Bridging the Divide: Building an Economy That Works for All
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This is Report no. 117-619, Union Calendar no. 447, titled Bridging the Divide: Building an Economy That Works for All, a report of the House Select Committee on Economic Disparity & Fairness in Growth, dated December 12, 2022. The Committee Work section says the Select Committee was established by Speaker Nancy Pelosi and created by House Resolution 8 to investigate and develop recommendations on policies to make the economy work for everyone, led by Chairman Jim Himes and Ranking Member Bryan Steil. It lists the hearings, roundtables, field hearings, and tours the Select Committee convened from July 1, 2021 onward, including field hearings in Lorain, Ohio, Kenosha and Milwaukee, Wisconsin, and McAllen, Texas.
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“Bridging the Divide: Building an Economy That Works for All.”
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U.S. Government Publishing Office
Washington : 2022
U.S. House of Representatives
117 st Congress, 1st Session
December 12, 2022
Report no. 117-619
Union Calendar no. 447
Bridging
the Divide
BUILDING AN ECONOMY
THAT WORKS FOR ALL
49-944_cov.indd 1 12/14/22 12:03 PM
Committee Members
CHAIRMAN RANKING MEMBER Rep. Marcy Kaptur Rep. Warren Davidson
Jim Himes (D-CT) Bryan Steil (R-WI) (D-OH) (R-OH)
Rep. Gwen Moore Rep. Jodey Arrington Rep. Vicente Gonzalez Rep. Stephanie Bice
(D-WI) (R-Tx) (D-Tx) (R-OK)
Rep. Pramila Jayapal Rep. Kat Cammack Rep. Angie Craig Rep. Byron Donalds
(D-WA) (R-FL) (D-MN) (R-FL)
Rep. Alexandria Rep. Sara Jacobs
Ocasio-Cortez (D-NY) (D-CA)
House Select Committee on AppENDIx
Economic Disparity & Fairness in Growth Endnotes 197
49-944_cov.indd 2 12/14/22 12:03 PM
Letter of Transmittal
1
House Select Committee on
2 Economic Disparity & Fairness in Growth
Committee Work
Over the course of the 117th Congress, the Select Committee on Economic
Disparity and Fairness in Growth hosted numerous hearings and events in
Washington, D.C. and across the country to hear directly from local experts,
civic leaders, and community stakeholders. Established by Speaker Nancy
Pelosi and created by the 117th Congress by House Resolution 8, the
Select Committee set out “to investigate, study, make findings, and develop
recommendations on policies, strategies, and innovations to make our
economy work for everyone, empowering American economic growth while
ensuring that no one is left out or behind in the 21st Century Economy.” Led by
Chairman Jim Himes and Ranking Member Bryan Steil, the Select Committee
created the following report of its findings which highlight actionable policies
to alleviate the economic hardships Americans face and build a more vibrant
and resilient economy of shared and inclusive prosperity.
The Select Committee convened the following events:
• July 1, 2021: Committee Meeting with Heather Boushey, Member, White
House Council of Economic Advisers
• July 29, 2021: Hearing: “The Nature and Consequences of American
Economic Disparity”
• September 21, 2021: Tour of Library of Congress: Works Progress
Administration exhibits
• September 21, 2021: Briefing with Kate Bahn, Ph.D., Washington
Center for Equitable Growth and Michael Strain, Ph.D., of American
Enterprise Institute
• September 28, 2021: Hearing: “The Interconnected Economy: The Effects
of Globalization on U.S. Economic Disparity”
• October 17, 2021: Trolley Tour of Lorain, Ohio led by Mayor Jack Bradley
• October 18, 2021: Lorain Historical Society Listening Session and Tour
• October 18, 2021: Field Hearing in Lorain, Ohio: “Renewing Prosperity in
the Industrial Heartland: An Economic Agenda for Forgotten Communities”
• November 3, 2021: Hearing: “Our Changing Economy: The Economic
Effects of Technological Innovation, Automation, and the Future of Work”
• November 15, 2021: Roundtable with National Faith Leaders
• November 17, 2021: Roundtable on Measuring Economic Disparity
• December 8, 2021: Hearing: “Growing our Economy by Investing in
Families: How Supporting Family Caregiving Expands Economic Opportunity
and Benefits All Americans”
• December 9, 2021: Roundtable on America’s Unbanked and Underbanked
• January 20, 2022: Hearing: “Race, Ethnicity, and the Economy: How
Improving Economic Opportunity Benefits All”
• February 9, 2022: Hearing: “Connecting Americans to Prosperity: How
Infrastructure can Bolster Inclusive Economic Growth”
3
• February 22, 2022: Roundtable discussion on Artificial Intelligence and
Economic Disparity in San Francisco, California
• February 23, 2022: Visit to Anthropic in San Francisco, California
• February 23, 2022: Roundtables in San Francisco, California with
Community Leaders on Family-Support Programs and Bold Ideas to
Alleviate Economic Disparity
• March 1, 2022: Hearing: “Promoting Economic Prosperity and Fair Growth
Through Access to Affordable and Stable Housing”
• March 3, 2022: Member briefing from the Organization for Economic
Co-operation and Development’s Centre on Well-being, Inclusion,
Sustainability, and Equal Opportunity
• March 16, 2022: Hearing: “Big Ideas for Small Businesses: Fostering
American Entrepreneurship Through Starting, Sustaining, and Growing
Small Businesses”
• April 6, 2022: Hearing: “(Im)Balance of Power: How Market Concentration
Affects Worker Compensation and Consumer Prices”
• April 7, 2022: Roundtable: “Economic Empowerment for Native
Communities: Harnessing Innovation and Self-Governance to Unlock
Economic Potential”
• April 11, 2002: Listening Session with University of Wisconsin - Parkside
Students and Local Business Leaders
• April 11, 2022: Field Hearing in Kenosha, Wisconsin: “Pathways to
Opportunity: Lessons from Kenosha”
• April 11, 2022: Forum with Milwaukee, Wisconsin, Community Leaders
and Housing Experts
• April 12, 2022: Bus Tour of Milwaukee Neighborhoods
• April 12, 2022: Field Hearing in Milwaukee, Wisconsin: “Addressing
Milwaukee Housing Inequality”
• April 26, 2022: Member Meeting with AFL-CIO President Liz Shuler and
AFL-CIO Executive Committee Members
• May 11, 2022: Hearing: “Bringing Prosperity to Left-Behind Communities:
Using Targeted Place-based Development to Expand Economic Opportunity”
• June 17, 2022: Listening Session with Community Members in
McAllen, Texas
• June 17, 2022: Driving and Walking Tour of Indian Hills Colonias in
Weslaco, Texas
• June 17, 2022: Field Hearing in McAllen, Texas: “Infrastructure Investment:
Building Economic Resilience in South Texas”
• June 22, 2022: Hearing: “Tackling the Tax Code: Evaluating Fairness,
Efficiency, and Potential to Spur Inclusive Economic Growth"
• July 14, 2022: Roundtable: “Building Inclusive Prosperity for Rural America”
• July 28, 2022: Hearing: “Building a Modern Economic Foundation:
Economic Security and Income Support for 21st Century America”
House Select Committee on
4 Economic Disparity & Fairness in Growth
• August 8, 2022: Welcome Discussion with Local Elected Officials in
Seattle, Washington
• August 8, 2022: Labor Roundtable in Seattle on fair pay and
worker protections
• August 8, 2022: Dinner with Local Business Leaders in Seattle, Washington
• August 9, 2022: Boat Tour and Visit to Harbor Island Training Center
Hosted by the Port of Seattle
• August 9, 2022: Field Hearing in Seattle, Washington: “Lessons from
Seattle: New Horizons for Workers’ Pay, Benefits, and Protections”
• September 21, 2022: Roundtable: “Just Good Business: Private Sector
Strategies that Promote Shared Economic Prosperity”
• September 29, 2022: Roundtable: “Good Pay for Hard Work:
Apprenticeships, Workforce Development, and Diverse Pathways to
High-Quality Jobs”
• October 3, 2022: Tour of North Atlantic States Regional Council of
Carpenters Apprenticeship facility in Boston, Massachusetts
• October 3, 2022: Discussion with Faculty from Harvard Kennedy School
and Harvard Business School in Cambridge, Massachusetts
• October 3, 2022: Discussion with Commission on Reimagining Our
Economy hosted by the American Academy of Arts and Sciences in
Cambridge, Massachusetts
5
Acknowledgments
The Select Committee on Economic Disparity and Fairness in Growth would
like to thank the hundreds of experts, officials, storytellers, and staff who
enriched its work and made this report possible. Committee Members and staff
benefited from the generous time, effort, wisdom, and hospitality provided to
them in Washington, D.C. and around the country. The Committee would like
to thank Speaker Nancy Pelosi for her leadership in forming the Committee,
its colleagues on standing Committees for their collaboration, and everyone
who took the time to share their story.
The Committee would particularly like to thank the following individuals from
the Select Committee staff who contributed to this report:
Majority Staff
• Mark Henson – Staff Director
• Diane Lim – Policy Director
• Eric Harris – Senior Advisor and Communications Director
• Lisa Ransom – Director of Outreach and Engagement
• Mauricio Armaza – Press Secretary and Committee Clerk
• Ksenia Shadrina – Senior Professional Staff
• Ryan Zamarripa – Senior Professional Staff
• Megan Rivera – Policy and Outreach Advisor
• Andrew Cobián – Policy Advisor
• Michael Suchecki – Digital Director
Minority Staff
• Ryan Carney – Staff Director
• Anne DeCesaro – Policy Director
• Harry Fones – Communications Director
• James Langnes – Director of Member Services
• Jack Chambers – Press Assistant
• Grace White – Senior Advisor
House Select Committee on
6 Economic Disparity & Fairness in Growth
Contents
Chapter 1
Introduction 9
Economic Disparity and the American Dream
Chapter 2
Economic Disparity 15
What it Looks Like
Chapter 3
Finding Agreement 30
Bipartisan Solutions We Can Do Now
Chapter 4
Investing in People 37
Lifelong Support for Better Futures
4.1 Early Education 40
4.2 Lifelong Learning 47
4.3 Caregiving 60
4.4 Small Businesses 68
Chapter 5
Building Connections 78
Bridging the Divide to Economic Opportunity
5.1 Affordable and Accessible Housing 80
5.2 Hard Infrastructure Investments 92
Chapter 6
An Unlevel Playing Field 101
Structural Economic Challenges
6.1 The Geography of Unequal Opportunity 104
6.2 The Balance of Power Between Employers and Workers 114
6.3 Economic Security Programs 125
6.4 Tax Policy and Equal Opportunity 133
6.5 Market Competition Policy 140
Chapter 7
Conclusion 144
Where We Go from Here
Chapter 8
Minority Views 148
Perspectives and Recommendations
8.1 A Prosperous Economy 150
8.2 Safety in American Communities 155
8.3 Freedom for the Future 159
8.4 Government Held in Check 163
8.5 Minority Conclusion 169
Appendix: ENDNOTES 170
7
House Select Committee on
8 Economic Disparity & Fairness in Growth
Introduction
ECONOMIC DISPARITY AND THE AMERICAN DREAM 1
CHAIRMAN HIMES AND COMMITTEE MEMBERS ANNOUNCE
COMMITTEE MISSION AND MEMBERSHIP
It’s not just a dream. From our founding centuries ago, the United States has
been thought of as the iconic land of opportunity. The poem inscribed on the
Statue of Liberty welcomes the homeless and “tempest-tost” immigrant
through a “golden door” to a freedom and prosperity unimagined in the old
world. It is the defining idea of America in the world’s imagination, and our
history has shown that the American Dream can be a reality. Our nation has been
the stage for a million tales of rags to riches, and home to a burgeoning middle
class whose citizens enjoy health and wealth undreamt of by our ancestors.
In truth, there have always been very different American stories: Langston
Hughes spoke of the “dream deferred” for his people. H.L. Mencken wrote
of the “forgotten men who always suffer when schemes of uplift are afoot.”
Walker Evans hauntingly photographed the slow-burn brutality of rural poverty
in Appalachia and the Dust Bowl.
And yet, the American story endured. Perhaps because the wealth always grew
and was shared, occasionally and unequally. Perhaps because, in America,
hope always seemed to outpace abundance.
Until today.
CHAPTER 1
Introduction 9
In the middle of its third century, America is both more prosperous and still
profoundly unequal. A once-proud middle class now struggles to educate its
children or to retire with dignity. The lucky few launch themselves into space
and buy global companies like baubles in a toy store, while almost 40 million
Americans, including too many children, live in poverty.
Put 100 representative Americans
into a room with one big pie
representing all of American wealth:
One solitary person would own a third
of that pie. His slice alone would be 15
times bigger than the crumbs left for
50 of the people in that room. That is
the definition of inequality run amok.
There are reasons — moral, economic,
and political — for concern. Profound
inequality dashes not just the dreams
of individual Americans. It reduces
the productivity of the economy as
a whole, shrinking the size of the
pie. Deeply unequal economies
don’t perform as well as more
DOROTHEA LANGE’S PHOTO
equal economies.
“MIGRANT MOTHER” 1
Ominously, a society in which fewer and fewer people have meaningful
economic stakes may not be compatible with democracy. A quote attributed
to Supreme Court Justice Louis Brandeis noted that “we can have democracy
in this country, or we can have great wealth concentrated in the hands of the
few, but we can’t have both.” Thomas Jefferson realized in the early days of
the Republic that enduring democracy depends upon a population of educated
citizens capable of critical thought who see themselves as stakeholders in a free
society. As more Americans feel left behind or unequipped to succeed, as they
strive within a system that seems incurably rigged against them, we should
not be surprised to see rot growing at the very foundations of our democracy.
In 2021, House Speaker Nancy Pelosi established the House Select Committee
on Economic Disparity and Fairness in Growth (“the Committee”) to shine a
light on the nature of this problem, and to propose practical, analytically sound
solutions to the Congress. Members of the Committee held hearings and
roundtable discussions with economists, policy experts, and representatives
from the public and private sectors to better understand the barriers
to prosperity.
Our Committee was determined to listen to people whose voices are not
normally heard in Washington: in the hulking shadows of shuttered steel mills
in Lorain, Ohio; in isolated residential “colonias” along the Texas-Mexico border;
and in previously redlined neighborhoods in Milwaukee. The Committee traveled
to San Francisco to consider the role of technology; heard from researchers,
House Select Committee on
10 Economic Disparity & Fairness in Growth
union, and business leaders in Seattle; and visited the Academy of Arts and
Sciences in Cambridge, Massachusetts.
From the start, the Committee faced the challenge of defining “fairness.” We
need a concept of fairness to take the measure of today’s economy and to lay
out a roadmap for progress. There is, of course, no consensus on the nature
of a just society. For centuries, utopias have been developed in libraries and
coffee houses only to collapse in the streets, sometimes with hideous violence.
Forests are felled for innumerable tracts on utilitarianism, communitarianism,
and the nature and possibility of meritocracy.
COMMITTEE VISITS TO SAN FRANCISCO, THE RIO GRANDE VALLEY,
MILWAUKEE, AND THE PORT OF SEATTLE
Fortunately, Americans have a practical answer to the question of fairness:
Everyone who works hard and plays by the rules should be able to make a
secure and comfortable life for his or her family. This rough-and-ready definition
of fairness has its critics. There are those who argue for equality of outcome,
and those who worship unfettered capitalism. History shows that neither of
those absolutes is durable or desirable.
The pragmatic American ideal of fairness embraces the notion that freedom
from want and fear unleashes the full human potential of each and every
citizen. The next great thinkers, leaders, inventors, jurists, and creators are
growing up today. If each of them is able to reach his or her full potential, our
society as a whole will flourish.
We understand that our society falls far short of this modest standard of
fairness. Too often success in our country depends on carrying a certain
last name, being a certain gender, or being born into a certain neighborhood
or with a certain skin color, things over which an individual has no control.
There is no formal American aristocracy, but some Americans are borne by
powerful tailwinds of wealth and privilege while others face cruel headwinds
of poverty and despair.
CHAPTER 1
Introduction 11
Of course, effort, talent, and grit matter. But they are far from all that matters
in determining who succeeds. This Committee starts from the premise that
those things should matter more for every American, and arbitrary factors
should matter less. Could any principle better capture the founding spirit of
our nation?
SPEAKER PELOSI APPOINTS COMMITTEE MEMBERS 2
The Committee’s hearings, research, and travels gave us a fine-grained look at
the economic challenges faced by Americans. We also developed a profound
appreciation for the stories of struggle and dignity, of success and failure,
of doors opened and closed that are lost in dry statistics. We produced a
30-minute documentary entitled “Grit and Grace” which tells the stories
of three American families. Our hope is that our recommendations will be
considered with those families in mind.
The Committee recognized from the start that addressing economic disparity
has never been the sole purview of the federal government. In fact, programs
at the state and municipal levels often demonstrate an adaptability and
nimbleness that federal programs find difficult to achieve. Philanthropy
transforms lives, as well it should. At nearly $500 billion per year, American
charitable giving approximates the size of Canada’s federal budget.3 American
employers make a meaningful difference not just by providing jobs but by
assisting employees to get college educations, by offering child care, and, in
some cases, by paying minimum wages that exceed the federal minimum
wage. The federal role should be thought of as a partnership that backstops,
supports, and augments these efforts.
Our recommendations are organized around the three biggest factors that
determine an individual’s success. A free-market economy, however regulated
or buoyed by safety nets and social insurance, is (or should be) an essentially
competitive environment, and so we borrow a sports metaphor. Success is a
function of the native talent, application, and training of the individual athlete.
But no athlete succeeds in a vacuum: Support and teamwork matter. And no
House Select Committee on
12 Economic Disparity & Fairness in Growth
matter how well an athlete or a team is trained and supported, the fairness of
the playing field matters. Our proposals, therefore, fall into the categories of
investing in individuals, building and supporting communities, and dismantling
structural barriers hindering opportunity and growth.
Investing in Americans throughout their lives — including affordable, high-
quality child care, universal pre-kindergarten, and accessible lifelong learning
options — is one of the most effective ways to help children realize their full
potential, reduce the costs and financial burdens facing families, and provide
opportunities for adults to sharpen their skills and improve their prospects.4
Underserved and left-behind communities often suffer as much from a lack
of connection as they do from a lack of capital. Crumbling or non-existent
physical infrastructure — including roads, bridges, and broadband — have
undercut the ability of various places to support local entrepreneurship and
promote consistent job growth.5 An absence of accessible and affordable
housing holds back economically vibrant locales and challenges the stability
of older communities. Federal investment in local economic development
partnerships can address these challenges.
No examination of American economic disparity can ignore the charged issue of
race. Communities of color struggled for generations with violence, prejudice,
bigotry, and economic systems which kept them down. The achievements of
the civil rights movement and the diversification of American society have
delivered some progress. But they have not silenced the echoes of generations
of discrimination and of opportunities denied, echoes which are apparent in
almost all social indicators and economic statistics.
AN UNOCCUPIED, CITY-OWNED HOME IN MILWAUKEE 6
Even as our courts and legislatures struggle with the debts that may be owed
and the remedies that might be offered for our nation’s history of prejudice
and bigotry, we must at a minimum not shrink from honest reflection on
the systemic barriers that helped turn the American Dream into a mirage for
too many.
CHAPTER 1
Introduction 13
Finally, the Committee was comprised of Democrats and Republicans working
in a historically polarized time. We disagreed more often than we agreed, on
the causes and implications of economic disparity, and especially on solutions
that might be offered by the federal government. The Committee did, however,
dedicate itself to putting observation and analysis ahead of ideology and
partisanship. We built unlikely personal relationships of trust and respect.
This report and the views of the minority demonstrate the visions of the
Committee’s members. We have made the case for those visions as well as
we can. But we decided to highlight those measures, modest though they
might be, that could be implemented in our divided legislature.
Our history has shown that modest initiatives that remove barriers or expand
opportunity have cascading effects over time. Every GI who went to college,
every family that grew up in a beloved home that became their financial
nest egg, every senior liberated from being a burden by Social Security and
Medicare, every new business funded with a prudent loan guaranteed by the
Small Business Administration created seeds of opportunity for individual
American families.
If we know one thing for sure it is this: Give Americans a lifeline out of
poverty and an opportunity to flourish and they will amaze the world. We
urge the Congress to move speedily on the passage of the modest initiatives
chronicled here.
House Select Committee on
14 Economic Disparity & Fairness in Growth
Economic
Disparity
WHAT IT LOOKS LIKE
2
THE CHICAGO GARMENT WORKERS’ STRIKE IN 1910; AN OCCUPY
WALL STREET PROTEST IN 2011 7
America’s system of modified free-market capitalism was, and is, a machine
for unprecedented and explosive wealth creation. Industrialization and the
era of the robber barons radically transformed our economy into a coal-fired
behemoth of mass production. Workers had new access to cheap goods but
struggled in a Dickensian dystopia of seven-day workweeks, child labor, and
violent catastrophes like the Triangle Shirtwaist factory fire in 1911 that killed
146 garment workers, including 123 women and girls. Unions rose to fight
for worker safety and dignity. Muckraking journalists like Ida Tarbell and Ray
Stannard Baker exposed the brutal depredations of trusts like Standard Oil
and the rank corruption in city political machines and the U.S. Senate.
In response, the federal government, led by Presidents Roosevelt, Taft,
and McKinley, ushered in the Progressive era, which limited the power of
monopolies, established a federal Department of Labor, set standards for
food and drugs, and laid the groundwork for the emergence of a national
social safety net. States also responded. Wisconsin, led by reformers like
Robert La Follette, innovated with progressive ideas for good governance
and instituted the nation’s first workplace injury compensation law and the
first state income tax.8
By the end of World War II, national mobilization and this progressive evolution
had helped create a massive, consumer-oriented, and optimistic middle class.
Even those who had been historically excluded from the nation’s burgeoning
prosperity, especially Black Americans, found opportunities in the insatiable
demand for workers by factories throughout the Midwest, New England, and
CHAPTER 2
Economic Disparity 15
in the explosive growth of California. The vast majority of Americans could
expect to earn more than their parents.9 Prosperity was shared, if not equally,
across American demographics. The portion of total income going to the top
10% of earners fell from 50% in 1928 to 33% in 1944.10
Expanded progressive taxation generated critical government revenue
streams, allowing the expansion of the social safety net, the construction of
the interstate highway system, and investments in education and research
that would drive innovation for generations. Rising incomes and plentiful job
opportunities were the norm.
About 40 years ago, this remarkable engine of increasingly shared prosperity
slowed, sputtered, and for many, came to a grinding halt, then began
to reverse.11
Globalization and the emergence of sharply competitive international labor
markets, technology, and the decline in union membership and collective
bargaining power12 led to stagnant wages for most workers.13 The evolution
of the economy away from manufacturing and towards automation and
services increased downward wage pressure even as it put huge premiums
on high-end knowledge workers, leading to dramatic pay increases for those
at the top of the income ladder.14
Figure 1: Income Inequality Has Been Rising For Decades
SHARE OF NATIONAL INCOME RECEIVED BY THE TOP DECILE (1910 – 2010)
SOURCE: THOMAS PIKETTY (2013)15
In the last several decades, income inequality and economic disparity across
job sectors, geographic areas, and racial groups have grown with alarming
speed. Today, income and wealth inequality is higher in the U.S. than
nearly any other developed nation,16 and it’s getting worse.17 Disturbingly,
the ability to climb the economic ladder — so central to the American
Dream — has all but disappeared. Over this period, as wages for most
workers stagnated, the costs of housing, health care, child care, and higher
education have soared. Worker pay grew in tandem with rising productivity
House Select Committee on
16 Economic Disparity & Fairness in Growth
in the postwar decades, but since 1980 productivity has risen much faster
than wages.18 The difference in average pay for CEOs and their workers
at large corporations was 20:1 in 1965. Last year, it was nearly 400:1.19
Figure 2: The United States Is One Of The Most Unequal Wealthy Nations
COUNTRIES BY GINI COEFFICIENT (2017 OR MOST RECENT YEAR)
SOURCE: ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT (2017-2021)20
Inequality in America Today
Disparities in income and wealth have grown so large that the U.S. has become
the world’s most unequal wealthy country. High-wage and low-wage jobs
have proliferated, as middle-income jobs have dwindled. More than two in five
workers — 53 million people — earn less than about $16 per hour. While the
top 1% of earners had an average income of more than $820,000 in 2020,
the bottom 90% averaged about $40,000.21
Such disparities in income are much less common in Western Europe and
Japan. The Gini coefficient, a widely used measure of inequality, is significantly
higher in the United States than in other rich countries. Disparities have been
growing in Europe, but at a slower rate, as the top 10% increased their share
of the pie by four percentage points across the Atlantic, compared to 13
percentage points in the U.S.22
Importantly, wages don’t fully reflect total compensation as the top three-
fifths of the workforce get health-insurance, 401(k)s, and other employer-
provided benefits that most lower-wage workers do not. The wealthy also
benefit disproportionately from income on capital such as capital gains,
interest, and dividend income, all of which are taxed more lightly than wages.
Complicating the picture, millions of poor, middle class, and older Americans
receive government services and benefits ranging from Social Security and
unemployment insurance to the Earned Income Tax Credit and food stamps.
If the precise income picture is messy, the broader situation is clear: Income
inequality is at levels unseen since the 1920s, and it is getting worse.23
CHAPTER 2
Economic Disparity 17
SCENES FROM THE GREAT DEPRESSION 24
Significant economic disparity manifests in very troubling ways as poverty and
lack of access to services deprive many families of a decent life. It correlates
with health outcomes, as high-income Americans live an average of 10 to 15
years longer than their low-income neighbors. Rates of diabetes, addiction and
overdoses, hypertension, accidents, infant mortality, and crime are significantly
higher among low- and middle-income individuals. Environmental hazards
threaten the less well-off disproportionately.25
The distribution of wealth — ownership of assets such as homes, investments,
retirement plans, businesses, and other assets — is even more skewed:
The richest 1% of households had 15 times the combined wealth of the
bottom 50% in 2021.26 That same 1% hold about one-third of the country’s
wealth. By contrast, the median wealth of those in the bottom quarter of the
population was negative; they had more debt than assets. Such asset poverty
is widespread, as more than a quarter of Americans do not have the cash to
cover three months of expenses.27
Figure 3: The Distribution Of Wealth In The United States
THE WEALTHIEST QUINTILE HOLDS NEARLY 90% OF U.S. WEALTH
SOURCE: WASHINGTON CENTER FOR EQUITABLE GROWTH (2019)28
House Select Committee on
18 Economic Disparity & Fairness in Growth
People with even modest wealth face much less risk in life. They have the
means to pay unexpected expenses. Unemployment is less of a threat. They
are much less likely to borrow and pay the high interest rates that lenders
charge low-wealth, low-income borrowers.
Those with above-average wealth tend to live in neighborhoods where schools
are better and associate with those who know of job or business opportunities.
They have more freedom to set their own schedules and find it easier to risk a
move, a new job, or an early retirement. They pass on wealth to their children.
Opportunity, which entails far more than achieving high levels of consumption,
surrounds them and their families in ways not available to those with little
or no wealth.29
Figure 4: Income and Wealth are Increasingly Concentrated in the Top Quintile
DISTRIBUTION OF FAMILY WEALTH AND INCOME AND INCOME QUINTILES (1995 – 2019)
SOURCE: BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM (2019)30
It is important to understand that inequality itself is not evenly distributed
among different segments of the American population, a fact that is often
obscured by aggregated economic statistics. Racial inequities are particularly
stark. Median wages for Black workers were just three-fourths those of white
workers in 2019. Because unemployment rates are higher and labor force
participation rates are lower, the earnings of Black households are only half
those of white households. The typical Black household has about one-eighth
the wealth of its white counterpart. The huge wealth differential between white
people and Black people, as well as a host of disparities ranging from education
and health to housing, cannot be understood without an understanding of
how such differences originate in a long history of racism.31
Other racial disparities are also pronounced. Hispanic household earnings
average about half that of white households, and median net worth is just
one-fifth the amount of the typical white family. Among America's indigenous
peoples, median household income is less than two-thirds that of white
households, and wealth is only one-eleventh.32
CHAPTER 2
Economic Disparity 19
Gender matters as well. There is a nearly 2-to-1 wealth gap between male-
and female-headed households. Women as a group earn about 80 cents for
every dollar that men earn, a fact driven by the disproportionate numbers
of women in low-wage jobs. The gender wage gap is even more pronounced
among college graduates, as women with a bachelor’s degree earn just 74
cents for every dollar that men make.33
Dwindling Social Mobility
Widening wealth and income inequality have been accompanied by declining
social mobility, as children from families with low or moderate wealth are
less able to out-earn their parents than their ancestors 50 years ago or their
peers in other wealthy nations.34 This is disturbing for a country that has long
considered itself the iconic land of opportunity.
Around 90% of children born in the 1940s grew up to out-earn their parents.
Similar numbers out-learned their parents, as college attendance rates shot
up. Stories of upward mobility were popular in Hollywood and regularly
featured in the news media. In contrast, American children born in the 1980s
— millennials — could not expect the same: Only about 50% would out-earn
their parents.35
Figure 5: Children Out-Earning Their Parents Is Becoming Less Common
PERCENT OF CHILDREN EARNING MORE THAN THEIR PARENTS AT AGE 30 (1970 – 2014)
SOURCE: OPPORTUNITY INSIGHTS (2016)36
Evidence that increasing inequality dampens mobility compounds
the challenges to those seeking to better their circumstances. Studies
show a strong correlation between social mobility and shared economic
growth. According to the International Monetary Fund: “In societies where
opportunities are unequal, including across generations, an increase in
income inequality tends to become entrenched, which limits the potential
and prospects of low-income earners, and stymies long-term growth.”37
The correlation between high inequality and low mobility was dubbed “the
Great Gatsby curve” by Alan Krueger, chairman of President Obama’s Council
of Economic Advisers. By the late 2010s, the probability that someone in
the bottom income quintile would remain stuck there was higher — and the
chances of rising to the top quintile were lower in the United States than in
Sweden, Germany, France, and Japan.38
House Select Committee on
20 Economic Disparity & Fairness in Growth
Why Has This Happened?
So, why has inequality increased and why has upward mobility become so
much harder than in the mid-20th century?
The answer lies in a combination of factors: globalization, technological
innovation, regressive policy changes, a labor market increasingly divided
by educational attainment, and the residual effects of generations of
discrimination against certain groups.
There has always been a robust debate, particularly in American politics, about
the relative importance of these structural factors and personal choices around
work, training, and behavior, with Democratic policy makers focused on the
former and Republican ones on the latter. Personal choices do meaningfully
affect economic outcomes, but for many these choices are made in a context
that is powerfully determinative of outcome. A 2020 analysis by the National
Bureau of Economic Research concluded that about three-fifths of American
income inequality is a function of structural factors and other “circumstances
beyond people’s control.”39 It is counterintuitive to believe that the personal
choices of workers in the 1950s differed so radically from personal choices
today that they drive the shocking disparities that developed in that period.
CHAPTER 2
Economic Disparity 21
Globalization
Stories in Context
WATCH VIDEO: MARJORIE CHAMBERS,
CLEVELAND, OH
Tool and Die Maker at General Motors,
Vice President UAW Local 1005
“I’ve been with UAW for 47 years. I’ve been with General Motors for 43 years.
When I started working in the early 70s, we had thousands of workers,” Marjorie
Chambers of Cleveland, Ohio told the Committee at its hearing on Revitalizing
the Industrial Heartland in Lorain, Ohio. “Right now, in our plant, we have under a
thousand.”
“I was laid off for two years with no hopes of going back and then worked again for
a year and was laid off for another year,” she added. “We have to reinvent ourselves
so that we can save and keep as many of the workers as we can.”
In the years following World War II, the U.S. economy stood nearly alone
amid the wreckage of Europe and Asia. American workers struggled to meet
the explosion in appetite for consumer goods from American consumers. As
Europe and Asia rebuilt, they became new markets, but also cheap competition.
Japanese goods, which in the early postwar years were emblematic of low
prices and poor quality, began to compete with many American products, from
consumer electronics to the fabled production of the iconic U.S. auto industry.40
International trade provides many benefits, from raising living standards
around the world, reducing prices, and increasing variety for consumers,
to expanding markets for domestic producers and farmers, and creating
jobs in export-oriented industries. It also generates severe harm to those
products, industries, and workers that are displaced. This is what economists
euphemistically call “dislocation.”
While the benefits of trade are generally diffuse, the costs were often
concentrated in specific communities. In the last generation, dislocation has
devastated jobs in manufacturing hubs in communities from Flint, Michigan
and Newton, Iowa to Rochester, New York, and Baltimore, Maryland.
House Select Committee on
22 Economic Disparity & Fairness in Growth
Although trade has increased since the General Agreement on Tariffs and Trade
(GATT) in 1947 began reducing tariff barriers, the 1994 North American Free
Trade Agreement (NAFTA) and China’s entry into the World Trade Organization
(WTO) in 2001 caused widespread job loss and reduced job quality in certain
communities — particularly among workers in manufacturing who could
no longer support their families
with high-wage union jobs after
offshoring. Referring to this “China
shock,” economists David Autor,
David Dorn, and Gordon Hanson
wrote: “Employment has fallen in
the U.S. industries more exposed to
import competition, as expected, but
offsetting employment gains in other
industries have yet to materialize.”41
CHAIRMAN HIMES SPEAKS WITH AFL-CIO The outsourcing of these jobs to
CHIEF ECONOMIST BILL SPRIGGS
countries with low-cost, sometimes
exploited labor often raised corporate profits and share prices, resulting in an
aggregate transfer of wealth from labor-intensive industries to capital-intensive
ones. This dislocation often devastated towns and regions, even as financial,
services, and consulting services thrived in different parts of the country.42
The country’s trade deficit also totaled $13.1 trillion between 1992 and
2021, as domestic production was displaced by imports.43 This left the U.S.
more dependent on international energy, metals, electronics, pharmaceutical
components, semiconductors, and even food.
Technological Change and Automation
Technology similarly both benefits and costs workers — particularly low and
medium-skilled workers. This is not a new problem. Since the early days of
the Industrial Revolution, workers have been displaced by machines that can
do certain tasks more efficiently and quickly than humans. Routine tasks, like
those involved in manufacturing, have been the most subject to automation,
creating pressure on wages and employment even as knowledge jobs and
some service jobs like cleaning are more insulated from harm.
Automation has shifted labor market demand, not only by doing away with
jobs but also by depressing wages for workers in affected sectors.44 As once
well-paying, unionized manufacturing jobs that required less education
disappeared, workers who survive are forced to accept lower wages, less secure
TWO INDUSTRIES FACING RAPID AUTOMATION
CHAPTER 2
Economic Disparity 23
jobs and less opportunity for advancement. Additional middle-skilled jobs, like
those of nearly nine million cashiers, retail salespersons, and administrative
assistants, are now at high risk from automation.
The story of Marjorie Chambers at General Motors illustrates how trade and
technology have decimated well-paid U.S. auto industry employment. One
study estimated that the differential exposure to automation among American
workers may be the cause of as much as half the increase in inequality during
the last 40 years.45
Looking ahead, it is hard to imagine this pressure moderating. Artificial
intelligence (AI) is boosting productivity and raising overall living standards,
but, because of its ability to closely mimic sophisticated human skills, may
cause “much more worker displacement and inequality than older generations
of inequality,” according to labor economist Harry Holzer. Whereas robotics
and software have replaced repetitive and predictable tasks, AI is threatening
higher-wage white-collar occupations like accounting, editing, and even some
medical fields.46
An Increasingly Bifurcated Labor Market
As trade and technology eliminated millions of semi-skilled middle-class
jobs, America’s workforce has become increasingly divided between high-
wage occupations requiring at least a college degree and low-wage jobs
largely held by those with less than four years of college. Jobs that require
highly specialized knowledge, associated with manipulating information
and technology, have commanded a wage premium. Conversely, “since the
1970s, low-wage jobs have undergone marked growth as a proportion of the
U.S. labor market,” according to the Bureau of Labor Statistics. “These jobs
include food service; housekeeping; low-level healthcare positions, such as
nursing assistants; and low-level retail positions, such as cashiers. Women
tend to be disproportionately represented in these occupations.”47
Figure 6: Estimated Median Household Income by Congressional District in 2019
MAP DISTRIBUTED AT 2021 COMMITTEE FIELD HEARING IN LORAIN, OHIO
PREPARED BY THE CONGRESSIONAL RESEARCH SERVICE (2021)48
House Select Committee on
24 Economic Disparity & Fairness in Growth
The typical weekly earnings of Americans with a professional or doctoral degree
in 2021 was around $1,900, compared to about $800 for those whose highest
credential was a high school diploma, and $900 for people with some college.
Economic status does not always correlate with educational attainment, but
median net worth for those with a college degree was about four times that
of those without in 2019.49
This growing divide between well-educated, higher-paid workers and lower-paid
workers with less education has been increasingly correlated with geographical
disparities between thriving urban and suburban areas, particularly in the
Northeast and on the West Coast, and rural, inner-city, and exurban areas
left behind. America is increasingly segmented into prosperous, at-risk, and
distressed communities. While knowledge workers are concentrated in the
former, the latter have become home to distressed populations including
disproportionate numbers of people of color, immigrants, the less educated,
and those disconnected from the labor force.50
Racism, Bigotry, and Anti-Immigrant Sentiment
For generations, de jure and then de facto racism excluded Black Americans
from the prosperity enjoyed by many whites. From the early 17th century in
the New World until the American Civil War, most Black people were brutally
enslaved and denied even the basic concept of personhood. For another
century, Jim Crow laws codified racial discrimination. Bias was and, despite
progress, still is pervasive — in our laws and law enforcement, our culture,
our educational institutions, and among employers.
Those laws designed to protect or boost the prospects of white workers,
veterans, and homeowners — ranging from the 1935 National Labor
Relations Act and the 1938 Fair Labor Standards Act to the Home Owners’
Loan Corporation in the 1930s and the GI Bill in 1944 — effectively excluded
people of color. The 1964 Civil Rights Act outlawed discrimination, but
racial inequities persist in education, employment, and homeownership,
shortchanging opportunities for people of color to build wealth.51
Native Americans were massacred, decimated by diseases brought by European
settlers, and forcibly resettled, keeping them on the sidelines of American
abundance. Today, Native American reservations have some of the most
endemic deep poverty in the country.
America has long considered itself a melting pot, yet that understanding
has often not extended to the actual experience of all races, ethnicities, and
cultures. The complex history of the United States reveals that not all people
have been welcomed or seen as equal under the law. For centuries, nearly
all immigrant and minority communities, especially those of non-European
descent, have experienced discrimination, hostility, and violence as a result of
xenophobia and bigotry — with detrimental outcomes that often persist today.
CHAPTER 2
Economic Disparity 25
Stories in Context
WATCH VIDEO: SGT. JOHNNIE CHEATOM,
KANSAS CITY, MO
Army Sergeant First Class (Retired, 25 years)
Awarded the Bronze Star and a Purple Heart
Served in Germany, Korea, and Vietnam
“I didn’t get the chance of getting the GI Bill," says Sgt. Johnnie Cheatom from
Kansas City, MO. "I didn't receive the same benefits as the rest of the GIs, because
they got the GI Bill and got a house with a low interest rate. Financially, it was a
bad deal for me. I was on my way to Vietnam, and I had five kids and a wife and, if I
got killed over there, I wanted them to have a place to stay. It was promised to you
[when you enlisted] that you could get a GI Bill.”
Like many servicemembers, Sgt. Cheatom tried to apply for the no-money-down,
no-interest rate home loan guaranteed by the GI Bill. However, he believes he was
denied a loan because of the color of his skin.
“I think they steered me away from getting the GI loan – I felt discriminated
against,” he explains. “And so, I put my uniform on, went over there to the FHA and
they said, ‘Yeah, you can get the house, you can get the house.’” But there was a
catch. “I got a 30-year loan, but I still had to pay interest on it,” he says, despite the
zero-interest rate mortgage loan promised to him through the GI Bill. “I had to pay
a high interest rate for 30 years.”
Just as overall American inequality diminished in the postwar era, racial
income and wealth gaps narrowed in the wake of the civil-rights movement
of the late 1950s and 1960s. Wages for Black and Latino Americans began
to catch up with those of their white counterparts, as racial segregation and
discrimination moderated. However, some economic gaps have widened since
the 1980s due to “retrenchment on anti-discrimination policy, in combination
with policies and practices that fueled growing wage inequality,” according
to Valerie Wilson of the Economic Policy Institute.52 Many of them will take
generations to close on current trajectories.
House Select Committee on
26 Economic Disparity & Fairness in Growth
Regressive Policy Changes
Trade and technological change have affected other rich nations, but what
distinguishes the U.S. from most of the European Union and the advanced
economies of East Asia are certain policy changes enacted since the 1980s
that have aggravated disparity.
In response to the economic stagnation and high inflation of the 1970s,
lawmakers began enacting tax cuts for wealthy Americans based on the
“supply-side” theory that these would unleash investment and economic
growth that would “trickle down” to the rest of the population and increase
overall government receipts. This did not prove to be the case. While federal
tax rates for middle-class workers remained largely unchanged, average rates
for the richest Americans plummeted. The net effect has been to increase
inequality, constrain government investments in people, and increase federal
borrowing and debt.53
The Reagan Administration paired tax cuts for the wealthy with cuts to programs
supporting job training, access to higher education, affordable housing, and
food security. The 1996 welfare-reform law ended welfare as an entitlement
program, required recipients to work after two years of benefits, and placed
a lifetime limit of five years on those benefits. These cuts to cash assistance
programs led to increases in deep poverty among families with children, even
as refundable tax credits like the Earned Income Tax Credit and the Child Tax
Credit blunted some of their effects.54
Figure 7: The Richest Americans Have Received the Largest Tax Cuts
CHANGE IN EFFECTIVE TAX RATE BY INCOME GROUP (1970 – 2004)
SOURCE: THOMAS PIKETTY, EMMANUEL SAEZ (2007)55
The Tax Cuts and Jobs Act of 2017, which in 2020 reduced the tax burden
of the richest 1% of Americans by $77.6 billion and that of the poorest
40% by just $14.3 billion, only accelerated the trend of more lightly taxing
high-income America.56
During the last 40 years, policy changes eliminated or watered-down
regulations and antitrust laws that protected homeowners, workers, and
consumers. Collective bargaining rights have been cut in many states. Federal,
state, and local governments have cut spending for education. Investments in
children and workers, as well as other “non-defense discretionary spending,”
also declined until 2021. Whereas half of federal spending growth between
CHAPTER 2
Economic Disparity 27
1945 and 1980 went to domestic discretionary initiatives, only about 20%
of the absolute growth since then has gone to such programs.57 Meanwhile,
accumulated inflation has caused the federal minimum wage to fall 40%, in
real terms, below its 1968 peak.
These policies are a dramatic break with the traditions of the Progressive era
of Teddy Roosevelt and Woodrow Wilson, when the government countered
inequality with a progressive income tax system, antitrust laws to limit
monopoly power, and laws limiting worker hours and child labor. The New Deal
cemented fair labor standards laws, protections for collective bargaining, and
income-security programs like Social Security and unemployment insurance.
In the postwar era, particularly during Lyndon Johnson’s Great Society,
policies made higher education and homeownership affordable for millions,
expanded eligibility for the minimum wage and Social Security, supported
infrastructure and research and development, provided federal aid to help
educate the poor through Head Start and Title I of the 1965 Elementary and
Secondary Education Act, and took aim at racial discrimination through the
1957 and 1964 Civil Rights Acts, the 1965 Voting Rights Act, and the 1968
Fair Housing Act.58
It is not hard to see which policy instincts have delivered widely shared growth
and social mobility to the American people.
PRESIDENT FRANKLIN DELANO ROOSEVELT; WPA POSTER 59
Inequality is Not Inevitable
As historical experience demonstrates, economic disparity is not inevitable. It
ebbs and flows with cycles of economic change and is mitigated or aggravated
by the decisions of political leaders. In short, we do not have to accept the
current state of affairs.
Much can be done at the state, local, and federal levels, as well as by the
private sector, philanthropies, and faith-based institutions to change course
and unlock prosperity for far more people. The Progressive era should inspire,
even if the solutions to 21st century challenges will be very different than
those of a century ago. Some policies must come from Washington because
House Select Committee on
28 Economic Disparity & Fairness in Growth
people, goods, services, and ideas move and interact throughout the nation.
Others are better initiated and implemented by states, counties, cities,
and towns, which best understand local needs and can serve as proverbial
laboratories of democracy. Often, the most innovative ideas come from the
private and nonprofit sectors. Churches, synagogues, mosques, and other
religious institutions may be more attuned to caring for their congregations
and communities.
For too long, we have failed to make the future-oriented investments in
people and communities that made the nation great. As a result of more
than a year of research, hearings, and engagement with citizens throughout
the country, we have identified a series of policies that will catalyze shared
prosperity and promote fairness in access to opportunity. We turn to these
in the next chapters.
MEMBERS TOUR A TRAINING FACILITY IN SEATTLE
CHAPTER 2
Economic Disparity 29
Finding
Agreement
BIPARTISAN SOLUTIONS WE CAN DO NOW
3
Over the 18 months of the Committee’s work, Democratic and Republican
Members frequently disagreed over the causes and nature of economic
disparity. We did agree that too many Americans are finding opportunity
elusive and prosperity beyond reach.
The partisan debate, and the research and philosophical differences that
underlie that debate, have been honed over many generations. As the Chairman
frequently reminded the Committee, we were unlikely to meaningfully expand
on the decades of academic work produced by the world’s research institutions
and think tanks.
We could, however, apply our hard-earned political judgment and a feel for
the current political moment to offer suggestions that might be achievable in
an era of divided government. Both parties will continue working to expand
popular support and create the legislative pathways for their ideas, but that
process must not forestall the progress that can be made today. The ideas
presented below have bipartisan support in one form or another, and the
Committee recommends the 118th Congress act immediately in these areas.
House Select Committee on
30 Economic Disparity & Fairness in Growth
REP. OCASIO-CORTEZ AND REP. DAVIDSON AT THE ROUNDTABLE ON
MEASURING ECONOMIC DISPARITY
Investment in Early Childhood Education
Every one of the four million children born in the United States each year
deserves access to opportunity. This means a good home, good health, nutrition,
care, and the intellectual and social stimulation so critical for child development.
Early childhood education has a transformative impact, as studies repeatedly
show a significant return on investment and other long-term benefits both
for individuals and the economy at large. That is why there is broad support
among business, educators, and the American people for expanding access to
early education, and why states like Oklahoma and Vermont have introduced
universal pre-K programs. A group of Republican Senators has called for
increased funding to support the public child care system and families in
need of child care assistance.60
While the Committee urges Congress to take action to expand early education,
the Committee also urges states to act now to expand access and enrollment
for early childhood education programs, including universal pre-K.
Increasing the Child Tax Credit
There is bipartisan recognition that every child should have good and fair
opportunities to thrive. That is why most Democrats and some Republicans
support the Child Tax Credit and other legislation to direct additional resources
to low-income families with children. These include the proposed Family
Security Act, introduced by Sens. Mitt Romney (R-UT), Richard Burr (R-NC),
and Steve Daines (R-MT), and the Advancing Support for Working Families
Act, co-sponsored by Sens. Bill Cassidy (R-LA) and Kyrsten Sinema (D-AZ).
CHAPTER 3
Finding Agreement 31
The Committee believes such legislation does not sufficiently help children
and parents in low-income families overcome barriers to upward mobility and
success. However, the bipartisan interest demonstrates that Congress can
work together to enhance opportunities for our nation's children and families.
Lifelong Learning
The Committee agrees on the challenges facing adult workers in today’s
rapidly evolving economy. The U.S. needs more flexible, affordable, and
accessible education and learning opportunities. The Committee agrees on
the need for reauthorization of the Workforce Innovation and Opportunity Act
to address administrative and regulatory barriers that inhibit the success of a
workforce development system and support apprenticeship expansions for
non-traditional occupations.
The Committee also finds bipartisan support for expanding Pell Grant eligibility
to students enrolled or seeking enrollment in short-term technical training
programs — at community colleges or other technical training schools — and
reducing the 600-clock hour length requirement to allow students in programs
of less length to be eligible for Pell Grants.
Expanding Access to Paid Family and
Medical Leave
As a country that believes in the importance of strong families, we know how
precious and critical it is for parents to be with a newborn baby or young child,
and for family members to care for a sick or elderly relative. This caregiving
often conflicts with responsibilities on the job, forcing many Americans to
choose between family and work. While those who are more affluent are
better equipped to handle both, for low- and moderate-income Americans, the
choice may jeopardize the safety and health of a relative or endanger income
or employment.
The Committee agrees that working Americans with young children or family
caregiving responsibilities need time off for these purposes. Republican and
Democrats both supported expanding 12 paid weeks of leave to nearly all
civilian and military federal employees through the passage of the National
Defense Authorization Act for Fiscal Year 2020 (S.1790 and Public Law 116-92).
Similarly, the bipartisan Strong Families Act provides a tax credit to employers
that offer employees paid leave.
While the Committee Majority is committed to the principle that every worker
should have access to 12 weeks of paid family and medical leave, the Committee
believes that bipartisan action to expand access to paid leave is possible in the
118th Congress.
House Select Committee on
32 Economic Disparity & Fairness in Growth
Small Businesses
The Committee believes that small businesses and entrepreneurs face obstacles
to reaching their full competitive and economic potential.
