Examining Incomplete Take-Up of Safety Net Programs

Not all individuals enroll in the public programs and claim the assistance for which they’re eligible. Why? Do families not know programs exist or not know they’re eligible? Is it too time-consuming or complicated to enroll or stay enrolled? Or perhaps receiving this type of assistance is too stigmatized? Does the importance of these explanations vary by program and across different communities? And what can policymakers do to promote take-up of these critical programs?                                                                                                                                     

These questions have been the focus of multiple research projects pursued by Matt Unrath, a fourth-year PhD candidate in public policy. As a Research Fellow at the California Policy Lab (CPL), Unrath has had the opportunity to study these questions and experimentally test possible solutions at a large scale. Through CPL’s partnership with the California Department for Social Services and the Franchise Tax Board, he and his colleagues spent years building an administrative dataset linking state welfare enrollment records to state-level tax records. This dataset has proved a critical tool, allowing CPL researchers to examine participation in California’s means-tested welfare programs and eligibility like never before. 

For example, Unrath and his coauthors ran a number of randomized controlled trials to test the impact of providing information about the federal and state Earned Income Tax Credit (EITC) on take-up of the program among eligible Californians. The team sent this information via hundreds of thousands of letters and text messages to eligible households to see what kind of information and what type of nudge would cause people to file their taxes and claim the benefit. Using matching tax records data, the researchers were able to determine whether or not the people who received information were more likely to claim the EITC.

The result? “None of our interventions worked,” Matt said. “We can rule out that we nudged anyone to file by just providing them this information.” These findings indicate that there is a limit to nudge-style outreach programs and what just providing more information can accomplish in this context. Additionally, Matt and his coauthors conclude that information is not the barrier to increased take-up in this instance. “If we really want to increase take-up of programs that are delivered through the tax system, we should think about how to make tax filing a lot easier,” Unrath concludes.

His team is now working to measure take-up of the state-level EITC supplement in California. “We really don’t know how many people claim the California EITC supplement because all of our measures of take-up are done nationally,” Matt explains. By aligning Supplemental Nutritional Assistance Program (SNAP), or food stamps, household data and tax data in California, “Could we create a model for states across the country to use their state administrative data to identify these likely eligible people and measure take-up of their own state-level EITC programs?”

In forthcoming work, Unrath also examines the effect of administrative burdens on enrollment in CalFresh, the SNAP program in California. Using fifteen years of administrative data for the country’s largest SNAP program, he documents a significant drop off in enrollment every six months, when participants are required to recertify their income eligibility in order to maintain benefits. Linking CalFresh data to state earnings records, he finds that, “The great majority of people appear to be income-eligible even when they exit the program.”

These projects point to the role that administrative procedures play in affecting program participation. Unrath points out that these processes are an inevitable feature of our choice to means-test safety net programs; the government needs to identify who is eligible, and that will impose some costs on applicants and enrollees. Some economists have posited that making these processes even more burdensome might discourage those on the margin of eligibility from enrolling, enabling more assistance to be targeted to individuals and families that are the least well-off. But do administrative burdens actually operate in this way? 

“People are aware that making processes harder deters participation, but what we don’t know as well empirically is who these processes are more likely to deter from participating. The concern is that we are not doing the right thing, and we are actually deterring folks who are more disadvantaged,” Unrath explains.

Contrary to theory, “You can imagine an alternative framework in which these burdens deter the folks who are the most disadvantaged, who face the most burdens in their daily lives, and who are least able to handle all the paperwork they need to file in order to apply for and stay enrolled in a program,” he adds. The database that CPL have constructed should enable Unrath and his colleagues to evaluate whether these administrative processes have this effect..

Unrath’s research is highly relevant for policymakers, many of whom are very concerned about incomplete take-up of the EITC in their states. In the short term, he points out, “The pandemic shines a spotlight on how to think about the administrative process of getting payments to people quickly and efficiently.” Longer-term, he adds, “There’s a lot of momentum in California to try to begin to use the matched dataset programmatically on an ongoing basis,” following CPL’s novel efforts in this area.

Ellora Derenoncourt and Claire Montialoux on Wages and Racial Equity

Recent research by Ellora Derenoncourt and Claire Montialoux reveals how increases in the federal minimum wage benefited Black workers. In recent decades however, the racial wage gap has increased again. Their work was cited in a recent NY Times column by David Leonhardt. Take a look!

