In his keynote address at the workshop, William Spriggs, professor of economics at Howard University and chief economist at the AFL-CIO,1 laid out some of the broad issues associated with the programs and policies discussed by later speakers. Broad economic trends have exacerbated inequities in the United States and other countries, he observed, which has contributed to health problems among major segments of the population. Purposeful public policies can counter these trends, but implementing such policies requires continued attention to disparities and the problems they cause.
“Organizations that used to be hostile to discussion of equality and equity have now become champions,” Spriggs said. The Organisation for Economic Co-operation and Development (OECD), the World Bank, and the World Economic Forum all now proclaim that equality and economic growth go hand in hand, that health, education, and economic security benefit not just individuals but the economy as a whole.
The OECD, for example, has been documenting that higher levels of inequality prevent people in the bottom of the income distribution from making the investments in human capital needed to provide countries with a growing skilled labor force. This lack of investment in human capital can limit the economic growth of countries and the employment prospects of
1 Spriggs also served as the assistant secretary for policy in the U.S. Department of Labor under President Obama.
individual workers. Public investments in workforce development can fill some of this investment gap (as discussed in the next chapter). But in the United States, such investments tend to focus on the bottom 20 percent of the income distribution, whereas the lack of investment actually applies to something like the bottom 40 percent, according to Spriggs.
Rising inequality further suppresses economic growth. Though economists continue to argue this point, when most income gains go to the wealthy, they are more likely to save those additional resources than devote them to consumption, which limits the economic growth that would accompany additional consumption. Furthermore, most of the people whose income stays the same tend to buy the same things from one year to the next, which also limits economic growth because the potential customer base is not expanding. From the end of World War II until 1979, incomes in the United States grew at all income levels, which provided many new customers buying new things. But since 1980, most income gains have gone to the upper-income levels, which suppresses the expansion of the customer base, said Spriggs. Since the year 2000, the median income level in the United States has not changed, meaning that the bottom half of the population overall has seen no increases in income.
With most income gains going to the upper end of the income distribution, businesses have to pursue consumers in that bracket, not a more general population. Furthermore, without the ability to sell to new customers, businesses have to try to lure customers from other businesses. One way they do that is by cutting costs to make their products cheaper. But that puts further downward pressure on the wages of their workers, exacerbating the problem. “When incomes keep going down, you are building in this downward spiral, and you’re locking in inequality and choking off your own business,” Spriggs observed.
Policy decisions have contributed to rising inequality, said Spriggs. Cutting taxes for higher-income Americans has not led to the creation of new business opportunities that would boost economic growth and distribute income more widely, he insisted. Furthermore, cutting income taxes has no effect on the bottom 40 percent of the population, because they already pay very little or no income tax. Even increases in the minimum wage, while welcome to people in those jobs, have relatively little effect on the overall economy, because so much of the national income is earned by people in higher-income brackets. President Obama’s policies sought to distribute benefits to people in lower-income brackets through such changes as increases in benefits distributed through the Supplemental Nutrition Assistance Program, unemployment insurance, the earned income tax credit, and other programs. “But that took a deliberate effort and an eye to understanding how inequality affects how you set macroeconomic policy,” said Spriggs, adding that “this is not always the case.”
The international business community clearly understands that it needs healthy workers. It hurts businesses when their workers miss days or are less productive because of illness. The problem is even more general, Spriggs noted. The United States has the lowest labor force participation among workers in the prime of their working years. “Why?” he asked. “Because we have the sickest set of workers among the OECD countries. We’re just not healthy. When you look at the share of Americans who draw disability, when you look at the ranking for the United States for worker deaths, we rank in the bottom in the OECD. This is hurting our bottom line in the United States,” he explained.
Economic growth depends on two factors: the size of the labor force and the productivity of that labor force. If workers retire at an early age or are less productive because they are disabled, that slows economic growth. In the past, high levels of immigration have somewhat offset the loss of workers, but immigration has slowed recently. “That means we have to look inward, and the key there is we have to get labor force participation rates up,” said Spriggs.