The Committee supports increasing the provision of technical assistance for
small businesses to improve competitiveness. The bipartisan SCORE for Small
Business Act (H.R. 6450), sponsored by Representatives Young Kim (R-CA) and
Angie Craig (D-MN), would reauthorize the Service Corps of Retired Executives
(SCORE) program under the oversight of the Small Business Administration.
The SCORE program would enable volunteers participating in the program to
provide free personalized business expertise and facilitate educational workshops
for small businesses. The bill’s emphasis on recruiting diverse volunteers and
providing services in rural and underserved communities will support those
who need it most.
Occupational Licensing Reform
The Committee believes variations in state licensing laws are an obstacle for
active duty servicemembers, veterans, and military spouses, who may be unable
to work where they are stationed due to local regulations. The Committee
recommends the bipartisan Military Spouse Licensing Relief Act of 2021 (H.R.
2650 and S.1084), sponsored by Rep. Mike Garcia (R-CA) and Sen. Mike Lee
(R-UT), to allow the portability of professional licenses of servicemembers and
their spouses who are relocated outside of the jurisdiction issuing the license.
The Committee believes states should consider occupational licensing reform as
a pathway to alleviate acute labor shortages in certain occupations. Bipartisan
support exists at the state level, evidenced by Arizona’s 2019 enactment of
reciprocity of occupational licensing with all out-of-state occupational and
professional licenses.
Housing
A safe and stable home is fundamental to economic opportunity. Affordable
housing can make a vital difference in securing the American Dream. The costs
to build, buy, or rent a home are far too high. The housing supply imbalance
of millions of housing units is threatening the nation’s economic growth and
denying opportunity to aspiring Americans.
The Committee believes Congress can take steps to encourage localities to
reduce restrictive zoning and prioritize housing affordability. The Committee
supports the bipartisan Yes In My Back Yard (YIMBY) Act (H.R. 3198), sponsored
by Reps. Derek Kilmer (D-WA) and Trey Hollingsworth (R-IN) and Sens. Brian
Schatz (D-HI) and Todd Young (R-IN), requiring Community Development Block
Grant program recipients to report on their local zoning, so that localities are
encouraged to remove barriers to the production of new housing units. The
Committee further encourages states and local governments to proactively
take more steps to embrace inclusive zoning measures and reduce restrictive
zoning measures to increase affordable housing.
CHAPTER 3
Finding Agreement 33
The Committee also recommends increasing the total amount of federal Low
Income Housing Tax Credits (LIHTC) offered by the federal government and
simplifying their use. The full Committee supports passage of the bipartisan
Affordable Housing Credit Improvement Act (H.R. 2573 and S. 1136), sponsored
by Reps. Suzan DelBene (D-WA), Donald Beyer (D-VA), the late Jackie Walorski
(R-IN) and Brad Wenstrup (R-OH) and Sens. Maria Cantwell (D-WA), Todd Young
(R-IN), Rob Portman (R-OH) and Ron Wyden (D-OR). It would increase Low
Income Housing Tax Credit allocations by 50% over current levels and make the
tax credit more responsive to local needs. The bill would support the production
of 1.5 million new affordable housing units over the next decade.
Support for Local Economic and Community
Development Efforts
One of the many divides in contemporary America is between communities
and neighborhoods brimming with opportunity and those mired in decline.
There is bipartisan agreement that geographical disparities hurt the American
people and economy. States, localities, and the private sector need the financial
and technical support of the federal government to rehabilitate and revitalize
these communities. Congressional proposals to increase targeted regional
investments have found bipartisan support.
The Rebuilding Economies and Creating Opportunities for More People
Everywhere to Excel Act (RECOMPETE) Act led by Rep. Derek Kilmer (D-WA),
includes block grants to provide direct, long-term assistance to distressed
labor markets, helping them to avoid navigating the maze of different federal
grant programs. A pilot version of the program passed into law as part of the
bipartisan CHIPS Act in August 2022.
The Restoring Communities Left Behind Act (H.R.816), introduced by Rep.
Marcy Kaptur (D-OH), has bipartisan support and “directs the Department
of Housing and Urban Development to establish a grant program for local
partnerships to carry out neighborhood revitalization support activities in
economically distressed areas.”
The Committee recommends Congress act to deliver more targeted resources
to support local economic development.
Addressing Administrative Burdens
The Committee finds that it is often complicated and time consuming for
people to access economic security programs for which they are eligible.
Since individuals with the least resources often face the biggest barriers to
accessing benefits, administrative burden can widen economic disparity.
Members of Congress have expressed bipartisan support for a whole-of-
government approach to make it easier for people to access government
benefits and services, and the White House has issued an executive order
with similar goals
House Select Committee on
34 Economic Disparity & Fairness in Growth
The Committee recommends additional policies to make it easier for people
to access benefits administered at the state level, including additional funding
for states to modernize technology and simplify application processes.
Additionally, the Committee recommends revising certain eligibility and
certification requirements that make it difficult for people to access benefits
they need. For instance, the bipartisan Modern WIC Act, introduced by Sens.
Kirsten Gillibrand (D-NY) and Roger Marshall (R-KS), would permanently revise
in-person application requirements for WIC by allowing remote certifications
begun during COVID-19.
Limiting Non-Compete Agreements
Noncompete agreements, which bar employees from switching to a similar
position with a competing firm, may make sense for workers with proprietary
knowledge, but they are harmful to fast-food, retail, and other low-wage
workers. The Minneapolis Federal Reserve found that “more than one in 10
lower-wage workers have non-compete contracts.” The Committee finds
bipartisan support to limit the use of non-compete agreements in the Workforce
Mobility Act (S.483 and H.R. 1367), sponsored by Reps. Scott Peters (D-CA),
Mike Gallagher (R-WI), Anna Eshoo (D-CA) and Peter Meijer (R-MI) and Sens.
Chris Murphy (D-CT), Todd Young (R-IN), Tim Kaine (D-VA) and Kevin Cramer
(R-ND). This legislation would prohibit companies from entering, enforcing or
threatening to enforce most non-compete agreements.
Supporting Free School Meals
Although adequate nutrition is essential for students to learn and succeed
at school, one in eight children faced hunger in 2021 and many more do not
get the healthy meals they need.61 These disparities add to other social and
economic inequalities that threaten the well-being of low- and moderate-
income children. The free and reduced-price school lunch and breakfast
programs help millions of children, but millions more fall through the cracks
for reasons ranging from eligibility, food shortages, and school buses that
arrive too late for breakfast.
During the pandemic, when the number of hungry children at risk of starvation
rose, Congress and the Administration recognized the need to keep children
fed by providing regulatory waivers. Bipartisan support for expanding access
to free school meals is evident by the introduction of Rep. Abigail Spanberger’s
(D-VA) Keeping School Meals Flexible Act (H.R.6613) — cosponsored by several
Republican Members — to grant the Department of Agriculture the authority
to establish, grant, or extend child nutrition waivers.
At the state level, action by Republican and Democratic governors like Charlie
Baker (R-MA), Phil Scott (R-VT), Tom Wolf (D-PA), and Steve Beshear (D-KY)
has expanded access to free school meals for public school children. In the
absence of federal action, the Committee recommends other states and
localities follow their lead.
CHAPTER 3
Finding Agreement 35
Employee Stock Ownership
Americans should have more tools to accumulate wealth. The Committee
believes more workers should have a stake in business profits through Employee
Stock Ownership Plans (ESOPs).
The bipartisan Securing a Strong Retirement Act (H.R.2954) — sponsored
by Ways and Means Committee Chairman Richard Neal (D-MA) and Ranking
Member Kevin Brady (R-TX) — includes provisions to create a tax deferral on
contributions to an ESOP by owners of S Corporations and clarify rules for
ESOP eligibility.
Measuring Economic Well-Being and Disparity
Members of the Committee are concerned that statistical measures produced
by government sources do not provide the necessary information to make
timely and accurate policy decisions. Advancements in technology offer
opportunities to more easily and frequently collect data, including leveraging
methods and data collection by the private sector. Computing power and
statistical methods now exist to process larger data sets and identify smaller
trends in shorter periods of time. Policy makers should have access to this
real-time, more granular data. Agencies should receive adequate funding to
produce better statistics and data.
House Select Committee on
36 Economic Disparity & Fairness in Growth
Investing in
People
LIFELONG SUPPORT FOR BETTER FUTURES
4
WATCH VIDEO: JANNA RODRIGUEZ, FREEPORT, NY
President & CEO, Innovative Daycare Corp
“I founded the Innovative Daycare Corp four years ago, motivated by a goal to
expand opportunities for very young children,” says Janna Rodriguez, the President
and CEO of a small business in Freeport, NY.
“The resources available are just not accessible to everyone, especially Black and
Brown people and women. Many of the children that I serve do look like me, so I
know firsthand the importance of inclusivity and diversity.
"When representation is at the core of your business philosophy, as it is with mine,
you are encouraging children to be astronauts, doctors, lawyers, teachers, even
advocates such as myself.” She explains, “You can get there — I believe that I am
living the American Dream.”
The most essential investment for the growth of the American economy is in
human potential — people’s skills, knowledge, and education. Investments
in people enhance productivity, increase labor force participation, and spur
economic growth.
CHAPTER 4
Investing in People 37
But what does it mean to invest in people? And how can such investment
reduce disparities and increase opportunity while boosting our nation’s output
and competitiveness?
Education and training are critical. Early education, K-12 education, post-
secondary education, and job training and retraining are all vital, high-yield
investments. These investments in children, youth, and adults are made by the
federal government, states and localities, the private sector, faith institutions,
and nonprofits.
America’s public schools, established in the 19th century, and its public
institutions of higher education are two of our nation’s greatest successes.
The GI Bill, enacted in 1944, enabled millions of veterans to get a college
education and financing for homeownership. Andrew Carnegie financed libraries
that helped millions read and learn. The 1962 Manpower Development and
Training Act pioneered federal investments in retraining workers dislocated by
automation. Community colleges, mostly funded by cities and states, have
provided career and technical education to millions.
LEFT TO RIGHT DESCENDING: SKILLS TRAINING PROGRAMS; BLACK
SERVICEMEMBERS LEARNING ABOUT THE GI BILL; A PRE-K
CLASSROOM; AND THE CARNEGIE LIBRARY IN WASHINGTON, D.C. 62
Despite our past successes, there are many ways in which we are not doing as
well as we could be, or as well as competitors. Fewer than one in six children
eligible for child care subsidies receives them and, in over half of states,
child care for infants costs more than tuition at a public university.63 Half of
American three- and four-year-olds, mostly from low-income families, are
not in preschool because it is not free and universal (as it is in France). For
the majority of American youth who do not get bachelor’s degrees, we do not
provide career-oriented skills or apprenticeships, as Germany does. Community
House Select Committee on
38 Economic Disparity & Fairness in Growth
college enrollment has fallen as these institutions, many of which were once
tuition-free, have become too pricey for low-income students.64
At every stage of life, the U.S. under-invests in education and training relative
to our economic competitors. In a world in which innovation and high-end
services — the products of the human mind — produce significant wealth,
we cannot expect to win the economic race if we underinvest in those minds.
In today’s lightning-fast, knowledge-based economy, a high school diploma
is just a start. To keep up with the changing economy and the demands of
employers, Americans need an education system that starts earlier and
supports them throughout their lives.
Educational investments cannot stop after high school or post-secondary
education; in order to help Americans learn, change and adapt, they must
continue right to the point of retirement.
“It is not enough to think about this strictly in terms of training
for adults or retraining for adults … We need to be thinking
about the formation of human capital from the beginning of
life, including among young children.”
BRENT ORRELL, SENIOR FELLOW AT THE AMERICAN
ENTERPRISE INSTITUTE
CHAPTER 4
Investing in People 39
Early Education
WATCH VIDEO: MARC E. JAFFE, STAMFORD, CT
CEO, Children’s Learning Centers of Fairfield County
“Investing more early will have dramatic savings later in a whole range of ways …
both economic and social,” Marc E. Jaffe, the CEO of Children’s Learning Centers of
Fairfield County, CT, testified. “90% of the brain is developed by the time a child is
five years old.”
“Unlike the public schools that are open nine months a year and six hours a day,
we are open and available not only to educate children and prepare them for
kindergarten, but to enable parents to work,” he added. “The population that we
typically serve are working class and lower income, about 95% of our families are
minority. About 70% of our families are immigrant, and they are the workforce
economy for Stamford and the surrounding communities.”
The first five years of a child’s life are the most consequential for enabling
success in school and adulthood, and “the benefits of a functional early care
and education system are difficult to overstate,” Elliot Haspel of the Robins
Foundation testified.65
“Earlier this year, we got the results of a natural experiment from Boston, where
a lottery determined which students got into a public preschool program,” he
added. “Comparing demographically similar lottery winners to lottery losers,
winners were 6% more likely to graduate high school, significantly less likely
to be suspended or incarcerated, and significantly more likely to take the
S.A.T. and to attend and graduate college.”
The Boston experiment, the first randomized control study of the long-term
effects of a large-scale preschool program, found other positive outcomes
across racial and income groups.66
High-quality, birth-to-age-five programs can provide a 13% return on
investment when offered to children from disadvantaged socio-economic
House Select Committee on
40 Economic Disparity & Fairness in Growth
backgrounds. That return is based on reduced costs in special education and
criminal justice expenditures, increased income, and tax payments across
children’s lives, and increased parental earnings — which is discussed later
in this chapter.67
The market for child care, however, displays the signs of market failure, in which
the aggregate value of the services exceeds what is charged or paid for the
services. In the case of child care, the costs of care are already unaffordable to
many, while the wages of care workers are too low to attract enough providers,
which leads to chronic shortages and continuing high prices.68
One estimate suggests families will spend an average of $10,000 on care per
child in 2022 — and in large cities, closer to $20,000 a year per child. Some
low-income families are spending up to 35% of their income on child care.69
Not surprisingly, enrollment in early childhood education and pre-K appears
to correlate with family income. Nearly half (48%) of children in households
making over $150,000 a year were enrolled in pre-K, while just over a third
(36%) from families making $20,000 to $50,000 were.70 These data suggest
that not everyone has access to the same opportunities for high-quality early
childhood education.
Beyond the issue of affordability, the majority of people in half the states
are living in a child care desert, defined as any geographic area where child
care supply meets less than one-third of the potential demand. Montana,
a rural state with several urban centers, illustrates this point: The Montana
Department of Labor and Industry has found that 60% of Montanans live in
a child care desert.71
Expanding the supply of licensed facilities and child care workers could reduce
prices, but the labor-intensive child care industry offers low pay. The median
child care worker earned an annual income of just over $27,000 (and an hourly
wage of just over $13) in 2021.72
The COVID-19 pandemic also had a lasting impact on child care workers,
as many left the industry or the workforce and have not returned. As of July
2022, there were at least 88,000 fewer child care workers than there were
pre-pandemic, exacerbating the pre-existing shortages.73
To attract more workers, child care providers could raise the pay for workers to
compete with higher wages elsewhere in the economy, but without sustained
public investment, the costs to families would likely go up.
Current federal support already falls short of reaching most eligible children:
The primary federal support for child care to states, territories, and tribes — the
Child Care and Development Block Grant — reaches less than 15% of eligible
children, and Head Start reaches less than one in five children.74
The lack of funding at the federal and state level decreases access to early
childhood education, including pre-K programs. It also lowers the quality of
existing programs, particularly for lower-income communities.75
CHAPTER 4
Investing in People 41
Figure 8: The United States Invests Relatively Little in Children Under 5
SPENDING PER CHILD ON CHILD CARE AND EARLY ED. (2017 OR NEWEST DATA AVAILABLE)
SOURCE: ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT (2022)76
Despite the importance of high-quality early childhood investments and the
significant growth in enrollment in such programs over the past century,
particularly for lower income communities, data from 2017 indicate that the
U.S. ranks below other industrialized nations on this metric, with a pre-primary
school enrollment exceeding only that of Turkey.77
“The fact that we as a nation are almost dead last in investing
in our youngest children amongst industrialized countries
should sound alarms, inasmuch as that is a threat to our global
competitiveness”
CHAIRMAN JIM HIMES
Only 40% of U.S. three- and four-year-olds attend pre-K, one form of early
childhood education. Of those, 60% were in a public program (enrollment
in early childhood education is lower for children under age three). However,
this level of enrollment has increased over the last half century, largely due to
the federal Head Start program — which provides children from low-income
families with early childhood education and their parents with daycare
services.78 Nonetheless, only 36% of eligible children are enrolled in Head
Start programs. Early Head Start, which serves children from birth to three
years of age, serves only 11% of eligible children.79
In the states, insufficient funding levels and income eligibility requirements
reduce children’s access to public pre-K programs. While every state
participates in federal Head Start, six states do not offer state-funded pre-K .80
Another 31 states offer some programs, but they are not available to every
three- and four-year old due to lack of funding, insufficient facilities, teacher
shortages, and geographic barriers.
Currently, 13 states have passed laws to offer universal pre-K to eligible four-
year-olds, but only six states — Florida, Iowa, Oklahoma, Vermont, West Virginia,
and Wisconsin have at least 70% of eligible children enrolled. Another four
— Georgia, Maine, New York, and California — lack the funding and available
House Select Committee on
42 Economic Disparity & Fairness in Growth
spots to fully enroll all eligible children. The final three — Alabama, New Jersey,
and New Mexico — offer limited, public pre-K due to inadequate funding.81
Research shows that universal systems tend to be better funded, promote
more socioeconomically integrated classrooms, and have higher classroom
quality. They also provide relief to middle-class families who struggle to afford
private market preschool.82
In states where resources are limited and pre-K is targeted to the most
disadvantaged children instead of being universal, states spend their
scarce dollars only on the highest need children.83 This is how children from
families with limited resources can end up concentrated together in severely
underfunded pre-K classrooms, which is a problem because children make
greater educational gains in classes with children of mixed income households.
Figure 9: Funding of Pre-K Across States
PRE-K PROGRAM ACCESSIBILITY BY STATE
SOURCE: THE NATIONAL INSTITUTE FOR EARLY EDUCATION RESEARCH (2022)84
Providing universal pre-K is expensive, but estimates suggest that every
dollar spent on preschool programs returns six dollars in benefits. Providing
less than universal preschool reduces impact and is less cost-effective.
Moving closer to universal pre-K provides the broadest benefit. This is why
the U.S. public education system is universal as opposed to targeted, and
why education scholars are concerned by economic and racial segregation
within public schools.85
Oklahoma has seen significant benefit from universal pre-K, for over 20 years,
including increased cognitive scores and test results for students.
CHAPTER 4
Investing in People 43
Universal Pre-K Program in Oklahoma
EARLY CHILDHOOD CENTER IN MUSKOGEE, OK 86
In 1998, Oklahoma expanded its successful pre-K program for
disadvantaged children to make it universal and high-quality. The state
began providing full funding to each of the state’s 543 public school
districts without a required match. A key requirement of the program was
that all teachers have a college degree and a certificate in early childhood
education. Group sizes were set at 20 students and child-to-staff ratios at
10-to-1.
A 2005 study of the program’s impact in Tulsa showed tangible benefits
to children, especially those from low-income and minority communities.
The researchers found an increase in cognitive and knowledge scores,
language, and motor skills among the program’s participants starting
kindergarten.87
A 2017 Georgetown University study showed lasting effects on test
scores, increased enrollment in honors courses, and grade retention for
students through middle school.88
The benefits of providing high-quality preschool to low-income children are
further illustrated by the Abbott preschool program, which was developed
after the New Jersey Supreme Court required the state to provide high-quality
preschool in 31 school districts with high concentrations of economically
disadvantaged and minority children.89
The program is considered the most successful example of a large-scale,
publicly funded initiative in closing gaps in educational outcomes between
low-income and high-income children. According to researchers, the reason
for its effectiveness was ample funding — $13,000 per child per year — as
well as requirements for highly qualified, well-paid teachers, and an ongoing
improvement and assessment system of curricula and standards.
House Select Committee on
44 Economic Disparity & Fairness in Growth
Importantly, investments in preschool should be paired with holistic
investments across the early care and education system. Researchers in
states that have expanded only publicly funded pre-K have found that some
providers may drop their infant and toddler programs to focus on providing
care to the larger pool of pre-K children due to the high labor costs associated
with providing infant care.90 Additionally, early childhood programs must
address the needs of working families. Pre-K programs typically run for a
limited number of hours during the day, but families often require access to
care outside of these hours.
Early childhood education delivered through a variety of programs — including
family and center-based child care providers, community-based organizations,
federal Head Start and Early Head Start, state programs, and public schools
— allows parents to choose a program that works best for their needs.91
Committee Findings and Recommendations
Investments in early childhood education yield enormous intellectual,
psychosocial, and economic returns throughout an individual’s lifetime,
increasing productivity and the nation’s economic growth. Because enrolling
young children in early education is critical to fostering their opportunities
and expanding our national economic potential, the Committee recommends
significant expansion of public investment in children.
CHAPTER 4
Investing in People 45
Increase federal funding for early childhood education.
Congress should increase funding for states to help them offer high-quality,
early childhood education, including universal pre-K for all three- and four-
year-olds. Funding should focus first on expanding access for low- and
middle-income children, for whom the gains from early childhood education
are greatest.
Congress should support funding to ensure families — especially low-income
and middle-class families — can afford high-quality child care that costs no
more than 7% of their income.92
Proposals for federal investment to support early childhood education from
birth to age five range from $40 billion to $70 billion annually and would direct
funding through the Department of Health and Human Services.93
House Select Committee on
46 Economic Disparity & Fairness in Growth
Lifelong Learning
WATCH VIDEO: CHARNELE EVANS, RACINE, WI
Electrician at Current Electric, WRTP | BIG STEP Tradeswoman
“When I first started out, I was in the medical field and I just wasn’t getting ahead,”
said Charnele Evans, an electrician at Current Electric in Racine, Wisconsin. “So, I
went to my community workforce training site, but I didn’t even know what trade I
wanted to do. The teacher was telling me that I should come try electrician training.
“Now, I knew nothing about [being an] electrician. I didn’t know nothing about no
screwdriver, no drill, none of that,” she added. “But she told me to apply, and I
applied and I got the job. And Current Electric gave me hands-on training, helped
me get an apprenticeship. So, every day since I’ve been there, I’m just learning.
“I love being an electrician,” she said. “Being an electrician has brought me so
much stability to my life and so much discipline for me and my daughters. And I
enjoy what I do. I wake up and I look forward to going to work and I love to see the
finished project.”
In a rapidly evolving economy, globalization, automation, and other economic
factors can eliminate the need for workers in one industry and swiftly create
new jobs in another. The ability to learn new, in-demand skills is critical to
maintaining stable employment and income, especially for workers in the
most economically precarious situations.
Workers, particularly those whose jobs have been displaced by technology,
must be able to adapt. The Government Accountability Office (GAO) found
that “technological advancement has caused the skills required for common
job postings to change up to 40% in the last decade,” while other research
finds nearly half of U.S. workers will find their jobs changed or completely
eliminated by automation.94 These changes have not fallen uniformly on
workers: scholars anticipate that many labor-intensive and cognitive tasks
are easily replaceable by machines.95
CHAPTER 4
Investing in People 47
CHARNELE EVANS SHARING HOW HER TRAINING AS AN ELECTRICIAN
CHANGED HER LIFE
Those with postgraduate degrees and certifications have seen their real wages
increase substantially since 1980, while those without college degrees have
experienced stagnant wages.96 Some of the least educated workers — those
without high-school diplomas — have seen real wages fall since 1980.
More occupations and tasks will soon be subject to automation, threatening the
ability of an increasingly large share of workers, including those in professional
services, to maintain stable employment and wage growth.
Technological change generally creates jobs even as it alters or eliminates
others. Many of yesterday’s jobs requiring strength or repetition are being
replaced by others that require adaptable thinking and specialized skills.
Occupations that will be most in demand in the future — those in healthcare,
caregiving, food service, clean energy, building and repairing infrastructure,
and highly competitive science, technology, engineering, and mathematics
(STEM) fields — already face shortages of adequately trained workers.97
Lifelong learning, the continuous process of acquiring in-demand skills
throughout one’s life, is required for workers to stay competitive in a rapidly
evolving economy. Lifelong learning can be done through a range of workforce
development and post-secondary educational programs for working adults
and new job seekers, including: career and technical education (CTE) in high
school; on-the-job apprenticeship programs; community college courses;
four-year universities; and public-private workforce training initiatives.
These programs are not necessarily sequential or mutually exclusive; rather,
workers must be able to easily access whichever ones help them adapt to
changing conditions.
House Select Committee on
48 Economic Disparity & Fairness in Growth
Underinvestment in lifelong learning programs has inhibited their accessibility,
coordination, and effectiveness, and many existing programs either fail to
address individuals’ or employers’ needs, for programs and curricula that
match available jobs.98 Furthermore, these programs are often siloed or in
competition, rather than coordinated effectively.99
The private sector generally recognizes the need for additional investment, and
some employers provide effective education and training to their employees.
But often that training goes
to the best-educated, well-
paid, and long-tenured
employees, exacerbating
existing disparities.100
In order to ensure workers
can adapt and compete in an
evolving economy, Congress
must ensure America’s core
educational and workforce
development programs
A HEAVILY-AUTOMATED U.S.
are well-funded and align CAR MANUFACTURING PLANT
with the needs of workers
and employers.
Career and Technical Education in High School
and Beyond
There is a broad range of career-specific learning opportunities available to
high school students. The first exposure that many people have to lifelong
learning is through high school Career and Technical Education (CTE) programs,
which increase their post-high school earning potential and connect them to
post-secondary education or full-time employment.
In CTE programs, students study in both traditional classrooms and in practical
settings. CTE covers 10 areas, including engineering, healthcare, and business
communication technologies.101
CTE programs are widely accessible. The National Center for Education
Statistics (NCES) finds that 98% of public school districts offer students CTE
coursework, and 12.3 million students were enrolled in CTE in 2022. The
Department of Education provided $1.3 billion in funding to these programs
under the Perkins V Act of 2019, enabling schools to provide CTE programs
at no cost.102
CTE programs can lead students to immediate post-graduation employment
or act as a stepping stone to other programs — including post-secondary
degrees, certificates, or apprenticeships.103 More than a third of all school
districts report that CTE programs align with post-secondary programs, and
73% of districts provide courses that can earn high school and post-secondary
credit. The financial benefits to students in CTE programs are clear: They make
more money after graduation than their non-CTE peers.104
CHAPTER 4
Investing in People 49
Funding challenges in CTE programs can hurt teachers’ ability to do
their jobs. Language barriers and a lack of supportive services, including
transportation to offsite work-based learning, child care for student
parents, or other financial support, can also inhibit students’ success.
Moreover, some studies have found that CTE occupational segregation
— the sorting of students into different career paths based on race,
gender, or family income — has led to disparate outcomes in earnings.105
The Power of Apprenticeships
After high school, registered apprenticeships can provide workers with paid,
on-the-job training for in-demand and high-wage occupations. High earning
potential in fields with apprenticeships, as well as the opportunities for full-
time employment following program completion, make them a key avenue
for upward mobility. The Department of Labor estimates that 93% of people
who complete an apprenticeship get jobs, and the average annual salary of
those who do is $77,000.106
Unfortunately, apprenticeships have not yet been widely adopted beyond
construction and other trade occupations.107
There is growth potential for apprenticeships in multiple industries, including
energy, finance, and technology. One study identified three million current
job openings that could be filled through apprenticeship programs, including
in construction and advanced manufacturing. The healthcare industry faces
complex and fast-growing workforce needs and is turning to the registered
apprenticeship model for “apprenticeable” occupations including medical
assistants, pharmacy technicians, and certified nursing assistants.108
Some researchers estimate that the 27 occupations in which apprenticeships
now operate could be expanded to 74 occupations — comprising up to 3.2
million jobs.109
The number of registered apprenticeships has, in fact, risen 64% over the last
10 years, with over 636,000 apprentices and 26,000 registered apprenticeship
programs across the nation in 2020. In addition, 3,143 new apprenticeship
programs were established nationwide in 2020, and almost a quarter million
people will begin an apprenticeship this year.110
House Select Committee on
50 Economic Disparity & Fairness in Growth
NORTH ATLANTIC STATES REGIONAL COUNCIL OF CARPENTERS
APPRENTICESHIP TRAINING FACILITY IN BOSTON, MA
The Link Between Community College and
Career Mobility
Community colleges are another important component of lifelong learning:
Their open enrollment and low-cost education options provide students an
accessible and affordable path towards economic opportunity and mobility
at any point in a career.
Public two-year colleges generally offer open enrollment for a range of
academic and technical programs, from associate’s degrees to short-term
technical certificate programs. Those with a community college degree
earn more over the course of their lives than those without post-secondary
education. One study estimated that workers with associate’s degrees earn
$2 million over their lifetimes, compared to $1.6 million for those with only
a high school diploma.111
Community colleges are also an affordable pathway: The average in-state
tuition for public two-year colleges is $3,770 annually, compared to $10,560
for public four-year colleges. Many states, including Arkansas, California,
Nevada, New York, and Oklahoma, offer tuition-free community college.112
Though community college are affordable, completion rates are lagging, with
fewer than 40% of students earning a certificate or degree within six years
of enrolling.113
CHAPTER 4
Investing in People 51
A variety of factors contribute to this low completion rate, including: academic
under-preparation in high school; institutional barriers and bureaucracy;
personal non-academic barriers, including health issues, financial shocks,
familial obligations, and mental health struggles; and the inability to
pay tuition.114
Many community college students take on debt to cover costs — around
$14,700 for certificate completers and $20,400 for associate’s degree
completers. Worse yet, 14% of two-year college entrants default on
their loans.115
Research shows that community college students who receive Pell Grants are
more likely to complete their degrees than those who do not, but there has
been a decrease in the percentage of community college students receiving
Pell Grants over the last decade.116
One reason why fewer community college students are receiving Pell Grants
is the current requirement that 600 hours of study be completed: Nearly 10%
of Americans attend community colleges for certificate programs, which have
been shown to increase wages by 10%, but these programs often take fewer
than 600 hours to complete.117 This restriction puts shorter programs and
their economic benefits out of reach for many low-income students.
A significant reason for the high costs of some community colleges is that
these institutions receive $8,800 less per enrolled student in revenue than
four-year institutions — a $78 billion revenue gap — and they receive only
18% of their funding from the federal government.118 This lack of funding can
compound students’ inability to graduate since it can reduce the amount of
affordable and accessible support services, including advising and counseling
services, quality classes, child care, and transportation assistance, which help
students complete their programs and acquire good-paying jobs.
Still, seven million students were enrolled in public two-year colleges during
the 2020-21 academic year — representing 33% of all undergraduates. The
share of Black, Latino, Indigenous, and Asian American students enrolling
in community college is increasing: They made up more than 50% of the
community college student body in 2020, an increase from 37% in 1996.119
A large share of working adults and parents attend community colleges as
well. One study found that 42% of all student parents are community college
students, while another shows adults aged 25 and over comprise 21% of all
full-time and 37% of all part-time community college students.120
While there is often a focus on degree-earning, studies show that the short-
term certificates offered at many community colleges have positive impacts on
earnings and economic mobility.121 Two-year public colleges are also credited with
helping half of the people in the U.S. who eventually earn a bachelor’s degree.122
House Select Committee on
52 Economic Disparity & Fairness in Growth
Enhancing College Affordability
SAN FRANCISCO KINDERGARTEN TO COLLEGE
The Committee visited with beneficiaries of the City and County of San
Francisco’s Kindergarten to College (K2C) program, the first universal
Child Savings Account program in the country. The program helps
families prepare for college by opening a college savings bank account
for every new San Francisco Unified School District student in grades
K-12 with an initial $50 deposit. Families and students can earn
incentives when they start making deposits into their K2C accounts.123
Students with dedicated college savings accounts — even with less
than $500 — are 2.5 times more likely to attend college.124
As of 2020, there were over 8,000 K2C families with savings totaling $5
million dollars. Each family that has made at least one contribution to
their children’s K2C account has saved an average of $731.50.
Benefits of the Higher Education Track
Four-year colleges and universities are another element of post-secondary
education: Among high school graduates who went to college in 2021, seven
in 10 attended four-year colleges125 and 23.5% of Americans in 2021 had a
bachelor’s degree.
To many Americans, a four-year college education is seen as a prerequisite for
economic mobility, especially in a rapidly changing world — and some of the
data bear this out. Research by Raj Chetty shows college education increases
earnings and supports intergenerational upward mobility.126 In 2020, workers
aged 18 and older with bachelor’s degrees made approximately $73,000 a
year, while high school graduates and GED recipients made about $39,000
a year.127
College provides students with more than just a skills-based education: Most
who enter college develop broad analytical and communication skills that are
transferable across occupations.128
However, gaining a bachelor’s degree doesn’t guarantee access to the middle-
class, and there is evidence of recent shrinking income and wealth premiums
to college education — especially for people born after 1980.129 Preston
Cooper, a senior fellow at the Foundation for Research on Equal Opportunity,
testified that the lack of a clear return on investment for four-year college
attendance suggests the need to consider other approaches like community
college or specialized programs. His research finds an associate’s degree in
nursing will provide a better return than most four-year degrees at a fraction
of the cost.
The cost of pursuing a four-year degree is a barrier and a source of risk. The
average net price of attendance for a four-year degree was $14,200 at a
public school and $28,100 at a private college in 2019, sharply higher than
CHAPTER 4
Investing in People 53
community colleges, which cost students $7,600.130 Partly as a result, the
average student loan held by a bachelor’s degree recipient was $27,800.
The cost of tuition can lead to students dropping out before completion,
sacrificing the college wage premium and sometimes leaving the student
stuck with debt. On average, only 62% of students who enroll in a four-year
school complete their bachelor’s degree in six years.131
STUDENT BODY PRESIDENT ALISSON ANGUIANO SALAS WELCOMES
ATTENDEES TO THE UNIVERSITY OF WISCONSIN PARKSIDE CAMPUS
Setting Workers Up for Success in the 21st
Century Economy
Whether helping individuals grow in their current jobs or assisting them in
learning new skills to change careers, workforce development is critical to
workers and companies in a rapidly changing economy.
The Workforce Innovation and Opportunity Act, last reauthorized in 2014,
is the primary federal workforce development program. It was designed
to increase coordination, prepare workers for in-demand occupations, and
provide student support and career services.
Though comprehensive in its approach to workforce development, research
shows mixed results from WIOA. The Department of Labor reports a 58%–68%
employment rate following the completion of a WIOA program (Youth, Adult,
and Dislocated Worker), and WIOA-funded programs served around 3.5 million
people in FY 2019.132
Other research, however, found WIOA programs had little impact on some
participants’ long-term earnings or employment.
House Select Committee on
54 Economic Disparity & Fairness in Growth
Some studies further indicate more must be done to improve earnings
potential and job prospects for jobseekers, including combating preexisting
occupational segregation for Black and Latino workers and providing more
support services for low-income participants to better facilitate training.133
MEMBERS VISIT WITH APPRENTICES AT THE PORT OF SEATTLE
The development of state and local workforce development boards was core
to the WIOA reauthorization and intended to identify skills that are in demand
by employers. The boards are charged with developing strategies to meet
the needs of job seekers and employers searching for skilled workers and to
conduct outreach to employers and workers that would benefit from WIOA
programs and services.
Of course, the most important funders of workforce training are the most
direct beneficiaries of it: private sector employers. According to the Center for
American Progress, employers are “responsible for funding a large share of the
worker training across the country.” Estimates vary widely across studies, but
the Georgetown University Center on Education and the Workforce estimates
employer-provided training costs to be $177 billion, with another $413 billion
going to informal training.134
Dane Linn from the Business Roundtable (BRT) testified that “BRT member
companies also understand the importance of focusing on workforce
issues to fill the millions of open jobs and address their emerging workforce
needs.”135 Linn highlighted the Business Roundtable CEOs' work with the
Chicago Apprenticeship Network to scale its programs and create over 10,000
apprenticeships across the country by 2030, as well as the efforts of their
Multiple Pathways Initiative, in which “member companies are focused on
recruitment, retention and reskilling practices that create opportunities for
individuals to work and advance.”
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Investing in People 55
MR. DANE LINN FROM THE BUSINESS ROUNDTABLE DISCUSSES
WORKFORCE DEVELOPMENT
During its field hearing in Kenosha, Wisconsin, the Committee also heard
about a program that helps local workers gain new employment skills.
Sherry Carrion — a 56-year-old Racine native — had been a cook at the Racine
County Jail for nearly three decades. After her father became ill and passed
away, she vowed to care for others the way she had wanted her father to be
cared for, but, without additional education, her options were limited. Then
she heard about SC Johnson’s Hope Scholars program, which provided the
funding she needed to become a Certified Nursing Assistant.
SC Johnson Foundation announced a donation to the Gateway Technical College
in Kenosha for the Highly Skilled Occupations for Professional Employment
(Hope) program in May 2020. SC Johnson’s donation supported Gateway in
providing the training for students to earn a workforce certificate for jobs in
construction, advanced manufacturing, information technology, and health
sciences. The initial investment of $500,000 was expected to have an annual
economic impact of $5 million on Racine County.
Other companies make similar investments in their workforce. Chipotle offers
employees $5,250 per year for college tuition and offers to fully cover workers’
eligible degrees through their Guild Education program. To date, 85% of their
“crew members” have utilized these programs, and those who do are 7.5
times more likely to move into management within the company.
Disney likewise provides 100% tuition-free education to all part-time and full-
time employees through its Disney Aspire network schools, whether or not
they relate to their job at Disney. Microsoft offers student loan refinancing and
consolidation programs for employees and financial assistance for pertinent
House Select Committee on
56 Economic Disparity & Fairness in Growth
GATEWAY TECHNICAL COLLEGE GRADUATE MS. SHERRY
CARRION SPEAKS TO THE COMMITTEE IN KENOSHA
coursework taken at accredited colleges, as well as apprenticeships and
career transition programs at community colleges and through the Microsoft
Datacenter Academy.
Many other companies also offer robust on-the-job workforce training and
development courses and programs to their employees. AT&T partners
with Georgia Tech University and the online education website Udacity to
offer executive-led professional development courses like web and mobile
development, data analytics, and tech entrepreneurship.
These efforts are admirable, but policymakers should not consider them
alternatives to more broadly available education and training programs. One
study found that businesses often concentrate their training investment
among their highly-educated and well-paid employees, while workers with
short-term contracts and tenures have less access to these opportunities.136
Committee Findings and Recommendations
Education and training can no longer be confined to the first 18, 22, or 25 years
of life. Higher education and advanced credentials are generally routes to
better-paying, more secure jobs, but continual ongoing education, training,
and re-training are increasingly necessary, as many workers end up having
to find new jobs that demand new knowledge and skills.
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Investing in People 57
It is imperative that we improve, expand, and better coordinate educational
and training opportunities. Although states, localities, and the private sector
have significant roles to play, Congress should invest more in each part of
America’s post-secondary and workforce development ecosystem. These
include initiatives with a proven track record, whether or not they rely on
traditional credentialing and promising new programs.
Provide free community college and fund programs that assist students
with child care and transportation needs.
Given community colleges’ central role in providing affordable education and
skills training, the Committee strongly supports making public community
college free throughout the U.S. In the past, many institutions of higher
education offered tuition-free enrollment, and states and localities are
currently leading the way.137
Connecticut has taken steps to make community college free, establishing
the Pledge to Advance Connecticut (PACT) in 2019 to cover the gap between
the federal and state grants that students receive and community college
tuition and mandatory fees. The Seattle Promise program offers tuition-free
access to all of the city’s public universities and scholarships to help with
related expenses. Georgetown University estimates that state and federal
funding of $14.3 billion a year can provide tuition and fee-free community
college, significantly expanding economic opportunity.138
REP. GONZALEZ AT THE ROUNDTABLE ON PRIVATE SECTOR EFFORTS
THAT BENEFIT WORKERS
Student support services are vitally important to ensure the success of
community college students. The federal government should award grants
to community colleges and consortiums of those institutions to help offer
services like child care, transportation, and case management for students.
House Select Committee on
58 Economic Disparity & Fairness in Growth
Expand Pell Grant eligibility.
The Committee recommends expanding Pell Grant eligibility to students
enrolled or seeking enrollment in short-term technical training programs
at community colleges or other technical training schools and reducing the
600-hour requirement. Removing that restriction would put shorter-term
programs and their economic benefits in reach for many low-income students.
Increase federal investment in career and technical education and
apprenticeship programs.
The Committee recommends that Congress award federal grants to fund
existing high school career and technical education programs, to improve
program quality and increase career and supportive services.
The Committee further recommends that Congress support the expansion of
federally recognized registered apprenticeship programs, pre-apprenticeship
programs, and youth apprenticeship programs. New apprenticeships should
expand into jobs and industries demonstrating growth. Congress should
also encourage participation and alignment of employers and educational
institutions.
The bipartisan National Apprenticeship Act of 2021 would invest $3.5 billion to
expand federally registered apprenticeship programs, youth apprenticeships,
and pre-apprenticeships, creating one million new apprenticeship opportunities.
Strengthen the public workforce development system.
Lastly, in order to strengthen the public workforce development system,
Congress must reauthorize the Workforce Innovation and Opportunity Act to
increase supportive services like transportation and child care for workers in
training, reduce occupational segregation, and better enhance coordination.
The changes to WIOA and increased support services would reduce barriers
to employment and improve outcomes for program participants. The 2021
House-passed reauthorization of the Workforce Innovation and Opportunity
Act makes these important changes while also creating training paths for
previously incarcerated people.139
COMMITTEE MEMBERS DURING THEIR VISIT TO SOUTHEAST WISCONSIN
CHAPTER 4
Investing in People 59
Caregiving
WATCH VIDEO: CLAUDIA MORRELL
BALTIMORE COUNTY, MARLYAND
Family and Community Caregivier, Founder and CEO of STEM Equity Initiative
“[My mother] is in a facility, and the facility closed. I had three daughters and three
grandchildren — ages three, five and seven — so I took over. My children all had to
go to work and their child care services disappeared,” Claudia told the Committee.
“The demand was who’s gonna take care of these kids. And because I was working
from home, the [grandkids] came into my home.”
“Now you’ve gotta deal with making sure that your grandkids are safe and healthy
and staying on track and are feeling loved, and then going to work at night because
you can’t work during the day with three small children, and you’ve gotta find time
to go take care of your mom,” she continued. “As we take on these important jobs
of caring for our elder adults and our children, we lose the ability to serve the very
economy that is supposed to support us.
“That’s middle America. Middle-class America,” finished Claudia. “I think we’re
invisible. And we’re getting crushed. We need help. I still need help, because if you
take me out of this equation, the whole house collapses.”
Economic Opportunity Through Family
Care Investments
Most Americans need to care for children and sick or elderly family members
at some point in their lives, but doing so typically entails either significant out-
of-pocket costs, lost potential for career advancement and wealth-building,
or both. Low- and middle-income families, and typically the women in those
families, often have to choose between paying thousands of dollars for child or
elder care or leaving the workforce to provide that care themselves, exacerbating
disparities between those who can afford care and those who cannot.
House Select Committee on
60 Economic Disparity & Fairness in Growth
To make matters worse, because child care and home health aides are
poorly paid and, in the case of elder care, the job is physically demanding,
there are significant worker shortages. If a person cannot find a caregiver
(or is effectively bidding against others who can pay more), the choice of
whether to work or provide care disappears. Given a rapidly aging population,
these worker shortages will only grow more acute in the absence of policy
interventions.
The millions of women (and some men) who don’t work to provide necessary
care for their families also represent lost productive potential for the economy
at large. During the COVID-19 pandemic, the increased need for child care
coincided with women’s labor force participation hitting a 33-year low
in 2021.140
Public policy has often left American families in the lurch. The Child Care
and Development Block Grant and Head Start programs only have funding
to support care for a small proportion of the nation’s children. Government-
guaranteed paid family leave — which is offered in virtually every other rich
country — is unavailable in most of the United States, making it much harder
for mostly women to balance their jobs and caring for their families.
Making child and elder care more affordable, boosting the pay of workers in
these industries, and providing paid family leave would all increase individual
opportunity, reduce disparities, expand workforce participation, benefit
businesses, and enhance economic growth.
Without a resilient and affordable care system, our economy risks lagging
behind for generations to come. As Dr. Michelle Holder of the Washington
Center for Equitable Growth told the Committee, “As a mother of two young
children and the daughter of a mother experiencing a health crisis, I can tell you
that families are desperately in need of support when it comes to the provision
of care. This is about increasing labor force participation, developing human
capital, increasing productivity. It is about building a more vibrant economy.”141
“To lower the cost of child care for a family like my son and
daughter-in-law — who are just starting out here in this world
as a young couple — will give them the freedom to pursue the
American dream."
REP. ANGIE CRAIG
Accessible and Affordable Child Care
The long-term benefits to children of high-quality early childhood education,
as previously discussed in this chapter, are not the only reason to invest in
child care. The market failures that lead to high costs for and limited supply
of child care also affect their parents’ — and particularly their mothers’ —
ability to work.
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Investing in People 61
The average child care expenditures per household had reached a record high
of $7,602 in 2019 — before the pandemic — with cost increases outpacing
other household expenses (as seen in the chart below). In 2022, families
reported spending an average of $10,000 on child care for the year.142
Figure 10: Daycare and Preschool Have Become Increasingly Expensive
PERCENT GROWTH FOR CONSUMER PRICE INDEX FOR VARIOUS GOODS (1991 – 2021)
SOURCE: BUREAU OF LABOR STATISTICS (2022)143
But the cost alone obscures the fact that in order to pay those rates, many
lower- and middle-income families would spend a potentially prohibitive
percentage of their salary for child care — often even outpacing one parent’s
earnings. These expenses are a particularly large financial strain on the
household budgets of low-income families who spent up to an average of
35% of their incomes on child care even before the pandemic.144
Moreover, it is often young parents, many also at a critical point of their
working lives, who can least afford these costs.145 All of this makes the
balancing act between caregiving and working even tougher, particularly for
middle- and low-income families.
“Our broken child care infrastructure is holding back kids,
working parents, and our economy. In my district in San Diego,
child care is 40% of the budget for a family of four – nearly six
times what’s considered affordable. And that’s only for families
lucky enough to find a spot. In the wealthiest country in the
world, every single family should have access to affordable and
high-quality early care and education. Universal child care isn’t
only the right thing to do, but also the responsible thing to do.
Because when we invest in high-quality care, it saves us $6
long-term for every $1 invested.”
REP. SARA JACOBS
House Select Committee on
62 Economic Disparity & Fairness in Growth
Improving child care availability and affordability, on the other hand, is
strongly associated with increases in employment among women, and
particularly among low-income women with young children.146
Dr. Holder testified that, “when the supply of child care in a community
increases, so too does that community’s parental labor supply.” Specifically,
she said, “a 10% reduction in child care costs increases maternal employment
by between 0.5% and 2.5%.”
“In a state such as West Virginia —
where about 136,000 women have
children at home and participate
in the civilian labor force — a 10%
reduction in child care costs would
lead to around 3,400 women
entering the labor force,” she
explained. “That’s 3,400 more
productive workers, and more
dollars in the pockets of consumers
DR. HOLDER AT THE HEARING to support local businesses.”
ON FAMILY CARE
The lack of accessible, affordable
child care has massive spillover
effects in the economy. The U.S. Chamber of Commerce Foundation estimates
that employers pay between $375 and $500 per working-aged adult due to
child care-related absences and employee turnover — cumulatively totaling
about $3 billion in costs per year.147
The long-term economic benefits of expanding access to affordable and
high-quality child care are significant in terms of boosting overall labor
force participation and increasing the productivity of current and future
workers.148 But making it affordable and accessible would require a higher
level of government support.
Rising Adult Care Costs
The costs of care for elderly Americans or those with special needs have also
ballooned over the past decades, leading more working people to take on
these responsibilities themselves.149
A nursing home room can cost over $9,000 per month, while home health
aide services cost over $5,000 per month, much of which is not covered by
health insurance. About 48 million Americans provide unpaid care to an adult
family member or friend, and almost 80% of these caregivers report spending
an average of $7,242 per year out of pocket.150
For low- and middle-income workers, especially those without generational
wealth, the need to take care of aging parents or family members with
disabilities in their homes can come at a significant expense in their working
lives. Unpaid care costs caretakers on average $300,000 of earnings over
their lifetimes, and often holds people back from participating more fully in
the labor force or further training and education.151
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Investing in People 63
“The majority of working family caregivers report having to make changes to
their work status due to caregiving responsibilities, like reducing work hours,
changing jobs, or leaving the workforce altogether,” Ai-Jen Poo, president of
the National Domestic Workers Alliance, testified to the Committee. “The
burden is especially acute for 'sandwich generation' family caregivers, who
are the 11 million Americans providing care for an aging or disabled loved one
while also raising and managing caring for children.”152
The situation is not likely to improve without some sort of intervention. By
2060, 94.7 million Americans will be over 65, and 70% of them will require
long-term care at some point in their lives.153
In 2021, however, over 820,000
people were on waitlists for long-
term in-home care services, a
preferred and more economical form
of long-term care. At the same time,
the median annual pay for home
health and personal care aides is
$29,430 — almost 40% lower than
the median pay for all workers — and
nearly 18% of such workers are living
in poverty. As with child care workers,
AI-JEN POO FROM NATIONAL the pandemic considerably increased
DOMESTIC WORKERS turnover among these workers.154
ALLIANCE TESTIFIES
This suggests that the supply and
demand for care workers are currently moving in opposite directions, and
points to potentially even greater disparities in the future.155
Investments in elder care — specifically in home-based care — can help
strengthen the economy by creating jobs, reducing costs by shifting
people out of nursing homes, and improving care outcomes for the elderly.
