Jacobs (2008) document the decline of economic security in America in recent decades. As shown in Figure B, they find that around 4% of non-elderly adults experienced family income drops of 50% or more during the early 1970s, compared with about twice that in the early 2000s. The authors attribute this decline to several factors, including the decreases in employer-sponsored health insurance and pension plans, and increases in consumer debt and involuntary job displacement. This greater family income volatility can also heighten family conflict and cause families to move in search of better economic opportunities (Batchelder 2010). Hacker et al. (2010) show how economic security typically falls during a recession. These trends have been worsening for over 30 years, and the Great Recession has only exacerbated these problems, especially for those with low incomes. These workers typically don’t have savings to draw from during a downturn, leaving them more vulnerable to income volatility. As we show later in the paper, simply missing a few days of work for a low-income worker can mean falling under the poverty threshold.

Figure B

Paid sick time is one of many important ways to increase economic security for working families. It gives workers a valuable safety net when they or their loved ones fall ill. Paid sick time provides workers with job and income stability and the knowledge that if a common illness arises, they will still be able to provide for their families. Workers with paid sick time have a more predictable level of income that makes it easier for them to manage their monthly finances. Even for workers who don’t use paid sick time, simply knowing they have this safety net makes them feel more secure. Furthermore, workers with paid sick time don’t need to worry about losing their jobs as a result of illness.

The growing need for paid sick time

Families and workplaces look different now than 20, 40, or 60 years ago, and yet workplace policies have not kept pace. Our lack of federal legislation ensuring paid sick leave is the vestige of a time when only one parent worked while another provided primary care to children and older adults. Now, however, women make up half of the labor force, and families are increasingly dependent on two parents’ incomes to make ends meet. This mismatch between families’ needs and our workplace policies has serious economic consequences for families.

As shown in Figure C, women are now more than twice as likely to be in the workforce than they were 60 years ago. In 1948, only about 35.0% of working-age women were in the labor force, compared with 75.2% in 2010 (U.S. DOL 2010a). During this period, men’s labor force participation fell slightly, but this small decline was dwarfed by the increase for women. Furthermore, families are more than twice as reliant on the income provided by women: More than 63% of mothers earned a significant share¹ of their family’s income in 2008; the percentage was a little under 28% in 1967 (Boushey 2009). The movement of women into the workplace is being driven by families’ needs for a second income just to get by. Over the last 30 years, hourly wages have barely budged for most workers after adjusting for inflation. Women have entered the labor force in part to compensate for this lack of real wage growth. According to Mishel, Bernstein, and Shierholz (2009), married couples without a working wife earned about the same amount in 2007 as they did in 1973; in other words, these families saw zero income growth over more than 30 years.

Figure C

These changes have resulted in a larger number of children with all parents working full time (either both parents or one in the case of single-parent families).² In 1968, only 24.6% of kids had all their parents working full time, compared with 48.3% in 2008 (CEA 2010). Parents in many families today are unable to take care of a sick child without missing work, unlike in the past. With more kids dependent on working parents, families have a greater need for access to paid sick time that can be used when a child is sick, but we know that millions of parents lack this protection.

In addition to child-care concerns, many U.S. workers also care for their aging parents. As health care advances lead to greater life expectancy, this kind of care-giving will only become more widespread. In 2009, there were 27 people age 65 and older for every 100 workers, the highest this ratio has ever been (U.S. DOL 2010a). This recent increase is partially due to the recession, which destroyed several million jobs, but it is also a result of the aging baby boomer generation. And as baby boomers retire, this ratio is expected to increase. According to the Council of Economic Advisors (2010), almost one out of five workers already provide care for someone over the age of 50. However, despite the growing need for workplace flexibility, including the ability to take a paid sick time when an older parent or relative needs medical care or has a routine illness, our laws have not adapted to the new norm. This argues not only for paid sick time for the occasional illness, but also an even more substantial safety net, such as paid family and medical leave for longer care requirements.

