Roots of Recent Discontent, Shifting Global Production, and Controlling the Yield Curve


  • The Roots of Recent Discontent
  • COVID-19 May Accelerate Shifts in Global Production
  • Controlling the Yield Curve

Carl comments on the protests that have spread across the United States.

I grew up on the South Side of Chicago in the 1960s. The latter part of the decade was a challenging time for our city, and for our country. I lived close to the University of Chicago, which was convulsed by student protests. The neighborhoods adjacent to ours were convulsed by anger over racial and economic inequality.

In some ways, our city has progressed since then. But in other ways, things have not changed. We received a reminder of that last weekend. The death of a black man in the custody of Minneapolis policemen was the catalyst for massive demonstrations (and, unfortunately, some violence). But the roots of the discontent that has been on recent display go deeper than the often-fraught relationship between black citizens and law enforcement.

The economic struggles of the black community in America are long-standing. Median family income for black families has been persistently and substantially below the national average. This is due, in part, to lower levels of educational attainment, which is central to better earnings prospects and a lower risk of job displacement. Only 23% of black Americans hold college degrees, a rate more than 10% lower than that of the U.S. population as a whole.

Weekly Economic Commentary - 06/05/20 - Chart 1

Even after adjusting for educational attainment, income and wealth disparities along racial lines are substantial. Access to professional networks is one reason why; studies have shown that bias (conscious and subconscious) is another factor.

Prior to the pandemic, the United States was celebrating its best job market in nearly fifty years. But the unemployment rate among black Americans was still 3% higher than that of white workers. Layoffs stemming from public health measures taken to restrict the outbreak have hit black workers disproportionally; they are overrepresented in many of the occupations that have been hardest hit.

Unfortunately, they are also much less likely to have a financial cushion to help them through this difficult interval. Almost 20% of black households have net worth that is zero or negative.

“Policy must seek to improve prospects for America’s black communities.”

Black families are also much more likely to live in urban settings. Major cities in the United States have struggled to attract investment and sustain employment. This, in turn, has created acute financial challenges that limit spending for schools and social services, leaving many black families and black children with a much tougher path to prosperity.

Urban living has also meant greater risk of exposure to the coronavirus, which has hit black communities much harder than others. And the neighborhoods that surround these communities often do not have access to the best health care services. The COVID-19 mortality rate for black patients is twice as high as it is for white patients.