Already, investments in home and community-based services are projected
to accelerate economic recovery, increase GDP, and create hundreds of
thousands of jobs in the long-term.156
Paid Leave: Balancing Work and Family Support
One way to help workers balance their family responsibilities (and their own
health) without sacrificing their jobs or their income is to provide workers with
paid family and medical leave.
As Dr. Michelle Holder testified, “Paid family and medical leave provides wage
replacement to workers who take time off from work to attend to the needs
of a loved one or their own serious medical condition,” she explained.
A mother’s access to paid family leave at the time of a birth increases labor
market participation by 5% — but, in its absence, 30% of those women leave
the labor market. The women who receive paid leave have higher earnings and
are 40% less likely to receive public assistance in the year after giving birth
than women who keep working and have none.157
House Select Committee on
64 Economic Disparity & Fairness in Growth
Despite the evidence that paid family leave benefits parents, employers
and Americans at large, only 11 states offer paid leave programs.158 Each
programs’ eligibility and benefits vary, and each program is funded through
employee- or employer-paid payroll taxes. Without a federal program,
California’s first-in-the-nation paid leave program is an example of how states
can provide access to paid leave for all workers, as seen in the box below.
California’s Paid Family Leave Program
THE CALIFORNIA STATE CAPITOL IN SACRAMENTO, CA 159
The first paid family leave (PFL) program was enacted in California in
2004 as a component of an existing benefit program known as State
Disability Insurance (SDI). It provides wage replacement benefits to
workers who need to take time off from work for child or ill family
member care. The program provides up to eight weeks of paid leave
to care for a seriously ill child, spouse, parent, or registered domestic
partner, or to bond with a new child.160
Since 2004, nearly 14.2 million claims have been paid, nearly one-third of
which went for family caregiving or child bonding. In 2020, about 6.7% of
covered workers used the program, an increase from the average 5%
per year.161 One study found that the program is associated with higher
work and employment probabilities for mothers nine to 12 months after
birth and with increased hours and weeks of work during their child’s
second year of life.162
A survey of California businesses from 2009 and 2010 showed that
about 60% of businesses coordinate their sponsored benefits with PFL,
resulting in cost savings for some of these businesses. Another economic
study on the effects of the program from 2004-2018 concluded that PFL
increased employment among new mothers and reduced labor costs of
14% per worker for small businesses.163
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Investing in People 65
Since October 2020, most military and civilian federal employees have 12
weeks of paid parental leave per year, and many states offer paid parental
leave for their employees.164
“Just one in five workers has access to paid family leave through their
employers,” Dr. Holder testified. “The figure is closer to one in 20 for workers
in the lowest-paid workers, who are disproportionately workers of color and
especially women of color.”
Compared to Asian American and white workers, Black and Latino workers
are overrepresented in low-income jobs, where paid leave is less likely to be
offered. This disparity in access compounds for families in which parents
are less educated or unmarried, who are even less likely to have paid leave
regardless of race or ethnicity.165
Access to paid leave ensures workers have money in their pockets so they can
buy food and pay rent. Without paid leave, workers lose out on income for
daily survival and are hindered from moving up the economic ladder.
“I am the daughter of a domestic worker. And I grew up doing
my homework in strangers’ houses while my mom vacuumed,
and cleaned, and did what needed to be done… The United
States is the only country in the OECD that does not guarantee
any paid family and medical leave to its citizens. And yet,
we come in here every day and people act as though it is
impossible.”
REP. ALEXANDRIA OCASIO-CORTEZ
Committee Findings and Recommendations
Caring for young children, elderly relatives, or others with special needs are
responsibilities that most Americans assume at different points in their lives,
but these should neither be unaffordable nor create irreconcilable conflicts
with people’s abilities to hold down jobs and earn their livings. The high
cost of paying for caregivers or sacrificing pay to provide care — a task that
disproportionately falls to women — causes economic and psychological
hardship for lower- and middle-income households. This hinders individual
opportunities for economic and career advancement and, hence,
economic growth.
In addition, care workers are generally underpaid and have little job security,
resulting in shortages of these workers at a time when demand for their
services is increasing.
House Select Committee on
66 Economic Disparity & Fairness in Growth
The Committee therefore urges Congress to ensure that affordable and high-
quality child care and elder care are available for every American family that
needs it. We also believe that workers should be able to take limited paid leave
to care for young children and respond to family health crises throughout
the lifecycle.
Provide increased funding for child care.
As recommended in the previous section on Early Childhood Education, the
Committee calls on Congress to ensure families — especially low-income and
middle-class families — can afford high-quality child care that costs no more
than 7% of their income. As discussed, these investments not only improve
children's outcomes, they also boost parents' labor force participation and
strengthen our economy.166
Establish a national standard for paid family leave.
The Committee recommends establishing a national standard of 12 weeks
for paid family and medical leave. The Family and Medical Insurance Leave
(FAMILY) Act (H.R. 804)167 would establish the first national leave insurance
program within the Social Security Administration. It would create a new
payroll tax on employers and employees to fund the program. The insurance
would provide 66% of an employee’s regular pay for up to 12 weeks of family
leave. The Congressional Budget Office estimates the FAMILY Act would cost
$547 billion over a 10-year budget window, while the taxes to fund it would
raise $319 billion in tax revenues.
SPEAKER PELOSI ADDRESSING THE NEED TO MAKE CHILD
CARE MORE AFFORDABLE
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Investing in People 67
Small Businesses
WATCH VIDEO: MOLLY MOON NEITZEL, SEATTLE, WA
Founder and CEO of Molly Moon's Homemade Ice Cream
“I opened my first shop in the spring of 2008 with seven employees,” testified
Molly Moon, owner and founder of Molly Moon’s Ice Cream, during a Committee
field hearing in Seattle, WA. “You can start in our company with no experience and
get management training, and leadership training to move up in our company and,
you know, make a job at Molly Moon’s your career, and be able to have a family if
you want to or buy a house.”
“It’s all a very interconnected web when you’re doing good in the community and
you’re running a business,” she continued. “Those things go well together … it’s
been really wonderful and amazing and fulfilling that it is profitable.”
Many Americans dream of pursuing an idea, being one’s own boss, and
creating a business. Whether it’s a neighborhood restaurant or a global tech
firm, nothing can be more exhilarating to those with the entrepreneurial spirit.
Starting a business, while demanding and speculative, can also be liberating
and lucrative, providing a path to upward mobility for people with low or
moderate incomes. This has been especially true for immigrants.168
People who start businesses on average earn higher lifetime incomes,
enabling small business owners to accumulate wealth and, for family-owned
businesses, transfer wealth to children.169
Small businesses have other benefits for communities and the country. While
about 96% of small businesses have fewer than 10 employees, they create
two-thirds of all new jobs and employ 61.7 million people — almost half of all
private sector employees.170 They also cultivate social capital, increase local
tax revenues, and are engines of economic growth.171
When small businesses succeed, American workers benefit.
House Select Committee on
68 Economic Disparity & Fairness in Growth
Until the COVID-19 pandemic led to an uptick in small-business formation,
entrepreneurship in the United States had been in decline for about 40
years. Financing constraints, complex and costly licensing requirements and
regulations, and the greater appeal of more secure, high-paying jobs may all
have played a part. Because of continued discrimination, capital — a requisite
for many budding businesses — has been particularly hard for minority
entrepreneurs to obtain.172
Since small businesses can do so much to increase opportunity and
reduce disparities, policies need to redress existing barriers to successful
entrepreneurship.173 Expanding access to capital, increasing technical
assistance, reducing regulatory red tape, and facilitating better options for
family-friendly policies for businesses would all be beneficial.
“Entrepreneurship and small businesses are at the very
core of the concept of the American Dream. It is also true,
obviously, that it is extraordinarily difficult to start a business
and to succeed. The market economy can be unforgiving.
And, of course — at least in my own anecdotal experience —
entrepreneurs who have identified a need often have extreme
difficulty in finding the capital to actually start the business and
grow that business successfully.”
CHAIRMAN JIM HIMES
Starting a business is an inherently risky venture shaped by a variety of factors
— including the quality of the business model, the industry, the presence of
local competition, access to financing, and macroeconomic conditions —
some of which are not in an entrepreneur’s control. Between 1994 and 2019,
about one-third of new firms with employees closed within two years of
opening, and half closed within the first five years.174
That is not inherently a problem: Not every business venture is well-conceived,
has a natural market, or should succeed. And serial entrepreneurs often learn
more from failure than initial success.175
There is evidence, however, of market failures and barriers that keep even the
most innovative entrepreneurs from starting, sustaining, and scaling a venture.
The economic justification for any government intervention in markets rests
on a failure of the free market to allocate resources efficiently.176 When it
comes to access to capital for small businesses, market failure stems in part
from lenders or investors who are unwilling to provide capital to firms due to
perceived risks — whether true or driven by gaps in information — associated
with localities, business development stages, or industries. Other studies
revealed that racial and gender bias can affect the decisions of lenders
and investors.
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Investing in People 69
Smaller firms, particularly in low-income communities, may have fewer
resources to navigate the complexity of the federal and state regulatory
systems which tend to be disproportionately burdensome on small
businesses. On average, small businesses pay $11,700 per year per employee
in regulatory costs, and the costs to smaller businesses — those with 50 or
fewer employees — of complying with regulation are nearly 20% higher than
they are for the average-sized firm.177
Low- and middle-income entrepreneurs often lack access to business
networks that can provide technical assistance and support business-building
activities like mentorship, business skills development, market expansion,
and business skills training.178
Removing barriers like these to successful entrepreneurship will bolster
national competitiveness and help chart a path to inclusive and sustained
economic growth.
Expanding access to capital, targeting technical assistance, reducing
redundant licensing requirements and regulations, and providing better
access to child care are the primary strategies for the government to
strengthen the competitiveness of small businesses.179
Access To Capital: Starting, Growing, and
Sustaining a Business
One of the steps to starting a business is securing the necessary capital
— whether via one’s own money or external financing, like loans or equity.
There are significant differences in access to capital across geography, race,
ethnicity, and gender.180
“Thankfully there is broad bipartisan support for small
businesses in the United States. But oftentimes we see that
we don’t treat all small businesses equally, depending on who
starts them or what kind of business you are, you don’t often
get access to policies, you don’t get access to capital. And
sometimes you are just not even treated favorably, whether it is
by your municipal government or your federal government."
REP. ALEXANDRIA OCASIO-CORTEZ
Studies have found that there is less small business lending in poor
neighborhoods and in neighborhoods where a majority of residents are Black
or Latino, even when controlling for factors like the number of employees.
This limits the potential of would-be entrepreneurs in those communities.181
A substantial body of research shows that racial bias plays a role in the
ability of minority-owned businesses to access start-up and growth capital,
hindering the potential of these businesses to succeed. Some studies showed
that minority borrowers were charged higher interest rates on bank loans
House Select Committee on
70 Economic Disparity & Fairness in Growth
than similar white borrowers. A “mystery shopping” study on bank lending
practices showed Black testers were asked to provide more information
about the business than white testers, including information that was not
related to the business.182
And, Black small business owners with high credit scores “are more than
twice as likely to report a fear of denial than white founders with below
median credit scores.”183
Research does show that minority-owned businesses are more likely to have
higher credit risks, limiting their ability to secure affordable capital. But the
Federal Reserve has found that minority-owned companies are less likely
to be approved for financing than companies with white owners, even after
controlling for credit risk.184
Figure 11: Minority-Owned Businesses Receive Funding They Seek Less Often.
SHARE OF FIRMS RECEIVING TOTAL FUNDING SOUGHT BY RACE/ETHNICITY & CREDIT RISK (2021)
SOURCE: UNITED STATES FEDERAL RESERVE SYSTEM (2021)185
All of these factors — combined with lower levels of inherited wealth, as
discussed in previous chapters — probably contribute to the fact that minority
entrepreneurs use less external funding and start their ventures with less
capital on average.186
In rural areas, the volume of small loans to rural businesses declined by more
than half between 2004 and 2017. The decrease coincided with regional and
community banks disappearing as the industry consolidated in the wake of
the Great Recession (2007-09).187
Women business owners are more likely to use their personal savings and
less likely to use bank loans compared to men — which may put their firms
at a disadvantage later, because an early relationship with a bank may be key
for future business financing.188
“I started my small business from scratch and was able to create my own
economic opportunities,” LaJuanna Russell, a small business owner of 20
years and chair of the board at Small Business Majority, testified to the
Committee. “Accessing capital as a woman of color isn’t a small task, but I
benefited from a community bank in the early stages of my business, which
helped set our trajectory.”189
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Investing in People 71
There are organizations that seek to bridge these gaps. Community banks
and financial institutions (CFIs) — including Community Development Credit
Unions, Community Development Financial Institutions (CDFIs), Community
Development Banks, SBA microlenders, and Certified Development
Corporations — play a critical role in providing access to capital and technical
assistance to small businesses, especially in underserved communities.190
Community banks are generally defined as organizations with less than
$10 billion in assets. They often have a strong presence in rural areas, local
community ties, and, in many cases, local ownership. Community banks often
rely heavily on interpersonal relationships instead of on financial statements
and data-driven models for making lending decisions.191
As of 2019, community
banks accounted for 15%
of total industry loans but
held 36% of the banking
industry’s small business
loans. Yet, the number of
community banks has
shrunk considerably over
the past 30 years, and,
should this trend continue,
it could threaten the role
MS. LAJUANNA RUSSELL FROM SMALL community banks play in
BUSINESS MAJORITY small business lending.192
“Community banks are essential to the small business ecosystem, as they
are able to provide critical funding to entrepreneurs with better terms and/
or lower fees and interest rates compared to more established financial
institutions,” Ms. Russell testified.
“They also offer more guidance and support in ways larger banks do not,” she
added. “Building and establishing my relationship with a community bank
not only opened the doors for me to build a network, but it also afforded me
the financial understanding and long-term support necessary to capitalize
on programs quickly.”193
Though it is less common, some small businesses — particularly in the services
industry — have been able to use equity to start or grow their businesses.
Numerous studies confirm that investors tend to concentrate their offers
with companies that are already close in proximity, generating a geographic
disadvantage for new small businesses in small towns and rural areas outside
of California’s Bay Area and Silicon Valley, New York and the Boston area.
Women are also less likely to receive funding in early-stage decisions from
angel investors, even when controlling for the content of the pitch.194
House Select Committee on
72 Economic Disparity & Fairness in Growth
Federal Government Support for Small Business
The Small Business Administration (SBA), created in 1953, supports
access to capital for small businesses through a variety of programs,
such as SBA's 7(a) loan guarantee program, CDC/504, and the Microloan
Lending Program. SBA also funds technical assistance to businesses
through 14,000 resource partners, including 62 Small Business
Development Centers, 136 Women’s Business Development Centers,
22 Veterans Business Outreach Centers, and more than 250 chapters
of the Service Corps of Retired Executives (SCORE).195
U.S. SMALL BUSINESS ADMINISTRATION HEADQUARTERS AND THE
DEPARTMENT OF COMMERCE BUILDING IN WASHINGTON, D.C. 196
SCORE is the nation's largest network of volunteer, expert business
mentors that has served more than eleven million small business
owners. SCORE recently created the Small Business Resilience Hub,
mentoring more than 700,000 clients online on topics like funding
and finance, recovery and growth, and startup business plans.197
The Minority Business Development Agency (MBDA) promotes the
growth and competitiveness of minority-owned businesses through
a national network of MBDA business centers, including Federal
Procurement and Export Centers.
The Department of the Treasury established the Community
Development Financial Institutions Fund (CDFI) in 1994 to address
persistent barriers to capital access among disadvantaged
communities and populations, with the goal of expanding economic
opportunity for underserved people and communities.198
Technical Assistance and Administrative Burdens
To gain access to capital or grow, small businesses may also require technical
assistance to persuade lenders of their capacity to repay debt. Other needs
may include targeted technical assistance for expanding a business, including
writing a business plan, helping overcome language or cultural barriers199 and
more effectively engaging in e-commerce.200
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Investing in People 73
“Years ago, when I ran a loan fund that was geared towards
small businesses with public health projects, we didn’t require
collateral. We had extensive technical assistance, which I
heard mentioned today from the witnesses. We cut down
the bureaucratic application process, and we had a specific
outreach strategy to reach the right kinds of businesses.
And guess what? We had a 99% repayment rate, even
with all of that.”
REP. PRAMILA JAYAPAL
“Entrepreneurs across America can benefit from free and low-cost business
assistance support to help them manage and pivot their businesses in times
of crises,” Ms. Russell testified. “The COVID-19 pandemic has shown that
the Small Business Administration (SBA) and its different mentoring and
technical assistance providers require more funding and resources in order
to better assist the growing influx of new and current entrepreneurs.”201
Small businesses face difficulties understanding, complying with, and
affording federal, state and local regulations — burdens which fall
disproportionately hard on them compared to larger companies, and which
may be much more difficult for new entrepreneurs to navigate.
For example, as Ms. Russell testified, “My business operates in 11 different
states, which means I need to become familiar with each state’s regulations and
processes. My annual tax return can be up to 200 pages. As you can imagine,
this takes a lot of time away from maintaining and expanding my operations.”
The regulatory costs of economically significant federal rules to small
businesses amount to over $40 billion per year, according to the U.S. Chamber
of Commerce. Increases in per capita regulatory expenditures are directly
correlated with decreases in the number of small firms that employ between
one and four persons, according to the Chamber’s report.202
Occupational licensing is another barrier for some small business owners.
While the ostensible objectives of licensing are to promote high-quality
services and safeguard public health, researchers and policymakers
have acknowledged the obstacles inherent in licensing and underscored
opportunities for reform. Experts agree on the need to balance licensing
requirements to ensure that market competition is not stifled.203
House Select Committee on
74 Economic Disparity & Fairness in Growth
Committee Findings and Recommendations
Increased entrepreneurship can provide a way to tackle the country’s dramatic
wealth gap and secure an economic future for the next generation. Yet many
entrepreneurs and small business owners, particularly people of color and
those living in rural
areas, face barriers
that prevent them
from reaching their
full competitive and
economic potential.
Many others with good
ideas for businesses
that could serve needs
and create jobs are
unable to launch them
because they cannot
raise the capital.
WATCH VIDEO: PAMELA AND
MONTINIQUE CAGER DISCUSS The federal government
CHALLENGES FOR THEIR CAKE should level the playing
SHOP IN NORTH CAROLINA field by expanding
access to capital,
increasing support for and improving the quality of technical assistance,
easing administrative burdens, and collecting more granular and timely
data on small businesses and federal program performance. These efforts
should be targeted to those facing barriers because of their economic status,
geography, race, or gender.
Update and expand existing Small Business Administration programs.
The Small Business Administration’s loan guaranty programs encourage
lenders to provide loans to small businesses “that might not otherwise
obtain financing on reasonable terms and conditions.”204 The Committee
recommends that Congress continue to support, monitor, and update the
SBA flagship 7(a) and 504 loan guaranty and Microlending programs.
In particular, the Committee recommends that Congress provide permanent
statutory authorization for SBA’s Community Advantage (CA) Loan Program.
Part of the 7(a) loan guaranty program, the CA Loan initiative is designed to
increase access to capital for small businesses located in low- and moderate-
income communities by allowing nontraditional, mission-oriented lenders,
including CDFIs, to participate in the 7(a) program, and by providing technical
assistance to small businesses located in underserved communities.205 SBA
data show the program reached underserved business owners but it remains
in a pilot status, limiting lenders’ willingness to participate.206
The Committee also recommends that the Administration improve small
businesses’ access to equity capital by amending SBA’s Small Business
Investment Company (SBIC) Program regulations to reduce barriers to
program participation for new private fund managers and private funds
focused on equity and long-term debt investments, particularly those in
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Investing in People 75
underserved communities and geographies. Through this public-sector
equity-finance program, qualified investment funds are licensed to operate
as SBICs, which allows them to leverage government-guaranteed debt
and capital raised from private investors. Some research shows that SBIC
financing is comparatively more diverse than private venture capital, but
important gaps remain in serving minority-owned and other disadvantaged
businesses that persist within the program.207
Further, the Small Business Administration should take additional measures
to reach neighborhoods in need of entrepreneurial advancement by expanding
the SBA Community Navigator program, including through the potential use
of mobile units to reach underserved communities in person.
Scale federal support for community and mission lenders.
The Committee repeatedly heard that community banks and other mission
lenders, notably Community Development Financial Institutions (CDFIs) and
Minority Deposit Institutions (MDIs), play a key role in bridging lending gaps,
particularly for small rural and underserved businesses. However, CDFIs and
other mission lenders are a small part of small business lending and are not
present in all communities.208 A Federal Reserve survey further indicated
that CDFIs experience capital and capacity gaps, limiting their ability to serve
clients effectively.209
The federal government can address some of the bottlenecks
to the ability of CDFIs to raise capital through a combination of
administrative and legislative actions. The Committee recommends
that Congress increase funding for the U.S. Treasury CDFI Fund to build
capacity and pilot a loan loss reserve pool for small business lending.
The Committee recommends the Administration increase Community
Reinvestment Act (CRA) credits for banks that invest into CDFIs for community
enhancing projects.
In a positive step, the Treasury Department recently has directed more than
$15 billion in investments and tax credits to community lenders and other
mission capital providers to expand inclusive entrepreneurship.210
Enhance technical assistance programs for small businesses, especially
underserved and rural businesses.
The Committee supports increasing the provision of technical assistance
for small businesses through refining and expanding high-quality, online
training programs. The federal government should increase its support of
public-private partnerships and local organizations that increase awareness
of technical assistance and CDFI products in smaller neighborhoods.
The Committee recommends passing the SCORE for Small Business Act of
2022, sponsored by Reps. Young Kim (R-CA) and Angie Craig (D-MN).
House Select Committee on
76 Economic Disparity & Fairness in Growth
Ease administrative burdens for new entrepreneurs.
The Committee recommends taking steps to help would-be entrepreneurs
get better information about state level licensing requirements, which can be
burdensome and redundant. The One Stop Shop for Small Business Licensing
Act of 2022 (S.5012), introduced by Sens. Shelley Moore Capito (R-W.V.) and
Jacky Rosen (D-NV), would “require the Small Business Administration (SBA)
to create a centralized website for licensing and business permit information
and materials for small businesses.”
Collect and publish more granular data on small business lending and
investments.
The Committee supports the collection of more timely and robust data
on small business lending. Section 1071 of the Dodd-Frank Act directs the
Consumer Financial Protection Bureau to collect data on lending to small
businesses in order to understand credit availability for small businesses
operated by minorities and women.211
CHAPTER 4
Investing in People 77
Building
Connections
BRIDGING THE DIVIDE TO ECONOMIC OPPORTUNITY
5
WATCH VIDEO: SHARON VOGEL,
RIVER SIOUX RESERVATION, SD
Executive Director of the Cheyenne River Housing Authority
“One of the things happening throughout Indian Country is overcrowding and a
lack of housing,” said Sharon Vogel, a member of South Dakota’s Cheyenne River
Sioux tribe and an employee at the Cheyenne River Housing Authority. “Families
living in poverty just have some really tough conditions, and when they lack stable
housing, it just becomes tougher.
“And if they were working, a lot of their money was being spent on transportation,”
she added. “It was taking away disposable income because they’re traveling on
unmaintained gravel roads, so they were having car repairs and of course the cost
of gasoline to get to and from work.”
Broadband, roads, and transit — the physical connections between our
homes, jobs, and schools — connect us to economic opportunity. Often, how
well you are physically or virtually connected to others strongly influences
your ability to achieve the American Dream.
House Select Committee on
78 Economic Disparity & Fairness in Growth
Ms. Nikitra Bailey, the senior vice president of public policy at the National
Fair Housing Alliance, put it in stark terms: “One’s ZIP code is often life-
impacting,” she testified.212 “Where people live determines their access
to home ownership, the type of credit they use, their ability to attend a
well-resourced school, their exposure to toxins and pollutants, and their
employment opportunities — all of which are consequential to their economic
status and level of wealth.”
“We sometimes talk about a whole-of-government effort. The
problems we address today are whole-of-society. And so,
the solutions lie — as they always have — partly with the
government, but also in our neighborhoods, our businesses, our
families, our houses of worship.”
CHAIRMAN JIM HIMES
When housing, roads, transit, and broadband are designed with the needs of
all Americans in mind, people are connected to economic opportunities and
critical services. When those connections fail, aspiring Americans can’t make
headway, and communities wither.
CHAPTER 5
Building Connections 79
Affordable and Accessible Housing
WATCH VIDEO: RAE JOHNSON, MILWAUKEE, WI
Writer at Esri, Homeowner Supported by Acts Housing
Homeownership and the American Dream
Rae Johnson, a first-time Milwaukee homeowner, explained during a field hearing
in Milwaukee what home ownership means: “If you understand where you’re going
to lay your head down at night, that’s one less thing that you have to worry about
when you’re trying to work or get your kids to school or daycare,” said Johnson.
“Having that security of knowing that I have a place to stay, that I have a place to
sleep tonight, can really alleviate a lot of burdens for a lot of people.”
“In 2019, I decided that I wanted to buy a house,” they added. “I was renting a
small apartment on the South Side with my son, who kept asking me if we could
get a dog. And I said, ‘No, we just don’t have space but once I buy a house, you can
get a dog.’ So, I worked really hard in 2019 to pay off my debt and save money in
order to be creditworthy, to buy a home.”
“When I finally got the call that I qualified, I was so overwhelmed with pride and
joy. My coworkers could hear in my voice that I was crying.”
A safe, stable, affordable place to live immeasurably improves quality of life
and the possibility of accumulating assets. Homeownership, in particular,
provides a clear pathway to upward mobility through home equity, improved
credit, and asset-building. Homeownership is by far the most critical wealth-
building mechanism for Americans, as it provides better long-term financial
security than renting and accounts for the majority of financial assets held
by lower- and middle-income people.213
While loan terms, location of home, and time of purchase all affect equity
gains, there are clear financial benefits to homeownership compared to
renting. The typical single-family home sold recently provided the seller
with an equity gain of $146,000 if purchased five years prior, $229,000 if
House Select Committee on
80 Economic Disparity & Fairness in Growth
purchased 10 years prior, and $352,000 if purchased 30 years prior.214 For the
vast majority of Americans, these are life-changing sums.
Unfortunately, these benefits are becoming increasingly inaccessible to a
growing share of the American population and, in the process, constricting
opportunities for economic mobility.
Over the past 30 years, increases in home prices and rent have significantly
outpaced increases in wages.215 As homes become more expensive, higher
incomes or outside financial resources will be prerequisites for buyers.
Consequently, the once widely available path of intergenerational wealth-
building that helped shape the American middle class is eroding one of the
most critical elements of the American Dream.
Signs of this erosion are showing in the data, despite the fact that, in 2017,
more than nine in 10 Americans believed that owning a home was either
“essential” or “important” to achieving the American Dream. The National
Association of Realtors found that first-time homebuyers recently accounted
for just barely one-quarter of all home purchases — the lowest share on
record. The age of the typical first-time homebuyer reached an all-time high
of 36 years, up from 29 in 1981 and 24-25 in 1960.216
Public sentiment reflects these statistics. Roughly seven in 10 Americans
believe that young adults today have a harder time saving for the future and
buying a home than their parents’ generation. Prospective homebuyers cite
a lack of affordable homes and saving for a down payment as the biggest
challenges associated with purchasing a home.217
The decrease in affordability largely reflects a lack of supply. The U.S. had a
deficit of 3.8 million housing units in 2020.218 As more Americans compete
to buy and rent — particularly in high-demand areas — a lack of sufficient
housing units drives up costs, limiting prospects for those with the lowest
incomes and least wealth.
CHAPTER 5
Building Connections 81
The relatively low rate of new housing construction in the U.S. in the last decade
is largely to blame for this shortage. In the 1990s and 2000s, construction
began annually on an average of 52 housing units per 1,000 Americans. In the
2010s, construction started on an average of just 31 housing units for every
1,000 Americans per year — 60% of the rate in the previous two decades.219
This low rate of construction is largely due to a lack of workers in the
construction industry and the state and local restrictions on home density
in places where people want to live.
“The lack of supply of new homes is also driving up price —
and we are seeing this in communities all over the country. We
have seen a number of instances where the government has
imposed unnecessary burdens on developers, which further
reduces supply of housing and drives up prices.”
RANKING MEMBER BRYAN STEIL
There are relatively few people willing and able to work in the construction
industry — especially compared to 20 years ago. After the Great Recession,
overall employment took 58 months to return to its pre-recession level.220
Construction employment, on the other hand, had still not fully recovered
by March 2020, even amid the tight labor market prior to the COVID-19
pandemic. Given the high labor intensity of the construction industry, fewer
workers means less output.
The supply shortage of labor in construction is unlikely to end soon, as
construction workers have been aging out of the workforce. In 2021, the median
construction worker was 42 years old, compared to 36 in 1985.221 Efforts
to attract younger workers have proved insufficient due to both the limited
pathways into construction as well as the cyclical nature of this employment.
The high cost of building new homes — particularly in areas where people
want to live — is often inflated by restrictive zoning, regulation, and land-use
laws. There are important reasons for governments to use zoning restrictions,
but Dr. Salim Furth, a senior research fellow at the Mercatus Center at George
Mason University, testified that the “primary driver of high housing costs is
strict local land use regulations.”
Research shows that restrictive land-use and zoning regulation tend to
increase home prices and limit economic mobility, curb productivity, and
contribute to segregation and poverty.222
Some of the most detrimental zoning requirements prohibit multifamily
development. In 2017, three-quarters of most American cities were zoned for
single-family detached homes, meaning that building apartments, condos,
or townhouses was simply illegal.223 While there may have been a time when
these zoning requirements did not prevent the supply of housing from
meeting demand, they now directly constrain how many units can be built.
House Select Committee on
82 Economic Disparity & Fairness in Growth
In high-demand, high-opportunity areas, single-family zoning requirements
are often accompanied by minimum lot size requirements, parking
requirements, and building height limits, all of which reduce housing density
and increase prices. A 2022 study concluded that more than 40% of the
costs associated with building multifamily developments were attributed to
regulatory costs at the local, state, and federal level.224
These constraints, coupled with continued long-term migration out of rural
areas, will put more pressure on regional housing markets.225
Zoning and regulation are associated with physical characteristics of
neighborhoods, but they were also commonly used to shape and control
the demographics by limiting racial and ethnic minorities’ access to certain
homes (or home ownership), a practice which has long term effects on who
owns, or can afford to own, a home today.
Roughly seven in 10 white households own their own homes, compared
to just four in 10 Black households, five in 10 Hispanic households, and
six in 10 Asian households. Research from the Brookings Institution
suggests these homeownership gaps are “byproducts of systemic racism,
including the legacies of slavery, Jim Crow segregation, redlining, and other
anti-Black policies.”226
Jacqueline Waggoner of Enterprise Community Partners testified about the
intergenerational effects of these actions. “Children of homeowners are more
likely to become homeowners themselves, and at earlier ages,” she explained.
The federal, state, and local actions that systematically denied homeownership
opportunities to minority communities still contribute to racialized economic
disparities today. The now-defunct Home Owners’ Loan Corporation (HOLC)
— established as part of the New Deal — is one such example. It created maps
for over 200 American cities to rate the “riskiness” of lending in different
neighborhoods using a color scale. This gave rise to the term redlining, as the
color red indicated that a neighborhood was “hazardous” for lending.
MS. NIKITRA BAILEY AT THE HEARING ON AFFORDABLE HOUSING
CHAPTER 5
Building Connections 83
In addition to characteristics such as proximity to industrial pollutant sources
and high flood risks, large non-white and immigrant populations were
considered by the HOLC to be “hazardous.” These areas subsequently suffered
from lower levels of investment and mortgage lending than neighborhoods
that were not redlined.227
Redlining was outlawed
more than 50 years ago
by the Fair Housing Act
of 1968, but its legacy
continues to shape and
harm urban neighborhoods
to this day.228
Nearly three-quarters of
neighborhoods that were
redlined nine decades ago
remain low-to-moderate
MS. JACQUELINE WAGGONER AT THE
HOUSING HEARING income today, and more
than three in five are
minority enclaves. Dr.
Anne Bonds, professor of geography and urban studies at the University of
Wisconsin-Milwaukee, testified that “racial covenants and other discriminatory
housing policies and practices continue to inform contemporary racial wealth
gaps and patterns of racial and housing segregation.”229
See the next page for more.
PANEL OF WITNESSES AT THE ACCESSIBLE HOUSING HEARING
IN MILWAUKEE, WI
House Select Committee on
84 Economic Disparity & Fairness in Growth
CRITICAL CONTEXT
The Legacy of Redlining in Milwaukee
Milwaukee has been particularly
affected by redlining: In the 1930s,
nearly half of central Milwaukee
neighborhoods received yellow
grades, while nearly a quarter
received red grades on the scale
established by the HOLC. Meanwhile
the green grade was reserved for a
select 8% of elite neighborhoods in
the suburban and lakefront areas
— which tended to be the areas
with then-new housing supported
by federal mortgage programs as
well as race restrictions prohibiting
non-white residents (other than
domestic workers) and homeowners.
SOURCE: UW APPLIED POPULATION LAB230
Because of redlining, residents of
Milwaukee who weren’t considered white
— its Black residents and members of
ethnic minorities who were then considered
“undesirable” by the majority culture
— faced increasingly inadequate living
conditions and poorly funded education
systems; a stronger likelihood of being in
closer proximity to environmental hazards;
and a greater probability of isolation from
adequate shopping, medical, and other
social services.231
By the 1950s, Milwaukee was among the
most racially segregated cities in America.
Despite the general decline in segregation
in the United States since 2000, in 2018
Milwaukee had the highest level of Black-
white segregation among metro areas with
populations over one million.232
CHAPTER 5
Building Connections 85
As many Committee witnesses explained, continued racial segregation in
underserved and impoverished areas fosters intense physical, social, and
financial inequalities.
Former Secretary of Housing and Urban Development Shaun Donovan
testified that “the pandemic-fueled dramatic increases in rents and home
prices have fallen particularly hard on the lowest-income Americans, [which]
only compounds a chronic crisis of unaffordable and unstable housing that
had been growing for decades in our country.”233
“Low incomes, not high rental prices, are the primary driver of
Milwaukee’s affordability gap. More than half of the households
are rent-burdened, meaning that they spent more than 30% of
their income on rent.”
REP. GWEN MOORE
Many renters are prevented from moving into home ownership by a lack
of capital for a down payment. In a 2017 survey, nearly seven in 10 renters
cited saving for a down payment as an obstacle to their homeownership.234
But because rents are increasing faster than wages, saving has become
increasingly difficult.
This is particularly true for lower-income renters. The share of rent-burdened
households — those that spend more than 30% of their income on rent and
have little, if any, income left for savings after meeting basic needs — rose
from 41% to 47% between 2001 and 2017.235
From 1998 to 2021, typical rents increased by 255%, while earnings have
increased only 159%. The average minimum-wage worker had to work 79
hours per week — nearly two full-time jobs — in 2020 to afford a one-bedroom
rental home without being rent-burdened. When sales and rental prices
outpace earnings, average Americans have to save more or wait longer to
achieve homeownership.236
Figure 12: Rent and Housing Price Increases Have Significantly Outpaced Wages
U.S. NOMINAL MEDIAN ASKING SALES PRICE, ASKING RENTAL PRICES, EARNINGS (1988- 2021)
SOURCE: U.S. CENSUS BUREAU AND THE BUREAU OF LABOR STATISTICS (2022)237
House Select Committee on
86 Economic Disparity & Fairness in Growth
Even if the many factors contributing to the lack of affordable housing were
to be resolved, there have always been Americans who earned too little
to afford market-rate housing. For decades, the federal government has
provided assistance.
The Housing Act of 1949 significantly increased construction of federally-
owned public housing stock. Owned by HUD and administered by local
housing agencies, public housing is available to low-income families, as well
as the elderly and the disabled. Rent is set based on the tenant’s income
and is typically no more than 30% of their monthly adjusted income. The
program currently serves about 970,000 households through roughly 3,300
local housing authorities.238
Due to negative perceptions of public housing in the middle of the 20th
century, however, the federal government largely abandoned it: The Nixon
Administration declared public housing a failure in 1973 and placed a
moratorium on further spending; there has not been a significant expansion
of the stock of public housing since.239
As a result, much of the current stock of public housing is in disrepair. The
Public Housing Capital Fund, which pays for repairs, is underfunded to the
extent that roughly 10,000 public housing units become unavailable to the
people who need them each year because they become uninhabitable. As of
2019, the cost to repair all public housing stood at $70 billion.240
More recent federal efforts to create affordable housing have incorporated
the private sector. The Low-Income Housing Tax Credit (LIHTC), established
in bipartisan fashion under President Reagan, awards federal tax credits to
developers in exchange for building rent-restricted units for low-income tenants.
State housing agencies administer LIHTC funding through a competitive
application process and distribute tax credits to investors who provide upfront
funding for projects over a period of 10 years. Since the 1990s, the LIHTC
program has received substantial bipartisan backing and has supported the
construction or rehabilitation of over two million affordable rental units.241
To encourage landlords to rent to low-income households, the federal
government also administers the Housing Choice Voucher Program via the
states. It provides money both to public housing authorities and to low-income
households via portable vouchers to help them rent from private landlords.
Tenant contributions to rent payments are capped at 30% of household
income, with the remainder covered by the federal government. Studies
have found that housing vouchers are effective at reducing homelessness,
housing instability, and overcrowded living conditions. They also lead to more
positive educational, developmental, and health outcomes for children. Due
to funding limitations, however, only one in four families eligible for vouchers
actually receive them, and waitlists in some parts of the country keep eligible
families waiting for years.242
Though critical, these programs are modest in scale compared to the totality
of the American housing stock. In 2021, there were approximately 142 million
CHAPTER 5
Building Connections 87
housing units in the United States — meaning that the Low-Income Housing
Tax Credit is responsible for less than 2% of them. Housing vouchers were
used by fewer than two million households in 2020, out of a total of 128
million, partially due to funding constraints.243
SECRETARY SHAUN DONOVAN AT THE HOUSING HEARING
Committee Findings and Recommendations
Access to affordable housing in high-demand areas is a substantial contributor
to economic disparity. As lower- and moderate-income Americans are faced
with fewer options for affordable housing in the areas they want to live, they
are denied access to good schools, public amenities, and well-paying jobs.
High housing costs also weaken economic security by preventing savings and
wealth accumulation.
When talented, hard-working, or entrepreneurial people are effectively
kept out of places with opportunity, they face barriers to achieving their
economic potential.
Because much of the nation’s housing crisis is a function of shortages of
affordable homes, supply must be increased to meet current demand.
The Select Committee recommends that the federal government provide
incentives for the construction and rehabilitation of affordable and market-
rate homes in areas of the most acute shortages.
Discourage overly restrictive zoning and encourage inclusive zoning.
Restrictive zoning severely curtails the construction of market-rate housing,
driving up prices in precisely those areas where Americans want to live. The
Select Committee believes that Congress should explore ways to incentivize
states and localities to eliminate unnecessarily restrictive zoning laws and to
encourage more inclusive zoning policies.
Inclusionary zoning programs vary in structure but often provide incentives
— such as density bonuses, expedited approval timelines, and fee waivers
House Select Committee on
88 Economic Disparity & Fairness in Growth
— to developers in exchange for providing affordable housing for low-and
moderate-income families. A study by the RAND Corporation of inclusionary
zoning programs notes that they successfully provide low-income families
with access to low-poverty neighborhoods and better performing schools.244
COMMISSIONER EILEEN HIGGINS AND REP. DONALDS DISCUSS
LAND USE PERMITTING AT THE INFRASTRUCTURE HEARING
The Committee believes Congress should encourage localities to roll back
restrictive zoning through the YIMBY Act (H.R. 3198), which would require
Community Development Block Grant program recipients to report on
policies for expanding high-density single-family and multifamily zoning.
The Unlocking Possibilities Program, which was included in the Biden
Administration’s Housing Supply Action Plan, would encourage states and
localities to eliminate barriers to housing production through $1.75 billion in
new competitive grants to state, local, and tribal governments to incentivize
the elimination of exclusionary and restrictive zoning and land uses to advance
fair housing and support the creation of affordable housing.245
Further, communities should plan to repair existing structures and add
infill housing to increase density in high-demand areas, creating a plan with
engaged residents and building trade leaders from impacted neighborhoods
needing revitalization.
Encourage the private sector to build additional affordable
housing units.
The private sector also needs better, more efficient incentives to build
affordable housing units. The Committee recommends increasing the
total amount of funding for federal Low-Income Housing Tax Credit (LIHTC)
offered and simplifying its access and use by passing the Affordable Housing
Credit Improvement Act (H.R. 2573 and S. 1136), sponsored by Reps. Suzan
DelBene (D-WA), Donald Beyer (D-VA), the late Jackie Walorski (R-IN) and Brad
Wenstrup (R-OH) in the House and Sens. Maria Cantwell (D-WA), Todd Young
(R-IN), Rob Portman (R-OH) and Ron Wyden (D-OR) in the Senate.
This legislation would raise LIHTC allocations by 50%, increasing LIHTC
investment by approximately $5.5 billion per year, enable the credits to better
reach underserved communities, and simplify rules to preserve existing
affordable housing. According to the National Council of State Housing
Agencies, it would result in the creation of over 1.5 million additional affordable
homes over the next decade.246
CHAPTER 5
Building Connections 89
To support affordable housing in rural areas where the Low-Income Housing
Tax Credit may not work effectively, the Committee recommends passing
the Strategy and Investment in Rural Housing Preservation Act (H.R.1728),
sponsored by Rep. Cynthia Axne (D-IA), which would provide assistance to
rural, multifamily rental-housing projects, and to tenants. It would restructure
the Department of Agriculture’s Section 515 loans, extend incentives for
owners to remain in the program, and provide properties with resources to
repair homes. The Section 515 program serves hundreds of thousands of low-
income families and elderly households and, in many rural areas, provides the
only affordable rental housing.
Enact down payment assistance for first-generation homebuyers.
A down payment assistance program, aimed at helping those from less
economically secure backgrounds to make a down payment on home
ownership, would expand wealth-building opportunities to a greater share
of the population.
The benefit of down payment assistance would be particularly valuable to
Black Americans and other racial and ethnic minorities, given the historically
discriminatory homeownership policies at the federal, state, and local levels,
as well as ongoing systemic discrimination in appraisals and lending.247 All are
significant contributors to racial gaps in home ownership.
Congress should consider legislation like the Down Payment Toward Equity
Act of 2021 — sponsored by House Financial Services Committee Chair Maxine
Waters (D-CA) — requiring that HUD establish a grant program for first-
time, first-generation homebuyers for up to $25,000 for down payments.
PUBLIC HOUSING UNITS OUTSIDE NEW YORK CITY
House Select Committee on
90 Economic Disparity & Fairness in Growth
Increase support to low- and moderate-income renters.
Increasing housing supply is vital but will take years. Renters need relief now.
The Committee therefore recommends increasing subsidies to low- and
moderate-income renters. Housing vouchers are a highly effective policy
tool to reduce homelessness and housing instability, with significant positive
spillover effects, especially for children, yet roughly 75% of eligible families do
not receive them due to funding limitations.248 The Committee recommends
that Congress pass the Ending Homelessness Act of 2021, which would
create and fund an entitlement for Housing Choice Vouchers for low-income
families, ensuring that all eligible renters receive the support they need.
Public housing also provides economically vulnerable populations with access
to stable and affordable shelter, but funding limitations continue to render
much of the current stock unlivable. To prevent the condemnation of more
affordable housing units and ensure that current public housing residents
do not live in unsafe conditions, the federal government should support the
rehabilitation and repair of public housing.
Increase the construction workforce.
The Committee believes that increased focus on Career and Technical
Education (CTE), apprenticeship, and workforce development programs could
help ease the construction worker shortage.
CHAPTER 5
Building Connections 91
Hard Infrastructure Investments
WATCH VIDEO: RHONDA DIAZ, PROGRESO, TX
University of Texas Rio Grande Valley Student
JOINED BY: SERGIO CONTRERAS
CEO of Atlas Hall & Rodriguez LLP, Member of the Texas
Broadband Development Office Board of Advisors
“Starting with COVID, most of our classes were over Zoom,” Rhonda Diaz, a Texas
college student and VIDA program mentee, testified at the Committee’s field
hearing in McAllen, Texas. “The little town where I live, we have satellite internet
and the high speed we’ll get is probably 12 megabytes — so it’s very slow. My
Zoom meetings were always getting disconnected.
“Now whenever I had to do homework, I had to download a program to download
a program,” she adds. “So, I have to go to town somewhere where I have access
to free WiFi, because I’m not able to download that large an attachment with just
satellite internet.”
“With the gas being what it is — and I do have a small car — but even then, I still
spend about $70 a week because I have to drive from one town to the other, just
so I could go to Starbucks,” she says. “Sometimes I even spend extra time at the
campus just so I could be able to take advantage of using the WiFi there, ‘cause I
know once I get home, I’m really not gonna be able to do anything online.”
We need better ways for people to connect to the American Dream in the
21st century. Safe roads and bridges, reliable public transportation, and high-
speed internet all connect people to economic opportunities and contribute
to economic growth.
The passage of the Infrastructure Investment and Jobs Act (IIJA), a once-in-
generation bipartisan infrastructure bill, will not only create millions of well-
paying jobs that can’t be outsourced; it will transform the government's most
significant investments in passenger and freight rail, roads, bridges, ports,
airports, and public transit.
House Select Committee on
92 Economic Disparity & Fairness in Growth
Reliable public transit and roads are particularly important to Americans’
ability to get jobs and stay employed.249
“We should be making investments in our nation’s
infrastructure that can meaningfully improve people’s
lives. Strong infrastructure can provide individuals a safe road
to drive on, it can help lower gas prices, and it can make it
affordable for people to heat their homes on cold winter days.”
RANKING MEMBER BRYAN STEIL
“My residents would say they need affordable housing near public transit
so they can get more quickly towards economic opportunity,” Miami-Dade
County Commissioner Eileen Higgins testified. “And that is because transit
infrastructure is housing infrastructure: Affordable housing is even more
affordable when it is located near reliable transit.”250
The gap between where jobs are and where people live, considered a “spatial
mismatch problem,” is correlated with both overall unemployment and longer
durations of unemployment for low-income populations. Commute times
are likewise a strong predictor of upward mobility, according to research by
Raj Chetty and others.251
“I grew up poor in a rural textile town in South Carolina, and I
actually remember the days when the school bus had to travel
down dirt roads to pick up students ... We have made progress.
But for many communities, whether minority, Appalachian,
Tribal, urban, or rural, the dream of an inclusive economic
infrastructure is still not yet a reality.”
RICK WADE, SENIOR VICE PRESIDENT, U.S. CHAMBER OF COMMERCE
CHAPTER 5
Building Connections 93
The quality of local bridges, roads, mass transit, and broadband also factors
into where businesses decide to open, how accessible they are to their
suppliers, workforce, and customers, and whether they earn enough to stay
open and continue employing staff.252
According to the Business Roundtable, “a modern infrastructure system is
key to unleashing the full productive potential of the U.S. economy. In recent
years, however, public-sector investment in infrastructure has dwindled,
leaving many critical systems in disrepair and hampering U.S. competitiveness
and productivity.”253
“Texas is the gateway for U.S.-Mexico trade,” Cameron County Commissioner
David A. Garza testified.254 “In 2020, 65% of all the goods coming in from
Mexico to the U.S. went through Texas.”
“Recognizing the importance of high-quality transportation is a necessity
for our area to compete nationally for industry and jobs,” he added. “And
interstate highways are at the top of the site-selection factors to attract new
industry to an area.”
Similarly, the economic and social returns on broadband expansion and
adoption are significant: Increasing access and use of broadband in rural areas
results in increased job and population growth, higher rates of new business
formation, and lower unemployment rates.255
Finally, public investments in physical infrastructure systems are associated
with well-paid, long-term job opportunities, including everything from bus
drivers to telecommunication line installers.256
Neal Crabtree, a
foreman and pipeline
welder from Arkansas,
explained to the
Committee: “With
entry-level positions in
this field, $50,000 to
$70,000 is not unheard
of,” for a yearly wage, he
said. “It all depends on
how often you want to
work. It is like any field:
The more effort you put
WATCH VIDEO: DAVID GARZA into it, the more you
FROM THE TEXAS HEARING are compensated.”257
But, as Dr. Carlos Martín, an engineer and architect, testified, “The needs of
both a growing population and the maintenance of past investments” in the
connections between communities have not aligned with available funding
for decades.258
House Select Committee on
94 Economic Disparity & Fairness in Growth
From Here to There: Roads and Public Transit
The federal government has a long history of investing in physical infrastructure
— the means by which people, goods, and services get from one place
to another.
The creation of the Interstate Highway System (IHS) after WWII spurred
significant national economic gains, including approximately one quarter of
the nation’s productivity gains between 1950 and 1989.259
But the undertaking spurred economic disparity, particularly in minority
communities.
The Interstate Highway System and Inequality
Building the IHS divided and, in some cases, destroyed urban
neighborhoods, especially in historically Black and immigrant
neighborhoods in places like Milwaukee, Wisconsin, Chattanooga,
Tennessee, Cincinnati, Ohio, Miami, Florida and St. Paul, Minnesota.