The costs of going to work or school while sick

For the tens of millions of workers without access to paid sick time, falling ill creates a dilemma with no good options. For many, there really is no choice—missing work and losing a day’s pay might mean being unable to pay rent for the month or buy food or medicine. Many workers feel forced to simply go to work sick (known as “presenteeism”), where they are likely to be less productive and more prone to mistakes.³ As job quality suffers, the worker may be at risk of termination. Finally, the lack of rest and/or medical attention may cause workers to be sick for a longer period of time. This is not only a cost to workers and their families, but also to businesses. Research shows that workers without paid sick time are more likely to go to work sick (Smith and Kim 2010), and employers bear the cost of the lost productivity that results—a cost that may well exceed that of providing paid sick time.

Families also bear costs when working parents are forced to send a sick child to school or delay necessary preventive care. According to one survey, parents without paid sick days are twice as likely to send a sick child to school, and are five times as likely to take a child or family member to an emergency room because of the inability to take time off during the work day (Smith and Kim 2010). If a parent is forced to work instead of attending to a child’s care, then the family may experience financial burdens associated with delayed health services, including higher costs arising from untreated illnesses, the higher incidence of health problems, and future financial risks associated with long-term illnesses. In some cases, where routine care or early treatment can mitigate the need for hospitalization, the family (or the health care system) incur the unnecessary cost of hospitalization. In 2006, nearly 4.4 million hospital admissions in the U.S., totaling $30.8 billion in hospital costs, could have been prevented with timely and effective ambulatory care or adequate patient self-management of the condition (Russo, Jiang, and Barrett 2007).

Delayed medical care undermines a child’s health and future development (IOM 2002). Children may, as a result, face longer illnesses and poorer health in general. Parents whose children lack routine care may fail to detect conditions such as ear infections, iron deficiency anemia, and lead poisoning. Such conditions, left untreated, have serious ramifications on a child’s language development, performance in school, and overall intellectual ability (Dallman, Yip, and Johnson 1984; Lozoff et al. 1998; Canfield et al. 2003). Unfortunately, many parents of children with chronic conditions do not have access to paid sick days. Forty percent of working mothers with asthmatic children and 36% of working mothers whose children have chronic conditions have no paid leave (Heymann, Earle, and Egleston 1996). Asthma is one of the most common chronic conditions among children, and if left untreated may result in hospitalization (Lovell and Miller 2009).

Improvements in health lead to better outcomes at school, including paying attention in class and keeping up in school activities (Brown 2004). In the long run, better health improves future prospects and increases earnings, which benefits both the future adults and their communities in the form of a better economy and higher government revenues (Hadley 2002). For example, Savage et al. (2004) find some evidence that children who receive early preventive dental care incur fewer dental health costs in the future. In contrast, untreated vision, hearing, and oral health problems can all cause distractions from learning (Rothstein 2004).

The costs of missing work without paid sick leave

The second option for ill workers without paid sick time is simply to miss work. However, losing even a day of pay may not be a viable option for workers who are living paycheck to paycheck—missing work might mean being unable to pay rent or buy food for that week. According to a recent survey, some 44% of people are living paycheck to paycheck all of the time or most of the time (Lake Research Partners 2010). Missing work also leads to job loss, the threat of job loss, or other workplace discipline. Sixteen percent of American workers report that they or a family member have lost a job or been otherwised punished, or that they would be fired, for taking time off work to care for a sick family member or their own illness (Smith and Kim 2010).

The income loss associated with sick days is not trivial. For millions of working families, missing a day, two days, or five days of pay can have serious consequences. As noted earlier, the workers without access to paid sick time generally earn much less than those who have it. Lack of paid sick days compounds the critical shortfalls that already exist in family budgets. The median wage for workers without paid sick time is $10 an hour, compared with $19 for workers who do have it.⁴ This means that a full-time worker without paid sick time can expect to earn about $20,800 a year, or $1,735 a month. In many places, this is not nearly enough to make ends meet. There are several estimates of what a family of a given size needs to earn in order to get by, but one of the most frequently used is twice the federal poverty threshold (Blank 2008; Lin and Bernstein 2008), though many estimates suggest that even 200% of the poverty line is insufficient (Fremstad 2010). If both parents are working at $10 an hour full time, then their total family income would be $41,600, about 95% of twice the federal poverty line and thus just below the standard for a family budget. Three days of illness more than double that shortfall, while five days of illness triple it.