Sol Hsiang on global COVID response policies: No Human Endeavor Has Saved So Many Lives in Such a Short Period of Time

O-Lab Affiliate Sol Hsiang, and his collegues at the Global Policy Lab, have produced new research on the lives saved due to COVID response policies and behaviors. The team looks closely at 6 countries and estimates that response policies have prevented a total of over 500 million COVID infections.

The work was published in Nature and Hsiang discussed the findings on the Rachel Maddow Show.

Mitigating Burnout Among Frontline Public-Sector Workers

In the midst of the coronavirus pandemic, there has never been a greater focus on frontline workers. While much of the country continues to shelter in place, frontline workers are tasked with mounting the direct response to the pandemic as well as ensuring that essential government services are maintained. Frontline workers—many of them public sector employees—are crucial to an effective pandemic response, but these workers are facing exceptionally high levels of burnout and anxiety given stressful working conditions. Understanding what can be done to mitigate burnout amongst frontline workers is an increasingly urgent question for policymakers.

Faculty Director of The People Lab and O-Lab faculty affiliate Elizabeth Linos is well-placed to address this question. As a public management scholar and behavioral scientist, Linos’ research examines how to improve government using tools from both economics and psychology. In particular, she focuses on people in government, and through her work with The People Lab, works directly with governments to design and evaluate programs focused on improving strategies to better recruit, retain, and motivate public servants. Her research is motivated by efforts to understand and improve interactions between government workers and residents in order to identify ways to improve the responsiveness of government to its residents.

In this O-Lab Q&A, Linos discusses her latest research on frontline worker burnout as well as the shifting narratives and trends for frontline workers in the coronavirus era. She explains the important findings from her experimental study—one of the largest field experiments of its kind to-date—evaluating how to mitigate burnout and turnover among 911 dispatchers using low-cost, behaviorally-informed interventions. Finally, Linos discusses her own priorities for future research as well as the exciting potential for entirely new areas of research linked to frontline public sector workers.  

Given the ongoing pandemic, there is more attention than ever on the role of essential and other frontline workers. Can you describe how you think about frontline workers in this context and how your research ties into these discussions?

Elizabeth Linos: I'm very grateful and optimistic that people have been recognizing the importance of frontline workers as essential workers. With the pandemic, obviously there are many people who can't shelter in place. Some of them we highlight, like health workers. Others we should highlight more, like people who work at grocery stores and gas stations, or who are collecting our trash. But there's actually a huge group of public sector workers who are keeping the trains running by going to work, and often we don't see them. This is an opportunity to highlight the importance of having an effective government workforce because, without them, we couldn't possibly have an effective covid response.

The work that I've been doing lately tries to understand not only what motivates frontline workers, but also what barriers they face to be able to do their job well. And that's led me into a lot of research around burnout and anxiety. I've focused on professions or occupations where we've seen really high turnover rates over the past few years, and where it's been really hard to hire enough people to deliver services. The level of burnout and anxiety amongst those groups was high before, but during covid, it's shockingly high. Right now, we're finding that sometimes anxiety rates are 20 times higher than under normal circumstances. This is a huge challenge not only for the current crisis, but also to ensure that we will have frontline workers in the next few years that are able to deliver services over time.

Why did you look at 911 dispatchers specifically? 

Linos: The 911 dispatcher project came from government partners who asked me to work on it. When I first got the calls, I was working for the Behavioural Insights Team, which is a team of behavioral scientists that works with governments to help them use behavioral science to deliver better services. One question I kept getting from various cities was about 911 dispatchers: “They have really high levels of absenteeism. We can't keep them. They keep quitting. You say you're interested in people in government. Can you figure it out?”

“Feeling like people understand and value what you do seems to be highly correlated with lower levels of burnout. So, we started a project with 911 dispatchers across nine different cities to better understand why people were feeling burnt out and what we can do about it.

That kept happening, and after a while, I realized that this is a group of people who are really undervalued. In law enforcement, there's a lot of status placed on police officers in different settings. In society, we have a lot of respect for firefighters, but the people who actually pick up the phone when you call 911 are often less respected. Even in federal categorization, they're often considered call center workers, so they don't get a lot of the benefits and the privileges that emergency responders get. I've now found in my research that being undervalued actually is really important. Feeling like people understand and value what you do seems to be highly correlated with lower levels of burnout. So, we started a project with 911 dispatchers across nine different cities to better understand why people were feeling burnt out and what we can do about it. And that's really where this paper starts.

How were the studies designed and what were your results?