THE CONSTRUCTION AND RAMIFICATIONS OF THE IHS 260
Estimates suggest that “more than 475,000 households and more than
a million people were displaced nationwide because of federal roadway
construction between 1957 and 1977.” As communities lost churches,
parks, and homes to the construction of the highways, they also lost
small businesses that created jobs locally and kept those local economies
afloat, economies that were already struggling from zoning policies,
disinvestment and white flight.261
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Building Connections 95
As government investments in infrastructure decreased as a percentage of
GDP over the last half century, the number of collapsed bridges, dilapidated
roads, and other structures has increased.262
In early 2021, the American Society of Civil Engineers (ASCE) found that 43%
of public roadways are in poor or mediocre condition, and 7.5% of the nation’s
bridges — a total of 46,154 — are considered structurally deficient.263 An
earlier report by the Government Accountability Office (GAO) found that in
2014, nearly a quarter of all bridges were deficient.264
Dilapidated roads impact mass transit and individual commuters. The
largest group of public transportation commuters — 46.3% of all public
transportation commuters, or about 3.6 million people — reported that buses
were their primary commuting mode, which are dependent on sound roads
and bridges.265
Public transit alleviates congestion and pollution in large metropolitan areas.
In 2019, about 5% of workers in the United States used public transportation
to get to their jobs, primarily in urban areas like New York, where over two
million people commuted by public transportation, and San Francisco, where
over one third of workers did so.266
The availability of public transportation provides a critical option for people who
cannot afford to purchase a car and particularly those who work late shifts. The
American Automobile Association estimated that on average in 2015, owning
a modest car cost close to $9,000 annually, while the average annual income
for a household living in federally assisted housing was roughly $14,000.267
One in four adults regularly found it difficult to get from place to place in 2018,
regardless of mode of transit.268
Without access to high-quality, reliable, and accessible transportation, as
Commissioner Higgins described in her testimony, a resident from Florida City
— where the poverty level exceeds 40% — “can spend over an hour to simply
connect to the Metrorail system” to get to a job located in the urban core.269
"Robust public infrastructure is a prerequisite for prosperity.
But it is more than an obligation; it is actually an opportunity to
make lasting and transformational change to our economy and
shift it from an extractive one to a resilient one, an equitable
one to one that benefits everyone, white, Black, and brown.”
REP. PRAMILA JAYAPAL
As new residents choose to live closer to downtown business districts,
economic and demographic shifts can lead to displacement of low-income,
Black, immigrant, and Latino families. Those displaced are often left
disconnected from job centers and experience increased commute times,
as suburban areas are less served by frequent and reliable transit.270
House Select Committee on
96 Economic Disparity & Fairness in Growth
As the Chamber of Commerce noted, it can also have effects on employers:
“Inefficient public transit in America leads to longer travel times, as well as
a slowdown in workers’ economic output … [and thus has] a major negative
impact on business revenue.”271
All over America, access to safe transportation is essential to realizing
economic gains at the individual, family, community and national levels.
Mr. Ray Allen, former Secretary of the Wisconsin Department of Workforce
Development, told the Committee about the need for more partnership
between government, the private sector, and nonprofits in creating
infrastructure.272 “We’ve got to be more creative in how we think about
solutions to address” the mismatch between where people live and where
employers have facilities, he explained.
Bridging the Broadband Digital Divide
The increased availability and adoption of broadband is associated with
improved local economic conditions in the form of local economic growth,
increased median household incomes, increased employment and earnings
for low-income individuals, and the decisions of business about where to
locate — particularly in rural areas.273
High speed digital connectivity facilitates remote work, job searches,
e-recruiting, and increased productivity. The COVID-19 pandemic further
amplified the role of digital connectivity as a critical tool for health care,
distance learning, and remote work, among other uses.274
But affordability keeps broadband out of reach for millions of households
and businesses in rural and urban areas.275 This “ digital divide” exacerbates
other disparities.
“The COVID-19 pandemic exposed some of the ramifications of
underdeveloped broadband infrastructure. Without access to
reliable broadband, our young people cannot receive the quality
education they deserve, and our workforce could not meet the
21st Century needs.”
REP. VICENTE GONZÁLEZ
The COVID-19 pandemic exposed the uncomfortable fact that 15 million
students are without broadband internet. This resulted in a “homework gap”
between school age children with and without high-speed internet at home.
In a 2021 Pew survey, most respondents cited a lack of home broadband as a
major disadvantage for getting schoolwork done, a significant issue for some
children even prior to the pandemic.276
This lack of connectivity has also hurt college students’ progress and success.
Andrew Seibel, the former state secretary of the Virginia Future Farmers
CHAPTER 5
Building Connections 97
of America (FFA), testified about how the lack of broadband infrastructure
impacts what young people study and how they view their future prospects.277
“I feel like if I want to go into
a technical field, I can’t stay
in a rural community right
now,” he said. “I have many
friends who are going to Virginia
Tech engineering, who went
through high school with me
but are going all different
ways in their lives because
they feel like they can’t come
back to Roanoke County if
MR. ANDREW SEIBEL AT THE
they’re doing something that’s
ROUNDTABLE ON RURAL AMERICA
more technical.”
“We’re expecting those students to be able to put themselves through college
— in addition to covering those travel costs — and get the training and then
come back to a community that doesn’t have the infrastructure to provide
those technical positions,” he added.
There are different approaches to measuring availability and adoption, so
estimates of how many people cannot access broadband vary. The Federal
Communications Commission (FCC) estimated that census blocks containing
14.5 million households lack access, but a Minority-led letter from the House
Committee on Oversight and Reform noted recent research put the total
number of households lacking broadband access at 42 million.278
Dr. Nicol Turner Lee, the director of the Center for Technology Innovation
at the Brookings Institution, testified that 11.3 million to 17.6 million rural
residents do not have access to broadband — somewhere between 17% and
27% of Americans living in rural areas. Ms. Jessica Fulton of the Joint Center
for Political and Economic Studies testified that there are significant racial
disparities in broadband access in rural America: 38% of Black people and
23% of white people who live in rural areas lack home internet access.279
There is strong correlation between household income and home broadband
across both rural and urban communities: 43% of adults with incomes below
$30,000 report not having broadband services at home, compared to only
7% of those earning $100,000 or more.280
“Digital inclusion is economic inclusion,” Ms. Jordana Barton-Garcia, the
principal at Barton-Garcia Advisors and a senior fellow at Connect Humanity,
testified.281 “A lot of the young people [in the Texas colonias] go away currently
— we call it the brain-drain — to start their business.”
“Like a young woman from the Las Milpas Colonia in Pharr who went away
and started her business in the Silicon Valley,” she explained. “It is a telehealth
business, and she could run it here, but we just don’t have the broadband
infrastructure to be able to have those kinds of businesses.”
House Select Committee on
98 Economic Disparity & Fairness in Growth
“By having broadband networks, you will be supporting entrepreneurship,
workforce opportunities, hands-on experience for learning for young people
in the assets of the digital economy, and you will be creating an environment
for entrepreneurship,” she added. “If you don’t have that connectivity, you
are less likely to be able to start the business here and create those jobs and
opportunities here.”
Committee Findings and Recommendations
Since the nation has taken a historic first step in addressing many of our
infrastructure needs with the passage of the bipartisan Infrastructure
Investment and Jobs Act (IIJA) in 2021, communities will be able to get federal
assistance to “begin addressing long-term, systemic shortcomings that have
hindered economic prosperity and economic growth,” as Commissioner Higgins
testified.282 The legislation, which provides $550 billion over five years for bold,
targeted investments, including $110 billion for roads, bridges, and major
projects, $66 billion for passenger and freight rail, $65 billion for broadband,
$39 billion for public transit, $11 billion for transportation safety, and $1 billion
to remove barriers to opportunity created by past infrastructure projects.283
Figure 13: U.S. Household Broadband Adoption
HOUSEHOLD BROADBAND ADOPTION RATES BY COUNTY (2019)
SOURCE: BROOKINGS INSTITUTION (2021)284
Establish criteria for infrastructure projects to prioritize equity and
maximize impact.
The Committee recommends establishing monitoring and evaluation criteria
for infrastructure projects to ensure investments prioritize left-behind
communities. Clear, measurable objectives will help ensure targeted, holistic,
and transformative investments.
Strengthen local administrative capacity and prioritize engagement.
The Committee recommends implementation of the IIJA to prioritize
local engagement and building community capacity, targeting funding
for under-resourced communities through partnerships between
federal agencies and local governments. The federal government
CHAPTER 5
Building Connections 99
should focus on investing in capacity building and technical assistance.
Without such investments, Dr. Martín testified “the states and localities
with extensive pre-existing resources for conducting analysis, outreach, and
innovation will continue to be more competitive in discretionary federal fund
applications and in being able to advocate for state formula allotments.”285
MS. BARTON-GARCIA, DR. TURNER LEE, AND MS. FULTON ALL
STRESSED THE IMPORTANCE OF BROADBAND INVESTMENTS
IN ADDRESSING ECONOMIC DISPARITY
Simplify and streamline regulatory and permitting processes on
infrastructure projects.
The Committee found that it is important to simplify the regulatory and
permitting processes in order to expedite critical projects. The current federal
permitting process for projects can be prohibitively slow, and the federal
government needs to ensure that the communities and workers can benefit
from the investments quickly while maintaining high environmental standards.
IIJA will lessen regulatory and permitting burdens on communities through,
among other provisions, codifying “One Federal Decision,” based on an
Executive Order from the Trump Administration. The legislation requires that
a single lead agency bear responsibility for shepherding projects through
multi agency reviews, limits National Environmental Policy Act (NEPA) reviews
to two years, and limits most environmental impact statements for major
projects to 200 pages.286 In addition, it expedites operational rights-of-way
evaluations to 45 days, and opens up project schedules, descriptions, and
other details to public review.
Invest in a talent pipeline for the infrastructure workforce.
The Committee recommends using IJJA funds to build a talent pipeline for
the infrastructure workforce. Nearly a quarter of all existing infrastructure
workers are expected to retire over the next decade, according to Brookings.
And, as Dr. Turner Lee testified, “having quality broadband infrastructure
relies upon an established training pipeline and workforce,” and “over four
million jobs will be 5G or related technology opportunities … [with] higher
than average wages.”287
The bipartisan IIJA allows states to allocate funds for workforce development,
including for pre-apprenticeship, apprenticeship, and on-the-job training. It
also provides expanded funds for engagement with workforce development
boards and additional new funding for digital upskilling.288
House Select Committee on
100 Economic Disparity & Fairness in Growth
An Unlevel
Playing Field
STRUCTURAL ECONOMIC CHALLENGES
6
WPA WORKER IN 1939; ACTIVISTS ORGANIZE IN SUPPORT OF DISABILITY
RIGHTS LEGISLATION IN 1977 289
Our discussion so far has focused on the need for adequate investments in
people and communities that maximize individual potential, opportunity and
mobility, and on the need to invest in the infrastructure that opens doors to
learning, connection, and the entrepreneurship that allows individuals and
communities to thrive. But these investments alone are insufficient as long
as individuals continue to face structural inequities that drag them down.
The metaphors collide: level or unlevel playing fields; headwinds or tailwinds.
However framed, the fact is that individual Americans are meaningfully
helped or hurt by factors beyond their control: race, gender, and geographic
location. Distressed rural and urban areas suffer from disinvestment, poverty,
crime, poor schools, low tax revenues, and outmigration, leaving those who
are left behind at a distinct disadvantage compared to those in thriving,
highly educated centers of the knowledge economy. The more these arbitrary
factors matter, the further the nation strays from the idea that a fair outcome
is the product of working hard and playing by the rules.
Leveling the playing field has been the work of generations of activists,
faith leaders, philanthropists and political leaders. But in this critical work,
government has played a central role. The New Deal created programs to
address poverty, exclusion, and social inequities. The 1935 National Labor
Relations Act gave workers a fairer balance of power with employers. Title I
of the 1965 Elementary and Secondary Education Act gave schools in poorer
CHAPTER 6
An Unlevel Playing Field 101
neighborhoods more equal funding. The 1990 Americans with Disabilities Act
sought to equalize opportunities for disabled Americans. Monumentally, the
Civil Rights Acts and interventions of the mid-20th century accelerated the
perennial quest for justice and equality for Black Americans.
Today, a survey of the “playing field” suggests five areas in which thoughtful
government intervention might shift our nation towards better equality of
opportunity: place-based policies, worker protections, economic security,
tax policy, and market competition.
In the nation’s poorest ZIP
codes, median household
income hovers around
$10,000 a year, a fraction of
the poverty level. A typical
household in America’s
wealthiest ZIP codes makes
more than $1 million. These
disparities are extreme, yet
the United States is divided
economically by geography,
DR. GALE, PROF. BROWN, AND MR. HANLON
AT THE HEARING ON THE TAX CODE with the well-to-do clustered
in particular neighborhoods
and communities, moderate-income families in other areas, and the poor
in still others. Federal, state, and local governments have attempted to
address these disparities with place-based policies focusing on economic
development, jobs, education, housing, and education. Some have worked,
some have not.
Over time, workers’ rights to organize and collectively bargain for fair pay,
benefits, and decent working conditions have been rolled back at the federal
and state levels. Coupled with labor market trends that have eroded the
relative power of working people, this roll-back has contributed to a decline
in worker prosperity and security. Support like the minimum wage has also
eroded. Although many states and localities have raised their minimum
wages, the federal minimum wage is half of what it was in 1968 in real terms.
Income security programs, sometimes called the “safety net,” consist
of a patchwork of social-insurance programs like Social Security and
unemployment insurance (UI) and means-tested benefits like food stamps,
rental assistance, housing vouchers, and refundable tax credits like the
Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC). Because of
complexity and isolation, many Americans fail to access these programs at
critical moments.
Tax policy that disproportionately benefited the wealthy in the last 40 years
has also contributed to the explosion in inequality. Capital income, which is
earned mostly by the wealthy, is taxed less than the wages of middle-income
workers, and most tax expenditures — subsidies in the tax code — are skewed
to the well-to-do.
House Select Committee on
102 Economic Disparity & Fairness in Growth
Finally, as the trust-busting Teddy Roosevelt understood, a free market
economy depends on truly fair competition to deliver equal opportunity to
workers, consumers, and entrepreneurs. Today many large companies have
inordinate market power that has hurt innovators, workers, and in some
cases, employees.
As it has for centuries, the government can address these structural
challenges. The Committee believes that government rules and
tools can give Americans a fighting chance by investing more in
specific places; helping give workers stronger ground to bargain for
a good wage; modernizing the social safety net to help people in crisis;
rewarding work as much as wealth; and ensuring fair competition.
MS. SHARON PARROTT, MR. MARC MORIAL, MS. MICHELE
EVERMORE, AND MR. INDIVAR DUTTA-GUPTA AT THE HEARING
ON ECONOMIC SECURITY PROGRAMS
CHAPTER 6
An Unlevel Playing Field 103
The Geography of Unequal Opportunity
WATCH VIDEO: LEAH HALL, ROCHESTER, MN
Affordable Housing Development Director, 3 Rivers
Community Action
“I can say that for a fact … I know what the small towns need, and I know what the
communities and the folks that are in those communities are looking for,” Leah
Hall, the director of affordable housing development at 3 Rivers Community Action
in Rochester, Minnesota explained.
Lorain, Ohio, like a lot of places in America, has seen more than its share of
economic struggle as the American economy shifted.
“Minus five years in the early 80s, I have been lucky to not spend a lot of time
unemployed,” testified Rick Cain, Vice President of United Steelworkers Local
1104 in Lorain, Ohio.290 “But unfortunately for too many of my union brothers
and sisters, they have been on the front line of deindustrialization from
globalization and a lack of domestic investment in our manufacturing sector.”
“In Lorain, we have seen this decline firsthand: When I first started in the steel
industry, there were over 10,000 workers maintaining and operating the mill,”
he added. “This number has steadily decreased over time until, today, I am
one of 60 employees working at Republic Steel’s bar mill.”
“The U.S. has suffered a net loss of more than 91,000 manufacturing plants
and nearly 5 million manufacturing jobs since 1997,” he went on. “These lost
jobs have led to systemic, long-term displacement in communities like my
own, and lack of attention by lawmakers has only made economic disparity
worse and undermined the American Dream.”291
Mr. Cain’s story — and the story of Lorain, Ohio — is not a unique one in
America.292 From the lumber mills of the northeast to the manufacturing
centers of the mid-Atlantic and Midwest, from the mines of Appalachia to
the textile mills of the South, the company towns and jobs in which many
Americans once built their lives have disappeared, and very little has come
along to replace them.
House Select Committee on
104 Economic Disparity & Fairness in Growth
“The history of America’s workers and farmers in our industrial
and agricultural heartland has been a rugged one, but one
that also inspires. We must bolster their potential to meet the
future. What America makes and grows makes and grows
America.”
REP. MARCY KAPTUR
While the solution voiced by some political leaders in the last few years has
been to tell residents to “go to another state where they can get a great job,”
the reality is that many Americans have neither the ability nor the desire to
move across the country for a job.293
Upward mobility in America is increasingly shaped by where people live, and
living in economically distressed areas is associated with lower economic
mobility, productivity, lower employment probability, and diminished
opportunities for innovation and entrepreneurship.294
AN ABANDONED STEEL MILL IN DOWNTOWN LORAIN, OHIO
Remarkably, the location of a person’s childhood is predictive of differences
in those children’s earnings as mid-career adults.295
This research suggests that “a child from a low-income family raised in
San Jose or Salt Lake City has a much greater chance of reaching the top
than a low-income child raised in Baltimore or Charlotte,” and that, even
within these cities, different neighborhoods may lead to different levels of
economic mobility.296
Patterns of local economic distress have persisted or widened both between
and within regions across the country over the past four decades. Since 1980,
a fraction of primarily coastal metropolitan areas have become some of the
most economically prosperous regions in history, while other places have
seen a precipitous economic decline.297
Outside of cities, labor force participation among people between the ages of
25 and 54 years old has not rebounded to levels before the Great Recession
(2007-09), while urban areas have seen a 9% increase in prime-age labor
force participation.298
CHAPTER 6
An Unlevel Playing Field 105
Despite the economic gains in metropolitan areas, two-thirds of urban
neighborhoods continue to suffer from disinvestment and have experienced
persistent or growing poverty rates. In 2018, poverty rates exceeded 30% in
nearly 4,300 urban neighborhoods — home to 16 million Americans.299
To address geographic inequalities like these, economists and policymakers
traditionally recommended targeting relief to people, rather than places,
because for most of the 20th century people simply moved to places with
more opportunities.300 Americans today, however, are not moving to higher-
income regions in pursuit of better economic opportunities, because of high
moving costs, lack of affordable housing, and existing local social ties, making
policies tied to location more important.301
As Dr. Timothy Bartik, a senior economist at the Upjohn Institute, testified,
encouraging people to move to other areas “removes young workers and
entrepreneurs, depresses property values, weakens local tax bases, and
lowers local demand for goods and services and hence local jobs,” hurting
both the areas and people left behind.302
The positive effects of encouraging people to move to different neighborhoods
are limited even within cities, as demonstrated by the Moving to Opportunity
program, a federal initiative in which low-income families were given housing
vouchers to move to less economically distressed communities. While
moving to lower-poverty neighborhoods led to positive long-term economic
outcomes for young children — supporting the importance of neighborhoods
early in life — there were no detectable short- or long-term impacts on adult
economic or educational outcomes.303
Experts now increasingly recognize that bringing economic opportunities to
underserved and left-behind communities requires both direct aid to people
and complementary “place-based” policies — i.e., ones that are geographically
targeted to support community and economic development.304
Figure 14: Household Income at Age 35 for Adult Children of Low-Income Parents
LOW-INCOME CHILDREN’S HOUSEHOLD INCOMES AT AGE 35 BY COMMUTING ZONE
SOURCE: OPPORTUNITY INSIGHTS (2022)305
House Select Committee on
106 Economic Disparity & Fairness in Growth
Economic Empowerment for
Native Communities
Fostering economic opportunities in place is essential for Native Americans
residing on tribal lands. Despite significant economic progress resulting from
increased sovereignty over the past 30 years, tribal governments continue
to face hurdles in fully realizing economic opportunities for their citizens, as
a result of the federal government failing to recognize tribal sovereignty and
its obligations to Native peoples.
The Committee, joined by
Native American Caucus
Co-Chair Rep. Sharice
Davids (D-KS), subject
matter experts, and Native
American leaders, held a
roundtable to examine
barriers and pathways
for Native American
communities to cultivate
sustainable economic
development and growth.
Experts and leaders provided key recommendations, foremost among them to
respect and expand self-governance of Tribal governments, emphasizing that
they are best positioned to
serve their communities
and should directly receive
and administer federal
funding.306 The leaders
also proposed strategies
to tailor current federal
policies for facilitating
flow of capital, economic
diversification, and data
collection on tribal lands.307
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An Unlevel Playing Field 107
Federal Place-Based Policies
The federal government has a long history of supporting place-based policies
to help address persistent geographic disparities.308 These policies are
generally implemented in partnership with state and local governments —
and sometimes with other community partners.
Though the definitions and objectives of place-based policies vary across
agencies, annual federal spending on the most common type of place-
based policies — targeted local economic development and job creation
— is between $10 and $20 billion.309 This funding is split across many
agencies and distributed to states and localities through competitive grants
or statutory formulas.
The federal government supports these communities for two main reasons.
First, many state and local governments look for federal assistance after their
communities have become economically distressed following the departure
of industries like manufacturing.310 As a result of the loss of both jobs and tax
revenues, it is challenging for localities themselves to fully fund key economic
development and diversification efforts.
Second, the legacies of past federal discriminatory policies — discussed
earlier in this report — still resonate in concentrations of urban poverty today.
“America’s separate and unequal neighborhoods did not evolve naturally or
result from unfettered market forces,” the Urban Institute notes. “Rather,
they resulted from plans, policies, and practices of racial exclusion and
disinvestment that primarily targeted Black people and laid the foundation
for the segregation of other people of color.”311
MILWAUKEE, WISCONSIN AS A MANUFACTURING HUB312
Lagging rural towns, former industrial hubs, and persistently disinvested
neighborhoods, however, require different policy approaches.
“In designing place-based policies, federal policymakers should recognize
that one size does not fit all,“ Dr. Bartik testified. “Urban areas have different
needs from rural areas and each area has different industrial bases, amenities,
or proximity to markets which dictate different strategies.”
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108 Economic Disparity & Fairness in Growth
The Community Development Block Grant (CDBG) program, a dedicated fund
administered by the U.S. Department of Housing and Urban Development
(HUD), has been the most sizable, flexible, and holistic source of support for
local community and economic development since the 1970s.313
The economic development portion of CDBG is, on average, $1.1 billion of
its roughly $3 billion in federal funding, but the program has remained
funded at that level since its inception and has not kept pace with inflation
or the increase in eligible communities. This reduced its ability to support
transformative projects.314
A recent University of Maryland study found an increase of 13% in jobs
among low-income workers living in or near a community where large CDBG
investments occurred. However, these grants may not sufficiently target
the most distressed members of a community, as more jobs were created in
comparatively less-disadvantaged neighborhoods.315
Experts agree that much more could be done to reform the program to help
it reach the most distressed neighborhoods.
The U.S. Economic Development Administration (EDA) — a sub-agency of
the Commerce Department — was created in 1965 to lead the economic
development agenda, investing in physical infrastructure, regional economic
planning, and technical assistance projects.316 The Brookings Institution
suggests that the EDA is under-resourced and tasked to do “too much with
too little” with pre-pandemic annual funding of only $300 million.317
The fragmentation of funding at the federal level poses difficulties for
distressed communities looking for transformative development despite
the EDA’s and other agencies’ work. As Jay Williams, the president of the
Hartford Foundation for Public Giving and a former Assistant Secretary of EDA,
testified, “While each agency’s funding and programs address community
needs per the agency’s subject matter expertise, mission focus, and statutory
authorities, this too often results in 'stove-piped' program execution.”318
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An Unlevel Playing Field 109
Federal Empowerment Zones
The federal Empowerment Zone (EZ) program is one of the most
prominent federal place-based policies. Jointly administered by HUD,
HHS, the USDA, and the Internal Revenue Service (IRS), the program
provided a combination of tax credits, grants, bonding authority, and
other benefits in distressed urban and rural communities.319
The first round of EZ designations in Atlanta, Baltimore, Chicago, Detroit,
New York , and Philadelphia “resulted in substantial increases in zone
employment along with increases in the wages of zone residents” and
“appeared to have successfully transferred income to a small spatially
concentrated labor force.”320
MAP OF FEDERAL EMPOWERMENT ZONES
IN DETROIT, MICHIGAN321
At a Committee hearing, Dr. Bartik noted that the success of the first
round of the program was largely due to the fact that, in addition to tax
incentives, it “also gave a large block grant to each neighborhood that was
used in practice for job training; it was used for small business job creation;
it was used for nurturing the growth of small businesses.”
In addition to grant programs, the federal government also created a system
of place-based tax incentives. But experts say that without more targeted
complementary funding for programs, tax cuts alone have yielded mixed
results in economic development.
The Opportunity Zones (OZ) program, for example, was recently created
as part of the Tax Cuts and Jobs Act of 2017 (TCJA) to spur investment in
economically distressed neighborhoods by reducing capital gains taxes for
individuals and businesses who invest in qualified OZ funds.322
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110 Economic Disparity & Fairness in Growth
Early evidence suggests that the program facilitated the flow of funds into
some communities, but that communities most in need of these investments
are not receiving them, as more investment has been made in neighborhoods
with relatively higher incomes, home values, educational attainment, and
population growth.323 The incentives also overwhelmingly funded real estate
projects, rather than investments in ongoing businesses, limiting their
effectiveness for long-term development in these communities.
Dr. Tracy Hadden Loh, a Brookings Metro fellow, testified that one issue with
the program is that it was designed “without any mechanism to commit this
capital to increasing wages, creating new job opportunities for residents, or
offering entry points for residents to ownership of properties or businesses.”324
In contrast, the New Markets Tax Credit (NMTC), enacted in 2000 and operated
through Community Development Entities (CDEs), works to attract private
capital into communities by permitting individual and corporate investors
to receive tax credits for making equity investments into projects and non-
profits served by the CDEs.
A recent Urban Institute study found that 52% of NMTC funding went to local
manufacturing, food processing, retail, health care, schools, and child care
facilities projects.325
“It’s clear to me that we can and must do more to promote
economic growth in rural areas, because if we don’t, the small
towns and communities that make this country such a special
place to call home could be left behind.”
REP. ANGIE CRAIG
The fragmented nature of federal development funds makes access difficult
— especially for competitive grants, as many distressed communities lack
the funding and/or the technical capacity to secure such grants compared
to better-resourced areas. “Many under-resourced communities do not have
the capacity or funds to prepare these complex reports and must rely on
engineering firms for assistance,” Cheryal Hills, the executive director of the
Region Five Development Commission in Minnesota, testified.326
Dr. Loh further stressed in her testimony that, “Without high-capacity local
partners and implementation, program targets may not know about, trust,
or be in a position to take advantage of program tools.”
Committee Findings and Recommendations
Geography is clearly linked to economic status and opportunity: Some
communities offer abundant high-paying jobs in expanding industries, while
others are home to declining industries and primarily low-wage service
jobs. Some places have high-quality schools, good housing stock, excellent
transportation, and an appealing environment, while others have few of these
attributes. These differences may be stark in different regions of the country
or in different neighborhoods within a metropolitan area.
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An Unlevel Playing Field 111
PANELISTS AT THE HEARING ON LOCAL ECONOMIC DEVELOPMENT
Rather than allow such differences to perpetuate disparities among
Americans, the Committee believes that the federal government can more
effectively and efficiently stimulate local economic activity in less advantaged
areas. We offer several policy recommendations to increase funding to hard-
hit areas, improve coordination among federal, state, and local economic
development efforts, and better target and evaluate federal programs like
Opportunity Zones.
Support, monitor, and evaluate the most recently enacted place-based
programs.
Congress should appropriate full funding at authorized levels and monitor
and evaluate requirements that are set up for the pilot RECOMPETE and
Regional Technology Hubs place-based programs as enacted through the
CHIPS and Science Act of 2022.
With $11 billion of funding over five years, the two programs represent the
most significant and comprehensive investment in place-based economic
development since the Tennessee Valley Authority (TVA). The programs will
be administered by EDA as flexible funding for a wide variety of infrastructure
and services, including workforce development and entrepreneurial
programs. The Hubs program will focus on technology development,
whereas RECOMPETE is a grant program that will provide direct long-
term help to distressed labor markets, helping them navigate the maze of
different federal grant programs.
Reauthorize the U.S. Economic Development Administration (EDA).
The Committee recommends reauthorizing the U.S. Economic Development
Administration (EDA) to expand economic planning and federal resource
integration efforts. As part of reauthorization, we recommend expanding the
EDA planning coordination program and increasing pre-development funding
to support local capacity building.
Enhance coordination of regional, rural, and urban economic
development resources.
Congress should also consider and pass the Great Lakes Authority Act of
2022 H.R.7131, introduced by Rep. Marcy Kaptur (D-OH), an example of a
holistic place-based strategy that coordinates across the federal agencies.
Communities in the Great Lakes region were devastated by the loss of American
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112 Economic Disparity & Fairness in Growth
manufacturing jobs. Rep. Kaptur’s legislation seeks to restore economic
vibrancy in the region by building on existing regional strengths. Supported
by local stakeholders, the Great Lakes Authority aims to spur local economic
growth by making critical investments to finance green and clean energy,
broadband, and water infrastructure projects, while also investing in local
workforce education and training.
The Committee also recommends that federal agencies standardize economic
development plans, measures of economic distress, and evaluation criteria.
Now, at least three federal agencies — HUD, Labor, and Transportation
— in addition to EDA, require communities to produce detailed economic
development plans to apply for federal funding related to community or
local economic development. Integrated plans and objectives could help
communities pursue more holistic and inclusive place-based development
strategies, incorporating workforce, land use, transportation goals, and more
traditional economic development goals.327 Another complicating factor in
coordinating, implementing, and evaluating current place-based efforts is that
separate agencies have different definitions of economic distress, including
varying standards of unemployment rate, poverty rate, and others. In order
to tailor strategies to local economic needs, the Committee recommends that
federal agencies harmonize definitions of local economic distress.328
Further, we support the creation of a commission to document the "Impact of
Deindustrialization of U.S. Industries and Communities and Recommendations
for Reinvestment and Revitalization" that will report back to Congress in 2024.
Reform Opportunity Zones.
The Committee suggests that Congress reform the Opportunity Zones program
to narrow the targeting of eligible areas; require that OZ funds be paired with
flexible grants for local capacity building to help prepare, place, and keep
OZ residents in jobs and invest in small businesses; and increase reporting
and independent evaluation requirements to ensure that the program is
incentivizing investment that benefits existing residents.
Proposals include the “Opportunity Zones Transparency, Extension, and
Improvement Act of 2022,” sponsored by Sens. Tim Scott (R-SC) and Cory
Booker (D-NJ), which would narrow the eligibility for higher-income tracts and
increase reporting requirements on investment. Other legislative efforts, like
Rep. James Clyburn’s (D-SC) “Opportunity Zone Reform Act,” would tighten
eligibility both for zone designation and acceptable investment projects.
Better coordinate assistance for rural areas.
To enhance coordination of federal resources in rural areas, the
Committee recommends enacting the bipartisan Rural Prosperity
Act H.R. 7018 introduced by Rep. Angie Craig (D-MN). This bill would
establish the Office of Rural Prosperity within the Executive Office of the
President and charge it with developing a strategy for rural development,
standardizing metrics to measure the effectiveness of federal programs
on rural areas and setting up a council to coordinate federal efforts.
CHAPTER 6
An Unlevel Playing Field 113
The Balance of Power Between
Employers and Workers
WATCH VIDEO: EMILY WILDER, STANDISH, ME
Registered Nurse in the Cardiac Intensive Care Unit at
Maine Medical Center; Member of National Nurses United
“I got into nursing, fell in love with it, fell in love with the patients and specifically
with the ICU,” Emily Wilder, a registered nurse in Portland, Maine and a member of
National Nurses United, said “It was the fall of 2019 — before COVID hit — when
we first started saying: We don’t have enough bodies on the floor. We don’t have
enough staff to safely care for these patients — not even enough for me to walk off
the floor for 15 minutes to pump.”
“Year after year, we’re told, ‘Sorry, it’s not in the budget, we don’t have the money
for staffing,’” she added. “The driving force behind unionization was never about
the money. It was never about being able to take extravagant vacations and time
off. The number one priority, when people were surveyed at the beginning of
the union drive, was that we could not provide safe care because we didn’t have
enough people.”
“Once the hospital got wind of our unionization efforts, they hired consultants
from an out-of-state company to come in for something called captive audience
meetings, to speak with us about the ‘dangers of unionization,’” she explained.
“But they were coming into the hospital to hold these meetings at a time when,
because of COVID, we were completely shutting out visitors. I was holding my
personal phone up to patients’ family members so they could say their last
goodbyes. And it was just such a punch in the gut.”
“It was definitely the straw that broke the camel’s back,” she said. “We won our
union election.”
In the wake of the economic disparities of the Gilded Age and 1920s and the
widespread suffering of the Great Depression, New Deal-era legislation was,
in part, driven by the idea that economic growth should be shared among
all who contribute to it. President Franklin Delano Roosevelt explained that
“the test of our progress is not whether we add more to the abundance of
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114 Economic Disparity & Fairness in Growth
those who have much; it is whether we provide enough for those who have
too little.”329
For more than 30 years after the conclusion of World War II, worker
compensation largely reflected overall economic productivity. Private-sector
wages grew 102% between 1948 and 1980, while total economic productivity
grew 112%.330 Worker power — the ability of workers to command wages
commensurate with their productivity — not only helps solid wage growth, it
also reinforces competitive market dynamics, which increase both economic
efficiency and economic growth.
Research shows unions were instrumental in keeping economic disparity
in check in this period: The “wage premium [for union members] was larger
at the bottom of the income distribution than at the middle or higher” and
“unions substantially narrowed urban wage inequality at mid-century.”331
Between 1980 and 2021, however, the relationship between economic
productivity and worker compensation began to unravel. The former
increased 65%, while the latter grew by just 17% — barely a quarter of
economic productivity.332
While external forces, such as globalization, automation, and a shift in
labor demand from production-oriented jobs to services, contributed to
the decoupling of wages and productivity, stagnant income growth for the
average American is also a result of the decline in union membership.333
Figure 15: Wage and Productivity Growth Have Been Diverging Since the 1970s
PERCENT GROWTH IN WORKER COMPENSATION & TOTAL ECONOMIC PRODUCTIVITY (1948–2019)
SOURCE: ECONOMIC POLICY INSTITUTE (2021)334
Unions Under Siege: Declines in Organized Labor
This reduction in unionization began with the passage of the Taft-Hartley Act
of 1947, which led to a series of rulings by the National Labor Relations Board
(NLRB) that weakened unions, including through the prohibition of secondary
boycotts and decreased bargaining power regarding contracting and plant
closings.335 It also allowed states to pass right-to-work laws — which through
banning union shops and making union dues optional for employees lower
rates of unionization and in turn wages.336
CHAPTER 6
An Unlevel Playing Field 115
As states began to pass such laws, the South became generally less friendly to
unions than the Northeast and Midwest, and highly-unionized manufacturing
industries in the latter two regions began to move production to Southern,
right-to-work states in an effort to reduce labor costs.337
Vastly increased foreign competition starting in the late 1970s — which coincided
with the establishment of the General Agreement on Tariffs and Trade (GATT)
and the culmination of Japan’s economic rebound following World War II — put
sustained pressure on the highly unionized domestic manufacturing industry.
Newly competitive imports from Japan, coupled with the lowering of trade
barriers with developing countries and large swings in the value of the United
States dollar, led to widespread, permanent job losses in manufacturing.338
The Supreme Court further weakened union power in its 1974 ruling in Linden
Lumber Division v. NLRB, which ruled that employers could deny recognition of
then-standard “card checks” and instead insist on an official NLRB-supervised
election.339 Critics of card checks state that elections should be conducted in
secret and organized by the NLRB, yet the time it takes to organize an official
election often allows employers to engage in aggressive — and sometimes
illegal — anti-union campaigns.340
AMAZON WORKERS IN NEW YORK CITY PROTEST IN FAVOR OF
UNIONIZING 341
Deregulation in the 1970s and 1980s in the trucking, railroad, airline, and
telecommunications industries — through legislation such as the Airline
Deregulation Act of 1978, the Staggers Rail Act of 1980, and the Motor Carrier
Act of 1980 — increased cost- and wage-cutting pressures. Though these
established more robust competition in those sectors and thus increased
choices and lowered prices for consumers, unions experienced increased
difficulty in matching organizing efforts with the rate of firm creation, which
led to decreased unionization and lower real wages for workers.342
Then, in what was perhaps one of the most critical shifts in public perception
of organized labor, in 1981 President Reagan fired more than 11,000 striking air
traffic controllers who were organized by the Professional Air Traffic Controllers
Organization (PATCO).343 Previously, public sentiment opposed the firing of
striking workers, despite its legality.344
House Select Committee on
116 Economic Disparity & Fairness in Growth
SEARS ROEBUCK EMPLOYEES ON STRIKE AGAINST UNFAIR LABOR
PRACTICES, MARCH 15, 1967 345
The Reagan Administration’s decision ultimately normalized what was seen
as a direct attack on workers and weakened the power of the strike as a
bargaining tool. The data on strike frequency since reflect this: In the decades
prior to the air traffic controller strike, major strikes occurred roughly 300
times each year. There are fewer than 30 per year today.
The dual recessions at the beginning of the 1980s had yet further negative
effects on employment in the manufacturing and mining industries
— both of which had large union membership.346 While output in these
industries eventually recovered, employment did not: Over that decade
alone, 6% of workers shifted from goods-producing industries to service-
producing ones.347
Domestic manufacturing employment fell — and with it unionization rates
— even more after the implementation of the North American Free Trade
Agreement (NAFTA) in 1994 and the entry of China into the World Trade
Organization in 2001.348
Increased global connectivity, meanwhile, allowed firms to transfer elements
of their operations to foreign nations with lower labor costs, dislocating
domestic workers in the process. What became known as foreign outsourcing
tended to first displace workers with low levels of education in occupations
that require less training. This offshoring accelerated with ever-improving
transportation and communication technology.
The growing import competition and the movement of manufacturing
capacity to lower-cost countries contributed to job loss and depressed
regional economic activity, particularly in New England, the Southeast, and
the Midwest.
Between 1970 and 2021, goods-producing employment as a share of
total nonfarm employment fell from 31% to 14%, while service-providing
employment grew from 69% to 86%.349 And, in the same period, the number
of private-sector workers belonging to a union had dropped from one in three
to about one in 20.350 The advancement of labor-reducing or -augmenting
technology has presented employers with similar competitive pressures.
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An Unlevel Playing Field 117
Technology offers lower costs and increased efficiency but drives out those
workers whose skills are most easily replaced by automation.
Strong Protections Demand Strong Enforcement
Despite unions’ importance in providing workers with a means to collectively
bargain for fair compensation and safe workplaces, the decline in union
density alone does not completely capture the entirety of the recent decline
in worker power.
Laws such as the National Industrial Recovery Act of 1933, the Fair Labor
Standards Act of 1938, the Equal Pay Act of 1963, and Title VII of the Civil
Rights Act of 1964 were crucial to curbing extreme income inequality, in part
by establishing many of the rights and workplace protections that workers
enjoy today, including collective bargaining, the federal minimum wage,
overtime pay rules, and pay equity laws–all of which help keep economic
inequality at bay.
IN 1981, MEMBERS OF THE PROFESSIONAL AIR TRAFFIC CONTROL-
LERS ORGANIZATION HELD NATIONWIDE STRIKES FOR BETTER
WAGES AND WORKING CONDITIONS 351
Yet laws are only effective when enforced … and enforcement has decreased
since the 1980s.
The Wage and Hour Division (WHD) of the Department of Labor — which
is responsible for enforcing the Fair Labor Standards Act — has gone from
allocating about 82,000 workers per investigator in 1979 to roughly 190,000 per
investigator in 2019, an enormous increase in workload, due to Congressional
appropriations to the Division not keeping pace with the growing workforce.352
The resulting decrease in enforcement has drastic impacts for workers;
between 2017 and 2020, WHD recovered just $3 billion in stolen wages for
workers. In 2019 alone, more than $9 billion was estimated stolen from
workers earning below $13 per hour.353
The Occupational Safety and Health Administration (OSHA), which is
responsible for ensuring the “safe and healthful working conditions for
workers by setting and enforcing standards” that prevent workplace-related
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118 Economic Disparity & Fairness in Growth
sickness and injury, is likewise less equipped to inspect workplaces for
violations than four decades ago.354 In 1979, there were roughly 62,000
workers for each OSHA inspector; by 2019, there were about 199,000–a more
than threefold increase.355
With weakened enforcement mechanisms, many firms may find that the risk
of being fined by OSHA or the WHD — or the fines themselves — are not large
enough to warrant compliance with existing laws. A study from the Peterson
Institute for International Economics notes that “neither the FLSA nor the
NLRA penalty and enforcement regimes create sufficient incentive to comply
for many firms,” adding that given such weak enforcement, “the substantial
evidence of minimum wage and overtime violations, and of illegal employer
behavior towards unions, is not surprising.”356
Looking Back and Moving Forward: The History
and Future of Unions
“On average, a worker covered by a union earns 10.2% more in wages than a
peer with similar education, occupation, and experience in a nonunionized
workplace in the same sector,” Dr. Heidi Shierholz, the president of the
Economic Policy Institute, testified.357 “Union workers are far more likely to
be covered by employer-provided health insurance … [and] more likely to
have paid vacation and holidays, more input into the number of hours they
work, and more predictable schedules.”
Unions also provide beneficial spillover effects to non-unionized workers.358
According to an August 2022 Gallup poll, some 71% of Americans are supportive
of unions — the highest approval rating since 1965.359 Yet nationally, only 9%
of all American adults actually belong to a union.360
“The large gap between the share of workers who want a union and the share
of workers who are in a union underscores that our system of labor laws is
not working,” Dr. Shierholz testified.
Studies note that “public policies that make it harder for unions to organize
and represent workers lead to lower bargaining power and wages.”361 Other
research has shown that union decline starting in the 1970s explains between
one-fifth and one-third of the increase in wage inequality between 1973
and 2007.362
Today, evidence points to decreased economic gaps between racial and ethnic
groups for unionized workers compared to those who are not unionized.363
However, not all workers were granted the right to organize and bargain
collectively or were initially welcomed into unions. Despite the benefits
to many workers from the passage of the National Labor Relations Act
(NLRA), agricultural and domestic workers were not — and to this day still
are not — classified as employees and are therefore not covered under the
NLRA’s guarantees.364
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An Unlevel Playing Field 119
PRESIDENT FRANKLIN D. ROOSEVELT SIGNING THE WAGNER
UNEMPLOYMENT BILL ON JUNE 6, 1933 WITH REP. THEODORE A.
PEYSER (D-NY), SECRETARY OF LABOR FRANCES PERKINS, AND SEN.
ROBERT WAGNER (D-NY) 365
Today, Latinos make up a majority of agricultural workers, and more than
half of all domestic workers are women of Black, Hispanic, Asian American,
or Pacific Islander descent.366 None are covered by the NLRA.
Despite the pervasive racism present in many unions prior to the Civil Rights
Era, organized labor became a crucial ally in the fight to pass many of the
protections against discrimination that workers enjoy today.367 Unions today
are far more representative of the overall working population.368
When Employers Respond to Changing Workforce
Dynamics
Changes in the ways employers view their relationships with their employees
have also contributed to the decline in worker power. Shareholder primacy
— a form of corporate governance that proposes that the maximization
of profit and shareholder wealth should be the objective of public firms —
served to reinforce the decline of American labor.
During most of the post-World War II era, large corporations often saw
themselves in service to a variety of stakeholders, including customers,
suppliers, workers, stockholders, and the communities in which they operated.
Financial sector deregulation in the middle of the 20th century — which led
the share of corporate stock held by institutional investors to rise from
10% in the early 1950s to more than 60% in the early 2000s — led to more
shareholder interventions pushing for increased shareholder payments.369
Mergers, downsizings, and anti-union activity were increasingly seen as
channels through which stock buybacks and dividends could be increased,
despite their unproven effects on firm profitability.370
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120 Economic Disparity & Fairness in Growth
Compounding the negative effects of shareholder primacy on workers is
employee misclassification, which occurs when companies hire someone who
is an employee as defined by the Fair Labor Standards Act as an independent
contractor, thereby avoiding the costs associated with employing workers.371
Misclassification can impose costs on workers, including the addition of taxes
that traditional employees do not pay. Moreover, misclassified workers are
often denied basic workforce protections such as access to the minimum
wage, overtime pay, unemployment insurance, and workers’ compensation.372
Various state-level analyses estimate that 10 to 30% of employers engage
in misclassification.373
Though the popular idea is that misclassified workers are largely employed
in the gig economy, the construction industry is the major field in which
misclassification has historically been endemic.374 Construction workers
— who represent one in five independent contractors — are among the
lowest paid and least-protected workers, and are generally not provided the
flexibility and opportunity that comes from being an independent contractor.
There are employment relationships in which misclassification is challenging
to determine. The gig economy, for instance, provides workers with flexibility
in exchange for more traditional employment benefits. While some workers
appreciate the flexibility to earn extra income, other people who work full-
time at a single gig economy job are denied the benefits that traditional
employment relationships provide.375
REP. KAPTUR, REP. JAYAPAL, AFL-CIO SECRETARY-TREASURER FRED
REDMOND, AFL-CIO PRESIDENT LIZ SHULER, AND CHAIRMAN HIMES
Non-compete contracts, which prohibit workers from starting in a similar
position at a competing firm, are another tool that can be abused by employers
to suppress worker power. Traditionally reserved for employees who have
proprietary knowledge and could carry that knowledge to a competing firm,
low-wage workers without access to such knowledge — such as hourly-paid
fast-food workers or retail workers — have been subjected to non-competes
with detrimental effects.
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An Unlevel Playing Field 121
By constraining their ability to find alternative employment and reducing
competition for labor between employers, non-competes serve to suppress
wages for some of the most economically vulnerable workers. According
to the Federal Reserve Bank of Minneapolis, more than one in 10 low-wage
workers report having a non-compete contract.376
According to the same study, “when Oregon ended the enforcement of non-
competes for hourly paid workers, wages for those workers rose by 2-3%,
with larger effects in occupations where non-competes are more common.”
Committee Findings and Recommendations
Individual workers rarely, if ever, have the power that their employers do to
determine their pay, benefits, working conditions, or job security. Labor laws
and regulations play a key role in protecting employees’ rights, safety, and
opportunity. Such laws are especially important in ensuring that workers have
the rights to collectively bargain, receive a fair paycheck, and are treated with
dignity on the job.
Therefore, the Committee recommends a set of specific policies that support
unions, increase the minimum wage, and fully fund those government
agencies entrusted with looking after the welfare of the 160 million Americans
who work for a wage or salary.
Support unions and collective bargaining.
The Committee recommends that Congress make it easier for workers to
bargain collectively by passing the Protecting the Right to Organize Act (PRO
Act), which would expand the scope of workers covered by NLRA standards,
ban state-level right-to-
work laws, and make it
easier to organize a union,
among other policies.
The Committee also
recommends that Congress
pass the Public Service
Freedom to Negotiate Act
(PSFNA). Currently, states
have wide discretion over
MS. STERLING HARDERS, MX. public-sector collective
MAELSTROM PULLMAN, AND MR. TRENT bargaining procedures.
WU AT THE ROUNDTABLE ON WORKER
If signed into law, the
RIGHTS IN SEATTLE, WASHINGTON
PSFNA would empower the
Federal Labor Relations Authority to determine whether each state provides
a minimum level of rights, including the right of public-sector employees to
self-organize, form or join a union, or collectively bargain.
House Select Committee on
122 Economic Disparity & Fairness in Growth
RIDESHARE DRIVER IN NEW YORK SUPPORTING THE PASSAGE OF
THE PRO ACT 377
Raise the federal minimum wage.
The Committee recommends raising the federal minimum wage — which is
currently in its longest streak of nominal stagnation since its implementation
in 1938 — pegging it to inflation, and broadening the scope of workers who are
covered. Increasing the minimum wage and ensuring it will go up over time
without continual Congressional intervention would provide workers greater
bargaining power in wage negotiations with employers.378
According to an analysis by the Congressional Budget Office (CBO) “increasing
the federal minimum wage would raise the earnings and family income of
most low-wage workers, lifting some families out of poverty.”379 The CBO
estimates that raising the federal minimum wage to $15 would lift 300,000
people out of poverty and increase the total annual income of all families
earning below three times the official poverty rate by $4.5 billion.
Moreover, a higher wage floor increases bargaining power of low-wage
workers earning above the minimum wage, as outside employment options
with comparable pay become more plentiful and provide workers with
credible threats to find new employment if their current employers do not
meet their needs.
In the 117th Congress, the House passed legislation, the Raise the Wage Act,
that would increase the federal minimum wage to $15 over a five-year period,
index it to inflation, and eliminate the separate minimum wage requirements
for tipped and disabled employees.
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An Unlevel Playing Field 123
Critics claim that raising the minimum wage in this way could reduce overall
employment and hours for low-income workers — but the gains for the most
economically vulnerable are clear. Moreover, many studies point to the fact that
there are few, if any, aggregate job losses when the minimum wage is raised.380
Figure 16: The Real Minimum Wage is at its Lowest Point Since 1949
REAL HOURLY FEDERAL MINIMUM WAGE (1947 – 2022)
SOURCE: DEPARTMENT OF LABOR, BUREAU OF LABOR STATISTICS (2022)381
Strengthen the agencies that protect worker rights.