For the workers least likely to have paid sick days, it is clear that missing work because of illness has a serious impact on family economic security (Table 1). Using the same standard of twice the poverty threshold, a family needs to earn $3,639 a month in order to get by. As mentioned above, even without getting sick, the average two-child family with two parents working full-time jobs without paid sick leave earns $3,470, not enough to meet this standard. Missing five days of work will cost this family $400, reducing its income to $3,070 for the month. Five unpaid days means an income drop to 84% of the amount needed to get by, putting families in the position of potentially foregoing critical expenditures, such as gasoline, utilities, food, or health care, a benefit that is even more critical under the circumstances.

Table 1

For single parents, the situation is even worse. A worker without paid sick time making $10/hour can expect to earn the same $1,735 per month, but without a second source of income, this is far below the three-person family budget of $2,891 a month. In fact, if this worker misses more than three days of work in a month, her income will be less than half of the family budget and below the federal poverty threshold.

Column 1 of Table 2 displays the average monthly household expenditures on a selected set of goods for a household earning between $40,000-$49,999 per year  (U.S. DOL 2008), the range in which a family of four with two parents working full time at $10 per hour ($41,600 annually) would fall. The second column illustrates the number of unpaid sick days each monthly expenditure in a family budget costs. For example, if one parent needs to take off 3.5 days in a given month due to a family illness, the lost income is equivalent to the household’s entire grocery budget ($280). Seven days is more than the household’s entire transportation budget ($533). If one parent has a long-term illness or injury that requires missing work for 15 days, that translates into a hole in the family budget equivalent to their total expenditure on housing ($1,192). That family loses a secure source of payment for their housing, even though the other parent works full time all month.

Table 2

For those lucky enough to have health insurance—less common for families without paid sick days—the average premium contribution plus total monthly health care expense is $245. It takes just over three unpaid sick days to lose the funds needed to cover health expenditures in a family’s budget. Cutting back on health care at a time when it is most needed puts the family at further risk in the future in terms of both health and economic security.

These problems of reduced income and potentially losing a job don’t arise for workers with paid sick time. In Table 1, they remain in the “No illness” row, as long as they don’t use more paid sick time than they have. So instead of having an income of $3,470 one month, and $3,070 the next, those with paid sick leave can rely on a steady monthly income. This income security allows them to rest and fully recover from an illness before returning to work. More importantly, it allows workers to continue paying their monthly bills, even in the event of illness. This economic security is incredibly important for low-income families, the vast majority of whom do not currently have access to paid sick time.

Job loss

Perhaps the gravest consequence of missing work due to an illness is the possibility of losing one’s job. According to a recent survey, 16% of workers say that they had or could lose a job or be punished due to illness (Smith and Kim 2010). Indisputably, job loss is a worker’s greatest fear, but it is especially traumatic in the current economic climate. Data from the Bureau of Labor Statistics shows that the American economy shed 8.7 million jobs since the start of the Great Recession in December 2007. This is the largest drop in terms of both the total number and percent of jobs lost since 1947. It also marks the steepest rise in the unemployment rate on record, from 4.7% in December 2007 to its height of 10.1% in October 2009. While the unemployment rate has fallen slightly to 9.1% in May 2011, the U.S. economy is still 6.9 million jobs below where it was at the start of the recession.

The millions of lost jobs and an unemployment rate at levels not seen in a generation highlight the weakness of the current job market, but in many ways the reality for most unemployed workers is far grimmer. Not since the crippling recession of 1981 have American workers experienced such an elevated rate of unemployment, and the record-high number of available workers for every job opening makes matters worse. As shown in Figure D, there are currently 4.6 unemployed workers for every job opening in the entire economy. This does not mean that there are 4.6 applicants for every job; there are many times more than that for any particular job opening. This means that if every job opening in the economy were filled tomorrow, 78% of those currently unemployed would still be out of a job. To put this job seeker-to-job opening ratio in historical perspective, the worst month of the last downturn saw a high of 2.8 job seekers per job opening.