Linos: We did this project in collaboration with the Behavioral Insights Team as part of the What Works Cities Initiative. What we did was actually quite simple. I realized that a lot of the ways that we try to motivate public servants revolves around telling them how important they are to residents. What I have found is that if you've joined government because you want to help people—say you became a social worker because you want to help children or you join law enforcement because you want to help protect people—the actual day-to-day tasks that you're assigned to do don’t always mesh with that vision.

So I wanted to test a different way of thinking about impact that was not based on having an impact on residents. I wanted to focus on how people can have an impact on each other and how they can have an impact on their peers. What we set up was a system that was really low-tech, where we asked 911 dispatchers to share their experiences and their advice to other new dispatchers. Every week they got an email from their supervisor with a specific prompt that was behaviorally informed. It would be something like, "What would you tell a newbie about what it's like to be a 911 dispatcher?" Another week, it could be, "What are the characteristics of a good mentor and who has been a good mentor to you?" 

“All of these nudges, these weekly emails, had the same underlying purpose, which was to prime 911 dispatchers to reflect on how they are connected to each other, how they can support each other, and how valuable they are to each other.

But all of these nudges, these weekly emails, had the same underlying purpose, which was to prime 911 dispatchers to reflect on how they are connected to each other, how they can support each other, and how valuable they are to each other. You don't need to get your status or your value from the police officer or from society. You can actually have an internal group, a group of 911 dispatchers, that has a strong professional identity and a sense of connectedness. And because we were able to do this in nine cities, this was really about building a professional identity outside of the team. Dispatchers were speaking to and hearing from other 911 dispatchers across the country, and I think that was part of why this was effective. For six weeks, they got these e-mails. Some people read the emails. Some people wrote about their experiences. Not everyone did. And that's, I think, an important part of how you set up these types of programs. And then we measured their levels of burnout before the program, right after the program ended, and four months later.

These were set up as randomized controlled trials, so we also had a control group, or comparison group, of 911 dispatchers during the same period in the same city that didn't receive the e-mails. Because we set it up as a randomized control trial, we know that any difference that we see either in burnout scores or other organizational outcomes for the people who received those emails can really be attributed causally to the program and not to other factors that were happening at the same time.

To our surprise, we found that not only did burnout go down but also resignations went down significantly. We saw resignations drop by more than half in the post-intervention period. We saw burnout scores go down by about eight points on the validated CBI (Copenhagen Burnout Inventory) scale. What that translates to is approximately the difference between being an administrative assistant versus being a hospital social worker in terms of the change in burnout. Now, I should say this is probably one of the biggest randomized control trials trying to reduce burnout, but it's still pretty small. The study included a little over 500 people. I think of this as a really interesting and promising pilot that we now can expand and try to replicate to make sure that the mechanism that we think is causing these effects is actually causing it.

“We found that not only did burnout go down but also resignations went down significantly. We saw resignations drop by more than half in the post-intervention period.

Can you talk about the mechanism in this kind of intervention?

Linos: Both in experiments that we've done afterwards and in some correlational survey work that we've done, we're really trying to tease out why this works. What is it about sharing your experience or feeling like you're connected with other people that causes burnout to go down? And it seems like we've learned a couple of things. For one, I consistently find that people who feel like they don't belong in public service or who feel like they're not connected to people at work show higher levels of anxiety, burnout, and fatigue. There's this really strong correlation that we find where there's something about feeling like you're part of a group of public servants that matters.

And we know this from other research as well. From private sector research, we know that one of the strongest predictors of whether or not you stay at a job is whether or not you have a best friend at work. So it's not new to think about social support as a really important part of people's work experience. What I think is newer is really thinking about belonging to a kind of an undervalued group in public service and seeing that as an important part of what makes people get up and go to work in these difficult environments. And we've seen it with correctional officers. We've seen it with health workers. We've seen it with obviously 911 dispatchers. We've also seen it across city employees.

It's a really important question because if we can figure out how to make people feel like they belong, we might have these subsequent effects on all these organizational outcomes that we care about, ranging from making sure people don't quit too early all the way to how they interact with residents. So what we think is happening is that feeling like you have someone to talk to and feeling like you're going to be understood by a group of people who understand what you're going through increases your sense of personal accomplishment and your sense that you can handle the difficulties that come your way at work. I also want to be clear about this. Obviously, your work environment in the more traditional sense are going to affect whether or not you're exhausted at work. Your work hours, your pay, whether your manager supports you—all of these things are clearly really important. But this additional force of feeling connected to people at work or feeling connected to public service seems to have an additional effect on burnout and anxiety, so that's really what we're focusing on in subsequent studies.