The Committee recommends increasing funding to federal agencies protecting
worker rights, including the National Labor Relations Board, the Wage and
Hour Division, and the Occupational Safety and Health Administration.
Dr. Kate Bahn, the chief economist at the Washington Center for Equitable
Growth, suggested in her testimony the NLRB should be better equipped to
enforce current worker protections.382 Congressional appropriations for the
agency have remained the same for the last nine consecutive years despite a
rise in union election petitions and unfair labor practice charges.383 Compared
to fiscal year 2010 levels, this is equivalent to a 25% budget cut, which delays
the adjudication of claims.
Ms. Danielle Alvarado, the executive director of Working Washington & Fair
Work Center, testified at the Seattle field hearing about the importance
of enforcing worker protection laws, suggesting that Congress should be
“committing dedicated funding for federal agencies to community-based
enforcement partnerships, particularly the NLRB, DOL, and EEOC.”384
House Select Committee on
124 Economic Disparity & Fairness in Growth
Economic Security Programs
WATCH VIDEO: ANGELA HILL, ANDERSON, SC
Founder of Journey Changers Scholarship Solutions
“Just because my mother was on welfare does not mean that I had to be on
welfare,” Angela Hill told the Committee. “But I had to use the resources that were
available for me.”
“At the time, I had two younger boys, and it allowed me to be able to afford the
benefit of going to the grocery store,” she explained. “And then once I landed a job,
I was able to say, ‘OK, I don’t need the SNAP benefits anymore, I don’t need the
unemployment benefits because I have a full-time job.’”
“It was a building block for me. It is a resource to use to help make yourself and
make your life better,” she said. “I had an incentive of going to college, becoming a
business owner, and being able to show people how I can pay it forward.”
Angela Hill is one of the millions of Americans who have experienced
the challenges of poverty and relied on an economic security program.
Government benefits gave her the tools to keep going and to eventually be
able to contribute and give back to her community. She has since founded
Journey Changers Scholarship Solutions — an organization that provides
financial aid for people to realize their career goals and find economic success.
Nearly every American will, like Angela, access economic security programs
at some point over the course of their lives.
According to the White House Council of Economic Advisers (CEA), 70% of
Americans have benefited from economic security programs.385 The CEA
also found that between 1978 and 2010, more than one-third of all people
received support from either SNAP, TANF, or Supplemental Security Income
(SSI). Including Social Security, an economic security program for elderly,
disabled, orphaned and widowed people, nearly every American will obtain
federal economic benefits.386
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An Unlevel Playing Field 125
These programs are important because many Americans are unable to
withstand even small financial disruptions: 40% of Americans are not able
to cover a $400 emergency expense, and 17% of adults couldn’t pay some
or all their bills in the month they were surveyed.387 Whether an economic
crisis affects the entire country or an individual, without sufficient support,
seemingly temporary economic episodes can permanently widen disparities.
The United States provides support through a variety of programs to help
individuals and families. Some, like Social Security, are universal programs
to insure people against loss of income due to old age, sickness, and
disability, while others are means-tested. Economic security programs
play an important role in reducing inequities among the American people.
A History of Economic Security Programs
Meaningful federal social welfare programs began with the New Deal
to combat the poverty and unemployment of the Great Depression.
The Social Security Act of 1935 provided retirement security for the
elderly and support for other disadvantaged people and established the
unemployment insurance (UI) system and the Aid to Dependent Children
(ADC) program, which provided cash assistance to low-income families.
The temporary Food Stamp Program of 1939 was the first iteration of
federal nutrition assistance to combat hunger and is now known as the
Supplemental Nutrition Assistance Program (SNAP).388
President Johnson’s Great Society initiative established Medicaid and
Medicare389 — health-insurance coverage for the poor and elderly. The
Nixon Administration established the Supplemental Security Income
(SSI) program to benefit low-income people with disabilities and the
Women Infants and Children (WIC) program to provide food assistance to
pregnant women and young children.
The idea of using the tax code to bolster the economic security of
lower-income Americans became law under President Ford, with the
establishment of the Earned Income Tax Credit (EITC) and expanded
through the Child Tax Credit (CTC), a refundable tax credit created in 1997.
Since the 1960s, the poverty rate in the U.S. has declined but remains high,
especially compared to other developed countries: In 2021, it was 11.6%,
meaning that 37.9 million people lived in households with incomes below the
Census Bureau’s official poverty threshold.390 This is among the highest of
all OECD countries — higher than Germany, Australia, the U.K., and France.391
Millions of Americans struggle with incomes just above the official poverty
threshold, which does not take into account the cost of housing, transportation,
child care, health care, or geographical differences.392
More middle-income families are receiving benefits to address their needs.
Research shows that government benefits are an increasing proportion of
House Select Committee on
126 Economic Disparity & Fairness in Growth
middle-income households’ finances. But the most deleterious effects of
poverty and near-poverty fall on children — and can last a lifetime.
Poverty rates are higher among the youngest Americans than among the
oldest: The child poverty rate in 2021 was 16.9%, while the poverty rate for
people over age 65 was 10.3%.393
Childhood poverty damages children as well as the U.S. economy. Research
measuring the loss of human potential that childhood poverty imposes on
society — including on health costs, reduced earnings, increases in crime,
the social costs of incarceration, child homelessness, and increased child
maltreatment costs — concludes that the annual aggregate cost of child-
poverty is over $1 trillion, or 5.4% of GDP.394
Figure 17: The United States Spends Relatively Little on Benefits for Families
GOVERNMENT EXPENDITURES ON FAMILY BENEFIT PROGRAMS AS A SHARE OF GDP
SOURCE: ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT (2021)395
In the face of these costs, the United States spends less of its GDP to mitigate
or alleviate childhood poverty than other developed countries do.396
There are many long-term benefits for both society and poor children when
their families have access to economic security programs. These programs,
which immediately increase parents’ disposable income, improve not only
children’s health, but also their educational and career outcomes.397 The
effects last into adulthood.398
Ms. Sharon Parrott, the president of the Center on Budget and Policy Priorities,
testified that “Studies link additional income with better outcomes for children
in families with low incomes, including better educational performance and
attainment, higher earnings in adulthood, and better health, which can yield
benefits for children and their communities over the course of their lives.”399
Federal, state, and local governments, the private sector, and charitable
organizations all have roles in protecting and enhancing Americans’ economic
well-being. Philanthropy plays a significant role in alleviating poverty,
improving opportunity, and exploring new approaches to social problems.
America’s nonprofit sector is much larger than in other rich nations, making
up for at least some of the shortfall in U.S. government spending on economic
security relative to Western European countries.400
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An Unlevel Playing Field 127
However, according to the National Philanthropic Trust, less than one-fourth
of total private giving went to “public-society benefit” and “human
services” combined.401
“While the philanthropic community has always played an essential role in
supporting the well-being of our communities, philanthropy should not —
and cannot — fill the resource gaps created by lack of government support,”
the Chicago Community Trust, a large community foundation, declared.
“Government funding for human services is essential because no other entity
can provide the capacity of support that government does.”402
Economic Security for All
The CTC and the EITC reach the largest number of people of any current
economic security programs besides SNAP and have the biggest impacts on
poverty reduction.
The CTC benefits Americans with children in married households earning up
to $150,000 per year or for individuals earning up to $75,000 per year. It lifted
an estimated 9.8 million people out of poverty in 2018.403
In 2021, the CTC was temporarily expanded from $2,000 to $3,600 and
made fully refundable under the American Rescue Plan Act (ARPA) to help
more families weather the economic shocks of the COVID-19 pandemic. The
families of some 61 million children received the CTC, which brought 5.3
million people out of poverty, including 2.9 million children. It also reduced
the Black child poverty rate from 14.5% to 8.1%.
The EITC is a refundable tax credit targeted at families with children. Established
in the 1970s and subsequently expanded, it provides support to low- and
moderate-income workers and families. ARPA broadened EITC eligibility to
include people aged 19 to 24 and over 64 and tripled the maximum credit for
childless workers to $1,502 in 2021. As a result, in 2021, about 25 million
workers and their families received the EITC, further reducing poverty. However,
despite overwhelming support in both Democratic chambers of Congress for
extension, the expanded CTC and EITC expired at the end of 2021.404
A 2019 National Academies of Sciences report concluded that “out of 10 policy
options, a child allowance similar to the expanded Child Tax Credit would be
the single most effective policy for reducing child poverty.”405
In addition to the tax credits, another broad-based economic security program
is the UI system, which provides cash benefits to those who lose their jobs.406
Unemployment insurance plays a critical role alleviating poverty, most
recently during the COVID-19 pandemic.407 The CBPP found that around five
million more people would have fallen into poverty in 2020 — and potentially
another six million in 2021 — without expansions provided through pandemic
relief programs. Close to 46 million individuals received unemployment
benefits in 2020 — and Black workers’ poverty levels declined by 2.5%,
compared with 1.4% over all.
House Select Committee on
128 Economic Disparity & Fairness in Growth
Programs like these are designed to expand automatically during recessions
to address unemployment and income loss, and not only provide short-term
relief, but reduce the macroeconomic severity of a recession.408
Unemployment benefits thus provide some countercyclical stabilization to
the economy — more than other economic assistance programs do — but
are not as responsive or effective as they could be.
The UI system is handicapped by its dependence on state-level funding — and
state funds are routinely exhausted during downturns.409 The pandemic also
highlighted challenges with the current UI system’s outdated information
technology, which resulted in delayed payment of benefits to workers.
Programs That Target Poverty
Other economic security assistance programs, such as Temporary Assistance
for Needy Families (TANF) or SNAP, are targeted at households that fall below
the poverty threshold and thus serve a smaller number of people — four
million in the case of TANF. Their total cost is smaller than the broad-based
programs, but they also have less impact on poverty reduction.410 Still, the
Urban Institute has found that in a typical month, nearly one in five people
receive support through SNAP, SSI, TANF, public or subsidized housing, the
WIC program, or the Child Care and Development Fund.411
Outside of the tax credits, SNAP is one of the largest economic security
programs, in terms of both cost and reach: More than 41 million people
(estimated) received SNAP benefits in July 2021, which cost $111 billion. Food
assistance through SNAP has one of the largest anti-poverty impacts for low-
income working families, older adults, and people living with disabilities on fixed
incomes. Over two-thirds of SNAP participants are families with children, while
the rest are households with older adults or people living with disabilities.412
The CBPP found that households below the poverty line received 92% of
SNAP benefits and that the program kept nearly eight million people out of
poverty every year before the pandemic.413
However, the Department of Health and Human Services (HHS) found in
2018 that 64.4 million people were eligible for SNAP benefits, yet benefits
reached only 40.9 million people — a 63.4% participation rate.414 Standards
for eligibility for both SNAP (as well as UI) recipients have not kept pace with
the modern workforce.
A number of other direct-benefit programs are operated by federal, state, and
local governments, including TANF, which provides cash assistance.
In 2019 and 2020, $5.4 billion in TANF benefits were distributed to states,
helping over a million families. However, TANF’s design allows its funds to be
used by states for reasons other than cash assistance and, since it replaced
the Aid for Families with Dependent Children (AFDC) program, the number of
people served has declined by 76% due in part to that flexibility.415
In 2020, an estimated 2.38 million families who would have been eligible for
AFDC failed to qualify for TANF.416
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An Unlevel Playing Field 129
MR. MARC MORIAL AT THE HEARING ON ECONOMIC SECURITY
Accessibility
Much of the challenge with economic security programs is a result of coverage
gaps stemming from outdated benefit levels, eligibility, and duration. Beyond
these gaps, the administration of these programs poses a significant
challenge to people applying for and accessing these program benefits. This
is due partly to administrative burdens, lack of easily available information
for potential beneficiaries, and compliance costs.417
Furthermore, outdated technology at the federal and state levels hampers
access and delivery of many benefits, according to the House Budget
Committee. UI capacity also varies by state. Without updated and resilient
technology, economic security programs cannot function at an optimal level.418
The Impact of Work Requirements On Poverty
The Clinton-era Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 ended AFDC, replacing it with the TANF program,
which provided time-limited benefits and required recipients to work.
The Congressional Budget Office has found that, while TANF’s work
requirements increased participants’ employment, it did not increase their
income — especially because some people lost benefits when they began
to work, exacerbating the poverty the program was intended to alleviate.419
Subsequent work requirements added to SNAP and Medicaid benefits
similarly reduced people’s access to poverty alleviation programs but did
not increase their employment rates or take-home pay. Instead the declines
in people’s access to cash assistance programs led to increases in deep
poverty420 among families with children, even as the welfare rolls shrank.421
House Select Committee on
130 Economic Disparity & Fairness in Growth
The Future of Economic Security Programs?
Broader programs to support Americans’ economic security exist.
Dr. Darrick Hamilton testified about Baby Bonds, which would create
a savings account for every newborn and provide annual deposits
based on family income. At age 18, recipients
could use the money to purchase a home,
start a business, or pay for higher education.
"The accounts could go a long way towards
establishing a more moral and decent
economy that facilitates assets, economic
security, and social mobility for all its
citizens," he stated.422
The American Opportunity Accounts Act, by Sen. Cory Booker (D-NJ)
and Rep. Ayanna Pressley (D-MA), would enact this program on the
federal level.
Some scholars recommended establishing universal income programs
to provide Americans with a base level of income security. San
Francisco's Abundant Birth Project, for example, aims to support
maternal health and economic security of Black and Pacific Islander
women through a universal cash assistance program offered monthly
through their pregnancies and postpartum periods.423
A related proposal is the sovereign wealth fund, a mechanism designed
to share government profits created from a state’s natural resources.
While not widespread now, these programs could provide the basis of
more expansive economic security programs in the future.
Committee Findings and Recommendations
Marc Morial, President of the National Urban League, testified that “We must
invest in economic security programs, but in addition to simply investing in
the number of people served — which is of paramount importance — it is just
as important to ensure each program has the resources needed to reach the
people they aim to serve, those who need it most.”424
The Committee believes that the federal government should do more to
ensure economic security for all Americans — especially our youngest. This
would reduce disparities early in children’s lives and grow the productive
capacity of our economy.
The Committee supports strengthening, expanding, and modernizing existing
programs like SNAP, UI, the CTC, and the EITC to deliver more effective support
to more Americans, enabling them to achieve lasting self-sufficiency and
preventing economic downturns from sabotaging future economic opportunity.
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An Unlevel Playing Field 131
Restore the expanded Child Tax Credit and Earned Income Tax Credit and
make the expansions permanent.
Because a person’s starting point is so critical to economic prosperity — and
because child poverty is unconscionable in a wealthy nation — the Committee
recommends restoring the CTC provisions enacted under ARPA, increasing it
to $3,000 for each child ages 6 to 17, and up to $3,600 for younger children.
The Committee also recommends restoring the “childless” EITC provisions
that were enacted under ARPA, including increasing the credit to $1,502;
increasing the phase-in and phase-out rates; reducing the ages of eligibility
for workers; and eliminating the upper age limit.
Increase the responsiveness of economic security programs.
The Committee believes that economic security programs like UI and SNAP
must be more nimble and responsive during economic crises. Unemployment
Insurance must be reformed to address gaps in eligibility, duration, and level
of benefits. Congress should expand eligibility for UI benefits for workers
currently ineligible, including part-time, gig, and seasonal workers, among
others.425 The Committee also recommends tying increases and decreases
in federal benefits to objective economic indicators in order to reduce the
legislative uncertainty associated with unpredictable economic developments.
Legislation should be considered to target unemployment and maintain
workers’ paychecks during recessions. Consideration should include such
measures as permanently extending the Employee Retention Tax Credit,
originally passed under the CARES Act. This credit is designed to encourage
employers to keep workers on payroll if they are forced to suspend or limit
operations due to recession or a government order.
Other legislation to consider includes a version of the Paycheck Recovery
Act, introduced by Rep. Pramila Jayapal (D-WA) in the 116th Congress, which
would provide grants to eligible small businesses that lost revenue due to the
COVID-19 pandemic to help pay employees’ wages, rent, utilities, and other
expenses, but could be adapted to future economic crises. ,
House Select Committee on
132 Economic Disparity & Fairness in Growth
Tax Policy and Equal Opportunity
DR. WILLIAM GALE, PROF. DOROTHY BROWN, MR. SETH HANLON,
MS. AMY MATSUI, AND DR. ANGELA RACHIDI TESTIFY AT THE
HEARING ON TAX POLICY FOR INCLUSIVE ECONOMIC GROWTH
For millennia, nations have taxed their citizens to achieve a variety of purposes.
Every society makes decisions about whom and what to tax, and how much.
In the United States, particularly in the post-World War II era, individual and
corporate income taxes, along with payroll taxes that finance Social Security
and (since 1965) part of Medicare, have been the primary sources of federal
revenue. These federal taxes affect American income distribution in two primary
ways: through direct redistribution achieved by taxing higher-income earners
and passing the revenue collected to lower-income earners, and through the
funding of programs intended to increase the current and potential prosperity
of the population as a whole.
Whereas the primary role of taxes is to fund government, the United States is
unusual among rich countries in the degree to which it uses tax policy, more
than economic security programs, to redistribute income and subsidize certain
activities. Today these elements of tax policy, known as “tax expenditures,”
overwhelmingly benefit higher income Americans.
While the income tax is progressive and reduces inequality, recent changes
to the nation’s tax system have increasingly aggravated income inequality.
First, most tax cuts since the 1980s — regardless of arguments that they
stimulate demand during downturns or propel investment — mostly benefit
the wealthy. Second, the federal tax code treats capital income, which comes
from returns on assets like financial investments or real estate, more favorably
than income earned by labor. Third, the average effective corporate tax rate
has fallen dramatically. And fourth, tax subsidies, or “tax expenditures,” largely
benefit the well-to-do.426
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An Unlevel Playing Field 133
Addressing the Theoretical Tradeoff between
Progressivity and Growth
In theory, tax policy presents trade-offs between the goals of more fairly
distributed income and the growth of the overall economy. Higher tax rates
on the wealthy and corporations may raise revenues for economic-security
programs to help low- and moderate-income Americans, but there may be
a point at which too-high tax rates may disincentivize work and growth-
producing investments. While tax cuts during recessions can stimulate
demand for goods and services, tax cuts on those with very high incomes
are often justified as being economically stimulative in a way that will
“trickle down” to lower income Americans and provide higher tax revenues,
growing the economy so much that everyone benefits and overall tax
revenues rise.
In reality, most evidence shows that such “supply side” tax cuts increase
inequality and reduce government revenues with little discernible effect on
growth. The 2017 Tax Cuts and Jobs Act (TCJA) provides a good recent test of
supply side tax theory. According to William Gale and Claire Haldeman of the
Brookings Institution, the TCJA cuts, which reduced tax rates on new investment,
produced neither increased investment nor new business creation.427
Supply siders’ predictions that Clinton-era tax increases would lead to
recession were confounded by the strong economic growth of the late 1990s,
as Nobel laureate economist and New York Times columnist Paul Krugman
has noted.428 America had some of its most robust, sustained growth during
the 1950s and 1960s when tax rates were much higher than they are today.429
Long-Term Decline of Taxes on the Rich
Taxes have been cut repeatedly since the 1980s. Despite periodic increases,
the long-term trajectory of “effective tax rates” has been downward for those
at the top and the bottom of the income distribution.
Between 1980 and 2020, the list of tax cuts favoring the wealthy is long:
The top marginal tax rate — or the amount paid on each additional dollar
of income — has been cut from 70% to 37%.430 The top rate on qualified
dividends has gone from 70% to 25%, and the top rate on long-term capital
gains has been cut from 35% to 25%.431 In addition, the estate tax has been
cut from 70% to 40%, and estates of less than $11.5 million are now excluded
from any tax. The top marginal corporate tax rate has gone from 46% to 21%,
and the top rate on “pass-through income” — business income reported on
the owner’s individual tax return– went from 79% to 35%432
The payroll tax, which finances Social Security and Medicare, is also regressive
in that it applies the same tax rate regardless of income, and it does not tax
wage income above $147,000. Because of this limit, the payroll tax burden on
the top 1% declined from 3.1% in the mid-1990s to 2.7% in 2018.433
The evolution of the federal income tax has also led to a byzantine system that
is not neutral in how it treats different sources and levels of income, types
House Select Committee on
134 Economic Disparity & Fairness in Growth
of employment, household
structures, and different
forms of consumption,
making an already unlevel
economic playing field
even more so. The tax
code therefore affects
all kinds of household
decisions–including where
to live and work, saving for
retirement, buying a home,
PROF. DOROTHY BROWN AT THE even whether to marry.
COMMITTEE’S HEARING ON TAX POLICY
How the Tax System Favors Capital Income over
Labor Income
One of the main reasons for regressivity in the tax code is the fact that capital
income, or income from assets like stocks or real estate, is taxed at a lower
marginal rate than income from wages and salaries. Although the primary
source of income for the vast majority of households is from wages and
salaries, the top 1% of households, and particularly the top 0.01%, receive
most of their income from capital.434
Because capital income is taxed at lower rates, the effective tax rate of the
very highest-income households is actually lower than the rate on the next-
highest-income households. The top 0.5% of tax returns, which were subject
to the 37% top marginal rate, paid that rate on less than half of their income
because most of their earnings were from capital gains and dividends.435
The 2017 tax cut further reduced effective tax rates on capital by cutting
capital gains, dividend, and corporate tax rates. As a result, in 2018, labor
income was taxed at a higher average rate than capital income for the first
time in modern U.S. history, according to Berkeley economists Emmanuel
Saez and Gabriel Zucman: “From the 1940s to the 1980s, the average tax
rate on capital exceeded 40%, while labor paid less than 25% ... Since its
peak of the 1950s, however, the average capital tax rate has been cut by 20
percentage points. At the same time, labor taxation has risen more than 10
points, driven by the upsurge in payroll taxes.”436
The favorable tax treatment of capital also encourages “firms to substitute
machines for workers, even when workers may be more productive,” as MIT
economist Daron Acemoglu told the Committee.437
Due to this preferential tax treatment and the fact that capital owners have
more capital income today than in the 1980s because of appreciation in stock
market and property values, the after-tax incomes of the richest households
have grown more than the after-tax incomes of everyone else. Since capital
income accumulates over time to become wealth, and since wealth is largely
untaxed, this has been a contributor to the fact that wealth inequality is
greater and has grown more than income inequality.
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An Unlevel Playing Field 135
Figure 18: The Wealthiest Americans Experienced The Most Income Growth
AVERAGE ANNUAL POST-TAX INCOME GROWTH BY INCOME PERCENTILE (1980 – 2014)
SOURCE: GABRIEL ZUCMAN (2018)438
How Tax Policy Subsidizes Mostly the Activities of
the Rich
Tax expenditures represent a shadow budget, as they are invisible in accounts
of federal spending. These exclusions, deductions, credits, and preferential
rates in the federal tax system resulted in $1.2 trillion in foregone tax revenue
in 2019 — close to the cost of all discretionary federal spending actually
appropriated by Congress. These tax subsidies are economically equivalent to
spending and must be paid for by higher taxes or, recently, more borrowing.
They generally do not go through the regular review that is part of the annual
appropriations process but increase the size and scope of government. They
are also inefficient and distort the tax system, because decisions are made
on the basis of tax treatment rather than on market or social benefits.439
Tax expenditures are skewed, both in absolute terms and relative to income,
to the wealthy, increasing economic disparities. A CBO analysis found that
about half of the benefits from income-tax expenditures and one-third of
those from payroll-tax expenditures accrued to households in the highest
income quintile, compared to 9% and 4% in the bottom quintile. The top 1%
of households receive a larger aggregate benefit from all the tax expenditures
for which they qualify — $188 billion in 2019 — than the middle 20% of
households do — $173 billion in 2019.440
The biggest tax expenditures, the exclusions for employment-based health
insurance and for pensions and retirement savings accounts, account for
nearly half the total cost of all tax expenditures combined. By definition, they
do not benefit lower-income workers whose employers do not provide health
insurance or retirement plans or people who do not owe federal income taxes.
Similarly, homeowners, who generally have greater wealth than renters,
benefit from the mortgage interest deduction and the exclusion of capital
gains on the sale of a primary residence.
House Select Committee on
136 Economic Disparity & Fairness in Growth
Only two of the 13 largest tax expenditures, the Earned Income Tax Credit
and the Child Tax Credit (CTC) are refundable credits that supplement the
incomes of lower-wage workers and therefore reduce disparities. The cost of
these refundable tax credits is small relative to the cost of the tax expenditures
that benefit the wealthy. CBO analysis shows that the entire cost of the CTC
in 2019, $118 billion, was barely more than the value of the preferential tax
treatment of capital gains and dividend income to the top 1%, which was
$113 billion.441
Figure 19: Comparing the Child Tax Credit to Capital Income Tax Preferences
COST OF SELECT TAX EXPENDITURES AND WHERE THOSE BENEFITS GO (2019)
SOURCE: CONGRESSIONAL BUDGET OFFICE (2021)442
How Tax Policy Favors Traditional Relationships
American tax policy was originally designed for traditional household and
employment relationships — married, single-earner families and full-time
jobs with benefits rather than part-time or contract work. Despite more
recent reforms, since the joint tax return was established in 1948, the income
tax system has created marriage penalties on two-earner couples with similar
earnings and marriage bonuses for single or primary breadwinner couples.
The tax system also favors those in full-time, conventional employment. Most
part-time and contract workers do not benefit from two big tax expenditures–
employer-provided health insurance and retirement savings plans. These
workers have to purchase health insurance and save for their retirement
on their own and without the benefit of the tax subsidy. They also pay both
employer and employee portions of the payroll tax.
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An Unlevel Playing Field 137
Committee Findings and Recommendations
America’s tax code, intended to raise sufficient government revenue to fund
spending and to redistribute national income more fairly, fails to achieve
either of these goals. Outlays in excess of revenues requires the federal
government to borrow to pay for its programs and operations. Meanwhile,
the structure of the tax code makes the distribution of income and wealth
more unequal than it might otherwise be.
Harmonize the effective taxation of capital.
Since capital income is taxed more lightly than labor income, the Committee
recommends bringing effective tax rates on capital gains, carried interest,
and dividends more in line with rates on wages and salaries, making the tax
code more progressive overall.
The estate tax is the only federal tax on wealth. However, the exemption level
was doubled under the TCJA, and current law exempts accumulated but
unrealized capital gains at death through the step-up in basis provision, such
that most wealth is never taxed at all. The Committee therefore recommends
eliminating step-up in basis in a way that takes into account the effects
these changes would have on passing family farms or businesses from one
generation to the next. Because taxing estates does not take into account
the income or wealth of individual heirs or how much of an estate they each
receive, Dr. William Gale of the Brookings Institution recommends converting
the estate tax on decedents’ estates to an inheritance tax on heirs’ inherited
wealth.443
Reduce tax subsidies that benefit mostly the rich.
There are several ways tax policy could be changed to reduce the regressive
nature of tax subsidies that deliver the highest benefits to the highest income
earners. One comprehensive strategy would be to convert deductions or
exemptions, which all convey higher percentage subsidies to higher-bracket
households, to credits. Credits subtract the benefit from the tax liability after,
rather than before, marginal tax rates are applied.
Another approach focuses on itemized deductions and would cap the rate
of itemized deductions for the highest-income households at the same rate
as for middle-income households at 22-24%.444 This would reduce but not
eliminate the benefit for high-income taxpayers, and would not reduce the
benefit for middle- and lower-income taxpayers.
House Select Committee on
138 Economic Disparity & Fairness in Growth
Raise more revenue.
For a generation at least, the federal government has run substantial deficits,
in periods of economic growth and in periods of stagnation, under Democratic
and Republican governments. Washington argues endlessly and fruitlessly
over whether the cause is overspending or under-taxing. The fact is, Americans
are accustomed to the social insurance programs, the national defense, and
the investments in infrastructure and education offered by their federal
government. They are much less comfortable with the taxes required to pay
for it all. This tension has led to deficits, and to dishonest political solutions
involving “waste, fraud and abuse” or cuts to obscure programs that are
meaningless in the context of the budget challenges.
Most honest treatments of the federal government’s long-term debt, deficit
and unfunded liability issues recognize that sustainability will come from a
combination of increased revenues and targeted reductions in spending in
appropriated accounts or tax expenditures.
Since the fundamental role of taxes is to raise revenue to pay for public
goods and services, including investments vital to equitable growth, effective
individual rates could be raised on the nation’s highest earners without
damaging economic growth or breaking with precedents set in previous
generations. If the nation does not find ways to increase revenues and move
away from deficit spending, it will contribute to intergenerational inequality
by shifting the burden of paying for current spending to future generations
of taxpayers or will result in lower government benefits to them.445
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An Unlevel Playing Field 139
Market Competition Policy
“Corporate concentration has a direct impact on widening
economic disparities, making workers, consumers, and small
businesses unable to bargain for fair wages, lower prices, or a
sustainable market share … To make matters worse, the abuse
of power is more prevalent in industries that disproportionately
employ marginalized groups — and I think that is important –
such as rural communities, women, and people of color.”
REP. PRAMILA JAYAPAL
Competitive markets are essential to innovation, entrepreneurship, and the
reduction of economic inequality. When free markets and competition are
compromised, consumers, workers, and innovation suffer.446 As just one or
a very few companies control products, services, or labor markets, they can
set prices above or wages below competitive levels, benefiting themselves
at the expense of workers and consumers.
History shows that economic concentration can be a driver of inequality,447
and recent scholarship indicates that concentration can contribute to
disparities.448 A study by the OECD’s Competition Division concluded that
“the welfare losses due to the exercise of monopoly power are not only
significant but also regressive.”449 In the late 19th century through the early
20th century, the growth of monopolies in many U.S. industries widened social
and economic disparities between industrial titans and workers, permitted
harsh working conditions, and limited opportunities for entrepreneurs to
enter the market.
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140 Economic Disparity & Fairness in Growth
In response, Congress passed the Sherman Antitrust Act in 1890, under which
federal cases were brought against giant industrial trusts like Standard Oil. In
1914, Congress passed the 1914 Federal Trade Commission Act and the Clayton
Antitrust Act.450 President Franklin D. Roosevelt, who fought monopolies
ranging from railroads to tobacco and signed the 1936 Robinson-Patman
Act, observed:
"Throughout the nation, opportunity was limited by monopoly.
Individual initiative was right in the cogs of a great machine.
The field open for free business was more and more restrictive.
Private enterprise, indeed, became too private. It became
privileged enterprise, not free enterprise. . . The political
equality we once had won was meaningless in the face of
economic inequality.”451
PRESIDENT FRANKLIN D. ROOSEVELT
Enforcement of these laws during the middle years of the 20th century helped
foster greater competition and a sustained period of inclusive economic
growth during which the middle class vastly expanded.452 However, reduced
enforcement since the 1970s has resulted in increased consolidation in a
number of industries.
Concentration Hurts Consumers and Workers
It is important to distinguish between the harms caused by monopolies and
oligopolies, on the one hand, and monopsonies. In monopolies, markets are
dominated by a single seller, and oligopolies, which are more common, are
characterized by a handful of dominant firms.453 In monopsonies, markets
are dominated by a single buyer.454
As the Council of Economic Advisers noted in a 2016 issue brief, firms
with monopoly power are able to charge higher prices without losing
customers due to a lack of competition, whereas firms with monopsony
power can pay lower prices for what they buy. The latter is important in labor
markets, where employers can pay lower wages than they would in a more
competitive market.455
The Effect of Market Concentration on Worker Pay
Although the increasing power imbalance between workers and employers can
be explained, in part, by increased globalization and automation and decreased
unionization, market concentration in specific labor markets may also be at play.
Monopsony can occur where workers have limited employment alternatives.
The classic example is a factory town where an employer could pay workers
less than what would be expected under competitive market conditions.
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An Unlevel Playing Field 141
When there are only a few employers in a community or sector, workers have
less opportunity to bargain for higher wages and better conditions. One study
of geographically defined labor markets during the Great Recession found that
industry consolidation decreased advertised wages by as much as 17%.456
Occupations in sectors of growing concentration, such as health care and private
security, appear to have had sluggish wage growth.457 “One recent survey finds
that, on average, employers
have the power to keep
wages more than one-third
lower than they would be
in a perfectly competitive
market,” according to
Kate Bahn, director of
labor market policy at the
Washington Center for
Equitable Growth.458
Although direct causal
links between market
REP. ALEXANDRIA OCASIO-CORTEZ AT
concentration and broad-
THE HEARING ON CORPORATE POWER
based wage stagnation or
decline is still a matter of some debate, the Economic Innovation Group argues
that when employers’ power in a labor market is substantial, this allows firms
“to exert downward pressure on wages.”459 Other studies have found that
labor market concentration may contribute to “declining job-to-job mobility,”
“rising inequality of earnings for workers in different firms,”460 and unsafe or
hazardous working environments.461
The Effect of Market Concentration on Prices
The ability of companies in uncompetitive sectors to set higher product
prices disproportionately hurts low- and moderate-income households,
deepening economic disparity. Higher prices for necessities like health care,
housing, energy, phone and internet service, and food cut more deeply into
limited incomes, increasing economic insecurity and reducing these families’
ability to build wealth.
A study of eight OECD countries, including the United States, found that
“market power increases the wealth of the richest 10% by between 12%
and 21% . . . while it reduces the income of the poorest 20% by between
14% and 19%.”462 America’s high racial wealth disparities are also likely to be
impacted.463 In addition, the OECD found that decreased competition and
increased consumer expenses may slow U.S. productivity growth.464
The Effect of Market Concentration on
Small Business
Small businesses are clearly affected by corporate consolidation. “Sixty-five
percent of small businesses said that a top challenge was big competitors
strong-arming suppliers and receiving special discounts from them, which
House Select Committee on
142 Economic Disparity & Fairness in Growth
then delays shipments to small businesses and forces suppliers to charge
them more," Michael Mitchell, the Groundwork Collaborative’s director of
policy and research, said, reporting the findings of a 2022 survey.465
Dominant companies can exert such pressure on suppliers and drive
out smaller businesses by lowering consumer prices below cost with the
expectation that they will be able to raise prices later. Mom-and-pop stores
often disappear when a chain superstore enters the market.466
Corporate consolidation risks driving out smaller competitors for essential
goods in underserved rural and urban areas. Mega-chains, which lack the
community ties that small businesses have, may be quick to leave if they are
unprofitable, even after draining communities of resources and opportunity
and forcing small businesses that cannot match their prices to fail.
Committee Findings and Recommendations
Increasing concentration and reduced competition in several sectors in recent
years exacerbate disparities between wage- and price-setting businesses and
most Americans. The Committee believes that antitrust policy has not kept
up with changes in the economy.
There is broad, bipartisan concern that current antitrust law is inadequate to
protect and promote competition. In 2021, the House Judiciary Committee
passed five bipartisan bills to rein in the abuses of big tech monopolies, and
Sens. Jon Tester (D-MT), Chuck Grassley (R-IA), and Mike Rounds (R-SD)
introduced legislation to address anticompetitive practices in the meat and
poultry industries. As Senator Rounds observed: “Congress knew in 1921 what
we know today – anticompetitive behavior in the meatpacking industry hurts
both consumers and producers.”467
There is also bipartisan agreement that federal antitrust enforcers do not have
sufficient funding to adequately enforce existing antitrust laws. Former FTC
Chair Joe Simons testified in 2019 that “[t]he largest obstacle to enforcement
remains resources.”468
Current FTC Chair Lina Khan told the Senate Judiciary Committee’s
Subcommittee on Antitrust, Competition Policy, and Consumer Rights in
2022: “Despite the increased appropriations Congress has provided in recent
years, we continue to lack sufficient funding.”469
The Committee urges Congress to provide the FTC and the Justice
Department’s Antitrust Division with more resources. The Committee
also recommends amending federal antitrust laws to make it easier for
government enforcers and private plaintiffs to prove that firms have entered
into anti-competitive agreements, engaged in anticompetitive behavior, or
proposed anticompetitive mergers—and to secure prompt and effective relief
from courts against those illegal behaviors.
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An Unlevel Playing Field 143
Conclusion
WHERE WE GO FROM HERE 7
SELECT COMMITTEE MEMBERS ENGAGE WITH PANELISTS AT OUR
INFRASTRUCTURE AND CORPORATE POWER HEARINGS
Economic disparity and lack of opportunity are critical national problems.
Nine years ago, President Obama called inequality “the defining issue of our
time.” It still is. Inequality can be found in every corner of the country. While
people of color, women, those with less education, and other subsets of our
population are disproportionately affected, disparity does not discriminate
based on partisan affiliation or political philosophy. It holds too many
Americans back from living their best possible lives. And it holds our nation
back from having the most dynamic and productive economy possible, one
that stands heads and shoulders above the rest of the world.
The mission of the Committee — closing the prosperity gap and reshaping
the economy to work for all Americans — is one of the most audacious and
consequential objectives in American history. Policy proposals discussed
throughout this report recognize past oversights and look to a future
where the American Dream can be achieved, regardless of any American’s
race, gender, age, background, or birthplace. No simple panacea exists for
the disparities that pervade the U.S. economy and American society. Our
legislative proposals exemplify the practical, analytically sound approaches
needed to change course and build economic resilience. As we look ahead to
the 118th Congress and beyond, we see a moral and democratic imperative
to support the common goal of ensuring that all Americans have equal
opportunities to thrive in a time of rapid economic change.
House Select Committee on
144 Economic Disparity & Fairness in Growth
With the country facing levels of inequality not seen for generations, the
Committee — in consultation with many of the country’s preeminent scholars,
economists, and policy analysts — has identified targets where enhanced
and well-designed federal investments can help rebalance the economy
and close widening gaps in wealth, income, and broad socioeconomic
well-being. That is why we call for initiatives to invest in people and
communities, strengthen economic security programs, address inequities in
the tax code, and tackle power imbalances between employers and workers.
Federal, state, and local lawmakers — together with the private sector, faith
communities, and philanthropy — can help turn the page on economic
disparity in America by taking action to provide hope to struggling families and
individuals. The investments we propose also take into account racism and
discriminatory policies and practices in our nation’s history that contributed
to today’s inequities.
The extent and impact of the problems associated with inequality and
diminished social mobility demand a national response devoid of the tribalism
and partisan entrenchment that have divided communities and turned
neighbors against each other. They demand a spirit of compromise and
mutual understanding. Compromise is possible, as seen by the passage of
bipartisan legislation like the infrastructure law, the CHIPS and Science Act,
and the PACT Act expanding veterans’ health care.
Despite the different perspectives and policies offered by Committee
Democrats and Republicans, many proposals reflect the Committee’s
decision to leave the confines of the Capitol and listen to Americans where
they live. All too often, policy debates lack a visceral sense of the struggles
and hopes of our nation’s more than 330 million people. As both Chairman
Himes and Ranking Member Steil have acknowledged, “there is immense
power and wisdom in personal stories. Only so much can be learned from the
dense jargon and obscure statistics inundating Capitol Hill.” And we believe
that by truly listening to Americans from diverse backgrounds, we can lower
the temperature of our polarized politics.
With this in mind, the Committee chose to build its report and work from the
moving stories of everyday Americans presented at hearings and captured
in the groundbreaking documentary film detailing three different, arduous
paths taken to economic security and mobility.
Entrepreneurs like Janna Rodriguez of New York shared her perspective that,
despite small businesses being the backbone of America’s economy, would-
be entrepreneurs struggle to access necessary resources to make their dreams
a reality. Rural residents like Michelle Schroeder of Minnesota discussed the
daily challenges that she and her neighbors face because limited broadband
connectivity hampers their ability to work, access telemedicine, and stay in
touch with friends and family.
Homeowner Rae Johnson of Wisconsin told of their journey navigating the
housing market as a first-time home buyer, as they saved money and built
their credit. Early education specialist Marc Jaffe of Connecticut spoke
passionately about how important it is to invest in young children, including
those with disabilities, as well as their teachers.
CHAPTER 7
Conclusion 145
These stories shed light on the barriers Americans face in their shared pursuit
for prosperity that statistics alone cannot. They also illuminate ways that
lawmakers can develop policies to level the playing field and make the
economy more inclusive.
Economic disparity and the lack of good opportunities for all Americans are
challenges that have an impact on nearly every facet of our society. If we
don’t take action, these problems will further hinder the nation’s potential
for innovation and growth. They will erode our democratic institutions and,
most tragically, they will make the American Dream impossible for too many
of our people. That is why every elected representative must work together
to help every American achieve the bright and prosperous future that they
so richly deserve.
House Select Committee on
146 Economic Disparity & Fairness in Growth
CHAPTER 7
Conclusion 147
Minority
Views
PERSPECTIVES AND RECOMMENDATIONS
8
American workers and families are struggling. Over the last two years, costs
have gone up, families cannot afford the same life they previously lived,
and constructive leadership in Washington, D.C. has been absent. In fact,
the ruling party continued to double down on
reckless spending policies and ended up making
things worse. Republican Members of the Select
Committee on the Economy have taken the
last year to hear from American workers and
families on how bad things have gotten and,
more importantly, what steps they can take to
open more doors to opportunity. The common
RANKING MEMBER theme across all the hearings, roundtables, and
BRYAN STEIL
field trips the committee has undertaken is that
the cost of one-party rule in Washington, D.C. is far too high. Americans need
policies focused on bringing down costs, growing the economy, creating more
opportunities, and holding leaders in Washington, D.C. accountable to the
people they serve.
The Select Committee on the Economy, formally named “The Select Committee
on Economic Disparity and Fairness in Growth” by Speaker Nancy Pelosi (CA-11),
was formed at the Speaker’s direct order to justify her ineffective, out-of-touch,
and inflationary policies that have pushed America
into a recession when the economy should have
been roaring back to life after the pandemic ended.
Republican members, under the leadership of
Ranking Member Bryan Steil (WI-01), included Rep.
Warren Davidson (OH-08), Rep. Jodey Arrington
(TX-19), Rep. Stephanie Bice (OK-05), Rep. Kat
Cammack (FL-03), and Rep. Byron Donalds (FL-19).
Members took the opportunity to highlight the REP. WARREN DAVIDSON
failures of Speaker Pelosi’s agenda and the financial
and everyday toll it placed on Americans. Republican Members believe every
American should have the opportunity to experience the freedom and prosperity
that America can offer.
House Select Committee on
148 Economic Disparity & Fairness in Growth
America was built on a strong foundation of families and communities, which
leads to a strong economy. Making sure people have family-sustaining jobs in a
strong economy is the foundation of growth.
Back in the economy of 2018-2019, real wages
increased by 6.8%.470 Rising wages were visible at
levels unseen in recent memory among a variety
of groups including women, blacks, Hispanics,
and veterans. Families were getting ahead.
Unfortunately, two years of one-party Democrat
control in Washington has erased that prosperity.
REP. JODEY ARRINGTON
From September 2021-2022, real wages declined
by 3.8% while inflation increased to a peak of 9.1%
in June 2022. Workers are struggling today to afford
the same life they could live just a year ago. Food
prices are through the roof.471 The cost of eggs is over
30% more expensive than last year and milk is 28%
more in the same time period. Gasoline and diesel
are almost double what they were in January 2021
after hitting all-time record highs at $5.01/gallon and
REP. STEPHANIE BICE
$5.82/gallon, respectively, in the summer of 2022.
Families are struggling to afford everyday essentials, and their communities
are becoming less safe. Across America, violent crime is rising. America’s
biggest cities are shattering homicide records and liberal politicians are letting
criminals back out on the streets. That crime wave has spilled over into smaller
communities, which are seeing burglaries and aggravated assaults spike as well.
Safety at the Southern Border has been neglected
as well. The controlling party in Washington, DC has
ignored the worsening conditions at our nation’s
Southern Border, where cartels are trafficking
criminals and deadly drugs into the country every
day. In 2022, 98 people from the terrorist watch
list were caught crossing the Southern Border,
more than 5 times higher than the previous 5
years combined.472 REP. KAT CAMMACK
And while Border Patrol is dealing with migrants
coming over the border, cartels smuggle dangerous
drugs like fentanyl into the country to poison our
communities. Last year, there were more than
100,000 drug deaths in America fueled by a rise in
deadly fentanyl that can kill someone on his or her
first use.473 Opioid overdoses are now the leading
cause of death for ages 18-45 and affect every
REP. BYRON DONALDS
community from coast to coast.474
After dozens of hearings, roundtables, and field trips across America, Republican
Members of the Select Committee on the Economy are prepared to offer a new
vision for America where life is affordable, safe, and free.
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Minority Views 149
A Prosperous Economy
“American small business
creation is one of the
most powerful economic
forces in the world. In no
other country is it as easy
and rewarding to go on to
pursue entrepreneurship
as here. Americans have
an unparalleled privilege to
improve our living standards
through entrepreneurship,
which provides employment
opportunities and enormous value to our communities… I fear that I would not
have been able to start my own business if I were beginning today. One of the
biggest problems American small businesses face right now is high inflation.
It must be addressed in order to turbocharge creation and growth. Officially,
American businesses are approximately 10 percent inflation in their inputs.
But in my restaurant experience, our supply costs are rising even faster. For
instance, a box of limes that I used to be able to find for $30 now costs me
$90. I have been forced to raise prices just to stay profitable, alienating my
loyal customers on a fixed income who do not understand my predicament.”
Name: Ms. Dina Rubio, Owner of Don Ramon Restaurant in West Palm
Beach, Florida
Hearing: Big Ideas for Small Businesses
Location: Washington, D.C.
Date: March 16, 2022
Inflation at Time of Hearing: 8.5%
Unfortunately, stories like Ms. Rubio’s are not uncommon across America
right now. But it should not stay that way. A strong economy is the backbone
of opportunities for workers to prosper and families to get ahead. Economic
opportunity allows for growth, including family-sustaining wages and the
ability for Americans to live the kind of life they want for their families. That
was the economy America had leading up to the Covid pandemic.
The pandemic is over, but that prosperity has not returned. Inflation is
clobbering workers’ paychecks and families are falling behind. This inflation
stems from two years of excessive federal spending with nothing to show for
it but economic headwinds, higher prices, and workers continuing to remain
out of the labor force.475
House Select Committee on
150 Economic Disparity & Fairness in Growth
Figure 20: The Cost of the Biden Agenda
In roundtables, Members heard how the federal government spent over $1.9
trillion in three partisan actions. That is more than the entirety of the private
sector payroll for almost a year.
In the hearing centered around simplifying the tax code on June 22, Members
heard from Dr. Angela Rachidi, Rowe Scholar at
the American Enterprise Institute, about workers
who are staying on the sidelines or have left
the workforce altogether. Because of excessive
government spending, these people are achieving
a similar standard of living with little to no work
rather than working full time. In fact, potential
low-income workers have accumulated, on average,
$5,500 in savings. This comes from excessive
Covid-era government benefits that have been DR. ANGELA RACHIDI
handed out for far too long. And according to the
Census Bureau, these excessive benefits have kept over 20 million workers
out of the workforce altogether.476 Work is the most effective tool against
poverty, for upward economic mobility, and
for the well-being of children and families. The
federal government should be encouraging, not
discouraging, opportunities for more Americans to
have a better life than what government benefits
can offer.
What were the repercussions of these disastrous
policies? First, America saw inflation skyrocket,
MR. SHAY HAWKINS reaching 9.1% in June 2022, the highest in 40
years.477 Inflation is insidious because it hurts
everyone. However, high inflation like the country has seen since January
2021 hits seniors and those living on fixed incomes the hardest. The red-hot
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Minority Views 151
inflation that clobbered American workers has effectively stolen a month of
pay. When work only pays 11 months for 12 months of labor, families cannot
grow and prosper. In the committee’s first field hearing in Lorain, Ohio on
October 18th, 2021, Mr. Shay Hawkins, President of the Opportunity Funds
Association, described inflation as “a tax on everybody.” Record inflation is
regressive, hurting the poorest Americans the hardest.
In fact, the 2022 holiday season is poised to be the most expensive on record,
with food costs up 21% on average. Turkey costs 20% more than last year,
which was already 25% more expensive than the year before. Butter and
margarine are up 27% and 44%, respectively. Potatoes are almost 18% more
expensive than last year and fresh vegetables round it off at 9.2% higher.
This translates to less money for families when they have to pay more for the
same amount of food.
Figure 21: Consumer Price Index, 12 Month Inflation Change
SOURCE: BUREAU OF LABOR STATISTICS, HTTPS://WWW.BLS.GOV/CPI/
Food is not the only necessity hitting record-high costs for families stocking
their pantries. The cost of energy, including gasoline and diesel, is hitting
record highs too. American families are dreading every trip to the gas pump. In
January 2021, before one party rule took control of Washington, gasoline cost
$2.38/gallon. In June 2022, gas prices peaked at $5.01/gallon, a more than
100% increase. In the same interval, diesel fuel prices climbed from $2.68/
gallon to $5.82/gallon. American workers and families cannot thrive if the
fuel that moves their cars, produces their goods, and powers their machines
is 100% more expensive.
With record-high energy prices, it is imperative that lawmakers focus on
unleashing American energy. There is an enormous domestic supply of natural
resources that cannot be accessed because of liberal government policies.
If the nation were to reverse course and allow that supply into the market,
utility bills and prices at the pump would fall.
House Select Committee on
152 Economic Disparity & Fairness in Growth
Figure 22: Weekly U.S. Regular Retail Gasoline Prices (LEFT) and Weekly U.S.
