Preliminary Report of the Impact of the Economic Stimulus Plan on Communities of Color
Kirwan Institute for the Study of Race and Ethnicity
The Ohio State University
February 18, 2009
The impact of the recent economic downturn has had a profound effect on the U.S. and global economy. While the troubles plaguing our economy have been devastating to Americans of all walks of life, the devastation is not even. The brunt of unemployment, layoffs, social service and education budget cuts, foreclosures, and bankruptcies will be borne by groups already marginalized or undervalued by the mainstream economy: people of color, women, manufacturing employees, rural residents, people with disabilities, and the like. For example, United for a Fair Economy found that although the U.S. has been in a recession for more than a year, people of color have been in a recession for nearlyfive years, and have entered a depression during the current economic crisis. Between 2000 and 2007, median black family incomes dropped 1.0% for all families the overall decline is the first in a business cycle of this length since WWII. African American homeownership gains were reversed after 2004; they have reverted to 2000 levels.
As we rebuild the economy, we have to do it in a way that is consistent with American values, and that is open and fair to all populations, so that no group is limited by the plan's design or effect. Policy makers must recognize that "universal" policies fail to acknowledge how people are differently situated. In fact, treating people who are situated differently as if they were equally able to access the benefits of "universal" policies can lead to greater inequities. In contrast to a universal approach, we advocate a "targeted universal" approach in which the needs of the particular are uplifted while recognizing that we are all part of the same social fabric. Targeted universal policies are inclusive, yet they are sensitive to the reality that the labor market and other aspects of our lives are unevenly segmented. A targeted approach takes everyone's situated unevenness into consideration, as well as the condition of the most marginalized.
The new President and his Administration have begun to act, and we applaud their attempts to craft a bipartisan economic recovery plan. Some of their plans seem to be attentive to unevenness in our society, with a goal to making some corrections. For example, 10% of the rural infrastructure grants (housing, community facilities, business and utilities) are targeted to persistent poverty counties (Title I, Sec. 105). The Home Investments Partnership Program language states that, "as part of the review, the Secretary shall ensure equitable distribution of funds and an appropriate balance in addressing the needs of urban and rural communities with a special priority on areas that have suffered from excessive job loss and foreclosures."
Other examples are sprinkled about the ARRA.2 We believe this principle can more robustly inform federal recovery policy and advocacy. Our concern is that a long-term recovery effort (and indeed, all future federal policy), if not deliberately crafted to include all of our people and all of our communities, could maintain, or even worsen, the uneven effects of the recession. For example, at press time, $29 billion of the ARRA is allocated for road and bridge construction; $8.4 billion to public transit improvements; $8 billion to high-speed rail investments and $18 billion to grants and loans for water infrastructure. $5 billion is allocated for home weatherization grant; $6.3 billion for energy efficient upgrades for public housing. All of these will stimulate construction jobs, yet labor statistics show that African Americans, while comprising 13% of the population, make up less than 6% of construction workers. Women - half our population -- hold 9.4% of construction jobs. This is an "early warning bell" that stimulus job creation may not be as equitable as it could be.
Progressive leaders have already called the stimulus package a "first phase" or "downpayment" on a potentially long-term infrastructure rebuilding plan for the nation.To take The Kirwan Institute's home state as an example, Ohio stands to gain roughly $8 billion from the current plan. The Columbus Dispatch reported that "[Ohio Governor] Strickland speculated yesterday that the package still could leave a hole of $400 million or $500 million in his proposed $54.7 billion, two-year budget."4 Ohio state officials had identified $2.7 billion in "shovel-ready" projects, but Ohio will receive only a third of that.
While some of the money will be managed by federal departments (such as the Department of Energy), much of it will be managed locally. How localities implement transportation and energy infrastructure improvements, balance school budgets, and buy and rehabilitate foreclosed and vacant properties is yet to be determined. For example, 60% of the formula funding provided for highway investments will be directed to states, while 40% will be sub- allocated to local governments. The transportation allocation includes a "competitive grants" section for projects that "have a significant impact on the nation, a region, or a metropolitan area." This could be a powerful incentive for regional, collaborative, and equitable proposals. However, we must be informed enough to ask for, and monitor, the "equitable."
Advocating for an equitable recovery plan can be begun fairly simply. First, we must collect credible data on the impact of the recession and the impact of the recovery on disaggregated groups in our society - women, people of color, and people in rust belt and rural regions, to name a few. Second, in the administration of these new policies and spending priorities, we must develop and monitor efforts to correct inequities. And finally, in future laws and policies, we must address the needs of all Americans -- which means deliberately including groups that are not adequately considered in the design and implementation of economic policy in the first place. We must be guided by a simple principle: economic recovery should not deepen economic inequality. It should aim to narrow opportunity gaps, not widen them.
While this principle should be applied to all groups to make sure they are fairly included in the American dream, this report focuses on racial minorities. In addition to the stimulus, we discuss the foreclosure crisis, the restructuring of Fannie Mae and Freddie Mac, and integrating our nation's schools. The time is imminent for an intervention into the proposed stimulus implementation, and for beginning a long-term, inclusive discussion around making the economy work for all people and all communities. As Karen Kornbluh5 recently argued, American social insurance is still designed for the 1930's, but the global economy and our family structures have changed dramatically. At the time of the New Deal, 70% of families had one (male) earner -- today, 70% of families have two employed parents or are headed by a working single parent. The "New New Deal" policies must support the new economic and social realities, and this includes hearing the voices of previously marginalized groups and communities. For example, the people and communities who have suffered (and learned) the most from the subprime housing crisis should be participating in the conversation around macro-level solutions.
We look forward to a continuing and productive discussion with you in the near future
Link to Full Report: http://4909e99d35cada63e7f757471b7243be73e53e14.gripelements.com/publications
. Below are some useful links to the ARRA and various tracking and reporting sites:
The American Recovery and Reinvestment Act of 2009 (HR 1) http://www.whitehouse.gov/thepressoffice/arrapublicreview/
President Obama's Homeowner Affordability and Stability Plan http://graphics8.nytimes.com/packages/pdf/politics/20090218factsheet.pdf
Romer and Bernstein on the Job Impact of the ARRA http://otrans.3cdn.net/ee40602f9a7d8172b8 ozm6bt5oi.pdf
Zandi Report (Chief Economist, Moody's Economy.com) http://www.economy.com/mark-zandi/documents/EconomicStimulusHousePlan012109.pdf
Romer and Bernstein update the Job Impact of the ARRA by Congressional District http://www.whitehouse.gov/assets/documents/RecoveryActcongressionaldistrictjobs2-17.pdf
Economic Policy Institute http://www.epi.org/
Center on Budget and Policy Priorities http://www.cbpp.org/
Leadership Conference on Civil Rights http://www.civilrights.org/