“If we can figure out how to make people feel like they belong, we might have subsequent effects on all these organizational outcomes that we care about, ranging from making sure people don’t quit too early all the way to how they interact with residents.

This research looks specifically at 911 dispatchers, but how does this work apply to other types of frontline workers?

Linos: We're still learning where this is applicable and where it isn't. It’s important to note that there's some fundamental level of connectedness that you would need for something like this to work. We are encouraging people to reflect on how they are connected to each other. And so, if things are really bad in a specific agency or there really is a toxic work environment, it's possible that a nudge of this kind is not enough or might even backfire. When you ask people to reflect about how they interact with their work colleagues, that can have anxiety-inducing effects if things are really bad. One thing that we need to still tease out in future research is under what conditions would something like this work.

The second thing we need to explore further is what type of frontline workers are most likely to be responsive to this. There, we are seeing frontline workers who feel more undervalued, or who feel like they're not understood by society at large, seem to have stronger effects. We've done some work with correctional officers, we've done work with 911 dispatchers, and we’re now doing some work with health workers. It's possible that this is more broadly applicable. We don't know yet. One thing that I'm going to do in future research is also look at social workers, teachers, and other types of frontline workers where we do see the same retention challenges but that look very different in terms of how they think about their own identities at work.

What are the major contributions of this paper to the wider literature on frontline workers in burnout?

Linos: I should start by saying that, even though burnout is really a popular term these days, there are decades and decades of really rich literature that looks at both the predictors of burnout and the consequences of burnout. I think what's different about this project and my future work in this space is that, rather than describing burnout, we've now moved into this second phase of trying to figure out what works in reducing it. And that's a whole other challenge. Bringing the rigor of causality to that question is where this study starts, but other studies will move this forward as well. Understanding burnout is step one, trying to figure out what works is step two.

The main contribution here is that even something that is low-cost and behaviorally-informed might be applicable. Most of the thinking around burnout focuses on much bigger structural changes, such as changing the number of hours that people work or giving people more leave time. It’s thinking about the four-day work week if you're in the private sector or more autonomy over your job and your job design. A lot of the tools that we've heard of in the past are much more applicable to a private sector environment. You don't have a lot of say in many public sector frontline work environments about the specifics of your job, your job title, or even what shift you work on. What I'm excited about with this paper is thinking about something that works in an environment that has all the restrictions and limitations of a public sector environment. I think that's where the main contribution is, but again, I think we're still at the beginning of understanding how to mitigate burnout.

~THE STUDY SHOWS MEANINGFUL SAVINGS FOR ORGANIZATIONS DUE TO REDUCTIONS IN TURNOVER. SCALING THIS INTERVENTION TO ALL EMPLOYEES COULD SAVE A CITY WITH 100 DISPATCHERS MORE THAN $170,000 PER YEAR.~

What are some of the opportunities you see for more supportive workplace policies in the public sector, particularly given the attention to frontline workers over the last few months?

Linos: I think there are a couple of different areas that we can explore. One, obviously, is this idea of making sure people feel like they belong. We know now from surveys that we've done in a bunch of different cities and state environments that, for example, employees of color are less likely to feel like they belong in public service when things go badly. There are many ways that we can think about belonging and making sure that people feel like they belong and are supported at work that might have effects on burnout. There's also a whole separate category of projects around supervisors and thinking about what supervisors can do differently to make sure that their staff feel heard. For example, with correctional officers, Amy Lerman has shown that experiencing violence and the threat of violence significantly increases anxiety— but what she and others have found is that if you have a boss or supervisor that you feel is going to have your back, that link between experiencing violence and anxiety is mitigated.

One question that we haven't tackled, but which I think is important for future research, is how society at large views frontline workers. It doesn't help when you have an administration that talks about bureaucrats as though they're the enemy or about draining the swamp. There's a whole history of talking about government workers as though they are lazy and corrupt. I'm hoping that with this crisis and with future crises, we're realizing more and more how inaccurate that is and how damaging that can be, not only in terms of how current public sector workers feel and how motivated they are, but also in terms of our likelihood of getting talent into government in the future as well. I think those areas are the ones that we need to explore a little bit more carefully in the future.

“Employees of color are less likely to feel like they belong in public service when things go badly. There are many ways that we can think about belonging and making sure that people feel like they belong and are supported at work that might have effects on burnout.

Your previous research took place prior to the start of the pandemic. What are you currently working on and what are some of the preliminary findings on frontline worker burnout that you are seeing?