Retail Diesel Prices (RIGHT)
SOURCE: U.S. ENERGY INFORMATION ADMINISTRATION, GASOLINE AND DIESEL FUEL UPDATE
One example of bad policy was canceling the construction of the Keystone
XL Pipeline. Not only would the pipeline have increased access and supply
to consumers, but it would also negate reliance on foreign energy, improve
national security, and open up thousands of new jobs for American workers.
The committee heard from Mr. Neal Crabtree, a foreman on the Keystone
XL pipeline whose job, along with hundreds of others, was eliminated by
the stroke of a pen on January 20, 2021 by President Biden. The proposed
pipeline was a privately funded project to connect American consumers with
domestically and Canadian produced energy, and provide skilled workers with
family sustaining jobs. The XL pipeline would have produced 830,000 barrels
a day reducing reliance on sources outside North
America. Following the cancellation of the pipeline’s
construction, gas and energy costs for American
consumers began to skyrocket as the country was
forced to import more foreign energy. Thousands
of American workers had their jobs eliminated.
Today, American consumers are dealing with the
consequences of that loss.
In a hearing centered around American infrastructure MR. NEIL CRABTREE
on February 9, 2022, Members discussed the
skyrocketing cost of roads and public transit thanks to excessive government
regulation. For example, Ranking Member Steil referenced the cost to build one
mile of a subway in New York City was about $5 billion, seven times the global
average for similar projects because of excessive red tape forced on builders
by the government at all levels.
The economic hardship workers and families across the country are facing
has a direct link to bad policy decisions in Washington, D.C. Workers have
been on the sidelines for too long and need to go back to work. Two years of
excessive federal spending has sent inflation to record highs. Higher costs
mean less money for families to afford everyday items.
Members of the committee have put forward several solutions to get the
economy back on track. There is no greater economic threat to workers’
abilities to live the kind of lives they want than the current record-high inflation.
CHAPTER 8
Minority Views 153
The soaring prices for food, transportation, energy, and virtually everything
else means families cannot afford the lives they lived a year ago, and it also
means they cannot save for the future. The solution to getting inflation under
control is getting spending under control and unleashing American energy. To
get spending under control, lawmakers need to exercise fiscal discipline and
prioritize spending on projects most effective in helping American workers
and families.
Select Committee Member Led Solutions
H.R. 3448: “The Helping Startups Continue to Grow Act,” Rep. Bryan Steil (WI-
01):
This bill reduces the regulatory burden on startups and allows them to focus
on creating valuable products instead of navigating a maze of regulations.
H.R.6217: “The Expanding Access to Affordable Credit for Small Businesses
Act,” Rep. Byron Donalds (FL-19):
This bill expands the pool of potential lenders to get small businesses up and
running and provides more competition for better interest rates.
Additional Actions
HR 8913: “The TCJA Permanency Act”
This bill makes the key provisions of the 2017 Tax Cuts and Jobs Act permanent.
Certainty against tax increases helps workers plan for the future and keep
more of their hard-earned money.
House Select Committee on
154 Economic Disparity & Fairness in Growth
Safety in American Communities
“Illicitly manufactured fentanyl has
zero medicinal purpose. It is distributed
through illegal drug markets for its
heroin-like effect and is often added to
drugs because of its extreme potency
which makes drugs cheaper, more
powerful, more addictive, and thus
much more dangerous… Fentanyl is 50
to 100 times stronger than morphine
and is only slightly less deadly than
nerve gas and just as deadly as ricin,
both of which are considered weapons of mass destruction. An amount
equivalent to a grain of salt can cause death. Fentanyl is almost always
consumed accidentally. Most do not seek out to use or abuse fentanyl. Fentanyl
and other synthetic opioids are efficient and cost-effective for drug producers
and traffickers, and often deadly for those who consume them. Unless you
overdose in an emergency room, your chances of survival are slim. Even if
someone with the opioid reversal med Narcan finds you overdosed and uses
it on you, the chances you survive are still not great.”
Name: Dr. Katherine Pannel, Medical Director of Right Track Group
Hearing: Substance Abuse and Addiction: Destroying Families, Communities,
and the Opportunity for Prosperity
Location: Washington, D.C.
Date: March 2, 2022
Inflation at the Time of Hearing: 8.2%
The increasing flow of deadly drugs into communities across America threatens
the safety of every community. Every American has the right to feel safe. Whether
someone is leaving their house to get groceries or traveling to a different state,
Americans should feel safe in their communities.
Unfortunately, this is increasingly not the case. Across the country, both smaller
communities and big cities alike are becoming less safe. Nationally, robberies
are up 12% and aggravated assault is up 3%. It is worse in America’s biggest
cities. Compared to 2019, aggravated assaults are up 36% and murder is
up 50% in 2022. Nine major cities are on track to set new homicide records.
The combined population of these nine metro areas is over 65 million people,
roughly 20% of the national population. Because of the safety issues in cities,
many established businesses are relocating to safer communities and taking
workers with them. When jobs dry up and workers leave, the fabric that holds
communities together falls apart.
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Minority Views 155
This rise in crime is further fueled by lawlessness at the country’s Southern
Border where cartels are going unchecked in smuggling dangerous drugs,
including fentanyl, to sell across our country. The lucrative drug trafficking
business is a multi-billion dollar operation for criminal cartels.
The influx of drugs, specifically fentanyl, at the border has had a devastating
effect on communities across the country. Since January 2021, 20,000
pounds of fentanyl have been seized at the Southern Border by federal,
state, and local law enforcement.
That comprises enough potentially
fatal doses to kill every American
13 times over.
Members of this committee have
seen the dangers this country faces
firsthand. During a field hearing in
McAllen, Texas, members heard from
local leaders about illegal migrants
flooding into their communities,
RECORD 1 MILLION PILLS WITH FEN- overflowing jails, and creating
TANYL SEIZED BY THE U.S. DRUG EN- massive court backlogs and stacks
FORCEMENT AGENCY, JULY 2022 478 of paperwork.
They are also diverting local services like police officers and ambulances
during emergencies. The committee heard the story of a long-time community
resident who was unable to get the emergency medical care he needed during
a heart attack because the town’s single ambulance was helping a struggling
migrant who also needed care. The man ultimately died when he could have
been saved with timely medical care. The Members also saw Texas Public
Safety (TPS) officers apprehending illegal migrants trafficked across the border
by cartel members lacking enough food and water for the desert conditions.
The open border has created a humanitarian crisis.
Members also heard Ms. Susan Kibbe, President of the South Texas Property
Rights Association and a local rancher herself, talk about the hardships she and
other ranchers face because of the border crisis. Many ranchers are too afraid
to leave their homes at night, especially unarmed.
Regularly, dangerous armed cartel members
trespass while trafficking migrants, often leaving
behind some who go on to suffer heat stroke and
die. Landowners discover these tragedies, along
with piles of trash and drugs. Ms. Kibbe explained
that TPS does its best to apprehend cartel members
and stem the flow of illegal migrants, but that they
are simply too understaffed and underfunded to MS. SUSAN KIBBE
be effective everywhere at all times, which is a
weakness the cartels exploit. While state-funded TPS works around the clock
to stem the tide of illegal activity on the border, federal Border Patrol Agents
are forced to stand down by an Executive Branch that has abandoned its duty
to protect communities and farmers at the Southern Border.
House Select Committee on
156 Economic Disparity & Fairness in Growth
Scenes from South Texas, Broken Fences and a
Truck that Ran into a Storage Shed
IMAGES COURTESY OF THE SOUTH TEXAS PROPERTY RIGHTS ASSOCIATION
In 2021, more than 100,000 Americans died of an opioid overdose, a new
record fueled by the rising prevalence of fentanyl. That figure is up 300%
since 2012. One key detail is that many of these deaths are poisonings
thanks to fentanyl disguised as other drugs like Xanax or Adderall. Fentanyl
is 50 times more potent than heroin and 100 times more potent than
morphine. This dangerous substance has become a nefarious presence in
communities across America. Because fentanyl is so potent and dangerous,
it is killing thousands of Americans on their first use. Fentanyl is not just
contributing to a crisis of addiction; it is creating an entirely new crisis of
poisoning that immediately results in death.
Substance abuse has changed. Figure 23: US Overdose Deaths,
Death now comes to someone with by Substance, 1999-2021
no behavioral indicators towards
substance abuse because just one
pill can kill. “Opioid deaths have
become so commonplace, they are
equivalent to a fully booked 747 jet
crashing every day,” said Mr. Michael
Gray, a panelist at the committee’s
substance abuse roundtable, who
lost his daughter Amanda to fentanyl
poisoning at just 24 years old. The
same night Amanda died, six other
people in her city died as well due
to fentanyl poisoning, likely from
SOURCE: KEATING, DAN AND BERNSTEIN, LENNY.
“100,000 AMERICANS DIED OF DRUG OVERDOSES IN
12 MONTHS DURING THE PANDEMIC.” WASHINGTON
POST, NOVEMBER 17, 2021.
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Minority Views 157
the same batch of drugs from a single dealer. The
presence of this deadly narcotic is a threat to the
safety of all Americans when left unaddressed.
This crisis is putting Americans in danger, as opioid
overdoses are now the leading cause of death for
Americans aged 18-45.
MR. MICHAEL GRAY
Select Committee Member Led Solutions
HR 378 “The David Dorn Act,” Rep Jodey Arrington (TX-19):
This bill increases the criminal penalties for inciting and participating in a riot,
doubling the maximum potential prison time from five to 10 years and setting the
minimum fine at $1,000.
HR 377 “The Patrick Underwood Act,” Rep. Jodey Arrington (TX-19):
This bill increases the penalties for assaulting, resisting, or impeding law enforcement
officers in the line of duty.
HR 5831 “The Protect Our Communities from a Porous Border Act,”
Rep. Jodey Arrington (TX-19):
This bill prohibits the federal government from relocating illegal migrants to a state
without a state’s consent and compels the Department of Homeland Security to
check if a migrant has a criminal history and notify a state before relocating the
migrant there. Empowering states to take control will force transparency out of
the executive branch in issues of immigration.
HR 8561 “The Stop the Cartels Act,” Rep. Warren Davidson (OH-08):
This bill includes common-sense reforms to reduce human trafficking, increase
bilateral efforts to stop crime at the southern border, and reduce illegal immigration
Additional Actions
HR 2070 “The POWER Act”
This bill gives the Department of Justice the authority to issue grants to local
police departments to screen for fentanyl and other dangerous drugs to keep law
enforcement officers equipped for dangerous situations and more effective in the
line of duty.
HR 6184, “The HALT Fentanyl Act”; HR 2041, “The SIFT Act”; HR 2209,
“The Stopping Overdoses of Fentanyl Analogues Act”:
These bills classify fentanyl and five of its deadly analogs as Schedule I Substances,
meaning they have almost no practical medical or everyday use and pose a high
threat to users. Schedule I status also means criminals found distributing this
poison to communities face larger punishments for distributing it to communities.
House Select Committee on
158 Economic Disparity & Fairness in Growth
Freedom for the Future
“Kids are our future. We have failed
them by neglecting to educate them
during school closures and isolating
them and their friends. And now we
have a whole generation that is not
equipped with the education they
deserve and the tools they need to
thrive… I decided to homeschool [my
6-year-old son] rather than do school
virtually. During the school closures, I
struggled to keep my children inspired
to learn and to stay motivated and learn the importance of tailoring each
individual child’s education to his and her learning needs… I know I’m not
alone, nor are my children or the children that come through my center. There
are thousands, maybe millions, of parents and children with similar stories like
mine. Even though schools are open again, I am still homeschooling [my 6-year-
old]. I remain concerned that the masking, social distancing requirements, and
the school’s overuse of iPads would be unhealthy for his young development
stage… My teenage daughter and her peers have struggled with their return
to school during the mobile learning. My daughter’s school did not provide
lessons. They just gave them a bunch of assignments online. As a result, the
high school kids did not learn. Unfortunately, even though schools are open
now, the kids are still primarily on iPads.”
Name: Mrs. Denise Ladson Johnson, Mother from South Carolina
Hearing: Investing in American Families
Location: Washington, D.C.
Date: December 8, 2021
Inflation at Time of Hearing: 7.0%
Sadly, Mrs. Johnson’s story is not unique and is the result of limited freedom
for parents to do what is best for their children and families. When the nation’s
report card was released earlier this year, results showed that months and
even years of closed schools resulted in the loss of 20 years of progress in
math and reading scores.479 The severe learning loss resulting from excessive
school closures is set to cost students $17 trillion in lost potential wages,
according to a World Bank estimate.480 The OECD also estimates global GDP
will reduce by 1.5% per year for the rest of the century due to government-
mandated school closures and its resulting learning loss.481
Reversing these losses will be complicated and take a lifelong learning approach
to overcome. From the earliest days as a three-year old in a quality pre-school
setting through to a worker’s mid-career change to a high-growth industry,
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Minority Views 159
education combined with the economic opportunities this nation has to offer
will be required to overcome the consequences of the disastrous decisions
to close our schools.
At the committee’s field hearing in Kenosha, Wisconsin, in Ranking Member
Steil’s home district, Members heard from Ms. Sherry Carrion, a recent graduate
of Gateway Technical College. Ms. Carrion first graduated from Gateway in
1987, but with the changing economy and a different desire for her career, she
returned to Gateway to pursue a degree as a nursing
assistant, inspired by the passing of her father the
year before. She now has a career she is proud of,
that is fulfilling, and she earns more than she had
previously. Sherry personifies lifelong learning.
On the same trip to Wisconsin, Members traveled
to Milwaukee to discuss housing discrimination. In
the hearing, Ranking Member Steil reinforced the
MS. SHERRY CARRION
necessity of a good education, and by extension
school choice for parents, as a driver of overcoming past discrimination.
Milwaukee pioneered school choice by using funds for students and not school
systems. By doing so, education dollars follow students to schools that parents
believe are the best fit for their children rather than locking them into a failing
school because of their ZIP code, providing more opportunities for students
and families. The one-track system of a ZIP code determining where a child
goes to school, and the quality of education they receive, is antiquated. It
limits future opportunities and wages for today’s students.
Opportunity also means that workers have control of how and when they
work, not the government. In a field hearing in Seattle, Washington, Members
heard about the detrimental effects that excessive government mandates
have had on gig workers. The one-size-fits-all mandates in Seattle hurt gig
workers’ opportunities to work and earn as best fits their situation. According
to research at the Harvard Business School, gig workers place significant value
on flexibility.482 For many, the freedom to use their time as they see fit, including
for child care or personal time is the highest priority. The simple fact is that gig
jobs mean freedom for workers. Mandating structure and controls from the
government removes the freedom that makes gig work so attractive for 16%
of the nation’s workforce.483
Freedom is a central value to who we are as Americans. It is what propels
individuals and families from the bottom rungs of the economic ladder to
the top. The success freedom breeds is the reason millions of people want
to come to the United States. But to remain a leader in an ever-changing
global economy, America needs workers who are ready to fill the jobs of today
and be prepared to take on the challenges of tomorrow. The importance of
education starts as early as Mrs. Johnson’s six-year-old in front of an iPad,
and continues throughout a worker’s entire career, as told by Ms. Carrion. .
Freedom allows gig workers to thrive in a way that best suits the needs of
their family. A competitive, skilled worker has the opportunity to command
a competitive wage with decreased risk for unemployment – a true recipe
for economic success.
House Select Committee on
160 Economic Disparity & Fairness in Growth
Figure 24: Real Median Household Income by Race and Ethnicity,
2000-2019
Before 2020, there were enormous opportunities for employment and family-
sustaining wages across America. Real wages were rising across the board.484
In 2022, that progress has been lost and families are falling farther behind.
Real wages are falling and opportunities for a family-sustaining wage are drying
up as America weathers the effects of a pending recession and record-high
inflation. Under one-party rule, the federal government spent too much money,
too fast, while keeping workers at home and on the sidelines. The continued
federal designation of the pandemic emergency has kept the spigot of federal
benefits needlessly flowing. As a result, today there are nearly 11 million open
jobs in the US waiting to be filled while 20 million workers continue to stay
out of the labor force, all while prices continue to rise.485
The solution to these problems is to maximize educational and economic
opportunities for current and future workers in America. It is a recognition that
learning should start early and be lifelong so America’s workforce remains the
most competitive in the world. Government should not be standing in the way
of students and workers pursuing their own path to family-sustaining wages
for the economic gains of their families, their communities, and the nation.
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Minority Views 161
Select Committee Member Led Solutions
HR 6436 “The Workforce and Education Partnership Act,” Rep. Stephanie
Bice (OK-5):
This bill connects employers to educational institutions to give workers opportunities
upon graduation for a family-sustaining wage.
HR 7860 “The Financial Freedom Act of 2022,” Rep. Byron Donalds (FL-19):
This bill prevents the Department of Labor from deciding where workers can invest
their 401(k) earnings and instead returns that choice to the worker earning the
money, opening more doors for opportunity and investment.
Additional Actions
HR 2954 “The Securing a Strong Retirement Act of 2022 (SECURE 2.0)”:
This bill makes various changes with respect to employer-sponsored retirement
plans, including providing for the automatic enrollment of employees in certain
plans and increasing the age at which participants are required to begin receiving
mandatory distributions.
HR 2990 “The Gig Worker Equity Compensation Act”:
This bill prevents state governments from infringing on a worker’s freedom. Instead,
it gives workers the opportunity to choose for themselves by preventing states
from classifying them only as employees instead of independent contractors. This
gives the choice to workers and keeps state governments from forcing mandates.
House Select Committee on
162 Economic Disparity & Fairness in Growth
Government Held in Check
“While we appreciate the attention of
the theater of political campaigns, we
also believe that there is a purposeful
and intentional speed of government
and a speed of business. In [Elkhart]
county when addressing challenges,
we choose to move at the speed of
business. Too often the weight in any
other way is tiresome and frustrating.
In 2008 during the recession when our
unemployment rate was over 20%
National projections indicated it will take Elkhart 20 years if ever to recover.
By 2012 We had mostly righted the ship. This was done through the support
of local and regional entities that believed in and understood Elkhart County
Business communities, and our resilience has prepared us for times like this,
and we waited on outside solutions.”
Name: Mr. Levon Johnson, President of the Elkhart, Indiana Chamber
of Commerce
Hearing: How Targeted Place-Based Development Can Expand
Economic Opportunity
Location: Washington, D.C.
Date: May 11, 2022
Inflation at Time of Hearing: 8.6%
There can be no strong economy, no safe communities, and no true freedom
if the government is not accountable to the citizens it serves. Mr. Johnson’s
story of Elkhart, Indiana is a prime example. During the 2007 financial crisis,
Elkhart was a one-track economy with the majority of its value coming from the
RV industry. The federal government,
thinking it knew best, tried to come
in with a massive stimulus from
Washington, D.C. It was a colossal
failure that pushed Elkhart and the
surrounding areas into an even deeper
economic hole when the electric
truck manufacturing plant failed.
Yet, history is again repeating itself
with the $1.2 trillion infrastructure
package focused on green energy
because of a lack of discipline in
RV MANUFACTURING FLOOR IN
ELKHART, INDIANA
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Minority Views 163
Washington, D.C. to have the federal government hold itself accountable
both then and now.
What ultimately brought economic opportunity to Northwest Indiana was
not federal government bureaucracy. As Mr. Johnson shared, it was the local
leaders and residents. These leaders are accountable through elections, but
also their community relationship among one another. Community leaders
and residents know the strengths of their hometowns and what it has to offer.
Today, the federal government is again taking sweeping actions to impose
its will on local communities. Unilateral actions by the President combined
with bloated partisan bills mean trillions in taxpayer and borrowed dollars are
being administered by D.C. bureaucrats hundreds of miles away. The primary
means of government interference is through federal regulations. Red tape is
estimated to cost the American economy as much as $1.9 trillion per year in
direct costs, lost productivity, and higher prices.486 Costs to regulations are
only growing. Between 2000 and 2016, the federal government budget for
regulators, the agency staff responsible for drafting regulations, increased by
nearly 93%, and spending on economic regulation increased by 108%. During
that same period, however, the U.S. economy grew by only 32%, meaning
the regulatory infrastructure grew faster than the underlying subject matter
opening the door to new areas of regulation. Regulatory costs from rules issued
under the Biden administration thus far have cost the economy about $309
billion, a 50% jump compared to regulatory costs in the first two years of the
Obama administration when the federal government tried to “save” Elkhart.
Figure 25: Federal Means-Tested Benefit Programs and Spending in FY2018
SOURCE: RACHIDI, ANGELA, MATT WEIDINGER, AND SCOTT WINSHIP. “A SAFETY NET FOR THE FU-
TURE: OVERCOMING THE ROOT CAUSES OF POVERTY.”487
House Select Committee on
164 Economic Disparity & Fairness in Growth
Accountability should be at the core of every action undertaken by policymakers.
During the Committee’s hearing on the social safety net, which is a maze of state
and federal programs intended to help families, there was much discussion
about this lack of accountability. Decades of experience have shown that more
money and more government programs does not lead to economic mobility
for those who most need it.488 Programs often trap families rather than help
them experience the economic opportunity the nation has to offer. There is
a lack of accountability to the families receiving benefits and the taxpayers
who fund them.
Figure 26: Federal Outlays on Safety-Net Programs, Excluding Health-
Related Spening in Constant (Fiscal Year 2012) Dollars; 1962-2019
Ms. Heather Reynolds, Managing Director of the University of Notre Dame
University’s Lab for Economic Opportunity (LEO) encouraged policymakers
at the hearing to shift from short-term solutions to long-term solutions. This
meant that while the focus on stable housing, affordable food, and valuable
credentials is a worthwhile endeavor, policymakers should prioritize longer-
term metrics like employment, job retention, and earnings. She advocated
in the hearing for achieving these economic outcomes by using evidence-
based programs. This means federal policymakers
should prioritize programs that have a rigorous
evidence base, and they should apply rigorous
evaluations to current funded programs to keep
what works and modify what does not. This
approach results in the biggest strides toward
improving economic outcomes for families, and
restoring their accountability.
There are policies and approaches that are proven MS. HEATHER REYNOLDS
to be effective, yet they are ignored. Take the
Success Sequence as an example. It involves three steps: graduate from high
school, work full time, and get married before having a child. The research
says “that among Millennials who followed this sequence, 97% are not poor
CHAPTER 8
Minority Views 165
when they reach adulthood.”489 These are the outcomes that policy should
be driven toward.
Instead, teachers’ unions were prioritized over students in the closing of
schools. The results released in 2022 from the National Assessment of
Educational Progress, better known as the “Nation’s Report Card,” shows
a lack of accountability. Students experienced steep declines in math and
reading scores among U.S. fourth- and eighth-graders. The nation’s average
math score for fourth-graders fell by five points since 2019 (from 241 to 236,
out of a possible 500). Eighth-graders’ national average math score dropped
by eight points (from 282 to 274, out of a possible 500). Average reading
scores for both grades fell by three points. Scores in a group of large urban
school districts fell by similar margins.490
Figure 27: Mathematics Scores Declined Most for Those Already Behind
SOURCE: HTTPS://WWW.NATIONSREPORTCARD.GOV/HIGHLIGHTS/MATHEMATICS/2022/
Accountability is a two-way street. States are sitting on billions in COVID funds
intended to address the learning losses experienced by students. States that
receive infrastructure funds should be held accountable for maximizing their
use for projects and not overhead. Schools that received COVID stimulus
funds should be using them to provide tutoring and extra academic help
to students who have fallen behind, but not all that has gone to improving
education outcomes.491 Work or preparation for work should be expected
from workless, able-bodied households who receive welfare benefits.
Without action to reinstate accountability on the trillions of dollars already
committed by Democrat-controlled Congress, families will suffer the economic
consequences. Mr. Johnson, who led his community from hard times to
prosperity, emphasized the need for governments to help communities thrive,
not dictate how they should operate. Government programs intended to
promote economic mobility for families should be accountable for achieving
desired outcomes and truly helping the families they serve. State governments,
local governments, and individuals should be accountable when entrusted
with taxpayer funds. Together, this is a more accountable structure that helps
families, communities, and the nation to grow and prosper economically.
House Select Committee on
166 Economic Disparity & Fairness in Growth
Select Committee Member Led Solutions
HR 7602 “The Fiscal Transparency Act,” Ranking Member Rep. Bryan Steil (WI-
01):
This bill compels government agencies to r`eport their annual spending and
allows Americans to see where and how these agencies spend taxpayer money.
HR 5688 “The People Care Act,” Rep. Warren Davidson (OH-08):
This bill simplifies and streamlines benefit systems, ensuring workers will
have more time to focus on finding a family-sustaining wage and less time
worried about paperwork and approaching “benefit cliffs.”
HR 4132 “The Unnecessary Agency Regulations Reduction Act of 2021,” Rep.
Byron Donalds (FL-19):
This bill aims to cut unnecessary regulations so that workers and businesses
can focus more on earning money and less time navigating government red
tape by creating a report of overbearing and duplicative regulations that
increase costs and make it harder for businesses to operate.
HR 1776 “The Regulations from the Executive in Need of Scrutiny (REINS) Act
of 2021,” Rep. Kat Cammack (FL-03):
This bill reforms the congressional rulemaking process so multi-million dollar
provisions can no longer be passed without scrutiny.
HR 4513 “The Small Business Advanced Cybersecurity Enhancements Act of
2021,” Rep. Byron Donalds (FL-19):
This bill creates a federal resource center to help prevent cyber attacks on
small businesses and aid businesses that fall victim to cyber criminals.
HR 8157 “The Clarity Act,” Rep. Byron Donalds (FL-19):
This bill outlines required public transparency from the federal government
in its procurement of food during supply chain crises.
HR 8562 “The Defense Production Oversight Act of 2022,” Rep. Byron Donalds
(FL-19):
This bill prohibits the executive branch from skirting Congress in pursuit
of partisan agenda items by activating the Defense Production Act, an
emergency bill that has been used to justify partisan projects without full
congressional approval.
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Minority Views 167
HR 9032 “The Controlling America’s Perilous Spending (CAPS) Act,” Rep. Jodey
Arrington (TX-19):
This bill gradually caps the amount the federal government is allowed to spend
as the national debt grows far beyond the value of annual GDP, forcing the
federal government to be more prudent with taxpayer dollars and the loans
lawmakers take out in taxpayers’ names.
House Select Committee on
168 Economic Disparity & Fairness in Growth
Minority Conclusion
America has experienced a rocky two years under one-party rule. While this
committee was created by Democrat leaders to justify their inflation-inducing
policies, Republican Members of the Select Committee on the Economy focused
on the issues affecting American workers and families. Costs have gone up,
groceries are unaffordable, trips to the gas pump are emptying wallets, home
heating costs are set to soar this winter, kids are not learning in school, and
layoffs are happening at major companies.
However, the struggles forced on Americans across the country from poor
leadership in Washington, D.C. do not have to continue. Members of this
committee have taken the time to hear from workers and families across the
country. They have listened to learn what has been successful and what has
not. Members have often thrown out Washington, D.C. formalities and hosted
roundtable discussions where more dynamic exchanges of ideas happened.
Members have flown across America to meet workers and families in their
own communities. This unique opportunity has yielded critical insights.
This committee discovered that when the government makes policies driven
towards proven success indicators like the Success Sequence, poverty is
dramatically reduced. When the government advances an agenda that gives
workers and families more freedom, Americans experience record wage
gains. When the government removes red tape and lets localities move at
the speed of business instead of the speed of government, communities
thrive. When the workers are gainfully employed instead of relying on the
government, the economy grows and incomes rise. When schools are open
and kids go to class in-person instead
of online, kids thrive and have brighter
economic futures.
Members have reimagined this
committee into a positive action
plan for the next Congress, hearing
what hurt workers and families under
one-party rule and how the country
can improve. The bills highlighted in
this report represent an agenda that
Members are committed to pursuing
in the next Congress. This is not just
a philosophy, but an action plan.
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Minority Views 169
Endnotes
Chapter 1: Introduction
1 Dorothea Lange, “Migrant Mother, Nipoma, California”
1 Dorothea Lange, “Migrant Mother, Nipoma, California”
2 House Speaker Nancy Pelosi announces the creation of the Select Committee on Economic Disparity and Fairness in Growth to
studyHouse
2 Speaker
inequality and Nancy Pelosi
disparities announces
in the economy the creation
and ofat
society, the Select
the Committee
Capitol in on Economic
Washington, Wednesday, Juneand
Disparity (APinPhoto/J.
Fairness
16, 2021,
ScottGrowth to study inequality and disparities in the economy and society, at the Capitol in Washington, Wednesday, June
Applewhite)
16, 2021, (AP Photo/J. Scott Applewhite)
3 Giving USA 2022: The Annual Report on Philanthropy for the Year 2021," Giving USA Foundation. June 21, 2022, https://givingusa.
3 “Giving USA 2022: The Annual Report on Philanthropy for the Year 2021," Giving USA Foundation. June 21, 2022, https://
org/wp-content/uploads/2022/06/GivingUSA2022_Infographic.pdf
givingusa.org/wp-content/uploads/2022/06/GivingUSA2022_Infographic.pdf
4 Mary King, "A Strong Economic Case for Federal Investment in Universal Preschool," Dec. 8, 2021, https://inequality.org/research/
4 Mary King, "A Strong Economic Case for
build-back-better-universal-preschool/; Federal
Andres S. InvestmentEric
Bustamante, in Dearing,
UniversalHenrik
Preschool,"
Daae Dec. 8, 2021,Deborah
Zachrisson, https://inequality.
Lowe Vandell,
org/research/build-back-better-universal-preschool/;
Kathy Hirsh-Pasek, “High-quality Andres
early child care and education: S. gift that
The Bustamante, Eric
lasts a Dearing, Henrik
lifetime,” BrookingsDaae Zachrisson,
Institution. Nov. 4, 2021,
Deborah Lowe Vandell, Kathy Hirsh-Pasek, “High-quality early child care and education: The gift that lasts a lifetime,”
https://www.brookings.edu/blog/education-plus-development/2021/11/04/high-quality-early-child-care-and-education-the-gift-
Brookings Institution.
that-lasts-a-lifetime/; OECD,Nov. 4, 2021,
“OECD https://www.brookings.edu/blog/education-plus-development/2021/11/04/high-
Skills Outlook 2021: Learning for Life,” June 15, 2021, https://doi.org/10.1787/0ae365b4-en
quality-early-child-care-and-education-the-gift-that-lasts-a-lifetime/; OECD, “OECD Skills Outlook 2021: Learning for
5 Josh Bivens, “The
Life,” June 15,potential macroeconomic benefits from increasing infrastructure investment,” Economic Policy Institute. July
2021, https://doi.org/10.1787/0ae365b4-en
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ic Inequality
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APPENDIX
Endnotes 171
40 Joseph M.
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https://lmi.mt.gov/_docs/Publications/LMI-Pubs/Special-Reports-and-Studies/ChildCareDesertsWhitePaper-FINAL.pdf
68 Meredith Johnson Harbach, "Childcare Market Failure," Utah Law Review: Vol. 2015: No. 3, Article 3, 2015,https://dc.law.utah.
72 “Occupational “The
edu/ulr/vol2015/iss3/3; Outlook Handbook:
Economics ChildcareSupply
of Childcare Workers, “U.S.
in the Bureau of
United Labor
States,” U.S.Statistics,” https://www.bls.gov/ooh/person-
Department of the Treasury, Sept.
al-care-and-service/childcare-workers.htm; A joint study by Columbia University, New York University, and the National
2021. https://home.treasury.gov/system/files/136/The-Economics-of-Childcare-Supply-09-14-final.pdf
Women’s Law Center noted that, even pre-pandemic, 16% of child care workers lived in poverty, many of which were wom-
69 Care.com 2022 Cost of Care Survey, June 2022 https://www.care.com/c/how-much-does-child-care-cost/; Grover J. “Russ”
en often struggling to afford care for their own children while they provide care for others. Hartley, Robert Paul, Chaudry,
Whitehurst, “Why the federal government should subsidize childcare and how to pay for it,” Brookings Institution, Mar 9,
Ajay, Boteach, Melissa, Mitchell, Estelle, and Menefee, Kathryn, “A Lifetime’s Worth of Benefits: The Effects of Affordable,
2017, https://www.brookings.edu/research/why-the-federal-government-should-subsidize-childcare-and-how-to-pay-for-
High-Quality Child Care on Family Income, the Gender Earnings Gap, and Women’s Retirement Security.” March 2021. Avail-
it/; Rasheed Malik, “Working Families Are Spending Big Money on Child Care” Brookings Institution, June 20, 2019, https://
able at: https://nwlc.org/wp-content/uploads/2021/04/A-Lifetimes-Worth-of-Benefits-_FD.pdf
www.americanprogress.org/article/working-families-spending-big-money-child-care/
73 Maureen Coffey, Rose Khattar, “The Child Care Sector Will Continue To Struggle Hiring Staff Unless It Creates Good
70 “Percentage of 3- to 5-year-old children enrolled in school, by age and selected child and family characteristics:
Jobs”Center for American Progress. Sep. 2, 2022: https://www.americanprogress.org/article/the-child-care-sector-will-con-
2010 through 2020,” National Center for Education Statistics. https://nces.ed.gov/programs/coe/indicator/cfa/enroll-
tinue-to-struggle-hiring-staff-unless-it-creates-good-jobs/; An October 2022 New York Times article reports that Bureau
ment-of-young-children
of Labor Statistics data suggest the industry shrunk by 100,000 workers. Dana Goldstein, “Why You Can’t Find Child Care:
71 Rasheed100,000
Malik, Katie Hamm,
Workers Are Leila Schochet,
Missing,” “America’s Child Care Deserts in 2018,” Center
Oct. 13, 2022: for American Progress, Dec.
https://www.nytimes.com/2022/10/13/us/child-care-worker-shortage.html
6, 2018:, https://www.americanprogress.org/article/americas-child-care-deserts-2018/; Amy Watson, "Child Care Deserts
74 The Child Care Development Block Grant was $6.2 billion in the fiscal year 2022 and is the Department of Health and
An Analysis of Child Care Supply and Demand Gaps in Montana," Montana Department of Labor and Industry, Aug. 2021,
Human Services’ main program to support low-income families with childcare. The GAO has found that of the 13.5 million
https://lmi.mt.gov/_docs/Publications/LMI-Pubs/Special-Reports-and-Studies/ChildCareDesertsWhitePaper-FINAL.pdf
children eligible for federal subsidies, only 1.9 million children received them. “Child Care: Subsidy Eligibility and Receipt, and
Wait Lists,” U.S. Government Accountability Office. Feb. 18, 2021. https://www.gao.gov/products/gao-21-245r; Jane Fillion,
APPENDIX
Endnotes 173
“50-State
72 A joint
Analysis
study by
Shows Columbia
Impact of
University,
Insufficient
NewChild University,
YorkCare Funding,”
andFirst
the Five
National
Years Fund.
Women’s Aug.
Law2, 2022.
Center noted
https://www.ffyf.
that, even pre-pan-
org/50-state-analysis-shows-impact-of-insufficient-child-care-funding/
demic, 16% of child care workers lived in poverty, many of which were women often struggling to afford care for their own
75 children
One study from while
Georgia they
— provide careeligibility
a universal for others. “Occupational
pre-K Outlook
state — showed Handbook:
preschool Childcare
classrooms Workers, “U.S. Bureau
in state-sponsored of Labor
facilities
Statistics,” https://www.bls.gov/ooh/personal-care-and-service/childcare-workers.htm; Robert
in low-income and minority communities were of significantly lower quality. Daphna Bassok, Eva Galdo, “Inequality inPaul Hartley, Ajay Chau-
Preschooldry, MelissaCommunity-Level
Quality? Boteach, Estelle Mitchell,
Disparities and
inKathryn Menefee,
Access to “A Lifetime’s
High-Quality LearningWorth of Benefits:Early
Environments,” The Education
Effects of Affordable,
and
High-Quality
Development, Child Care on Family Income, the Gender Earnings Gap, and Women’s Retirement
27:1, 128-144,https://www.tandfonline.com/doi/full/10.1080/10409289.2015.1057463; Security,”
“Economic National
Report of theWomen’s
PresidentLaw
and Center, MarchReport
the Annual 2021, https://nwlc.org/wp-content/uploads/2021/04/A-Lifetimes-Worth-of-Benefits-_FD.pdf
of the Council of Economic Advisors,” April 2022. https://www.whitehouse.gov/wp-con-
tent/uploads/2022/04/2022-ERP-Book-wCover-final.pdf
73 An October 2022 New York Times article reports that Bureau of Labor Statistics data suggest the industry shrunk by
76 100,000 workers. Dana
“OECD Family Database,” Organization Goldstein, for"Why You Can’t
Economic Find Child
Cooperation andCare: 100,000 Workers
Development, Are Missing," New York Times, Oct. 13,
https://www.oecd.org/els/family/data-
base.htm 2022, https://www.nytimes.com/2022/10/13/us/child-care-worker-shortage.html; Maureen Coffey, Rose Khattar, “The Child
Care Sector Will Continue To Struggle Hiring Staff Unless It Creates Good Jobs,” Center for American Progress. Sep. 2, 2022,
77 Enrollment rates of 5-year-olds have grown to over 85% in recent years, while for 4- and 3-year-old children, enrollment
https://www.americanprogress.org/article/the-child-care-sector-will-continue-to-struggle-hiring-staff-unless-it-creates-
remained relatively low at 61% and 34%, respectively. Elizabeth U. Cascio, “Early Childhood Education in the United States:
good-jobs/;
What, When, Where, Who, How, and Why.” NBER working paper 28722. April 2021. https://www.nber.org/system/files/work-
74 The Child Care Development
ing_papers/w28722/w28722.pdf; Block Grant
Jonathan was $6.2
Borowsky, Jessicabillion in the fiscal
H. Brown, year E.
Elizabeth 2022 andChloe
Davis, is theGibbs,
Department
Chris M.ofHerbst,
Health and
Human Services’
Aaron Sojourner, main
Erdal Tekin, program
and Matthew to support
J. Wiswall,low-income families
“An Equilibrium with of
Model childcare. The of
the Impact GAO has found
Increased thatInvestment
Public of the 13.5 million
children eligible
in Early Childhood for federal
Education,” NBER subsidies,
Working onlyPaper1.9No.
million
30140,children received
June 2022. them. “Child Care: Subsidy Eligibility and Receipt, and
https://www.nber.org/system/files/working_pa-
Wait Lists,”
pers/w30140/w30140.pdf U.S. Government Accountability Office, Feb. 18, 2021, https://www.gao.gov/products/gao-21-245r; Jane Fillion,
"50-State Analysis Shows Impact of Insufficient Child Care Funding," First Five Years Fund, Aug. 2, 2022, https://www.ffyf.
78 Nationalorg/50-state-analysis-shows-impact-of-insufficient-child-care-funding/
Center for Education Statistics, “COE: Enrollment Rates of Young Children,” May 2022. https://nces.ed.gov/
programs/coe/indicator/cfa/enrollment-of-young-children; “Fast Facts: Child care,” National Center for Education Statis-
tics75https://nces.ed.gov/fastfacts/display.asp?id=4
One study from Georgia — a universal eligibility Sincepre-K state — was
the program showed preschool
established classrooms
in 1965, in state-sponsored
research has found Head facilities
in low-income
Start children more likely andtominority
graduatecommunities
high school, were
attend of college
significantly lower
and earn quality. Lauren
a degree. DaphnaBauer Bassok,
andEva Galdo,
Diane “Inequality in
Whitmore
Preschool Quality? Community-Level Disparities in Access to High-Quality Learning
Schanzenbach, “The Long-Term Impact of the Head Start Program,” The Hamilton Project, Aug. 2016. https://www.hamil- Environments,” Early Education and
Development, 27:1, 128-144, https://www.tandfonline.com/doi/full/10.1080/10409289.2015.1057463;
tonproject.org/assets/files/long_term_impact_of_head_start_program.pdf; “Head Start: Background and Funding,” “Economic Report of the
Congres-
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https://www.everycrsreport.com/reports/RL30952.html
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79 Jonathan Borowsky, Jessica H. Brown, Elizabeth E. Davis, Chloe Gibbs, Chris M. Herbst, Aaron Sojourner, Erdal Tekin, and
Matthew“OECD
76 Family
J. Wiswall “AnDatabase,”
Equilibrium Organization
Model of the forImpact
Economic Cooperation
of Increased andInvestment
Public Development, https://www.oecd.org/els/family/data-
in Early Childhood Education”
base.htm
NBER Working Paper No. 30140. June 2022. https://www.nber.org/system/files/working_papers/w30140/w30140.pdf
80 77 Indiana,
Idaho, Enrollment rates of
Montana, 5-year-olds
New Hampshire, have grown
South to over
Dakota and85% in recent years, while for 4- and 3-year-old children, enrollment
Wyoming.
remained relatively low at 61% and 34%, respectively. Elizabeth U. Cascio, “Early Childhood Education in the United States:
81 Allison Friedman-Krauss,
What, When, Where, W. Steven
Who, How,Barnett, Karin Garver,
and Why.” Katherine
NBER working Hodges,
paper 28722.G.G. Weisenfeld,
April Beth Ann Gardiner, Tracy
2021, https://www.nber.org/system/files/work-
Merriman Jost, “The State of Preschool 2021,” National Institute for Early Education Research, Rutgers Graduate School of
ing_papers/w28722/w28722.pdf
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78 Since the program was established in 1965, research has found Head Start children more likely to graduate high school,
82 Christinaattend
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college Yoshikawa,
and earn a degree. “Does
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ter for Education Statistics, https://nces.ed.gov/fastfacts/display.asp?id=4; CarlotaLauren
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82 Christina Becker
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87 William T. Gormley, and Ted Gayer, “Promoting School Readiness in Oklahoma: An Evaluation of Tulsa’s Pre-K Program,” The
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84 "The State of Preschool Yearbook 2021," National Institute for Early Education Research, 2022, https://nieer.org/state-pre-
89 Steven W. Barnett, and Ellen C. Frede, “Long-term effects of a system of high-quality universal preschool education in the
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85 Jorge Luis Garcia, Frederik H. Bennhof, Duncan Ermini Leaf, and James J. Heckman, “The Dynastic Benefits of Early
90 Suzann Morris, Linda Smith, “Examples of Mixed-Delivery Early Care and Education Systems,” Bipartisan Policy Center,
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174 Economic Disparity & Fairness in Growth
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96 Daron
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98 The101U.S. CTE
Houseprograms
Educationareand
a sequence of high school
Labor Committee foundcourses to provide
that there are over students
730,000with the knowledge
unique credentials and
and skills
475,000 needed to prepare
non-de-
for further education and careers in professions in: agriculture and natural resources; business,
gree credentials offered by many post-secondary education programs including community colleges, career and technical finance, and marketing;
education communication and communication
programs, employer technologies;
provided on-the-job training,computer
and WIOA and information
funded sciences;
workforce construction;
development consumer
programs. “The services;
engineering,
Future of Work: How design,
Congressand
Canproduction; healthcare;
Support Workers mechanical
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APPENDIX
Endnotes 175
107 AnneliesCTE
101 Goger
programs
and are
Chenoahsequence
Sinclair, of high
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school courses
are anto provide
overlookedstudents
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for the
creating
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to prepare
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2021.
further education and careers in professions in: agriculture
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and natural resources; business, finance, and marketing;
ating-more-access-to-quality-jobs
communication and communication technologies; computer and information sciences; construction; consumer services;
108 Joseph B. Fuller and Matthewand
engineering, design, production;
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144 This
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138 Anthony P.Center
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Jenna R.Progress
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ArtemtheGulish,
definition
Michael“low-income”
of C. Quinn, and as any
Gaylefamily
Cinquegrani,
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below 200
Dollars and
percent
Sense
of theoffederal
Free College,”
poverty level,
Georgetown
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a family
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on isEducation
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andyear;
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139 Sergio Galeano, by the First Five
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System care WIOA
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Bill,” to 39.9%,
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2022. of home-based
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APPENDIX
Endnotes 177
145 U.S.
141Dept.
Dr. of
Michelle
Treasury,
Holder,
“The former
Economics
president
of Child
andCare
CEO of
Supply
thein the
Washington
United Center
States,”for
September
Equitable 2021.
Growth, an
https://home.treasury.
Associate Professor of
gov/system/files/136/The-Economics-of-Childcare-Supply-09-14-final.pdf
Economics at John Jay College, City University of New York in the testimony before the Select Committee on Economic
Disparity
146 “The Effects andCare
of Child Fairness in Growth
Subsidies https://equitablegrowth.org/house-select-committee-on-economic-disparity-and-fair-
on Maternal Labor Force Participation in the United States,” ASPE. December 20, 2016.
ness-in-growth/
Available at https://aspe.hhs.gov/reports/effects-child-care-subsidies-maternal-labor-force-participation-united-states;
Alternately,
142 "Thea Duke
Economic
University
Role ofstudy
Paid Child
foundCare
thatin the
movingU.S.,"
to The expensive
morePublic Policychild
Center
careof the
statesConference
decreases the
Board.
odds
Feb.
of 2022.
employ-https://
ment for married mothers by 18%, compared to
www.ced.org/solutions-briefs/the-economic-role-of-paid-child-care-in-the-u.s;
married mothers who moved to less expensive Care.com
child
2022
careCost
states.
of Care
https://
Survey, June
read.dukeupress.edu/demography/article/58/2/451/169632/Are-States-Created-Equal-Moving-to-a-State-With
2022. https://www.care.com/c/how-much-does-child-care-cost/; Grover J. “Russ” Whitehurst, “Why the federal govern-
mentBernard
147 Mark Zandi, shouldYaros,
subsidize childcare and Consequences
“Macroeconomic how to pay for it,” Brookings
of the Institution,
Infrastructure Mar 9, 2017.
Investment https://www.brookings.edu/
and Jobs Act & Build Back
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Better Framework,” Moody’s Analytics. Nov. 4, 2021. https://www.moodysanalytics.com/-/media/article/2021/macro-
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early_childhood_report_update_final_non-embargo.pdf;
144 This is evidenced by the fact that the percentageSam Abbott,under
of children “The Childcare Economy,”
age 5 in paid care goesWashington Center
down steadily for
as household in-
EconomiccomeGrowth. Sep. 15,according
decreases, 2021; Elliot
toHaspel also noted
the Committee forinEconomic
his testimony that, “high-quality
Development. The Center early childhoodProgress
for American experiencesusesand
the defini-
financially
tionstable families — both
of “low-income” of which
as any familyare deeply
income influenced
below 200% of bythe
thefederal
presence of a functional
poverty level, whichchild
for care system
a family — shape
of four is $51,500 per
child development
year. A more and showanalysis
recent up in later life First
by the outcomes. As the
Five Years National
Fund showed Academy of Sciences
center-based care canhascost
shown,
up tochildren’s brainthe cost of
39.9%, while
architecture develops cumulatively, like building a house: the foundation for academic skills, socioemotional
home-based care is 32.3% of the state median income for a single parent in Ohio. "The Economic Role of Paid Child Care in skills, behavior,
and health
theare all The
U.S.," set in the earliest
Public years ofoflife.”
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the Conference Board, of Sciences.
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2022, https://www.ced.org/solutions-briefs/the-economic-
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financially stable families — both of which are deeply influenced by the presence of a functional child care system — shape
child Alternately, a
146development andDuke University
show up in laterstudy
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moving
the to moreAcademy
National expensiveof child care has
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the odds
children’s
employment
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156 “An Open Letter from Economists and Public Policy Scholars in Support of Investments in Home and Community Based
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152 Statement of Ai-jen Poo, Executive Director, National Domestic Workers Alliance and Caring Across Generations, Hearing
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157 A Rutgers University study finds that women who use paid leave are more likely to be working within nine to 12 months of
153 “An
childbirth Open
than womenLetter
whofromdoEconomists andLinda
not take leave. PublicHouser
Policyand
Scholars in Support
Thomas of Investments
P. Vartanian, in HomePositive
“Pay Matters:The and Community
Eco- Based
Services,”
nomic Impacts NewFamily
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Families, Businesses and the Public,” The Center for Women and Work, January
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paper/2019-07.htm; In addition to
wysiwyg/user-74/statedata_july2021_gf_092321.pdf
parental support and benefits to the economy as a whole due to increased labor force
participation and business productivity, paid family leave results in considerable health benefits for children whose parents
receive paid family leave, as the American Action Forum points out#. These benefits include the increased regularity of
well-baby check-ups, greater rates of immunization, increased likelihood and duration of breastfeeding, and increased
House Select Committee on
178 Economic Disparity & Fairness in Growth
155 Tara O’Neill
parental
Hayes,
care
Sara
and
Kurtovic,
engagement.
“The Ballooning
Moreover, paid
Costs of Long-Term
family leave allows
Care,”
more
American
time for
Action
earlyForum,
child-parent
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bonding
2020, https://
experiences.
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Tara O’Neill Hayes, Margaret Barnhorst, “How Children Benefit from Paid Family Leave Policies,” June 9, 2020. https://www.
156 “An Openamericanactionforum.org/research/how-children-benefit-from-paid-family-leave-policies/
Letter from Economists and Public Policy Scholars in Support of Investments in Home and Community Based
Services,” New
158 California,
America,
Colorado,
Oct. 7, 2021,
Connecticut, Delaware, Massachusetts, Maryland,
https://www.newamerica.org/new-practice-lab/letters/an-open-letter-from-econo-
New Jersey, New York, Oregon, Rhode Island, and
mists-and-public-policy-scholars-in-support-of-investments-in-home-and-community-based-services/;
Washington all offer state paid leave programs. “State Family and Medical Leave Laws,” National Mark Conference
Zandi,ofBer-
State Legis-
nard Yaros,
latures, Sept.