In a democracy, the general rule of thumb is “one person, one vote,” Spriggs noted. But in the marketplace, the rule of thumb is “one dollar, one vote.” Health care providers tend to think in terms of individuals, which is akin to the democratic perspective. But the health care system in general is a market system, Spriggs observed, and “The market follows dollars; it doesn’t follow people.” One consequence of this market-driven perspective is that hospitals serving low-income communities are under intense financial pressures, and many have closed down, because they cannot remain financially viable.
In turn, the physicians’ offices that used to surround hospitals have tended to move. The result is what Spriggs termed “health deserts”—regions that have no hospitals and very few physicians. In Washington, DC, only one hospital south of the Capitol serves a very large, predominantly low-income population. One argument is that the members of these populations can be served by outpatient clinics, but if that is the case, “Then why do all the wealthy people have hospitals near them?” Spriggs observed.
In general, paying attention to disparities is a powerful way of understanding current realities and the effects of public policies, Spriggs pointed out. For example, some have argued that the privatization of Social Security would benefit African Americans because higher death rates in that community mean that fewer African Americans receive retirement ben-
efits. But Spriggs’ own research has shown that many African Americans received Social Security benefits before retirement age, including the spouses and children of deceased workers and people who are disabled. Furthermore, many widows continue to receive Social Security benefits after their husbands die. Without paying attention to disparities among population groups, the full range of ways in which African Americans benefit from Social Security could be missed.
Similarly, disparities are important in health care because of the unequal ways in which some diseases affect population groups. For example, some African American women suffer from a more aggressive form of breast cancer that can rapidly spread between mammograms. Furthermore, more aggressive cancers can be more expensive to treat, putting further pressure on the hospitals that treat these patients. “If you don’t focus on disparities, you don’t find that out,” Spriggs pointed out.
Employers want their employees to improve their health by not smoking and eating right. But they are not willing to give their employees more time off so they are less stressed on their jobs. Furthermore, without time off, seeing physicians can be more difficult, and workers who do not know their work schedules in advance have additional complications in making health care appointments. Workers who do not have regularly scheduled meals because of their jobs or because they work night shifts can have trouble sticking to a medicine that is designed for a more regular life. “These are complications which, if we don’t have people paying attention to disparities, we are going to miss,” he said. This is the case even in countries with universal access to health care, Spriggs added.
Disparities do not imply that population groups are somehow biologically different. “Please don’t make race biological, because it is not,” said Spriggs. But race in the United States is closely tied to disparities for cultural and historical reasons, which is why disparities remain important.
In short, concluded Spriggs, “Inequality matters. It does slow growth; this is unarguable.” Addressing inequality requires designing policies that address disparities, which requires that advocates encourage people to “go out and vote, and make [political representatives] vote for the policies that matter,” he said.
“Health matters. Equality matters. That’s the bottom line.”
In the discussion session, Spriggs suggested three avenues for approaching these issues. One, for which he admitted that he has a conflict of interest, is to increase union representation. Over the past 30 years, he said, the productivity of workers has gone up by 29 percent, but real wages have gone up by only about 3 percent. Unions help channel the economic gains
of higher productivity toward workers rather than toward people in the upper-income brackets.
The second is to invest in human capital. “In the global world of the 21st century, higher education is as needed as high school education was needed in the 19th century,” he said. A national public commitment to higher education would represent an investment in the nation’s future.
Finally, better health is an investment in individuals even if it causes overall spending on health care to rise. “It’s only natural that a richer country should spend more and more of its income on health,” he said.
He also advocated public policies that can reduce the ruinous competition among states for jobs, which forces employers to reduce wages and benefits. In addition, businesses need to take longer-term perspectives than the price of the next quarter’s stock shares, he said. “I’m not antibusiness. We need businesses, and we have an economic system that [used to] flourish and benefit everyone. But [businesses] need to play within the bounds that make it profitable for everyone. The reality is that it makes them even more profitable, and makes more of them profitable, if they take equity and equality into consideration,” Spriggs explained.
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