Interview with Jeannette Wicks-Lim

C.J. Polychroniou: Why did you go into economics, and why did you choose to study at UMass Amherst?

Jeannette Wicks-Lim: Basically, I chose to study economics because I thought it would make me more effective in my political activities. I was involved in organizations such as Safe House–a shelter for domestic violence survivors, Dignity Housing West–a transitional housing program for homeless individuals and families, the Ella Baker-Nelson Mandela Center—a student organization promoting anti-racist education, and Labor Notes—a magazine promoting democratic reforms in the labor movement, among others. Each of these organizations was trying reduce some form of social oppression in the U.S.

I first encountered economics through two undergraduate classes: Political Economy with Tom Weisskopf and Marxian Economics with Frank Thompson. I loved both of these courses. The fundamental lessons I took from them were that: (1) political institutions govern whether individuals or communities have access to the material resources of a society (i.e., housing, land, income, healthcare, food, and so on) and (2) an individual or community’s level of access to these material resources strongly influences whether they have a voice in a society’s political institutions. These economics courses, combined with my political activities, made me think a lot about how important the role of the hoarding of economic resources is in enabling one group to oppress another. And how, on the flipside, having economic resources can protect one group from being oppressed by another.

What ultimately inspired me to pursue economics at an advanced level was my internship with homeless advocate, Dorothy King, in Oakland, California. While working for her I saw, up close, how the material struggles of homeless community members interfered with their political activities and how their political activities won them access to crucial economic resources: transitional housing. With that experience, I became focused on the question of how to influence the distribution of economic resources in the U.S. — who gets how much access to what. I wanted to promote public policies that would produce a more equitable distribution of economic resources across social groups, as a means to support the ability of these social groups to operate with equal political standing. I decided to pursue a Ph.D. in economics so that I could research—and promote–public policies that support economic and political equality.

Why UMass? That’s easy. Both Tom and Frank pointed me to UMass, as one of the few hubs of radical political economists in the U.S. at the time (the late 1990s). UMass also had the special advantage of numbers: it had enough radical political economists to provide a range of—sometimes clashing—heterodox views; this was perfect for enabling students to develop their own perspective. And, I heard that PERI would soon be forming at UMass and increase the research opportunities there.

CJP: Your scholarly work is rather diverse, but your primary expertise is in labor economics, with a focus on low-wage workers in the U.S. economy. How do we explain the phenomenon of wage stagnation in this country for the past 35 or so years?

JWL: Declining bargaining power among workers is a fundamental driver of wage stagnation in the U.S. Three coinciding trends illustrate this. Labor productivity – the amount of output per hour workers produce has been rising since the 1950s, sometimes faster, sometimes slower, but always rising. Average wages, on the other hand, rose in step with labor productivity between the 1950s and 1970s and then split off. That is, even as worker productivity continued to rise, wages flat-lined. Finally, the percent of workers in unions began to fall in the 1970s, a key source of bargaining power among workers – particularly low- to average wage workers. Another indicator of waning political power among workers is the diminishing value of the federal minimum wage. This century-old labor standard has basically, since 1968, lost value – in inflation-adjusted terms.

I know that other economists focus on the forces of globalization and technology as primary drivers of stagnating wages instead—that these forces have required workers to accept lower wages in order to keep their jobs. And I do think globalization and technology are powerful forces in our economy. Whose labor employers have access to and what ways employers can use that labor will, of course, influence wages or working conditions more generally. But how global interconnectedness and technology affect wages will ultimately be influenced by the choices we make—as communities and societies. As a result, essential to these wage outcomes is the level of power workers have in negotiating with their employers over the terms of their employment, including not just what they’re paid, but also what they’re hired to do and how they do it.

If we look across the globe we see, for example, across high-income countries all affected by globalization and labor-saving technology, a range of working conditions. And, importantly, better working conditions are not systematically linked to worse employment opportunities. Consider the important research from 2005 by Dean Baker, Andrew Glyn, David Howell, and John Schmitt (“Labor Market Institutions and Unemployment: A Critical Assessment of the Cross-Country Evidence”). Their work examines the experience of OECD countries during the 1980s and 1990s—a period of major technological advancement and growth in international trade—and finds no evidence of a trade-off between higher labor standards and employment opportunities. This suggests that workers are able to wrest different bargains from their employers even while all these countries are being exposed to technological changes and globalization.

So, at the end of the day, I think that increasing globalization and new technologies shake up the existing terms of the wage bargain between workers and employers—creating opportunities to change the terms of that bargain. But, the level of bargaining power each group has strongly influences the extent to which these terms move in favor, or against, workers.

CJP: Your research indicates that increasing the minimum federal wage to $15 an hour would not produce any unintended consequences in the fast-food industry, such as job losses or decrease in average wage profitability for firms. What methodology did you use to arrive at these conclusions, and, if your findings are unquestionably true, then what prevents the increase of the minimum wage when more than 65 million people, according to your estimates, will experience a significant increase in their standard of living?

