Initial Reflections from the Institute for Economic Equity Director’s First Listening Tour
One of the attractions to becoming the director of the St. Louis Fed’s Institute for Economic Equity (IEE) was the connection that I have had throughout my life to the Eighth Federal Reserve District. My father was born in Mississippi and grew up in the Douglass neighborhood of Memphis. My grandparents owned a small Memphis dry cleaning business. I remember visiting them and my aunts, uncles and cousins during the summer.
One memorable visit occurred on my way from New York to California for grad school. I spent close to a week with my grandfather. We spent the evenings talking about his life, which began in September 1901. On one occasion, I wanted to ask whether he had seen someone lynched. After my penultimate question about that experience, I could tell that the answer was going to be “yes,” but also that he clearly didn’t want to be asked directly. I respected his boundaries and changed the subject. The conversation provided the foundation for my scholarly research, public service, and now the perspective and passion I bring to the work of IEE and the Bank.
Another visit with my grandfather that stands out came years later, when I introduced him to his great-grandson, William McKinley Rodgers IV. Looking back, that was perhaps the best visit of all.
Given these lifelong ties to the Eighth District, I was eager to embark on a “listening” tour when I became IEE director last year. After a COVID-19 delay, I started locally by attending virtual monthly meetings of the St. Louis Anchor Action Network and then made a virtual presentation in April 2022 to the Memphis Delta Boule. Several weeks later, I visited the St. Louis Fed’s Memphis Branch and met with its board of directors and community development practitioners, plus journalists from local papers. The following week, I visited the Little Rock Branch and met with more community development professionals.
From these exchanges, I learned that stakeholders and advisory members appreciate how the St. Louis Fed acts as a neutral third-party convener. We help to ensure that all relevant stakeholders have a seat at decision-making tables. Constituents seemed to like our ability to provide evidence-based commentary, analysis and technical assistance.
A long list of concerns also bubbled up through these conversations: solving labor and skills shortages, increasing access to affordable child care and housing, expanding the capacity of local organizations to mobilize community resources, and helping communities recover from the pandemic.
In reply, I shared with stakeholders four cases for economic equity: a historical case, a deferred maintenance case, a resources-based case and a business case. They require a reimagining of how we want people to live in the U.S. Many community leaders found them useful and indicated a desire to expand this dialogue to include their friends and colleagues.
A Historical Case
The historical case starts with an essay from Martin Luther King Jr. published in a 1966 issue of The Nation. He asserted that “jobs are harder to create than voting rolls” and used the following observations to support his claim:
- A job is not necessarily equivalent to security.
- A job is often undercut by layoffs, and Black Americans are hit the hardest.
- Black Americans are traditionally the first fired and the last hired.
- Discrimination thwarts long-term employment, which negates building seniority.
- Black Americans need full-time and full-year employment.
- Black Americans need promotion and development opportunities.
- Black Americans need employment that feeds, clothes, educates and stabilizes a family.
- Declining unemployment rates veil the lack of job quality for Black Americans.
- Employment instability reflects the fragility of Black ambitions and economic foundations.
Today’s data, some of which contributed to my Russell Sage Foundation study, still support these observations.
Deferred Maintenance Case
As a nation, we have had several periods during which we “deferred” maintenance on what the United Nations calls human priorities investments. These are public investments in human capital, such as education and training, and social capital, such as social insurance and mental health services at the national level and child care and community centers at the local level. When the nation slowed its public investments just prior to the pandemic, inequality increased and economic security declined.
The pandemic raised awareness about expanding the nation’s public infrastructure investments beyond bridges, roads and broadband to social capital, mental health services and access to quality child care.
Yes, these investments have costs, but they also bring benefits. They raise worker productivity—a key ingredient to economic growth.
In 2009, the United Way of Northern New Jersey published its first ALICE report. ALICE stands for “asset limited, income constrained, employed.” It (or she, as the acronym implies) represents a community’s households that can’t afford a “survival” budget. ALICE informs, educates and mobilizes community members.
The following table provides the rationale for investing in ALICE.This table was reproduced with permission from United For ALICE’s 2012 “Study of Financial Hardship in New Jersey.” The concepts in the table have since evolved into the organization’s 2020 “Consequences of Insufficient Household Income” report. The table’s rows show the major budget lines that ALICE must cover each month. Its first column describes the consequences to ALICE and her family if she does not have good housing or accessible child care; the second column demonstrates the consequences to the community if ALICE does not have enough resources to meet her budget needs. It shows that we all bear a portion of the costs of the challenges that ALICE experiences. Simply put, if ALICE hurts, we all hurt.
|Impact on ALICE||Impact on Everyone|
|Substandard||Inconvenience and safety risks||Reduce local property values|
|Far from job||Longer commute, higher costs, less time||More traffic on road, workers late to jobs|
|Homeless||Disruption to job, family, education, etc.||Cost for shelter, foster care, health care|
|Substandard||Safety and learning risks; health risks||Future burden on education system|
|None||One parent cannot work - foregoing immediate income and future promotions||Future burden on education system and other social services|
|Less healthy||Poor health; obesity||Less productive worker, future burden on health care system|
|Not enough||Poor daily functioning||Even less productive worker, future burden on social services|
|Old car||Unreliable transportation and risk accidents||Worker late/absent from job|
|No insurance||Risk of fine, accident liability, license revoked||Higher insurance premiums, unsafe vehicles on the road|
|No car||Limit job opportunities/access to health care||Cost for special transportation|
|Underinsured||Forego preventative health; more out of pocket expense; less healthy||Workers sick in the workplace, spread illness, less productive|
|No insurance||Forego preventative health care; use emergency room; less healthy||Higher insurance premiums; burden on health care system|
|Low wages||Longer work hours; pressure on other family members to work (drop out of school)||Tired or stressed worker; higher taxes to fill the gap|
|No wages||Frustration of looking for work and social services||Less productive society; higher taxes to fill the gap|
|No savings||Low credit score, bank fees, higher interest rates||Less stable financial system; more public resources need to address ALICE crises|
|SOURCE: United For ALICE.|
The final case provides a business rationale for racial economic equity, but this narrative can be developed for other low- and moderate-income communities. I estimated Black buying power for St. Louis; Louisville, Ky.; Memphis, Tenn.; and Little Rock, Ark.—the four branches of the St. Louis Fed. If the St. Louis community closed the racial difference in income, it would raise Black purchasing power from $10.2 billion to a potential $16.3 billion. Comparable estimates for Memphis were a jump from $17.1 billion to a potential $22 billion. Louisville and Little Rock would experience increases from $4.9 billion to a potential $6.4 billion and $4.1 billion to a potential $5.2 billion, respectively.
Because households spend the largest portion of their incomes on housing expenses, a big part of these gains would go to businesses that construct homes and provide housing goods and services. Businesses in the food, transportation and health care sectors would also likely see large increases in their revenue.
When I presented these cases for equity during my listening tour, my hope was that one or all of them would resonate with participants, and that they would serve as a catalyst for more dialogue and, ultimately, change. I plan to build additional cases for equity in areas such as incarceration and mental illness.
If you want me to visit your community to discuss equity and other economic issues, don’t hesitate to contact me.