Isabel Sawhill is an economist at the Brookings Institution, where she focuses on much of the stuff I write about in this column. Her latest thinking is in a great, highly readable new book, one I enjoyed so much that I asked her to discuss it with my readers.
Bernstein: What motivated you to write “The Forgotten Americans”?
Sawhill: Like many, I was stunned by the election of President Trump and wanted to understand those who voted for him and the implications for policy going forward.
Q. Who are the forgotten Americans, and who is it that has forgotten them?
A. The forgotten Americans are the large numbers of working and middle-class families who have been left behind in today’s economy. To be more precise, I define them as those without a four-year college degree whose incomes are below about $70,000 a year. Other than the Affordable Care Act, we have done very little for this group in recent decades. Instead, Congress and the administration enacted a tax law in 2017 that provided almost all of its benefits to corporations and the wealthy and simultaneously worked to weaken the Affordable Care Act, the one program that provided significant help to this group.
Q. As a longtime follower and admirer of your work, I thought I saw some rethinking of some of your previously held views. If that’s right, which ones and why?
A. I used to think we just needed to raise the growth rate and redistribute its benefits via taxes and transfers, like nutritional or housing assistance. I now think we need to focus much more directly on jobs and wages. We can’t assume that either the benefits of growth will trickle down or that the benefits of the safety net will trickle up — or are what forgotten Americans really want. So, the big theme in my book is work. It’s a unifying value in an American context. Work provides more than income; it provides dignity, self-respect and a sense of contributing. It addresses not just the economic malaise of forgotten Americans but also some of their cultural anxieties.
Q. Relative to some on the progressive side of the street, you argue more for a public-private hybrid approach to meeting the challenges you document. What could the private sector do to help, and why should we expect them to do it?
A. It’s critical, in my view, to involve the private sector in training workers, boosting paychecks and providing benefits. After all, 85 percent of jobs and most income come from this sector. Government programs are no substitute for what businesses could accomplish. Right now, business leaders are overly focused on quarterly profits, not long-term productivity and value creation; on shareholders, not workers or communities. We can redirect their efforts and get the economic and social benefits of a different model by revising the 2017 tax law to encourage more on-the-job training and more sharing of rewards with workers. Ideally, we should combine this with more direct efforts to boost paychecks via a higher minimum wage and tax credits tied to earnings.
Q. You write compellingly about two seemingly contrary points: the far-reaching benefits of full employment and the limits of economic growth. How should we think about this disparity?
A. As you know better than most, the benefits of full employment are broadly shared while the benefits of growth are not. On top of that, we know a lot more about how to get to and maintain full employment than we know about how to produce more long-run growth. I have come to believe that the most important determinants of long-run growth are running a relatively high-pressure economy; maintaining a predictable business environment with simplified rules, regulations and tax laws; and improving education and infrastructure. That’s not supply-side economics; it’s a demand-side economics that recognizes that innovation naturally occurs when the market for new products is strong and our basic institutions, including the political system, are healthy and stable.
Q. Suppose you could sit down with the new House majority, a group that I believe was sent here in part to deal with the problems you lay out. Even though they probably won’t be able to legislate much, what would you recommend they start thinking and planning about?
A. I hope the new majority doesn’t get bogged down in internal squabbles or overreact to the president’s many transgressions. I’d love to see them come up with a new contract for America with the dignity of work and earning a good life at its core. The messaging should be simple, but under this broad theme, they could commit to a new GI Bill to re-skill the workforce, affordable health care, paid leave, child care and higher take-home pay. They may not be able to enact much of this in the next two years, but they need to signal what they stand for as a party. They should have an open debate, listening to everyone, but then have the courage to choose among competing themes to create a public document stating their aspirations in a way that commands public attention.
Q. I have a theory that one of the best ways to chip away at American racism and xenophobia would be something you recommend: a year of national service. Please explain your vision here.
A. There is solid research showing that when people from different subgroups or communities get to know each other at a personal level, and especially when they work together on a common task, they stop stereotyping “the other.” Therefore, I propose that all young people give a year of service — either civilian or military — to their country and that they get some help paying for college in return. I also suggest that American families volunteer to host a young person from another community during their year of service (we have a small program, AmeriCorps, but it is underfunded). At a relatively low cost, we could engage local communities, host families and nonprofit institutions in the work of responding to disasters, teaching children, improving the environment, helping the disadvantaged and bringing people together in the process. It’s a good way to address our cultural, and not just our economic, divisions.
Q. One aspect of the book that resonated with me was the urgency in your “voice” about facing up to the challenges of the forgotten Americans. Where is that coming from, and what do you view as the costs to the nation of continuing to forget?
A. I’m genuinely fearful about where the country is headed right now. Ordinary Americans need to know that the government is on their side, that our political system is not corrupt and can still deliver what people want and need. Democracy itself could lose its legitimacy if we don’t address their problems.