JWL: For this research—which I did with PERI Co-Director Bob Pollin—we used a straightforward methodology that relies heavily on empirical data. That is, the conclusions of our prospective study of what would happen if the U.S. adopted a $15 federal minimum wage are based on what we are able to observe from past experience with minimum wage hikes.

The political debate around minimum wage laws is primarily about whether or not employers will respond to a higher minimum wage by cutting back their workforce as a way to offset their higher labor costs. There is a mountain of economic research looking at this specific question. So much so that there are meta-analyses of these studies—that is, quantitative analyses of the results of this mountain of research. Comprehensive meta-analyses of this research conclude that, on average, employers have not reduced their workforce to any significant degree in response to past minimum wage increases. What this tells us is that employers find other ways to adjust to minimum wage hikes. And, in fact, empirical studies have documented other ways that employers adjust. So, our task in our $15 minimum wage study was to see whether employers could use these other adjustment channels to absorb the impact of a $15 minimum wage for the fast food industry, an industry known for its high share of low-wage workers.

We first looked at the workforce and pay structure of the fast food industry and estimated how much the industry’s wage bill would increase with a $15 minimum wage. We took account of both the direct raises—wage increases to get everyone to $15, and indirect or ripple effect raises—wage increases for worker who earn near, but above, $15 per hour. Employers adopt these ripple effect raises to maintain their firms’ wage structure before and after the minimum-wage hike.

We then looked at how fast-food employers could absorb this increase in the wage bill using the various adjustment channels employers have used in the past such as price increases, cost savings from achieving lower worker turnover, and revenue growth from operating in a healthy economy. We determined that employers could absorb their higher labor costs, without reducing their workforce, if the minimum wage increased to $15 over a 4-year period. Now, I need to point out that we examined the economic situation as of 2013, so we assessed the feasibility of achieving a $15 minimum before 2020. Each additional year of economic growth that has occurred since 2013 will have made any adjustments to a $15 minimum wage easier to absorb.

Why hasn’t there been passage of a $15 minimum wage? I think for the same reason that the federal minimum wage hasn’t increased at all for more than a decade. It’s the same reason why every proposed minimum wage—no matter how large or how small—seems to be met with resistance among legislators. Even the current federal minimum wage proposal that Congress has been considering wouldn’t reach $15 until 2025. Powerful political interests opposed to any minimum wage hike exert influence on federal legislators—the policymakers responsible for increasing the federal minimum. This is true despite the popularity of a higher minimum wage among their constituents: according to a 2019 Pew Research Center poll, two-thirds of those in the U.S. support increased the federal minimum to $15.

CJP: Another part of your research has revealed the existence of racial inequality with regards to income earnings among women. First, how big of a gap are we talking about, and, second, is this actual proof of institutional racism in the labor market? What are some ways to address this problem?

JWL: The existence of racial inequality in earnings among women has long been documented by economists and also historians: Cecilia Conrad, Michelle Holder, Jacqueline Jones, Janelle Jones (now the Chief Economist of the Department of Labor), Debra Newman and Valerie Wilson to name a few. I build off their work.

How big is the gap? In my PERI working paper, “The Persistence of Racial Inequality: The Earnings Gap Among Women from 1979-2016,” I estimate that, on average, white women earn 20 percent more annually than black women. And, for most women, this 20 percent white earnings premium has basically persisted over nearly four decades. To get a better sense of the magnitude of this difference, consider that the average black, single woman (with no children) earned about $31,640 in 2016 and the average white single woman (with no children) earned $39,000, a difference of over $7,000 annually.

Does my paper present proof of institutional racism in the labor market? I didn’t set out to establish a causal link between institutional racism and earnings inequality in my paper. There’s already plenty of research out there that provides evidence of how institutional racism has operated in the U.S. economy–inside and outside the labor market—that then have labor market consequences: racism regulates access to housing, clean air, good jobs with career ladders and benefits, credit, wealth, school resources, healthcare and so on. Especially helpful is research outside the economics discipline — for example, the work of historian Jacqueline Jones “American Work,” the work of historian Richard Rothstein “The Color of Credit,” the work of legal scholar Michelle Alexander, “The New Jim Crow.” And also, most recently, there’s the interdisciplinary scholarship of economist William Darity and folklorist and writer A. Kirsten Mullen presented in “From Here to Equality.” My paper begins with the premise that racism is a fundamental organizing force in the U.S. The exercise of my paper is to demonstrate how racism materializes into differential access to earnings among women by race.

A policy idea that I would like to see get more serious treatment in public debates is reparations—the policy idea which Darity and Mullen focus on in their book. Reparations is meant to repair some of the damaging effects of racism by providing financial transfers to black American descendants of persons enslaved in the United States. A major goal of reparations is to directly shrink the massive racial wealth gap. According to the Urban Institute, as of 2016, the wealth of the typical (median) white family is roughly ten times that of the median black family. I’m convinced that the racial wealth gap is a key consequence of racism and a key driver behind the persistence of racial economic inequality. Reparations is the only policy idea that I’ve heard of that appears to have the potential to effectively close this gap.