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Jobs Act & Build Back Better Framework,"
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Airport Peace Officers Association (laapoa.com)
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160 National Conference of State Legislatures. “Family and Medical Leave Laws.” https://www.ncsl.org/research/labor-and-em-
157 A Rutgers University study finds that women who use paid leave are more likely to be working within nine to 12 months of
ployment/state-family-and-medical-leave-laws.aspx
childbirth than women who do not take leave. In addition to parental support and benefits to the economy as a whole due
to 161 Bay Area
increased Council Economic
labor force Institute.
participation and “Evaluation
business of the paid
productivity, California
family Paid Family
leave Leave
results in Program.”
considerable July 2020.
health http://www.
benefits
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for children whose parents receive paid family leave, as the American Action Forum points out. These benefits include the
increased
162 Bay regularity of well-baby
Area Council Economic check-ups,
Institute.greater ratesof
“Evaluation ofthe
immunization,
California Paidincreased
Family likelihood and duration
Leave Program.” of breast-
July 2020. http://www.
feeding, and increased parental care and engagement. Moreover, family leave allows more time for early child-parent
bayareaeconomy.org/report/evaluation-of-the-california-paid-family-leave-program/
bonding experiences. Linda Houser, Thomas P. Vartanian, “Pay Matters: The Positive Economic Impacts of Paid Family Leave
163 Charles L. Baum II, Christopher J. Ruhm, "The Effects of Paid Family Leave in California on Labor Market Outcomes," Journal
for Families, Businesses and the Public,” The Center for Women and Work, January 2012. https://1library.net/document/
of Policy Analysis and Management, February 2016: https://onlinelibrary.wiley.com/doi/full/10.1002/pam.21894
yj7348d2-matters-positive-economic-impacts-family-families-businesses-january.htmlhttps://1library.net/document/
164 The federal government provides most federal civil service employees with 12 weeks
yj7348d2-matters-positive-economic-impacts-family-families-businesses-january.html; of paid
Kelly Jones,family
Britniand medical leave,
Wilcher,
"Reducing following
Maternal passage of the National
Labor Market Defense
Detachment: Authorization
A Role Act for
for Paid Family FiscalNo.
Leave," Year2019-07,
2020 (NDAA)Working(S.1790
Papersand Public
from Law 116-92).
American
Georgia,
University, New of
Department Hampshire, South
Economics, Carolina, and Wisconsin offer paid
2019, parental leave for their state Tara
https://econpapers.repec.org/paper/amuwpaper/2019-07.htm; employees. https://www.
O'Neill
congress.gov/bill/116th-congress/senate-bill/1790/text
Hayes, Margaret Barnhorst, “How Children Benefit from Paid Family Leave Policies,” June 9, 2020, https://www.american-
actionforum.org/research/how-children-benefit-from-paid-family-leave-policies/
165 The Bureau of Labor Statistics (BLS) has found that Hispanic mothers have lower rates of access to paid leave than non-His-
158 panic
California, white mothers.
Colorado, U.S. Bureau
Connecticut, Delaware,of Labor Statistics, “Racial
Massachusetts, andNew
Maryland, ethnic disparities
Jersey, New York, in access
Oregon,to and
Rhodeuse of paidand
Island, family and
Washingtonmedical leave:
all offer evidence
state fromprograms.
paid leave four nationally
“Staterepresentative datasets,”
Family and Medical Leave Jan. 2019.National
Laws,” https://www.bls.gov/opub/mlr/2019/article/
Conference of State Legis-
racial-and-ethnic-disparities-in-access-to-and-use-of-paid-family-and-medical-leave.htm;
latures, Sept. 9, 2022: https://www.ncsl.org/research/labor-and-employment/state-family-and-medical-leave-laws.aspx Oxfam has found that one in
five low wage workers reported losing a job due to taking leave for illness or to care for family. “Hard Work, Hard Lives: Sur-
159 Photo: Los Angeles Airport Peace Officers Association (laapoa.com)
vey Exposes Harsh Reality Faced by Low-Wage Workers in the U.S.” OxFam America. https://s3.amazonaws.com/oxfam-us/
160 “Family and Medical Leave Laws,” National Conference of State Legislatures, https://www.ncsl.org/research/labor-and-em-
www/static/media/files/low-wage-worker-report-oxfam-america.pdf
ployment/state-family-and-medical-leave-laws.aspx
166 U.S. Department of Health and Human Services, “HHS Poverty Guidelines for 2022.” https://aspe.hhs.gov/topics/pover-
161 “Evaluation of the California Paid Family Leave Program,”
ty-economic-mobility/poverty-guidelines; H.R.2886Bay- Area Council
Universal Economic
Child Care and Institute, July 2020,
Early Learning http://www.
Act https://www.congress.
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gov/bill/117th-congress/house-bill/2886/text?q=%7B%22search%22%3A%5B%22universal+preschool%22%2C%22uni-
162 Charles versal%22%2C%22preschool%22%5D%7D&r=2&s=6;
L. Baum II, Christopher J. Ruhm, "The Effects of Paid Family MarkLeave
Zandi,inSophia Koropeckyj,
California on Labor“Universal Child CareJournal
Market Outcomes," and Early
of PolicyLearning
AnalysisAct: andHelping Families and
Management, the2016,
February Economy,” Moody’s Analytics, Feb. 2019, https://www.warren.senate.gov/imo/media/
https://onlinelibrary.wiley.com/doi/full/10.1002/pam.21894
doc/Moody’s%20Analysis_Child_Care_Act.pdf
163 Eileen Appelbaum, Ruth Milkman, “Leaves that Pay: Employer and Worker Experiences with Paid Family Leave in California,”
167 H.R. 804, Family and Medical Insurance Leave Act or the FAMILY Act. https://www.congress.gov/bill/117th-congress/
https://www.cepr.net/documents/publications/paid-family-leave-1-2011.pdf;
house-bill/804#:~:text=Family%20and%20Medical%20Insurance%20Leave%20Act%20or%20the,not%20more%20
164 The federal government provides most federal civil service employees
than%2060%20days%20of%20qualified%20caregiving.; H.R.with
1185, 12 weeksAct
FAMILY of paid family and medical
| Congressional leave, Analysis, Feb.
Budget Office
following passage of the National Defense Authorization
13, 2020. https://www.cbo.gov/publication/56129 Act for Fiscal Year 2020 (NDAA) (S.1790 and Public Law 116-92).
Georgia, New Hampshire, South Carolina, and Wisconsin offer paid parental leave for their state employees. https://www.
168 CBO, “Federal Policies in Response to Declining Entrepreneurship,” Dec. 2020. https://www.cbo.gov/publication/56906a
congress.gov/bill/116th-congress/senate-bill/1790/text
165 The169
BureauGustavo Manso,
of Labor “Experimentation
Statistics (BLS) has foundandthat
the Hispanic
Returns to Entrepreneurship,”
mothers have lower rates 2015.;ofand https://journals.sagepub.com/
access to paid leave than non-His-
doi/10.1177/0891242414535468
panic white mothers. Oxfam has found that one in five low wage workers reported losing a job due to taking leave for illness
or to
170care for family.
Note, these “Racial
numbersand ethnic disparities
represent pre-pandemicin access
levels.to and use of paid family and medical leave: evidence from
four nationally representative datasets,” U.S. Bureau of Labor Statistics, January 2019, https://www.bls.gov/opub/mlr/2019/
Small Business and Entrepreneurship Council. “Facts & Data on Small Business and Entrepreneurship.” https://sbecouncil.
article/racial-and-ethnic-disparities-in-access-to-and-use-of-paid-family-and-medical-leave.htm; “Hard Work, Hard Lives:
org/about-us/facts-and-data/; U.S. Small Business Administration Office of Advocacy. 2022 Small Business Profile. August
Survey Exposes Harsh Reality Faced by Low-Wage Workers in the U.S,” OxFam America, https://s3.amazonaws.com/ox-
2022. Available at: https://cdn.advocacy.sba.gov/wp-content/uploads/2022/08/30121338/Small-Business-Economic-Pro-
fam-us/www/static/media/files/low-wage-worker-report-oxfam-america.pdf
file-US.pdf
166 “HHS Poverty Guidelines for 2022,” U.S. Department of Health and Human Services, https://aspe.hhs.gov/topics/pover-
171 Alina Schnake-Mahl, Jessica A. R. Williams, Barry Keppard & Mariana Arcaya (2018). A public health perspective on small
ty-economic-mobility/poverty-guidelines; H.R.2886 - Universal Child Care and Early Learning Act https://www.congress.
business development: a review of the literature, Journal of Urbanism: International Research on Placemaking and Urban
gov/bill/117th-congress/house-bill/2886/text?q=%7B%22search%22%3A%5B%22universal+preschool%22%2C%22uni-
Sustainability, 11:4, 387-411, DOI: 10.1080/17549175.2018.1461678 https://www.tandfonline.com/doi/full/10.1080/17549175.20
versal%22%2C%22preschool%22%5D%7D&r=2&s=6; Mark Zandi, Sophia Koropeckyj, “Universal Child Care and Early
18.1461678; Kobe, Kathryn, Schwinn, Richard. “Small Business GDP: 1998-2014.” December 2018. Available at: https://cdn.
Learning Act: Helping Families and the Economy,” Moody’s Analytics, Feb. 2019, https://www.warren.senate.gov/imo/media/
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doc/Moody's%20Analysis_Child_Care_Act.pdf
172 Notably, some of small-business formation might be driven by “necessity entrepreneurship.” Necessity entrepreneurs are
167 H.R. 804, Family and Medical Insurance Leave Act or the FAMILY Act. https://www.congress.gov/bill/117th-congress/house-
defined as those who are unemployed before starting their business, according to the Kauffman Foundation. Studies show
bill/804; H.R. 1185, FAMILY Act | Congressional Budget Office Analysis, Feb. 13, 2020. https://www.cbo.gov/publication/56129
that Latino and Black business owners may be more likely to start their businesses out of necessity than non-Latino white
168 “FederalandPolicies
Asianin Response
entrepreneurs.to Mills.
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et al (2018) Dec. 2020, https://www.cbo.
https://www.gsb.stanford.edu/sites/default/files/publication-pdf/slei-report-
gov/publication/56906
2018-latino-owned-businesses-shinging-light-national-trends.pdf; Economic Innovation Group. “ The Case for Economic
169 Dynamism and
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for-Dynamism-FINAL-Web.pdf;
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Entrepreneurship Can Reduce the Gap Dec.
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doi/10.1177/0891242414535468
173 numbers
170 These W.D. Bradford,
representThepre-pandemic
“Myth” That Black
levels.Entrepreneurship
“Facts & Data onCan Reduce
Small the Gap
Business in Wealth Between Small
and Entrepreneurship,” Black Busi-
and White Families.
ness andEconomic Development
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174 Botelho,
171 Alina et al.Jessica A.
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APPENDIX
Endnotes 179
175 Economic tainability,
Innovation 11:4,Group,
387-411, 2018,
“ The https://www.tandfonline.com/doi/full/10.1080/17549175.2018.1461678;
Case for Economic Dynamism and Why It Matters for the American Worker,” Kathryn Kobe, Richard
October
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https://eig.org/wp-content/uploads/2022/10/Case-for-Dynamism-FINAL-Web.pdf
176 B.R. Craig,cdn.advocacy.sba.gov/wp-content/uploads/2018/12/21060437/Small-Business-GDP-1998-2014.pdf
W.E. Jackson, J.B. Thomson, “Credit market failure intervention: Do government sponsored small business credit
programs
172 Notably,
enrich some
poorerofareas?”
small-business
Small Bus Econ
formation30, might
345–360, be driven
2008, by “necessity
https://doi.org/10.1007/s11187-007-9050-5;
entrepreneurship.” NecessityJan Jacob entrepreneurs are
Vogelaar &defined
Erik as
Stam,those“Beyond
who are market
unemployed
failure: before
rationales for regional
starting their business,
governmentalaccording
venture
to thecapital,”
KauffmanVenture
Foundation.
Capital, 2021;
Studies show
Craig and that Latino and
Thomson (2008) Black business
describe owners may
information be more
problems aslikely to start
difficulty their businesses
obtaining sufficient out of necessity
information about than non-Latino white
the parties
involvedandin aAsian entrepreneurs.
transaction that might Claire Kramer
prevent Mills, Jessica
otherwise Battisto,
creditworthy Scott
firms fromLieberman,
obtainingMarlene
credit and Orozco, Iliana Perez,
may result in credit ra- S. Lee,
Nancy
tioning or“Latino-Owned
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thanTrends,”
price. AStanford Graduate
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is credit https://www.
rationing
in whichgsb.stanford.edu/sites/default/files/publication-pdf/slei-report-2018-latino-owned-businesses-shinging-light-national-
a bank would not lend to someone offering to pay the higher interest rate because such a borrower is perceived
trends.pdf;
riskier than the average “Theborrower.
Case for Economic
The expected Dynamism
return on and Whyto
a loan It aMatters
borrower forat
the American
the Worker,”
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rate Innovation
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177 U.S. Chamber of Commerce Foundation. “Understanding Small Business in America.” https://www.uschamberfoundation.
173 W.D. Bradford, “The ‘Myth’ That Black Entrepreneurship Can Reduce the Gap in Wealth Between Black and White Families,”
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located
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184 Claire Kramer Mills,
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185 The Small Business Credit Survey (SBCS) defines financing as all debt and/or equity, including both new and refinanced.
The188 U.S.of
results Small Business
the SBCS Association
2021 survey show Office of success
similar Advocacy,rate“Small Business
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nonemployer
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disproportionate
189 LaJuannashare of firms
Russell, owned For
“Statement by people of color
the Record are The
Before nonemployer firms: 96%
Select Committee Onand 91% of Disparity
Economic Black-ownedAnd and Hispan-
Fairness In Growth
ic- ownedOnfirms are nonemployer
Fostering firms, comparedThrough
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191 Board of Governors of the Federal Reserve System, “Supervisory Policy and Guidance Topics: Community Banking,” https://
187 Neil A. Belson, “Promoting Rural Entrepreneurship and Rural Economic Development,”
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theyWay, 2020,
occupy https://www.
a relatively small share of
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the overall small business credit market, about 84% of CDFI customers are low-income, Kenan60%
Fikri,are
“Restoring
people ofWell-Be-
color, 50% are
ing and women,
Entrepreneurship
and 28% inliveRural America,”
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“Understanding than $10
Community billion in
Develop-
assets rose
ment Financial from 38and
Institutions to 138,
theirand the share
Impact of total
in Low- banking industry assets
and Moderate-Income held by these
Neighborhoods,” largerReserve
Federal banks increased from 28%
Bank of San
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193 LaJuanna, Russell, Small Business Owner. Statement for the record before the select committee on economic disparity
191 fairnessa in
andoccupy
While they growth on
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small American
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market, sustaining
about 84% ofand
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March
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60% https://smallbusinessmajority.org/sites/default/files/policy-docs/031622-LaJuannaRussell-SelectCommit-
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Manoa,fell
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A 2018
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between 1986
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196 PLACEHOLDER
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195 SBDCs areandhosted nationwide
fairness in growth by onleading
fosteringuniversities,
American colleges, state economic
entrepreneurship development
through starting, agencies,
sustaining andand private
growing partners.
small businesses”
BetweenMarch
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16, 2022.
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202 U.S. Chamber of Commerce Foundation. “Understanding Small Business in America.” https://www.uschamberfoundation.
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APPENDIX
Endnotes 181
203 NationalDigital
196 Conference
Tools of
Outreach
State Meeting
Legislatures.
– March
“The 23,
Evolving
2022 –State
SBA'sofOffice
Occupational
of Advocacy
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https://advocacy.sba.gov/2022/03/01/dig-
2019. Available
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ital-tools-outreach-meeting-march-23-2022/; Herbert C. Hoover Federal Building, U.S. Department of Ryan
Commerce
Nunn.and
“Eliminating
Bureautheof Industry
Anti-Competitive
and Security,
Effects of
iStock.
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197 “FY2020 Annual Report. Resilience,” SCORE, https://s3.amazonaws.com/mentoring.redesign/SCORE-FY2020_Annual%20
204 Congressional
Report%20FINAL.pdf
Research Service. “Small Business Administration 7(a) Loan Guaranty Program.” June 30, 2022. https://crsre-
ports.congress.gov/product/pdf/R/R41146
198 “About Us” U.S. Department of the Treasury, Community Development Financial Institutions Fund, https://www.cdfifund.
205 Congressional
gov/about;
Research
“Minority
Service.
Depository
“Small Business
Institutions:
Administration
Structure, 7(a)
Performance,
Loan Guaranty
and Social
Program.”
Impact,”
JuneFDIC
30, 2022.
Quarterly,
https://
2014, https://
crsreports.congress.gov/product/pdf/R/R41146;
www.fdic.gov/analysis/quarterly-banking-profile/fdic-quarterly/2014-vol8-3/mdi-study.pdf.
https://bipartisanpolicy.org/download/?file=/wp-content/uploads/2022/03/
Small-Business-Policy-Report_R01.pdf
199 “Small Business Technical Assistance: Micro Business, Small Business and Business Expansion,” Community Action Part-
206 Mr. Everett
nership,
Sands, CEO of Lendistry, testified to the Committee that, “SBA’s
https://communityactionpartnership.com/wp-content/uploads/2018/06/small-business-technical-assistance.pdf
Community Advantage program’s prolonged
status
200 asE-commerce
a pilot program
grew–increasingly
even thoughimportant
it has an 11-year
duringtrack record and
the COVID-19 is the only
pandemic. InSBA loan the
the U.S., program
sharewith at least 10%in total retail
of e-commerce
participation
sales increased from an average of 10-12% in the period spanning from 2018 Q1 to 2020 Q1 to 17% in 2020 Q2,toaccording
by minority-owned small businesses – reduces the number of lenders willing to make a commitment the to
program.the In OECD
addition, its stagnant
OECD. loan size
“International maximum of
Compendium of $250,000 leaves aPolicies.”
Entrepreneurship wideningOECDgap toStudies
banks’on
ever-rising
SMEs and minimum
Entrepreneurship,
business2020,
loan amounts.” The Biden-Harris Administration have recently introduced flexibilities, increased the maximum
https://www.oecd.org/publications/international-compendium-of-entrepreneurship-policies-338f1873-en.htm.
loan amount to $350,000: https://www.sba.gov/article/2022/mar/30/biden-harris-administration-expands-sba-pilot-pro-
201 LaJuanna Russell, Testimony before the Select Committee On Economic Disparity And Fairness In Growth, March 2022,
gram-targeting-access-capital-underserved
https://smallbusinessmajority.org/small-business-majority-board-chair-testifies-us-select-house-committee-econom-
207 Promoting Equity Investments for An Equitable Recovery | Urban Institute and Statement of the Hon. Sharice Davids on A
ic-disparity-fairness-growth-barriers-entrepreneurship
Review of the SBIC Program | Small Business Committee (house.gov); On October 18, 2022, SBA announced a new Federal
202 that
Registry “Understanding
proposes toSmall Business
“reduce in to
barriers America,” U.S. Chamber
SBIC program of Commerce
participation for Foundation,
new private https://www.uschamberfoundation.
fund managers and private funds
focusedorg/smallbizregs/
on equity and longer-term debt investments in small businesses and startups, especially those in underserved
communities and geographies,
203 “The Evolving capital-intensive
State of Occupational industries
Licensing,” and technologies
National Conference critical
of StatetoLegislatures,
national security.”
Nov. 11,For more
2019, informa-
https://www.ncsl.
tion, please visit: https://www.sba.gov/article/2022/oct/18/administrator-guzman-advances-new-small-business-invest-
org/research/labor-and-employment/the-evolving-state-of-occupational-licensing.aspx; Ryan Nunn, “Eliminating the
ment-company-reforms-expand-access-strengthen
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208 Theodos, Brett. “Testimony before the Select Committee on Economic Disparity and Fairness in Growth: Small Businesses
in the
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ports.congress.gov/product/pdf/R/R41146
209 Federal Reserve
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210 Economic
206 Opportunity
Mr. Everett Sands,Coalition. https://www.economicopportunitycoalition.org/;
CEO of Lendistry, testified to the https://www.whitehouse.gov/brief-
Committee that, "SBA’s Community Advantage program’s prolonged
ing-room/statements-releases/2022/10/04/fact-sheet-vice-president-harris-announces-new-public-and-private-sector-
status as a pilot program – even though it has an 11-year track record and is the only SBA loan program with at least
efforts-to-advance-racial-equity-at-freedmans-bank-forum/;
10% participation by minority-owned small businesses – under the the
reduces American
number Rescue Plan Act
of lenders of 2021,
willing StateaSmall
to make commitment
BusinesstoCredit InitiativeIn(SSBCI)
the program. gotits
addition, a $10 billionloan
stagnant investment to support
size maximum venture capital,
of $250,000 leaves loan guarantee,
a widening collateral
gap to support,
banks’ ever-rising
capital access,
minimum and loan participation
business loan programs:
amounts." https://home.treasury.gov/policy-issues/small-business-programs/
The Biden-Harris Administration have recently introduced flexibilities, increased the
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213 Kriti Ramakrishnan,
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207 On October 18, 2022, SBA announced a new Federal Registry that proposes to “reduce barriers to SBIC program partic-
ers#:~:text=Homeownership%20can%20provide%20pathways%20to,benefit%20from%20their%20home’s%20equity;
ipation for new private fund managers and private funds focused on equity and longer-term debt investments in small
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214 Scholastica (Gay) Coronation. “Single-family Homeowners Typically
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210 Under the American Rescue Plan Act of 2021, State Small Business Credit Initiative (SSBCI) ALSO got a $10 billion invest-
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216 Samantha President
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232 Schuetz,
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233
224 Paul “Community
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235 Sean
226 Andrew Veal, Jonathan
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APPENDIX
Endnotes 183
240 NationalLeah
230 LowFoltman,
Income Malia
Housing
Jones,
Coalition.
“How“ Public
Redlining
Housing:
Continues
Where
to Do
ShapeWeRacial
Stand?”
Segregation
October 17,
in2019.
Milwaukee:
https://nlihc.org/re-
1930s Lending Map Re-
source/public-housing-where-do-we-stand.
veals the Policy Roots of Housing Discrimination.” University of Milwaukee Applied Populations Lab, Feb. 28, 2019, https://
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241 Tax Policy Center. “Q. What is the Low-Income Housing Tax Credit and how does it work?” May 2020. https://www.tax-
policycenter.org/briefing-book/what-low-income-housing-tax-credit-and-how-does-it-work#:~:text=Since%20the%20
231 Leah Foltman, Malia Jones, “How Redlining Continues to Shape Racial Segregation in Milwaukee: 1930s Lending Map Re-
mid%2D1990s%2C%20the,in%20all%20since%20its%20inception..
veals the Policy Roots of Housing Discrimination.” University of Milwaukee Applied Populations Lab, Feb. 28, 2019, https://
apl.wisc.edu/shared/tad/redlining-milwaukee.
242 Will Fischer. “Research Shows Housing Vouchers Reduce Hardship and Provide Platform for Long-Term Gains Among
Children.”
232 William
CenterH.onFrey,
Budget and
“Black-white
Policysegregation
Priorities. edges
October 7,
downward
2015. since 2000, census shows,”
https://www.cbpp.org/research/housing/research-shows-
Brookings Institution, Dec. 17, 2018,
housing-vouchers-reduce-hardship-and-provide-platform-for-long-term;
https://www.brookings.edu/blog/the-avenue/2018/12/17/black-white-segregation-edges-downward-since-2000-census-
Sonya Acosta, Erik Gartland. “Families Wait Years
for Housing
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Vouchers Due to Inadequate Funding.” Center on Budget and Policy Priorities. July 22, 2021. https://www.cbpp.
org/research/housing/families-wait-years-for-housing-vouchers-due-to-inadequate-funding.
233 Shaun Donovan, Testimony before the House Committee on Economic Disparity and Fairness in Growth, March 1, 2022,
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Sonya
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Acosta, Brianna Guerrero. “Long Waitlist for Housing Vouchers Sarah Pressing
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and Affordability,” Urban Institute, Sept. 2018, https://www.urban.org/sites/default/files/publica-
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235 Sean Veal,ofJonathan
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248 Will Fischer, Sonya Acosta, Erik Gartland. “More Housing Vouchers: Most Important Step to Help More People Afford
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242 Will Fischer, “Research Shows Housing Vouchers Reduce Hardship and Provide Platform for Long-Term Gains Among Chil-
Acosta, Erik Gartland. “Families Wait Years for Housing Vouchers Due to Inadequate Funding.” Center on Budget and Policy
dren,” Center on Budget and Policy Priorities, Oct. 7, 2015, https://www.cbpp.org/research/housing/research-shows-hous-
Priorities. July 22, 2021. https://www.cbpp.org/research/housing/families-wait-years-for-housing-vouchers-due-to-inade-
ing-vouchers-reduce-hardship-and-provide-platform-for-long-term; Sonya Acosta, Erik Gartland, “Families Wait Years for
quate-funding.
Housing Vouchers Due to Inadequate Funding,” Center on Budget and Policy Priorities, July 22, 2021, https://www.cbpp.org/
249 “Economic Impact of Public Transportation Investment: 2020 Update.” American Public Transportation Association. April
research/housing/families-wait-years-for-housing-vouchers-due-to-inadequate-funding
2020. https://www.apta.com/wp-content/uploads/APTA-Economic-Impact-Public-Transit-2020.pdf.
243 “Housing Vacancies and Homeownership,” United States Census Bureau, https://www.census.gov/housing/hvs/index.html;
250 Eileen Higgins. “Written
Sonya Acosta, Statement
Brianna for The
Guerrero, Record
“Long Hon.for
Waitlist Eileen Higgins,
Housing County
Vouchers Commissioner
Show Miami-Dade
Pressing Unmet Need forCounty, Fla. Center
Assistance,”
in Collaboration
on Budget with the
and National
Policy Association
Priorities, Oct. 6,Of Counties.” February 9, 2022.
2021 https://www.congress.gov/117/meeting/
https://www.cbpp.org/research/topics/housing-vouchers#:~:text=More%20
house/114393/witnesses/HHRG-117-EF00-Wstate-HigginsE-20220209.pdf
than%202%20million%20low,state%20and%20local%20housing%20agencies.
251 While244a number of studies
“Inclusionary conclude
Zoning and that job accessibility
Mixed-Income is correlated
Communities,” U.S. to employment
Department outcomes,
of Housing causality has
and Urban been diffi-
Development, Spring 2013,
cult to establish, according to a study from the University of Chicago. Moreover, other
https://www.huduser.gov/portal/periodicals/em/spring13/highlight3.html; mechanisms
Heather L. might
Schwartz, drive
Liisa the Kristin
Ecola, correla-J. Leus-
tion between
chner,job accessibility
Aaron Kofner, “Isand employment
Inclusionary outcomes,
Zoning including
Inclusionary?: A lack
Guideoffor
information aboutRAND
Practitioners,” distant jobs, or 2012,
(perceived)
Corporation, https://www.
discrimination by employer. Please see Gazzé, Ludovica, “Chapter 5. Inequality in Job Accessibility via Transit in US Cities”
rand.org/pubs/technical_reports/TR1231.html.
2018. https://home.uchicago.edu/~lgazze/webfiles/2018_DividedCities_Gazze.pdf; Chetty, Raj, Hendren, Nathaniel, Kline,
245 “President Biden Announces New Actions to Ease the Burden of Housing Costs,” White House Briefing Room, May 16, 2022,
Patrick, Saez, Emmanuel. “Where is the Land of Opportunity? The Geography of Intergenerational Mobility in the United
https://www.whitehouse.gov/briefing-room/statements-releases/2022/05/16/president-biden-announces-new-actions-
States.” Quarterly Journal of Economics 129 (4): 1553-1623, 2014. Available at:
to-ease-the-burden-of-housing-costs/#:~:text=The%20Unlocking%20Possibilities%20Program%2C%20proposed,bar-
https://opportunityinsights.org/wp-content/uploads/2018/03/mobility_geo.pdf.
riers%20to%20affordable%20housing%20production%2C. Other research by Dong Liu and Mei-Po Kwan
show similar findings.
246 “Affordable Housing Credit Improvement Act Center,” National Coalition of State Housing Agencies, April 15, 2021, https://
252 Weinstock, Lida R., “Infrastructure and the Economy,” Congressional Research Service, 2021, https://crsreports.congress.
www.ncsha.org/resource/affordable-housing-credit-improvement-act-ahcia-center/.
gov/product/pdf/R/R46826
247 Rashawn Ray, Andre M. Perry, David Harshbarger, Samantha Elizondo, Alexandra Gibbons, “ Homeownership, racial segre-
253 “Delivering for and
gation, America:
policyThe macroeconomic
solutions impacts of
to racial wealth reinvesting
equity,” Brookings in America’s infrastructure
Institution, Sep. 1, 2021, systems.” Business Round-
https://www.brookings.edu/essay/
table. 2021. https://s3.amazonaws.com/brt.org/BusinessRoundtable_Delivering_for_America_Infrastructure_Report_Updat-
homeownership-racial-segregation-and-policies-for-racial-wealth-equity/; Emmanuel Martinez, Lauren Kirchner, “The Se-
ed_April2021.pdf.
cret Bias Hidden in Mortgage-Approval Algorithms,” The Markup, Aug. 25, 2021, https://themarkup.org/denied/2021/08/25/
the-secret-bias-hidden-in-mortgage-approval-algorithms;
254 Commissioner Garza’s oral and written statements can be accessed Freddie Mac, “Racial and Ethnic Valuation Gaps in Home Pur-
at: https://www.congress.gov/117/meeting/
chase Appraisals,” Sept. 20, 2021, https://www.freddiemac.com/research/insight/20210920-home-appraisals.
house/114918/witnesses/HHRG-117-EF00-Wstate-GarzaD-20220617.pdf
248 Campbell,
255 Sophia Will Fischer, SonyaRuiz
Jimena Acosta, Erikand
Castro, Gartland, “More Housing
David Wessel, Vouchers:
“The benefits and Most
costsImportant Stepexpansion.”
of broadband to Help More People Afford Stable
Brookings
Homes.”
Institution. Center
Aug. 18, 2021.on Budget and Policy Priorities, May 13, 2021, https://www.cbpp.org/research/housing/more-housing-vouch-
https://www.brookings.edu/blog/up-front/2021/08/18/the-benefits-and-costs-of-broadband-ex-
ers-most-important-step-to-help-more-people-afford-stable-homes;
pansion; “Bringing Broadband to Rural America.” Richmond Fed. Dec. 2020. Sonya Acosta, Erik Gartland, “Families Wait Years for
https://www.richmondfed.org/publications/
Housing Vouchers Due to Inadequate Funding,” Center on Budget and Policy Priorities, July 22, 2021, https://www.cbpp.org/
community_development/community_scope/2020/comm_scope_vol8_no1
research/housing/families-wait-years-for-housing-vouchers-due-to-inadequate-funding.
256 Carnevale, Anthony P., Smith, Nicole, “Trillion Dollar Infrastructure Proposals Could Create Millions of Jobs: Will the New
Jobs Lead to Sustainable Careers” 2017 https://cew.georgetown.edu/wp-content/uploads/trillion-dollar-infrastructure.pdf;
Escobari, M. D. G. “How federal infrastructure investment can put America to work.” The Brookings Institution. March 9,
2022, https://www.brookings.edu/research/how-federal-infrastructure-investment-can-put-america-to-work; Joseph W.
House Select Committee on
184 Economic Disparity & Fairness in Growth
249 “Economic
Kane,
Impact
Robert
of Public
Puentes,
Transportation
“Expanding opportunity
Investment: 2020
throughUpdate,”
infrastructure
American
jobs.”
Public
The Brookings
Transportation
Institution.
Association,
May 7,April
2015. https://
2020, www.brookings.edu/research/expanding-opportunity-through-infrastructure-jobs/
https://www.apta.com/wp-content/uploads/APTA-Economic-Impact-Public-Transit-2020.pdf
250 Eileen
257 Higgins,
“Community
Testimony
Development
before the House
FinancialSelect
Institutions
Committee
(CDFIs):
OnOverview
Economicand
Disparity
Selected
andIssues,”
Fairness In
Congressional
Growth, February
Research9, Service.
2022. Aug. 16, 2022. https://crsreports.congress.gov/product/pdf/R/R47217
https://www.congress.gov/117/meeting/house/114393/witnesses/HHRG-117-EF00-Wstate-HigginsE-20220209.pdf
251 While
258a number
Hearingof onstudies
Infrastructure
conclude and
that job
Economic
accessibility
Growth |isSelect Committee
correlated to employment
on Economic
outcomes,
Disparity and
causality
Fairness
has been
in Growth
diffi- (house.
cult to gov)
establish,
Hearing:
according
Connecting
to a study
Americans
from the
to University
Prosperityof Chicago. Moreover, other mechanisms might drive the correla-
tion between
259 Phelps,jobHailey.
accessibility
(2021). and employment
“When Interstatesoutcomes,
Paved theincluding
Way: Thelack of information
construction of theabout distant
Interstate jobs, orSystem
Highway (perceived)
helped devel-
discrimination
op the by USemployer.
Economy.”Ludovica Gazzé, “Inequality
Federal Reserve in Job Accessibility via Transit in U.S. Cities,” 2018, https://home.
Bank of Richmond.
uchicago.edu/~lgazze/webfiles/2018_DividedCities_Gazze.pdf; Raj Chetty, Nathaniel Hendren, Patrick Kline, Emmanuel
260“Where
Saez, In thisisanalysis,
the Landthe federal and state
of Opportunity? Theand local government
Geography investments
of Intergenerational are not
Mobility intreated separately
the United States,”because,
Quarterly“much
Jour- of the
infrastructure
nal of Economics investment
129 (4): 1553-1623,done
2014,by state and local governments is financed by the federal government through grants in
https://opportunityinsights.org/wp-content/uploads/2018/03/mobility_geo.pdf
aid.”
252 Lida R. Weinstock, “Infrastructure and the Economy,” Congressional Research Service, 2021, https://crsreports.congress.
Fair, Ray C. (2021). “U.S. Infrastructure from 1929 to 2019.” https://fairmodel.econ.yale.edu/rayfair/pdf/2019D.PDF; Earlier
gov/product/pdf/R/R46826
estimates from the Congressional Budget Office show that combined federal, state and local spending on infrastructure
253 “Delivering for
reported America: The macroeconomic
in 2019 was impacts$441
(in current 2019 dollars) of reinvesting
billion as ofin2017.
America’s infrastructure
That translated systems.”
into 2.3 percentBusiness Round-
of U.S. GDP. According
table. 2021. https://s3.amazonaws.com/brt.org/BusinessRoundtable_Delivering_for_America_Infrastructure_Report_Updat-
to a testimony of Richard E. Geddess of the American Enterprise Institute before the House Committee on the Budget on
ed_April2021.pdf.
October 22, 2019, the figure was “well below estimates of the spending needed to keep infrastructure in a state of good
repair.” This
254 Commissioner DavidCBO estimate
Garza, of before
Testimony transportation and water
the House infrastructure
Select Committee Onspending
Economic as a share ofand
Disparity GDP represents
Fairness In the lowest
Growth,
June 14, level
2022,in more than 60 years (spending peaked at about three percent in the late 1950s)”. https://budget.house.gov/sites/
https://www.congress.gov/117/meeting/house/114918/witnesses/HHRG-117-EF00-Wstate-GarzaD-20220617.pdf
democrats.budget.house.gov/files/documents/Infrastructure%20and%20the%20Economy%20-%20Post-Hearing%20
255 Sophia Campbell, Jimena Ruiz Castro, David Wessel, “The benefits and costs of broadband expansion.” Brookings Institu-
tion. Aug.Report%20-%20FINAL.pdf
18, 2021. https://www.brookings.edu/blog/up-front/2021/08/18/the-benefits-and-costs-of-broadband-expansion;
261
“BringingIn this
Broadband
analysis,
to the
Rural
federal
America.”
and state
Richmond
and local
Fed. Dec.
government
2020. investments are not treated
https://www.richmondfed.org/publications/communi-
separately because, “much of the
ty_development/community_scope/2020/comm_scope_vol8_no1
infrastructure investment done by state and local governments is financed by the federal government through grants in
256 Anthonyaid.”
P. Carnevale, Nicole Smith, “Trillion Dollar Infrastructure Proposals Could Create Millions of Jobs: Will the New Jobs
Lead
Fair,
toRay C.
Sustainable
(2021). “U.S.
Careers,” 2017
Infrastructure from 1929 to 2019.”
https://cew.georgetown.edu/wp-content/uploads/trillion-dollar-infrastructure.pdf;
https://fairmodel.econ.yale.edu/rayfair/pdf/2019D.PDF; Earlier M.
D. G. Escobari,
estimates “How fromfederal
the Congressional
infrastructureBudget
investmentOffice
canshow America
put that combined
to work,”
federal,
The state
Brookings
and local
Institution.
spendingMarch
on 9, 2022,
infrastructure
https://www.brookings.edu/research/how-federal-infrastructure-investment-can-put-america-to-work;
reported in 2019 was (in current 2019 dollars) $441 billion as of 2017. That translated into 2.3 percent Joseph W.GDP.
of U.S. Kane,According
Robert to a
Puentes, “Expanding
testimony opportunity
of Richard E. through
Geddess infrastructure jobs.”
of the American Enterprise TheInstitute
Brookings Institution.
before the HouseMay 7, 2015. on
Committee https://www.
the Budget on
brookings.edu/research/expanding-opportunity-through-infrastructure-jobs/
October 22, 2019, the figure was “well below estimates of the spending needed to keep infrastructure in a state of good
repair.”Testimony
257 Neil Crabtree, This CBO before
estimatetheofU.S.
transportation
House Selectand water infrastructure
Committee on Economic spending
Disparity asand
a share of GDP
Fairness represents
in Growth, Feb.the
9, lowest
2022, level in more than 60 years (spending peaked at about three percent in the late 1950s)”. https://budget.house.gov/sites/
https://www.congress.gov/117/meeting/house/114393/witnesses/HHRG-117-EF00-Wstate-CrabtreeN-20220209.pdf
democrats.budget.house.gov/files/documents/Infrastructure%20and%20the%20Economy%20-%20Post-Hearing%20
258 Dr. Carlos Martín, Testimony before the U.S. House Select Committee on Economic Disparity and Fairness in Growth, Febru-
Report%20-%20FINAL.pdf
ary 2022, https://www.brookings.edu/testimonies/fairness-and-equity-in-infrastructure-policy/
262 In this analysis, the federal and state and local government investments are not treated separately because, “much of the
259 Hailey Phelps, “When Interstates
infrastructure investmentPaveddone by thestate
Way:andThelocal
construction
governments of theisInterstate
financed by Highway System
the federal helped develop
government through thegrants in
U.S. Economy,”
aid.” Federal Reserve Bank of Richmond, 2021, https://www.richmondfed.org/publications/research/econ_fo-
cus/2021/q2-3/economic_history
Fair, Ray C. (2021). “U.S. Infrastructure from 1929 to 2019.” https://fairmodel.econ.yale.edu/rayfair/pdf/2019D.PDF; Earlier
260 Clockwise from topfrom
estimates left:the
Photo 1: “A Cross Bronx
Congressional Expressway
Budget Office interchange
show that combinedin 1973," Chester
federal, Higgins
state and / Environmental
local spending on Protec-
infrastructure
tion Agency;
reportedPhoto in 2: Construction
2019 of the
was (in current Milwaukee
2019 freeway
dollars) $441 in the
billion 1960s,
as of 2017. Milwaukee County
That translated intoHistorical
2.3 percentSociety; Photo
of U.S. GDP.3: According
Construction of the Cross
to a testimony Bronx Expressway;
of Richard E. Geddess of Photo 4: The Sheridan
the American Expressway
Enterprise Instituteinbefore
the Bronx, MarchCommittee
the House 19, 2017, Gregg Vigliotti
on the Budget on
for The New
OctoberYork22,Times2019, the figure was “well below estimates of the spending needed to keep infrastructure in a state of good
261 “Beyondrepair.”
Traffic This
2045,”CBO estimate
U.S. of of
Department transportation and water
Transportation, infrastructure spending as a share
June 2017. of GDP represents the lowest
https://www.transportation.gov/sites/dot.gov/files/
level in more than 60 years (spending
docs/BeyondTraffic_tagged_508_final.pdf; ”Howpeaked at about
Interstate three percent
Highways Guttedin the late 1950s)”. Reinforced
Communities—and https://budget.house.gov/sites/
Segregation,”
democrats.budget.house.gov/files/documents/Infrastructure%20and%20the%20Economy%20-%20Post-Hearing%20
HISTORY, https://www.history.com/news/interstate-highway-system-infrastructure-construction-segregation
Report%20-%20FINAL.pdf
262 In this analysis, the federal and state and local government investments are not treated separately because, “much of
the infrastructure Society
263 American investment of Civil
doneEngineers.
by state (2021).
and local“Report Card for is
governments America’s
financedInfrastructure.”
by the federal government through grants
in aid.” Earlier estimates from the Congressional Budget Office
264 GAO. Transportation Infrastructure: Information on Bridge Conditions. show that combined federal,Nov
GAO-16-72R state and
30, local
2015. spending
Available at:on
https://www.
infrastructure reported in 2019 was (in current 2019 dollars) $441 billion as of 2017. That translated into 2.3% of U.S. GDP. Ac-
gao.gov/products/gao-16-72r
cording testimony by Richard E. Geddes of the American Enterprise Institute in 2019, the figure was “well below estimates
265spending
of the “Beyondneeded Trafficto 2045.”
keep U.S. Department
infrastructure in aofstate
Transportation. https://www.transportation.gov/sites/dot.gov/files/docs/Be-
of good repair.” This CBO estimate of transportation and water
yondTraffic_tagged_508_final.pdf
infrastructure spending as a share of GDP represents the lowest level in more than 60 years (spending peaked at about
266percent
three Michael Burrows,
in the Charlynn
late 1950s)”. Burd,
Ray C. and
Fair, Brian
“U.S. McKenzie, “ from
Infrastructure Commuting
1929 toby Public
2019,” Transportation in the
2021, United States: 2019,”
https://fairmodel.econ.yale.edu/
rayfair/pdf/2019D.PDF;
U.S. Census Bureau. “PublicApr.
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https://www.census.gov/content/dam/Census/library/publications/2021/acs/acs-48.pdf
1956 to 2017,” Congressional Budget
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267 Oct. 15, 2018,
Christina https://www.cbo.gov/publication/54539;
Stacy, Yipeng Su, Eleanor Noble, Alena Stern,Testimony of Richard
Kristin Blagg, GeddesRichard
Macy Rainer, before Ezike,
the House Committee
“Access to Op- on
the Budget, Oct. 22,
portunity 2019, https://budget.house.gov/sites/democrats.budget.house.gov/files/documents/Infrastructure%20
through Equitable Transportation,” Urban Institute. Oct. 2020. https://www.urban.org/sites/default/files/
and%20the%20Economy%20-%20Post-Hearing%20Report%20-%20FINAL.pdf
publication/102992/access-to-opportunity-through-equitable-transportation_0.pdf; “Supporting Late-Shift Workers:
263 “ReportTheir
Card for
Transportation
America’s Needs
Infrastructure,”
and the American
Economy,”Society
Americanof Civil
PublicEngineers,
Transit 2021,
Association. Sep. 2019.
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cat-item/broadband/
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omy; Martha
264 “Transportation M. Galvez,Information
Infrastructure: “Transportation options
on Bridge are expanding,
Conditions,” but can Accountability
Government they reach the Office,
urban poor?” Urban
Nov. 30, 2015,Institute.
https:// June
22, 2016. https://www.urban.org/urban-wire/transportation-options-are-expanding-can-they-reach-urban-poor#:~:tex-
www.gao.gov/products/gao-16-72r
t=Whether%20it%20is%20car%20ownership%2C%20new%20forms%20of,have%20fewer%20fallbacks%20when%20
265 “Beyondtheir%20transportation%20falls%20through
Traffic 2045,” U.S. Department of Transportation, https://www.transportation.gov/sites/dot.gov/files/docs/Be-
yondTraffic_tagged_508_final.pdf
268 Alix Gould-Werth, “New research shows that 1 in 4 adults in the United States suffers from transportation insecurity,”
266 Michael Washington
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CenterBurd, and Brian
for Equitable McKenzie,
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14, 2022. https://equitablegrowth.org/new-research-shows-that-1-in-4-
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adults-in-the-united-states-suffers-from-transportation-insecurity/
267 Christina Stacy,Higgins.
269 Eileen Yipeng Su, Eleanor
“Written Noble, Alena
Statement Stern,
for The Kristin
Record Blagg,
Hon. EileenMacy Rainer,
Higgins, Richard Ezike,
County “Access to
Commissioner Oppor- County, Fla.
Miami-Dade
tunity through Equitablewith
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9, 2022. https://www.congress.gov/117/meeting/
house/114393/witnesses/HHRG-117-EF00-Wstate-HigginsE-20220209.pdf
APPENDIX
Endnotes 185
270 “Access to Opportunity through Equitable
cation/102992/access-to-opportunity-through-equitable-transportation_0.pdf;
Transportation: Lessons from Four Metropolitan “Supporting
Regions,” Urban
Late-Shift
Institute.
Workers:
Octo-
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Transportation Needs and the Economy,” American Public
ber 2020. Transit Association, Sept. 2019, https://www.apta.com/re-
https://www.urban.org/sites/default/files/publication/102992/access-to-opportunity-through-equitable-transpor-
tation_0.pdf; Raj Chetty, Nathaniel Hendren, Patrick Kline, and Emmanuel
search-technical-resources/research-reports/supporting-late-shift-workers-their-transportation-needs-and-the-economy;
Saez. 2014. “Where Is the Land of Opportunity?
The Geography
Martha ofM. Galvez,
Intergenerational
“Transportation
Mobility in
options
the are
United
expanding,
States.” but
Quarterly
can they
Journal
reachofthe urban
Economicspoor?”
129 (4):
Urban
1553–Institute,
1623. June 22,
2016, of
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Commerce, “How Infrastructure Impacts Business,” published September 15, 2021 https://www.uschamber.
com/infrastructure/business-guide-infrastructure.
268 Alix Gould-Werth, “New research shows that 1 in 4 adults in the United States suffers from transportation insecurity,”
Washington
272 Ray Allen, U.S. HouseCenter
Selectfor Equitableon
Committee Growth, Sept.
Economic 14, 2022,and
Disparity https://equitablegrowth.org/new-research-shows-that-1-in-4-
Fairness in Growth, “Connecting Americans to Prosper-
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leases/hearing-recap-connecting-americans-prosperity-how-infrastructure-can-bolster
269 Eileen Higgins, Testimony before the House Select Committee On Economic Disparity and Fairness In Growth, Feb. 9, 2022.
273 Stewart https://www.congress.gov/117/meeting/house/114393/witnesses/HHRG-117-EF00-Wstate-HigginsE-20220209.pdf
Schley, University of New Hampshire, https://www.unh.edu/broadband/study-finds-broadband-adoption-tied-
economic-growth;
270 “Access toJed Opportunity
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from Four
Economics,
Metropolitan
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281 — to address
Jordana the affordability
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Committee
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284 PLACEHOLDER
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From
Affordable
the testimony
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before the
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— aCommittee
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APPENDIX
Endnotes 187
304 Note thattion, March
there are 9, 2022, types of place-based policies with objectives ranging
different https://www.brookings.edu/blog/the-avenue/2020/12/15/just-before-covid-19-american-migration-hit-
from local economic activity stimula-
a-73-year-low/;
tion to targeting Davidprograms
educational Neumark,to“Do Place-Based
specific Policies
localities. Work?”
This ection Econofact,
focuses https://econofact.org/do-place-based-poli-
on the former. Benjamin Austin, Edward
Glaeser,cies-work
Lawrence Summers, “Jobs for the Heartland: Place-Based Policies in 21st-Century America,” 2018, https://www.
brookings.edu/wp-content/uploads/2018/03/AustinEtAl_Text.pdf;
302 Timothy J. Bartik, Testimony to the U.S. House Select Committee David Neumark,
on EconomicHelen Simpson,
Disparity and“Place-Based Policies.”
Fairness in Growth, May 11,
National2022,
Bureau of Economic Research, 2014; Robert Manduca,Catalina Anampa Castro, Analidis Ochoa, “Social Insurance
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Programs as Place-Conscious Policies to Reduce Interregional Geographic Inequality,” https://osf.io/preprints/socarxiv/
2022.pdf
p8rtv/
303 Jens Ludwig, Greg J. Duncan, Lisa A. Gennetian, Lawrence F. Katz, Ronald C. Kessler, Jeffrey R. Kling, Lisa Sanbonmatsu,
305 Jens Ludwig, Greg J.the
“Evaluating Duncan,
ImpactLisa A. Gennetian,
of Moving LawrenceinF.the
to Opportunity Katz, Ronald
United C. Kessler,
States,” Jeffrey
American R. Kling,Review
Economic Lisa Sanbonmatsu,
Papers and Proceed-
“Evaluating the Impact of Moving to Opportunity in the United States,” American Economic Review Papers and Proceed-
ings 103(3): 226-231, May 2013, https://www.povertyactionlab.org/evaluation/evaluating-impact-moving-opportunity-unit-
ings 103(3): 226-231, May 2013, https://www.povertyactionlab.org/evaluation/evaluating-impact-moving-opportunity-unit-
ed-states
ed-states
304 Note that there are different types of place-based policies with objectives ranging from local economic activity stimula-
306 “Community
tion toDevelopment Financial Institutions
targeting educational programs to(CDFIs):
specificOverview
localities.and
ThisSelected Issues,” on
section focuses Congressional
the former. Research
Benjamin Service.