Figure D

The difficulty of finding a job is further underscored by the duration of unemployment. The average duration of unemployment in May of 2011 was 39.7 weeks, or about nine months. Using the same workers and family types as discussed earlier as an example, losing a job could therefore mean a reduction in income from $20,800 a year down to $4,920—simply not enough to meet basic needs unless it is supplemented by unemployment insurance. Furthermore, the share of the long-term unemployed is at an all-time high. As shown in Figure E, in May 2011, 45.1% of the unemployed (a total of 6.2 million people) had been unemployed and actively looking for a job for six months or more. It may seem like a small sacrifice to take an unpaid sick day, but should that day lead to a worker losing his or her job, one day of illness could very easily become six months or more of foregone wages.

Figure E

Finally, the pain of losing one’s job and the associated unemployment duration does not just mean lost wages, but substantial hardship for years after. Research shows that job loss negatively impacts a displaced worker’s income for years after the initial spell of unemployment, affects the educational outcomes of an unemployed worker’s children, and can exact a toll on mental health.⁵ Current economic conditions serve as a reminder that now is a terrible time to lose a job because of illness. Paid sick days policies that offer job protection have never been more important for working families.

Conclusion

The United States has a proud tradition of passing laws to protect workers’ health, safety, and economic security in the face of the changing needs of families and the workforce, including well-established child labor prohibitions, maximum-hour laws, and minimum-wage laws. In recent decades, however, workplace standards have failed to reflect demographic and economic realities. Family economic security has declined over the past 30 years, and the need to have two incomes to support a family means that many kids and the elderly have no one at home to care for them when they need it. Millions of working families are living in poverty and breadwinners risk income and job loss when illness strikes. A national law that ensured the ability to earn paid sick time would allow workers to meet their responsibilities at work and at home without compromising their families’ economic security.

—The authors would like to thank Nicholas Finio of EPI for his research assistance on this paper and the National Partnership for Women and Families, the Rockefeller Foundation, and the Ford Foundation for their generous support.

Endnotes

1. Twenty-five percent or more of the family income.
2. The additional pay brought in by a second working parent should actually increase economic security—in a one-working-parent family, if this person loses his or her job, the family income will decrease by 100%, to zero. However, in a two-working-parent family, a job loss will only decrease family income by 50% (if both parents are earning the same amount).
3. Research shows that presenteeism has real and measurable costs (see Goetzel et al. 2004 and Hemp 2004). In addition to lost productivity from coming to work sick, the worker may spread illness to colleagues, further decreasing productivity in the workplace. This is especially problematic in food preparation occupations, where access to paid sick time is low, but the risk of spreading food borne illnesses (such as salmonella and norovirus) is high (JEC 2010).
4. Authors’ analysis of 2008 Medical Expenditure Panel Survey.
5. For a further discussion of the adverse consequences of unemployment and recessions, see Irons (2009).

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See Gould’s presentation: The future of employer-based health insurance following health reform

This Economic Policy Institute analysis examines the likely jobs impact of signing pending FTAs with Korea and Colombia. It shows, based on past experience, that these trade agreements will increase the U.S.’s trade deficit with both countries. Contrary to the Chamber’s projections, the EPI analysis then shows that the increased trade deficit per se will correspond to the loss of 214,000 jobs in the U.S. by 2015.

Depending on economic conditions, other factors may intervene to offset job losses, although they won’t change the fact that these jobs are displaced: The trade deficit per se will correspond to lost jobs in industries that compete with imports. While other factors could help spur job creation in other parts of the economy, for the factory worker who loses his or her job, this macroeconomic fact matters little. And given the weak U.S. economy, it’s unlikely that workers displaced from their jobs will find other employment quickly or easily.

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