CJP: There is a lot of discussion these days about “intersectionality.” How does this concept apply to the work that you do? Do you think it is an interesting concept?

JWL: Let me start with how I think about intersectionality: it’s an approach to studying social inequalities that focuses on how the type and extent of oppression that an individual or social group experiences—or exerts—is different depending on the particular marginalized group or intersection of marginalized groups that they are a member of. So, for example, an intersectional approach to examining racism’s economic effects would include comparing economic outcomes not only by race, but by race and gender. This approach emphasizes questions like: how does misogyny shape how white women express their racism? And, how does racism affect how black women experience misogyny? An intersectional approach can identify important ways that oppression operates in our economy that might otherwise be missed, and, as a result, can better equip us to promote just economic policies.

The working paper I referred to above provides an example. In that paper, I look at why the earnings gap between white and black women that appeared to largely disappear by the end of the 1970s began to grow again in the 1980s.To understand this trend, I examine how the combination of racism and misogyny produced different economic privileges and disadvantages for white and black women. And what I find is that an important driver of the growing earnings gap over roughly the past four decades is how married white mothers have been able to leverage their racial privilege increasingly through higher earnings as opposed to lower labor force activity.

More specifically, historically, racist practices have required both black men and women to work outside the home without regard for their families’ needs while among white households, women with husbands and children were expected to avoid working outside the home—a more sustainable arrangement, by the way, for households with white men’s wages. As a result, through the early 1990s, both the labor force participation rate and the annual average earnings of black married mothers exceeded that of white married mothers. These higher earnings among black married mothers relative to white married mothers helped obscure the fact that for all other household types – single women without children, single mothers, and married women with no children – black women had lower earnings than their white counterparts. The earnings of white women in household types aside from “married with children” consistently exceeded that of black women, by roughly 20 percent, over the entire nearly four-decade period that I look at.

But three decades of rising labor force participation among white married mothers in particular pushed their earnings closer to, and then above, that of black married mothers. And, with that, the white earnings premium that has persisted among single women without children, single mothers, and married women without children, now appears among married mothers. In other words, what I found is that the erosion of the misogynist—and racist—view that married white mothers should not work outside the home over the past few decades pushed these women’s earnings upward. So much so that their earnings rose from being lower than that of the black married mothers to higher, and this helped reopen the racial earnings gap between black and white women.

The intersectional approach of this analysis reveals that we did not ever achieve racial earnings equity among women in the U.S. The policy take-away? Not only did our policies fail to achieve racial earnings equity in 1979, our policies have also failed to meaningfully reduce racial inequality over the past four decades.

 
CJP: You do a lot of work with professional and advocacy organizations. Can you describe some of this work? Does it relate to your research? Why do you think it is important?

JWL: In terms of my work with advocacy and community organizations – this has been important, right from the start, in my work with PERI. Many of the organizations we work with are those working on policies to specifically promote a more equitable economy in the U.S. Typically, the objective of our research is to assess the extent to which their proposed policies are likely to achieve their goals, as well as assess their proposals’ economic feasibility. For example, a community group may come to us with a living wage proposal and a set of questions that they need answers to—often questions related to what impact their proposal would have on low-wage workers’ living standards, the business costs of low-wage employers, as well as, the fiscal health of the local government.

In fact, my first PERI project, as a graduate student, was a study of a proposal for a living wage ordinance in Santa Monica, California. Other more recent examples include an economic analysis of Medicare for All that I did with Bob Pollin, James Heintz, Peter Arno and Michael Ash, and another is an analysis of the how paying farm laborers overtime premium pay would impact agricultural workers and farmers in Massachusetts.

I value this work because it focuses my attention on policy proposals that have community support and some level of political momentum. This helps me stay in tune with economic questions that have a high level of social value. This type of work also requires me come up with ways to answer these socially- and politically- relevant questions – even if those questions are really hard to answer and even if I can only provide provisional answers. In these ways, this work is in line with the overall goal of my research: to help develop policies that effectively promote a more equitable distribution of economic resources.

At the same time, this doesn’t mean that I’m only interested in assessing policies that are currently in debate. As I was talking about earlier, I think that another way my research can be of service in producing good policy, is to improve how economics, as a discipline, studies patterns of economic inequality, such as by using an intersectional approach. To develop my ideas, I’ve relied heavily on my involvement with the National Economics Association—a professional economics association with a mission to produce and distribute knowledge about topics of particular interest to black Americans, Latinx, and other people of color.

In fact, I’m currently working on a book, with another NEA member, Michelle Holder at John Jay College. This book, we hope, will serve as an introductory text on the political economy of racism for college-level students. The primary theoretical framework we will use for that book is stratification economics – a subfield of economics that emphasizes the role of social groups in a society, and their activities in maintaining or improving their relative group position in a social hierarchy. Economists do not use this framework enough when examining the causes and consequences of racial inequality, so I’m very excited about this project.