Linos: Because we've set up really good partnerships with government partners through The People Lab, we were able to quickly survey a lot of employees in the midst of the pandemic. There are a couple of things that we've learned. One is that people are ready and willing to talk about mental health in a way that I think is really surprising. We're seeing some patterns that we haven't seen in previous research. For example, Asian-American employees seem to be reporting much higher levels of anxiety than in previous surveys that might have to do with the racism surrounding the coronavirus.

Next, we're also seeing a lot of really saddening levels of burnout and anxiety among frontline workers. Some of this has to do with government workers feeling like they need to protect their families and their loved ones. Some of it has to do with feeling like they need to meet the needs of their clients. For example, if you're working in unemployment insurance, a lot of the anxiety has to do with feeling like you can't keep up with the demand for more unemployment insurance claims. And then there's a third category that has do with financial insecurity, which I think is often overlooked for government workers. Being a government worker today is not like being a government worker a couple decades ago. There is not as much job security, pay is not as good, pensions are not as good, and so people are really worried about losing their jobs. And many of them have been furloughed and are going to lose their jobs during this pandemic.

If you put all these things together, you have workers who often can't stay home, so they can't really protect their families from the pandemic. They're worried about getting sick and getting their loved ones sick. They're also worried about increasing and changing demands on their work. For example, we have people who worked as social workers or caseworkers in a job center that are now running homeless shelters, meaning you’re changing your job description overnight, while still being worried about losing your job. So it's no wonder that frontline workers are struggling on the anxiety front. I think it's something that we really need to pay attention to and worry about investing in, if we're going to get out of this covid recovery in any effective way.

How do you think that the pandemic has changed the way society and the broader community outside of these occupations think about frontline workers?

Linos: In previous decades, people have talked about government bureaucrats as a negative drain on society, but I do see a changing narrative. When we had furloughs in recent years, people were highlighting the government workers who were going to soup kitchens and weren't able to pay their bills in national media outlets. For the first time, the national sentiment was that we need to support our government workers. The narrative I was hearing was that, whatever the politicians are doing, we need our permanent public sector workforce to hold down the fort and deliver services. I think a lot of this change in narrative has to do with who we think of as competent to deliver services. I don't know how that's going to change over time, but to me, it's exciting that people are starting to recognize and thank frontline workers for keeping the country running. That's really what a bureaucracy is made for. This is why, in the U.S. and in a lot of other developed countries, we have a permanent civil service that is different from the political administration. It's at moments like these that we might recognize how important a functioning democracy is to our lives.

“Being a government worker today is not like being a government worker a couple decades ago. There is not as much job security, pay is not as good, pensions are not as good, and so people are really worried about losing their jobs.

Given the context of a changing narrative around frontline workers, what are your priorities for future research in this area and behavioral science interventions more broadly?

Linos: I'm really interested in not only better understanding what works in supporting workers, but also in measuring whether or not this has an effect on the services they deliver. It's a theoretically justified hypothesis that says if you have more engaged frontline workers, you're going to be able to deliver better services, but we don't actually have good causal evidence that that's the case. I think it's really important to push the research in that direction, because if burnout affects whether or not frontline workers are able to deliver better or more equitable services or we show that there's less variability in their decision-making, then that really changes the importance in investing in that government workforce. That's what I want to study next.

For example, if you have a less burnt out frontline worker, do we see less bias? Will that frontline worker deliver services that are less variable based on the characteristics of the resident who they're interacting with? Let's imagine a world where you have less burnt out teachers. Is that going to affect the black-white test score gap? When we think about social workers, if they were less burnt out, are they able to make more equitable decisions around child removals? If we can actually look carefully and rigorously at the causal pathways between worker stress and burnout and resident experience, we might tap into a whole new world of research about how to improve government.

Jesse Rothstein: On the SAT and ACT Admissions Requirement

O-Lab’s Jesse Rothstein, along with Michael Kurlaender (UC Davis) and Sarah Reber (UCLA), urged the UC Regents to reconsider the SAT and ACT as a heavily weighted component of admission for students. Decades of research have shown that SAT and ACT test results are strongly influenced by a student’s race, income, and parent education levels. Rothstein argues that the Board should instead use a state assessment for K-12 students known as Smarter Balanced (already in use in California and several other states) because it has less bias against disadvantaged students.

Read the LA Times article here.