Austin, Edward
Aug. 16, 2022. https://crsreports.congress.gov/product/pdf/R/R47217
Glaeser, Lawrence Summers, “Jobs for the Heartland: Place-Based Policies in 21st-Century America,” 2018, https://www.
brookings.edu/wp-content/uploads/2018/03/AustinEtAl_Text.pdf;
307 The Indigenous peoples in the United States also include Native Hawaiians, David Neumark,
Samoans Helen Simpson,
in American “Place-Based
Samoa, Chamorro in Policies.”
Guam, andNational
Taino Bureau
residingofin Puerto
Economic Research,
Rico. For 2014;
more Robert please
information,Manduca,Catalina
visit: Anampa Castro, Analidis Ochoa, “Social Insurance
https://equitablegrowth.org/sovereignty-and-
Programs as Place-Conscious Policies to Reduce Interregional Geographic Inequality,” https://osf.io/preprints/socarxiv/
improved-economic-outcomes-for-american-indians-building-on-the-gains-made-since-1990/
p8rtv/
308 Before the COVID-19 pandemic, federal, state, and local governments were spending around $60 billion annually on spa-
tially-targeted
305 “The Opportunity
“place-based”
Atlas,”
policies
U.S. to
Census
create jobs
Bureau,in Harvard
low-incomeUniversity,
and and
economically
Brownstagnant
University,
areas. “Federal
https://www.opportunityatlas.org/
Resources for
State
306and Local Economic
Roundtable: Development,”
Economic Empowerment Congressional
for NativeResearch Service,
Communities, U.S.March
House22, 2021,Committee
Select https://crsreports.congress.gov/
on Economic Disparity and
product/pdf/IF/IF11794; Emilyhttps://youtu.be/pbsqZb0GPrA
Fairness in Growth, Parker, Laura Tach, Cassandra Robertson, “Do Federal Place-Based Policies Improve Economic
Opportunity in Rural Communities?” The Russell Sage Foundation Journal of the Social Sciences May 2022, 8 (4) 125-154;
307
DOI: The Indigenous peoples in the United States also include Native Hawaiians, Samoans in American Samoa, Chamorro in
10.7758/RSF.2022.8.4.06
Guam, and Taino residing in Puerto Rico. For more information, please visit: https://equitablegrowth.org/sovereignty-and-
309 Jay Shambaugh, Ryan Nunn, “Place-based Policies for Shared Economic Growth.”The Brookings Institution, September 28,
improved-economic-outcomes-for-american-indians-building-on-the-gains-made-since-1990/
2018. https://www.brookings.edu/multi-chapter-report/place-based-policies-for-shared-economic-growth/
308 Before the COVID-19 pandemic, federal, state, and local governments were spending around $60 billion annually on spa-
310 Jay Shambaugh, Ryan “place-based”
tially-targeted Nunn, “Place-based Policies
policies for Shared
to create Economic Growth.”The
jobs in low-income Brookings
and economically Institution,
stagnant areas. September 28,
“Federal Resources for
2018. https://www.brookings.edu/multi-chapter-report/place-based-policies-for-shared-economic-growth/
State and Local Economic Development,” Congressional Research Service, March 22, 2021, https://crsreports.congress.gov/
311 Jay Shambaugh, Ryan Nunn, Emily
product/pdf/IF/IF11794;“Place-based Policies for
Parker, Laura Tach,Shared Economic
Cassandra Growth.”The
Robertson, Brookings
“Do Federal Institution,
Place-Based September
Policies Improve28,
Economic
2018. Opportunity in Rural Communities?” The Russell
https://www.brookings.edu/multi-chapter-report/place-based-policies-for-shared-economic-growth/
Sage Foundation Journal of the Social Sciences May 2022, 8 (4) 125-154;
DOI: 10.7758/RSF.2022.8.4.06
312 Jay Shambaugh, Ryan Nunn, “Place-based Policies for Shared Economic Growth.”The Brookings Institution, September 28,
2018.
309 Timothy J. Bartik, "Using Place-Based Jobs Policies
https://www.brookings.edu/multi-chapter-report/place-based-policies-for-shared-economic-growth/
to Help Distressed Communities," Journal of Economic Perspectives, 34
313 (3): 99-127, https://pubs.aeaweb.org/doi/pdf/10.1257/jep.34.3.99;
Brett Theodos, Christina Stacy Plerhoples, Helen Ho, “ Taking Stock of the Testimony
Communityof Jay Williams before
Development Blockthe HouseThe
Grant,” Committee
Ur- on
Economic
ban Institute, AprilDisparity and Fair Growth, May 11, 2022, https://www.congress.gov/117/meeting/house/114724/witnesses/HHRG-117-
14, 2017, https://www.urban.org/research/publication/taking-stock-community-development-block-grant
EF00-Wstate-WilliaEIGmsJ-20220511.pdf
314 Timothy J. Barthink, “Using Place-Based Jobs Policies to Help Distressed Communities.” Journal of Economic Perspectives,
310 Jay Shambaugh,
34 (3): 99-127.DOI: Ryan Nunn, “Place-based
10.1257/jep.34.3.99 Policies for Shared Economic Growth,” The Brookings Institution, September 28,
https://pubs.aeaweb.org/doi/pdf/10.1257/jep.34.3.99
2018, https://www.brookings.edu/multi-chapter-report/place-based-policies-for-shared-economic-growth/
315 George Zuo, “Getting Beneath the Hood of Effective Place-Based Policies: Evidence from the Community Development
311 Grant,”
Block Margery Austin Turner
November andhttp://econweb.umd.edu/~zuo/files/ZuoGeorge_JMP.pdf
18, 2020, Solomon Greene “Causes and Consequences of Separate and Unequal Neighborhoods,” Urban
Institute, https://www.urban.org/racial-equity-analytics-lab/structural-racism-explainer-collection/causes-and-conse-
316 The funding levels for the agency have been historically volatile, reaching a peak of $4 billion in 1977 ($22.65 billion in 2021
quences-separate-and-unequal-neighborhoods
dollars), then plummeting to the average of $300 million between 2013-18. Brett Theodos, Leiha Edmonds, Christina Stacy,
312 Photo
Benjamin 1: Diesel
Docter, engine assembly
Christopher line at Shwabish,
Davis, Jonathan International Harvester’s
“History Milwaukee Works,
and Programmatic 1938.ofWisconsin
Overview Historical
the Economic Society,
Develop-
https://www.wisconsinhistory.org/Records/Image/IM3567;
ment Administration,” Photo 2: Two Falk employees, Virginia Breest and Shirley Gunn
The Urban Institute. October 2021, https://www.urban.org/sites/default/files/publication/105005/
on the right, attend to the speed increaser that is a later component of a jet engine compressor test stand on Feb. 8, 1973.
history-and-programmatic-overview-of-the-economic-development-administration_0.pdf
Wisconsin Historical Society. https://www.wisconsinhistory.org/Records/Image/IM50610
317 Liu, Amy, McDearman, Brad, et. al. “Making Local Economies Prosperous and Resilient: the Case for a Modern Economic
313 Brett Theodos,
Development Christina
Administration.” Stacy
June 27,Plerhoples, Helen
2022. Available at:Ho, “ Taking Stock of the Community Development Block Grant,” The Ur-
https://www.brookings.edu/research/making-local-econo-
ban Institute, April 14, 2017, https://www.urban.org/research/publication/taking-stock-community-development-block-grant
mies-prosperous-and-resilient-the-case-for-a-modern-economic-development-administration/
318 314 Timothy
Testimony of JayJ.Williams,
Bartik, "Using Place-Based
the president Jobs Policies
and Chief ExecutivetoOfficer
Help Distressed Communities."
of the Hartford FoundationJournal of Economic
for Public Perspectives, 34
Giving, before
the House(3):Committee
99-127.DOI:on 10.1257/jep.34.3.99,
Economic Disparity https://pubs.aeaweb.org/doi/pdf/10.1257/jep.34.3.99
and Fair Growth, May 11, 2022, https://www.congress.gov/117/meeting/
house/114724/witnesses/HHRG-117-EF00-Wstate-WilliaEIGmsJ-20220511.pdf
315 George Zuo, “Getting Beneath the Hood of Effective Place-Based Policies: Evidence from the Community Development
319 Block Grant,”
Empowerment ZonesNov.
(EZs)18, 2020,
were http://econweb.umd.edu/~zuo/files/ZuoGeorge_JMP.pdf
enacted alongside smaller-scale Enterprise Communities (ECs) and Renewal Communities
(RCs.
316)HUD
The funding
designatedlevels
six for
urban
the agency
communities have as
been
EZs in the firstvolatile,
historically round;USDAreaching a
designated
peak of
three
$4 rural
billion in 1977
communities.
($22.65
HUD
billion
andin 2021
USDA designated
dollars), then
20 additional
plummeting EZsto(15the
urban
average
and of
five
$300
rural),
million
and in the
betweenthird2013-18.
round, Brett
added nine
Theodos,
EZsLeiha
(seven urban
Edmonds, and two
Christina Stacy,
rural). Benjamin
“Revitalization
Docter,
Programs:
Christopher
Empowerment
Davis, Jonathan
Zones, Shwabish,
Enterprise "History
Communities,
and and
Programmatic
Renewal Overview
Communities,”of theGAO,
Economic
March Develop-
12, 2010, ment Administration,"
https://www.gao.gov/assets/gao-10-464r.pdf
The Urban Institute, Oct. 2021, https://www.urban.org/sites/default/files/publication/105005/histo-
ry-and-programmatic-overview-of-the-economic-development-administration_0.pdf
320 “Empowerment Zones, Enterprise Communities, and Renewal Communities: Comparative Overview and Anal-
ysis,”
317 Amy
Congressional
Liu, Brad
Research
McDearman,
Service,
Xavier
February
de Souza
14, 2011,
Briggs, Mark Muro, Anthony F.
https://www.everycrsreport.com/files/20110214_R41639_
Pipa, Adie Tomer, Jennifer S. Vey, “Making Local
b18ae5bf0fbe93505d7b6c2b13b744b76124b9ed.pdf
Economies Prosperous and Resilient: the Case for a Modern Economic Development Administration,” June 27, 2022, https://
www.brookings.edu/research/making-local-economies-prosperous-and-resilient-the-case-for-a-modern-economic-devel-
321 Scott Eastman, Nicole Kaedin, “Opportunity Zones: What We Know and What We Don’t,” Tax Foundation, 2022, https://
opment-administration/
taxfoundation.org/opportunity-zones-what-we-know-and-what-we-dont/
Testimony
318 Eastman,
322 Scott of Jay
Nicole Williams,
Kaedin, the president
“Opportunity andWhat
Zones: ChiefWe
Executive
Know and Officer
What ofWe
theDon’t,” TaxFoundation
Hartford Foundation, Public
for2022, Giving, be-
https://
fore the House Committee on Economic Disparity and Fair Growth, May 11, 2022, https://www.congress.gov/117/meeting/
taxfoundation.org/opportunity-zones-what-we-know-and-what-we-dont/
house/114724/witnesses/HHRG-117-EF00-Wstate-WilliaEIGmsJ-20220511.pdf
323 Testimony of the Urban Institute’s Brett Theodos before the U.S. House Ways and Means Committee’s Oversight Sub-
319 Empowerment Zones (EZs) were enacted alongside smaller-scale Enterprise Communities (ECs) and Renewal Communities
committee, https://www.urban.org/sites/default/files/publication/105094/opportunity-zones-current-status-and-op-
(RCs). HUD designated
tions-for-reform.pdf; six urban
Patrick Kennedy, communities
Harrison as “Neighborhood-Level
Wheeler, EZs in the first round;USDA designated
Investment three
from the rural
U.S. communities.
Opportunity ZoneHUD and
USDA designated 20 additional EZs (15 urban and five rural), and in the third round, added
Program: Early Evidence,” April 13, 2022 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4024514] nine EZs (seven urban and two
House Select Committee on
188 Economic Disparity & Fairness in Growth
324 rural).
Testimony of
“Revitalization
Brookings
Programs:
Metro Fellow
Empowerment
Tracy Hadden
Zones,
Loh to
Enterprise
the U.S. House
Communities,
Selectand
Committee
Renewalon Economic
Communities,”
Dis-Government
Accountability
parity and Fairness
Office,
in March
Growth,12,May
2010,
11, 2022:
https://www.gao.gov/assets/gao-10-464r.pdf
https://www.brookings.edu/testimonies/designing-the-next-genera-
320 tion-of-place-based-policies-to-address-concentrated-poverty-at-the-neighborhood-level/
“Empowerment Zones, Enterprise Communities, and Renewal Communities: Comparative Overview and Analysis,” Con-
325 Brett
gressional
Theodos,,
Research
Christina
Service,
Plerhoples
February 14,
Stacy,2011,
Daniel Teles, Christopher Davis,
https://crsreports.congress.gov/product/pdf/R/R41639
Ananya Hariharan, “Project: Evaluating the
321 NMTC
“SurveyProgram,” Urban
of Economic Institute, 2021,
Development Available
Programs at: https://www.urban.org/nmtc
in Michigan,” 2nd Edition, Report 347, June 2007, Citizens Research Council of
326 Cheryal
Michigan,Hills; Testimony before the US
http://crcmich.org/PUBLICAT/2000s/2007/rpt347-01.pdf
House Select Committee on Economic Disparity and Fairness in Growth, May 11,
322 2022. Available at:
Scott Eastman, https://docs.house.gov/meetings/EF/EF00/20220511/114724/HHRG-117-EF00-Wstate-HillsC-20220511.pdf
Nicole Kaedin, “Opportunity Zones: What We Know and What We Don’t,” Tax Foundation, 2022, https://tax-
or https://www.regionfive.org/post/r5dc-testifies-at-economic-development-hearing-before-congress
foundation.org/opportunity-zones-what-we-know-and-what-we-dont/
327 Amy Liu,
323 Brett BradMcDearman,
Theodos, “Making
Testimony before LocalHouse
the U.S. Economies Prosperous
Ways and Means and Resilient: the
Committee’s Case for a
Oversight Modern Economic
Subcommittee, De-
https://www.
velopment Administration,” “https://www.brookings.edu/research/making-local-economies-prosperous-and-resil-
urban.org/sites/default/files/publication/105094/opportunity-zones-current-status-and-options-for-reform.pdf; Patrick
ient-the-case-for-a-modern-economic-development-administration
Kennedy, Harrison Wheeler, “Neighborhood-Level Investment from the U.S. Opportunity Zone Program: Early Evidence,”
328 April
Jeff 13,
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329 Quotations. Franklin
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392 The Center for American Progress found that financial insecurity affects even more Americans, with a third of adults not
PF1_1_Public_spending_on_family_benefits.pdf
able to cover a $400 emergency expense. Sarah Ayres Steinberg, “The Safety Net Is Good Economic Policy,” Center for
397 Arloc Sherman and Tazra Mitchell, “Economic Security Programs Help Low-Income Children Succeed Over Long Term,
American Progress, March 31, 2014, https://www.americanprogress.org/article/the-safety-net-is-good-economic-policy/;
Many Studies Find,” Center on Budget and Policy Priorities, July 17, 20219, https://www.cbpp.org/research/poverty-and-in-
equality/economic-security-programs-help-low-income-children-succeed-over
APPENDIX
Endnotes 191
398 Alexandra
Areeba
Cawthorne
Haider and
Gaines,
Justin
Bradley
Schweitzer,
Hardy, and
“TheJustin
Poverty Line Matters,
Schweitzer, “HowBut It
WeakIsn’t
Safety
Capturing
Net Policies
Everyone It
Exacerbate
Should,”
Regional
Center for Amer-
and Racial
ican
Inequality,”
Progress, March
Center5,
for2020,
American Progress, Sept. 22, 2021,
https://www.americanprogress.org/article/poverty-line-matters-isnt-capturing-everyone/.
https://www.americanprogress.org/article/weak-safe-
ty-net-policies-exacerbate-regional-racial-inequality
393 Craig Benson, “Poverty Rate of Children Higher Than National Rate, Lower for Older Populations,” U.S. Census Bureau, Oct.
399 Testimony
2022,
of Sharon Parrott Before the House Select
https://www.census.gov/library/stories/2022/10/poverty-rate-varies-by-age-groups.html
Committee on Economic Disparity and Fairness in Growth, July 28,
2022,
394https://www.cbpp.org/research/poverty-and-inequality/the-nation-has-made-progress-against-poverty-but-policy-
Michael McLaughlin, Mark R Rank, “Estimating the Economic Cost of Childhood Poverty in the United States,” Social Work
advances
Research, Volume 42, Issue 2, June 2018, https://academic.oup.com/swr/article-abstract/42/2/73/4956930
400 “Charitable
395 “Public Giving Statistics,”
Spending National
on Family Philanthropic
Benefits” Trust, 2021,
Organization https://www.nptrust.org/philanthropic-resources/charita-
for Economic Cooperation and Development, Jan.2021, https://www.
ble-giving-statistics/; Bradford K. Smith, “Philanthropy’s Difficult Dance With Inequality,” Philanthropy News Digest, July 7,
oecd.org/els/soc/PF1_1_Public_spending_on_family_benefits.pdf
2015: https://philanthropynewsdigest.org/features/commentary-and-opinion/philanthropy-s-difficult-dance-with-inequali-
ty 396 The OECD includes counts as “family benefits”: child-related cash transfers to families with children; public spending on
services for families with children; and financial support for families provided through the tax system--at all levels of gov-
401 Nationalernment.
Philanthropic Trust,
“Public https://www.nptrust.org/philanthropic-resources/charitable-giving-statistics/
spending drawn from
on family benefits,” OECD Family Database, Jan.2021, https://www.oecd.org/els/soc/PF1_1_Pub-
“Giving USA 2022: The Annual Report
lic_spending_on_family_benefits.pdf on Philanthropy for the Year 2021”, Indiana University Lilly Family School of Philanthro-
py: www.givingusa.org.
397 Arloc Sherman and Tazra Mitchell, “Economic Security Programs Help Low-Income Children Succeed Over Long Term, Many
402 ChicagoStudies
Community
Find,”Trust,
Center“Why Philanthropy
on Budget Can’tPriorities,
and Policy Replace July
Government
17, 20219,inhttps://www.cbpp.org/research/poverty-and-inequality/
Helping Illinois Thrive,” Oct. 10, 2018, https://
www.cct.org/stories/why-philanthropy-cant-replace-government-in-helping-illinois-thrive/.
economic-security-programs-help-low-income-children-succeed-over
403 An398
expanded ChildCawthorne
Alexandra Tax Credit provides assistance
Gaines, Bradley to many
Hardy, families
and Justin left out of
Schweitzer, EITC,Weak
“How by extending
Safety Net assistance to families out
Policies Exacerbate Regional
of work or
and with very low
Racial earnings.
Inequality,” Arloc
Center forSherman
American and Danilo Trisi,
Progress, “Safety
Sept. 22, Net for Poorest Weakened
2021, After Welfare Law But
https://www.americanprogress.org/article/weak-safe-
Regained Strength in Great Recession, at Least Temporarily,” Center on Budget and Policy Priorities, May 2015: https://www.
ty-net-policies-exacerbate-regional-racial-inequality
cbpp.org/research/poverty-and-inequality/safety-net-for-poorest-weakened-after-welfare-law-but-regained; “EITC Fast
399 Internal
Facts,” Sharon Revenue
Parrott Testimony
Services. before the U.S. House Select Committee on Economic Disparity and Fairness in Growth, July 28,
https://www.eitc.irs.gov/partner-toolkit/basic-marketing-communication-materials/eitc-
2022, https://www.cbpp.org/research/poverty-and-inequality/the-nation-has-made-progress-against-poverty-but-policy-
fast-facts/eitc-fast-facts; ”About the Child Tax Credit,” ChildTaxCredit.gov. https://www.childtaxcredit.gov/about/
advances
404 “Expansions to Child Tax Credit Contributed to 46% Decline in Child Poverty Since 2020,” Census Bureau, Sept. 13, 2022,
400 “Charitable Giving Statistics,” National Philanthropic Trust, 2021, https://www.nptrust.org/philanthropic-resources/charita-
https://www.census.gov/library/stories/2022/09/record-drop-in-child-poverty.html; Ben Casselman, “Child Tax Credit’s
ble-giving-statistics/;
Extra Help Ends, Bradford K.
Just as Covid Surges Anew,”Smith, “Philanthropy's
New York Difficult
Times, Jan. 2, 2022:Dance With Inequality,” Philanthropy News Digest, July 7,
https://www.nytimes.com/2022/01/02/business/
2015, https://philanthropynewsdigest.org/features/commentary-and-opinion/philanthropy-s-difficult-dance-with-inequali-
economy/child-tax-credit.html; and Zachary Parolin, Sophie Collyer, and Megan A. Curran, “The Earned Income Tax Credit
and the ty
Child Tax Credit Give Temporary Income Boost to Low-Income Families,” Columbia University Center on Poverty and
Social
401 Policy, MayPhilanthropic
National 10, 2022, https://www.povertycenter.columbia.edu/publication/monthly-poverty-march-2022.
Trust, https://www.nptrust.org/philanthropic-resources/charitable-giving-statistics; “Giving USA
405 Greg Duncan and Annual
2022: The Suzanne Report on Philanthropy
Le Menestrel, A Roadmap for the Year 2021”,Child
to Reducing Indiana University
Poverty, Lilly5 Family
Chapter School
“Ten Policy andofProgram
Philanthropy:
Ap- www.
givingusa.org.
proaches to Reducing Child Poverty,” National Academies of Sciences, Engineering, and Medicine, The National Academies
Press,
4022019: https://www.ncbi.nlm.nih.gov/books/NBK547351/
Chicago Community Trust, “Why Philanthropy Can’t Replace Government in Helping Illinois Thrive,” Oct. 10, 2018, https://
406 Michaelwww.cct.org/stories/why-philanthropy-cant-replace-government-in-helping-illinois-thrive/
D. King, “Who Is Receiving Social Safety Net Benefits?” Census Bureau, May 24, 2022: https://www.census.gov/
library/stories/2022/05/who-is-receiving-social-safety-net-benefits.html
403 An expanded Child Tax Credit provides assistance to many families left out of EITC, by extending assistance to families out
of workBasics:
407 CBPP. “Policy or withUnemployment
very low earnings. Arloc Sherman
Insurance.” Octoberand Danilo Trisi, “Safety Net for Poorest Weakened After Welfare Law But
4, 2021.
Regained Strength in Great Recession, at Least Temporarily,” Center on Budget and Policy Priorities, May 2015, https://www.
408 Rose Khattar, Justin Schweitzer, Kyle Ross, “Expanding the Safety Net During a Recession Prevents Worsening Economic
cbpp.org/research/poverty-and-inequality/safety-net-for-poorest-weakened-after-welfare-law-but-regained; “EITC Fast
Pain,” Center
Facts,”For American
Internal Progress,
Revenue Sept.https://www.eitc.irs.gov/partner-toolkit/basic-marketing-communication-materials/eitc-
Services. 19, 2022: https://www.americanprogress.org/article/expanding-the-safe-
ty-net-during-a-recession-prevents-worsening-economic-pain/
fast-facts/eitc-fast-facts; ”About the Child Tax Credit,” ChildTaxCredit.gov, https://www.childtaxcredit.gov/about/
409 Robert
404 A. Moffitt andto
“Expansions James
Child P. Ziliak,
Tax Credit“COVID‐19
Contributed andtothe
46%U.S.Decline
Safetyin Net,”
ChildSeptember 2020,
Poverty Since https://ideas.repec.org/a/wly/
2020,” Census Bureau, Sept. 13, 2022,
fistud/v41y2020i3p515-548.html
https://www.census.gov/library/stories/2022/09/record-drop-in-child-poverty.html; Ben Casselman, “Child Tax Credit’s
410 Nick Gwyn,
Extra Help
“Historic
Ends, Just
Unemployment
as Covid Surges
ProgramsAnew,”
Provided
NewVital
YorkSupport
Times, to
Jan. 2,
Workers
2022,and the Economy During
https://www.nytimes.com/2022/01/02/business/
Pandemic,
Offer Roadmap for Future
economy/child-tax-credit.html;
Reform.” Center andon
Zachary
Budget and
Parolin,
Policy
Sophie
Priorities,
Collyer, and
March 24,
Megan2022:
A. Curran, “The Earned
https://www.cbpp.org/research/
Income Tax Credit
economy/historic-unemployment-programs-provided-vital-support-to-workers-and-the-economy
and the Child Tax Credit Give Temporary Income Boost to Low-Income Families,” Columbia University Center on Poverty and
411 Social
Robert A. Policy,
Moffitt andMay 10, 2022,
James https://www.povertycenter.columbia.edu/publication/monthly-poverty-march-2022.
P. Ziliak, “COVID‐19 and the US Safety Net,” September 2020: https://ideas.repec.org/a/wly/fi-
stud/v41y2020i3p515-548.html;
405 Greg Duncan and Suzanne andLe“Five
Menestrel,
Things A
You May
RoadmapNotoKnow
Reducing
AboutChild
the U.S.
Poverty,
Social
Chapter
Safety Five,
Net,”“Ten
Urban
Policy
Institute,
and Feb.
Program Ap-
4, 2019: proaches to Reducing Child Poverty,” National Academies
https://www.urban.org/research/publication/five-things-you-may-not-know-about-us-social-safety-net.
of Sciences, Engineering, and Medicine, The National Academies
Press, 2019,
412 “Policy Basics: https://www.ncbi.nlm.nih.gov/books/NBK547351/
Supplemental Nutrition Assistance Program,” Center on Budget and Policy Priorities, June 9, 2022: https://
www.cbpp.org/research/food-assistance/the-supplemental-nutrition-assistance-program-snap
406 Michael D. King, “Who Is Receiving Social Safety Net Benefits?” Census Bureau, May 24, 2022, https://www.census.gov/
library/stories/2022/05/who-is-receiving-social-safety-net-benefits.html
413 Policy Basics: Supplemental Nutrition Assistance Program,” Center on Budget and Policy Priorities, June 9, 2022: https://
407 “Policy Basics: Unemployment Insurance.” Center on Budget and Policy Priorities, October 4, 2021.
www.cbpp.org/research/food-assistance/the-supplemental-nutrition-assistance-program-snap
414 SuzannaRose
408 Macartney
Khattar,and
Justin
Robin
Schweitzer,
Ghertnerm,Kyle Ross,
“Participation
“Expanding
in thethe
U.S.Safety
SocialNet
Safety
During
Net:aCoverage
RecessionofPrevents
Low-Income
Worsening
Families,”
Economic
Department
Pain,”ofCenter
HealthFor
andAmerican
Human Services,
Progress, Sept.
November
19, 2022,
2021:https://www.americanprogress.org/article/expanding-the-safe-
https://aspe.hhs.gov/sites/default/files/documents/9e9000cb-
7b1e4e30c2e616e547ed9bd9/program-eligibility-participation-brief-december-2021.pdf
ty-net-during-a-recession-prevents-worsening-economic-pain/
415 “Policy
409 Robert
Basics: A.
Temporary
Moffitt and
Assistance
James P.for
Ziliak,
Needy“COVID-19 and
Families,” Center
the U.S.
on Budget
Safety and
Net,”Policy
September
Priorities,
2020,March 2022:
https://ideas.repec.org/a/wly/
https://www.
cbpp.org/research/family-income-support/temporary-assistance-for-needy-families
fistud/v41y2020i3p515-548.html
416 Aditi
410 Nick
Shrivastava
Gwyn,and
“Historic
Gina Azito
Unemployment
Thompson, “TANF
Programs
CashProvided Vital
Assistance Should
Support
Reach
to Workers
Millionsand
Morethe
Families
Economyto Lessen
During Hard-
Pandemic,
ship,”Center
Offeron
Roadmap
Budget for
andFuture
Policy Reform.”
Priorities,Center
February
on 18,
Budget
2022:and Policy Priorities, March
https://www.cbpp.org/research/family-income-support/
24, 2022, https://www.cbpp.org/research/
tanf-cash-assistance-should-reach-millions-more-families-to-lessen
economy/historic-unemployment-programs-provided-vital-support-to-workers-and-the-economy
417 Justin
411 Robert
Schweitzer,
A. “How
MoffittTo
and
Address
Jamesthe
P. Ziliak,
Administrative
“COVID-19 and
Burdens
theof
US Safety
Accessing
Net,”
the Safety
September
Net,”2020,
Center for American
https://ideas.repec.org/a/wly/fi-
Progress.
May 5, 2022.
stud/v41y2020i3p515-548.html; and “Five Things You May
https://www.americanprogress.org/article/how-to-address-the-administrative-burdens-of-accessing-the-
Not Know About the U.S. Social Safety Net,” Urban Institute, Feb.
safety-net/
4, 2019, https://www.urban.org/research/publication/five-things-you-may-not-know-about-us-social-safety-net.
418 “Federal
412 IT
“Policy
Investments
Basics: are
Supplemental
Necessary to
Nutrition
Deliver Critical
AssistanceRelief
Program,”
and Services
CentertoonFamilies,”
Budget and
House
Policy
Committee
Priorities,on
June
the 9,
Budget.
2022 https://
Sep. 3, 2020.
www.cbpp.org/research/food-assistance/the-supplemental-nutrition-assistance-program-snap
https://budget.house.gov/publications/report/federal-it-investments-are-necessary-deliver-critical-re-
lief-and-services; “Reforming
413 Policy Basics: Unemployment
Supplemental Insurance,” Program,”
Nutrition Assistance June 2021.Center
https://files.epi.org/uploads/Reforming-Unemploy-
on Budget and Policy Priorities, June 9, 2022: https://
ment-Insurance.pdf; Sara Soka, Chad Smith, “Economic Recovery Starts with a Modern Social Safety Net Benefit System,”
www.cbpp.org/research/food-assistance/the-supplemental-nutrition-assistance-program-snap
Beeck Center for Social Impact + Innovation at Georgetown University. Jul. 24, 2020. https://beeckcenter.georgetown.edu/
economic-recovery-starts-with-a-modern-social-safety-net-benefit-system .
House Select Committee on
192 Economic Disparity & Fairness in Growth
414 Suzanna“Work
419 Macartney and
Requirements
Robinand
Ghertnerm,
Work Supports
“Participation
for Recipients
in the of
U.S. Social
Means-Tested
Safety Net:
Benefits,”
Coverage of
Congressional
Low-Income
Budget
Families,”
Office, June
Department
2022.of Health and Human
https://www.cbo.gov/publication/58199
Services, November 2021: https://aspe.hhs.gov/sites/default/files/documents/9e9000cb-
7b1e4e30c2e616e547ed9bd9/program-eligibility-participation-brief-december-2021.pdf
420 “Deep poverty” is defined as households with incomes that are less than half the official poverty levels for their family size,
415 “Policy using
Basics:“expanded”
Temporary poverty
Assistance for
measures
Needy
thatFamilies,”
account for
Center on
government
Budget and
transfers
Policy
and adjust
Priorities,
forMarch
underreporting
2022, https://www.
in the Census
cbpp.org/research/family-income-support/temporary-assistance-for-needy-families
survey data. Arloc Sherman and Danilo Trisi, “Safety Net for Poorest Weakened After Welfare Law But Regained Strength in
416 Aditi Great Recession,
Shrivastava and GinaatAzito
LeastThompson,
Temporarily,” Center
“TANF Cash on Budget and
Assistance PolicyReach
Should Priorities, May 11,
Millions More 2015: https://www.cbpp.org/research/
Families to Lessen Hard-
poverty-and-inequality/safety-net-for-poorest-weakened-after-welfare-law-but-regained
ship,”Center on Budget and Policy Priorities, Feb. 18, 2022, https://www.cbpp.org/research/family-income-support/tanf-
421 “Chart Book: Temporary Assistance for Needy Families (TANF) at 26,” Center on Budget and Policy Priorities, updated Au-
cash-assistance-should-reach-millions-more-families-to-lessen
gust 4, 2022, https://www.cbpp.org/research/family-income-support/temporary-assistance-for-needy-families-tanf-at-26
417 Justin Schweitzer, "How To Address the Administrative Burdens of Accessing the Safety Net," Center for American Progress,
May422
5, 2022,
“Chart Book: Temporary Assistance for Needy Families (TANF)
https://www.americanprogress.org/article/how-to-address-the-administrative-burdens-of-accessing-the-
at 26,” Center on Budget and Policy Priorities, updated Au-
safety-net/
gust 4, 2022, https://www.cbpp.org/research/family-income-support/temporary-assistance-for-needy-families-tanf-at-26
418 “Federal IT
423 “The
Investments
Abundant areBirthNecessary
Project,” to
University
Deliver of
Critical
California
ReliefSan
andFrancisco.
Services to Families,” House Committee
https://pretermbirthca.ucsf.edu/abundant-birth-proj-
on the Budget,
Sep. 3, ect
2020, https://budget.house.gov/publications/report/federal-it-investments-are-necessary-deliver-critical-re-
lief-and-services;
424 This would:“Reforming Unemployment
increase the Insurance,”
EITC to $1,502; make the June 2021.phase-out
phase-in, https://files.epi.org/uploads/Reforming-Unemploy-
rates 15.3%; reduce the general age of eligibility to
ment-Insurance.pdf; Sara Soka, Chad Smith, “Economic Recovery Starts
19 years-old; reduce the age of eligibility for those attending school with a Modern
at least SocialtoSafety
part-time Net Benefit
24; reduce the ageSystem,”
of eligibility for
Beeck Center
formerfor Social
foster Impact
youth and+youth
Innovation at Georgetown
experiencing University,
homelessness to 18;Jul.
and 24,eliminate
2020. https://beeckcenter.georgetown.edu/
the upper limit. “The ‘Childless’ EITC: Tempo-
economic-recovery-starts-with-a-modern-social-safety-net-benefit-system
rary Expansion for 2021 Under the American Rescue Plan Act of 2021 (ARPA; P.L. 117-2),” CRS. May 3, 2021. https://crsreports.
419 congress.gov/product/pdf/IN/IN11610
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2022,
425https://www.cbo.gov/publication/58199
It would also be expanded to agricultural and domestic workers and workers with short continuous work histories because
420 “Deep they
poverty”
are is
either
defined
young
as or just
households
returning
withto the
incomes labor
that
force
are less
afterthan
longhalf
periods
the of
official
absence.
poverty levels for their family size,
using
426“expanded”
“Who Pays poverty measures
the Corporate thatCRS,
Tax?” account for government
September transfers and adjust for underreporting in the Census
2021, https://crsreports.congress.gov/product/pdf/IF/IF10742;William G.
survey data.
Gale Arloc Sherman
and Andrew A. and Danilo“Effects
Samwick, Trisi, “Safety Net for
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on Economic Welfare Law But Regained
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421 “Chart Book: Temporary Assistance for Needy Families (TANF) at 26,” Center on Budget and Policy Priorities, updated Au-
es-and-growth/
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ect tax-cuts-and-jobs-act/
428Morial,
424 Marc “Chart Book: Temporary
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429 Paul
425 It would Krugman,
also be “Charlatans,
expanded Cranks
to agricultural andand Kansas,”
domestic New York
workers andTimes,
workersJune
with29, 2014continuous
short https://www.nytimes.com/2014/06/30/
work histories because
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430 Pays
426 “Who “Chart
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26,” Center on Budget and Policy Priorities, updated
and Au-
Gale’s gust
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mittee-testimony-on-taxes-and-growth/
432 “Corporate Top Tax Rate and Bracket,” Tax Policy Center, February 2022, https://www.taxpolicycenter.org/statistics/cor-
427 Christina D. Romer and David H. Romer, ;
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tion,
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428 Paul Krugman, “Charlatans, Cranks and Kansas,” New York Times, June 29, 2014, https://www.nytimes.com/2014/06/30/
cycenter.org/briefing-book/how-are-pass-through-businesses-taxed.
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434 CBO, “The Distribution of Household Income, 2018.” https://www.cbo.gov/publication/57061
429 Thomas
435 L. Hungerford, Research
Congressional "Taxes and the Economy:
Service, An Economic
“Taxpayers in the TopAnalysis of the
Income Tax Top Tax
Bracket: Rates Since
Statistics and 1945,” December
Observations,” 12, 2021,
May 3, 2021.
https://sgp.fas.org/crs/misc/R42729.pdf; " A Guide to Statistics on Historical Trends in Income Inequality," Center on Budget
https://crsreports.congress.gov/product/pdf/IN/IN11653.
and Policy Priorities, January 13, 2020, https://www.cbpp.org/research/poverty-and-inequality/a-guide-to-statistics-on-his-
436 Emmanuel Saez and Gabriel Zucman, The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay (New
torical-trends-in-income-inequality
York: W.W. Norton & Company, 2019).
430 “Historical Highest Marginal Income Tax Rates,” Tax Policy Center, February 2022, https://www.taxpolicycenter.org/statis-
437 Daron Acemoglu, Testimony before the Select Committee, Hearing on Technological Innovation, Automation and the Future
tics/historical-highest-marginal-income-tax-rates
of Work, November 3, 2021.
431 Qualified dividends are now taxed at the same rate as capital gains. IRS explains: “Dividends can be classified either as
https://fairgrowth.house.gov/sites/democrats.fairgrowth.house.gov/files/documents/Acemoglu%20Testimony.pdf
ordinary or qualified. Whereas ordinary dividends are taxable as ordinary income, qualified dividends that meet certain
requirements
438 are taxed
Gabriel Zucman. at lower capital gain
“Distributional rates.”
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Accounts.” UC Internal
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439 CBO, “The Distribution of Major Tax Expenditures in 2019.” https://www.cbo.gov/publication/57413..
historical-capital-gains-and-taxes
440 Select Committee Majority staff calculations based on CBO report and underlying data tables.
432 “Corporate Top Tax Rate and Bracket,” Tax Policy Center, February 2022, https://www.taxpolicycenter.org/statistics/cor-
441 Select Committee majority
porate-top-tax-rate-and-bracket; staff calculations
“Pass-Through based Tax
Business,” on CBO, “The Distribution
Foundation, of Major Tax Expenditures in 2019.” https://
https://taxfoundation.org/tax-basics/pass-
www.cbo.gov/publication/57413.
through-business/; and “How are pass-through businesses taxed?” Tax Policy Center, https://www.taxpolicycenter.org/
briefing-book/how-are-pass-through-businesses-taxed
442 Congressional Budget Office, https://www.cbo.gov/publication/57061
433 “The
443Distribution of Household
William Gale (BrookingsIncome, 2018,”
Institution) Congressional in
recommendation Budget Office,atAug.
testimony the 4, 2021,Committee hearing
Select https://www.cbo.gov/publica-
on tax policy, June
tion/57061
2022, https://www.brookings.edu/testimonies/william-gales-house-select-committee-testimony-on-taxes-and-growth/
434 “The and in Gale’s
Distribution of 2019 book, Fiscal
Household Income,Therapy, https://global.oup.com/academic/product/fiscal-therapy-9780190645410.
2018,” Congressional Budget Office, August 4, 2021, https://www.cbo.gov/publica-
tion/57061
APPENDIX
Endnotes 193
444 See435
Tax “Taxpayers
Foundation,in“The
the Tax
Top Income
ChangesTax
in Bracket:
PresidentStatistics
Obama’s and
Fiscal Year
Observations,”
2015 Budget,”
Congressional Research
https://taxfoundation.org/tax-chang-
Service, May 3, 2021,
es-president-obama-s-fiscal-year-2015-budget/
https://crsreports.congress.gov/product/pdf/IN/IN11653
and CBO Options for Reducing the Deficit: 2017 to 2026, https://www.cbo.
gov/budget-options/2016/52254.
436 Emmanuel Saez and Gabriel Zucman, The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay,
445 Gale (2019),
W.W.Fiscal
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Therapy,
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446 William
437 Gale
Daron(Brookings
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in testimony
November
at the
3, 2021,
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https://docs.house.gov/meetings/EF/
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439 “The DistributionInstitution) recommendation
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2022, https://www.brookings.edu/testimonies/william-gales-house-select-committee-testimony-on-taxes-and-growth/
and440 Select2019
in Gale’s Committee Majority
book, Fiscal staffhttps://global.oup.com/academic/product/fiscal-therapy-9780190645410.
Therapy, calculations based on CBO report and underlying data tables.
448 441 Select(Brookings
William Gale Committee Majority staff
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recommendation based on CBOat
testimony report
the and
Selectunderlying
Committee data tables.
hearing on tax policy, June
2022, https://www.brookings.edu/testimonies/william-gales-house-select-committee-testimony-on-taxes-and-growth/
442 “The Distribution of Household Income, 2018” Congressional Budget Office, https://www.cbo.gov/publication/57061
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449 Williamliam-gales-house-select-committee-testimony-on-taxes-and-growth/
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458 Kate
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463 Darrick Hamilton &
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465 Michael Mitchell,
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467 SenatorSpletzer 2016;Press
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194 Economic Disparity & Fairness in Growth
461 “Wage
470 and
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Melissa;
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471 Sergent, Jim, “Inflation and Thanksgiving: Expect to pay 20% more for turkey and all the trimmings,” USA Today, Nov. 16,
462 Sean Ennis,
2022Pedro Gonzaga, Chris Pike, “Inequality: A hidden cost of
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market power,” Organization for Economic Coopera-
tion and Development,
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472 U.S.
463 Darrick Hamilton
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& and
Madeline
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Neighly,
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Corporate
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464 Jason
474 Furman,
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465 Michael Mitchell, Testimony
475 U.S.Bureau of Labor before the Civilian
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466 Shannon Pettypiece,“Here’s
476 Bloomberg, “Wal-Mart:
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477 U.S. Bureau of Labor Statistics, “Consumer prices up 9.1 percent over the year ended June 2022, largest increase in 40
467 Sen. Jonyears,”
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468 Testimony of Joe Simons,
478 Hernandez, Chair,
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Seized thethe
House
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469 Prepared Statement
479 National of Lina Khan,
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Card 2022, National United
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470 Jessica Semega, Melissa Kollar, Emily A.Shrider, John Creamer, “Income and Poverty in the United States: 2019,” United
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471 Jim Sergent, “Inflation and Thanksgiving: Expect to pay 20% more for turkey and all the trimmings,” USA Today, Nov. 16,
482 Katsnelson, Laura, Oberholzer-Gee, Felix, “Being the Boss:
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483 Anderson, Monica; McClain, Colleen; Faverio, Michelle; Gelles-Watnick, Risa, “The State of Gig Work in 2021,” Pew Research
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484 Leonhardt, Megan, “Incomes rose 6.8% in the U.S. last year—but a closer look shows there may not be much to cheer
about,”
473 “Issue brief: CNBC,drug-related
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475 “Civilian Enterprise Institute,
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476 “Here’s Why 100 Million Americans Weren’t Working This Month,” Bloomberg, Oct. 27, 2022, https://za.investing.com/news/
487 Ryan, P., & Rachidi, A. (Eds.). (2022). American Renewal: A Conservative Plan to Strengthen the Social Contract and Save the
hereswhy-100-million-americans-werent-working-this-month-2640414
Country’s Finances. American Enterprise Institute. https://www.americanrenewalbook.com/
477 “Consumer prices up 9.1 percent over the year ended June 2022, largest increase in 40 years,” U.S. Bureau of Labor Statis-
488
tics, July“The Distribution
18, 2022, of Household Income, 2019,” Congressional Budget Office, Nov. 15, 2022 https://www.cbo.gov/publica-
https://www.bls.gov/opub/ted/2022/consumer-prices-up-9-1-percent-over-the-year-ended-june-2022-
tion/58353
largest-increase-in-40-years.htm
489 Wilcox,
478 Salvador W. Bradford;
Hernandez, “Record 1 Wang, Wendy,
Million “TheFentanly
Pills with Millennial Success
Seized Sequence:
by the U.S. DrugMarriage, Kids, and
Enforcement the Los
Agency, ‘success Sequence’
Angeles Times, Among
Younghttps://www.latimes.com/california/story/2022-07-14/1-million-pills-with-fentanyl-seized-by-dea-in-ingle-
July 14, 2022, Adults,” American Enterprise Institute, June 14, 2017 https://www.aei.org/research-products/working-paper/millenni-
als-and-the-success-sequence-how-do-education-work-and-marriage-affect-poverty-and-financial-success-among-mil-
wood-during-record-breaking-bust
lennials/
479 “National Assessment of Educational Progress Report Card 2022,” National Center for Education Statistics, https://www.
490 National Assessment of Educational Progress Report Card 2022, National Center for Education Statistics https://www.
nationsreportcard.gov/highlights/reading/2022/
nationsreportcard.gov/highlights/reading/2022/
480 George Psacharopoulos, Victoria Collis, Harry Anthony Patrinos, Emiliana Vegas, “Lost Wages: The COVID-19 Cost of School
491 Binkley,
Closures,” PolicyCollin;
ResearchFoley, Ryan J.,
Working “Flush
Paper No.with COVID-19
9246, aid, schools
World Bank, steerhttps://openknowledge.worldbank.org/han-
May 2020, funding to sports,” Associated Press, Oct. 6, 2021
https://apnews.com/article/coronavirus-pandemic-school-funding-sports-5b468b260ebd2593e53f03f9104d9bca
dle/10986/34387
481 Eric A. Hanushek, Ludger Woessmann, “The Economic Impacts of Learning Losses,” OECD, September 2020, https://www.
oecd.org/education/The-economic-impacts-of-coronavirus-covid-19-learning-losses.pdf
482 Laura Katsnelson, Felix Oberholzer-Gee, “Being the Boss: Gig Workers’ Value of Flexible Work,” Harvard Business School
Working Paper, May 2021, https://www.hbs.edu/faculty/Pages/item.aspx?num=60255
483 Monica Anderson, Colleen McClain, Michelle Faverio, Risa Gelles-Watnick, “The State of Gig Work in 2021,” Pew Research
Center, Dec. 8, 2021 https://www.pewresearch.org/internet/2021/12/08/the-state-of-gig-work-in-2021/
484 Megan Leonhardt, “Incomes rose 6.8% in the U.S. last year—but a closer look shows there may not be much to cheer
about,” CNBC, Sept. 15, 2020 https://www.cnbc.com/2020/09/15/incomes-rose-in-the-us-last-year-but-a-closer-look-re-
veals-little-to-cheer-about.html
APPENDIX
Endnotes 195
485 “Job Openings and Labor Turnover Summary,” U.S. Bureau of Labor Statistics, Nov. 1, 2022, https://www.bls.gov/news.
release/jolts.nr0.htm
486 “Federal Regulations Cost an Estimated $1.9 Trillion per Year: Many Rules Hinder Virus Response, Economic Recovery,”
Competitive Enterprise Institute, May 28, 2020, https://cei.org/citations/federal-regulations-cost-an-estimated-1-9-tril-
lion-per-year-many-rules-hinder-virus-response-economic-recovery/
487 Paul Ryan, Angela Rachidi (Eds.), American Renewal: A Conservative Plan to Strengthen the Social Contract and Save the
Country’s Finances, American Enterprise Institute, 2022, https://www.americanrenewalbook.com/
488 “The Distribution of Household Income, 2019,” Congressional Budget Office, Nov. 15, 2022 https://www.cbo.gov/publica-
tion/58353
489 W. Bradford Wilcox, Wendy Wang, “The Millennial Success Sequence: Marriage, Kids, and the ‘Success Sequence’ Among
Young Adults,” American Enterprise Institute, June 14, 2017 https://www.aei.org/research-products/working-paper/millenni-
als-and-the-success-sequence-how-do-education-work-and-marriage-affect-poverty-and-financial-success-among-mil-
lennials/
490 “National Assessment of Educational Progress Report Card 2022,” National Center for Education Statistics https://www.
nationsreportcard.gov/highlights/reading/2022/
491 Collin Binkley, Ryan J. Foley, “Flush with COVID-19 aid, schools steer funding to sports,” Associated Press, Oct. 6, 2021,
https://apnews.com/article/coronavirus-pandemic-school-funding-sports-5b468b260ebd2593e53f03f9104d9bca
House Select Committee on
196 Economic Disparity & Fairness in Growth
Committee Members
CHAIRMAN RANKING MEMBER Rep. Marcy Kaptur Rep. Warren Davidson
Jim Himes (D-CT) Bryan Steil (R-WI) (D-OH) (R-OH)
Rep. Gwen Moore Rep. Jodey Arrington Rep. Vicente Gonzalez Rep. Stephanie Bice
(D-WI) (R-Tx) (D-Tx) (R-OK)
Rep. Pramila Jayapal Rep. Kat Cammack Rep. Angie Craig Rep. Byron Donalds
(D-WA) (R-FL) (D-MN) (R-FL)
Rep. Alexandria Rep. Sara Jacobs
Ocasio-Cortez (D-NY) (D-CA)
House Select Committee on AppENDIx
Economic Disparity & Fairness in Growth Endnotes 197
49-944_cov.indd 2 12/14/22 12:03 PM
U.S. Government Publishing Office
Washington : 2022
U.S. House of Representatives
117 st Congress, 1st Session
December 12, 2022
Report no. 117-619
Union Calendar no. 447
Bridging
the Divide
BUILDING AN ECONOMY
THAT WORKS FOR ALL
49-944_cov.indd 1 12/14/22 12:03 PM
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