Hilary Hoynes: Universal Basic Income

How can we design income support policy to protect the most vulnerable citizens during both good times and bad? Interest has grown in universal basic income as a solution, but it has drawbacks, and evidence is lacking. Hilary Hoynes and Jesse Rothstein examine how a universal basic income would play out in the United States, as well as in other developed countries, if implemented on a large scale. Knowable Magazine interviewed Hilary Hoynes about the benefits and challenges of such a program. 

Read the full interview on: Knowable Magazine

Examining the Role of Housing Regulations in Exacerbating Wealth Inequality

The stark inequalities that have divided American society over the past three decades don’t just appear in people’s paychecks. They also increasingly determine where Americans live, how much preparation their children receive for the future, and whether workers can count on predictable and steady work from one week to the next.

Those are the sorts of diverse forms of social inequality that Joe LaBriola, a sixth-year sociology Ph.D. candidate, has built his academic career researching. He’s explored, for example, the role of worker power in reducing inequality in work hour instability. That paper, written with O-Lab affiliate Daniel Schneider, won LaBriola the 2018 IPUMS USA research award for best graduate student paper.

“The thing that jumped out to us is that right after the Great Recession, work hour volatility spiked for workers who were less educated and making the least amount of money,” LaBriola said. “Next we want to think about what we think is causing work hour volatility.”

LaBriola has been a prolific researcher, with five peer-reviewed publications and three chapters looking at subjects such as the effects of post-prison employment quality on recidivism, risk-taking at U.S. commercial banks, and how class gaps in parental investment in children change during the summer. His research is motivated by a recognition that the well-off enjoy more advantages at every stage of life, and that those at the bottom end of the workforce are too-often denied the security and benefits of full-time and predictable employment.

Another of LaBriola’s ongoing projects focused on how home ownership - and the attempts of some homeowners to restrict the development of new housing - has exacerbated wealth inequality. He points to research showing how the housing market increasingly shuts out low-income people who are hoping to build wealth through ownership. The “wealth gaps” that then arise can be just as consequential as income gaps, and only exacerbate and compound inequality over generations.

“If we build more housing supply, this could be something that will even out the playing field in terms of household wealth allotment,” LaBriola said. “Wealth inequality is not something that’s talked about as much as income equality, but it’s extremely important because wealth determines the amount of resources you have to move around in the world.”

For his research on housing development, he is merging national data on residential building permits going back to 1980 with data on household finances. He is also investigating the relationship between lawsuits over residential land use policy and housing development.

“I’m interested in whether homeowner opposition to new housing is a form of social closure,” LaBriola said. “Basically, people who already have a house they like - and who like the neighborhood they live in and don’t want to change - they might gain wealth by keeping it this way while everyone else suffers.”

Hilary Hoynes: Safety Net Spending and the COVID-19 Crisis

The COVID-19 crisis is intensifying long-standing debates about whether our safety net provides adequate coverage for the most vulnerable. Safety net spending is typically geared more toward people with jobs than those who are unemployed, and Hilary Hoynes warns that this imbalance will lead to worsened outcomes for our neediest children.

Read the full article on: New York Times.

Emmanuel Saez and Gabriel Zucman: Congress and the Coronavirus Pandemic

Emmanuel Saez and Gabriel Zucman urge Congress to legislate more forceful measures during the COVID pandemic to avoid another Great Depression. These include increased job protections, robust business support, universal healthcare, and excess profit taxes.

Read the full article on: New York Times.

Catherine Wolfram: It’s a Good Time for Women to Win the Nobel Prize

The recent Nobel Prize for Economics highlighted the valuable role of rigorous experimental research in building evidence for policy-making. It was also an important milestone for women in economics. Catherine Wolfram discussed both recently with Resources for the Future.

Read the full interview on: Resources Magazine

Emmanuel Saez and Gabriel Zucman: Proposal for a Massive Government Intervention

Emmanuel Saez and Gabriel Zucman have been strongly advocating for a more robust federal response to the economic dislocations of COVID. In this piece at the Guardian, they press for the federal government to guarantee wages and lost revenues to business facing shutdown.

Read the full article on: The Guardian and

Check out their proposal.

Applying New Data to Understand Gender Disparities in the Workplace

Gender inequality among top employee ranks has proved stubbornly persistent over the years, with management positions still dominated by men in much of the corporate world.

Labor economists have long asked whether that disparity results from women not applying for higher positions or from active discrimination against women applicants. O-Lab Graduate Fellow Ingrid Haegele is helping to answer that question with the use of a large new dataset that helps her study patterns of application, hiring, and promotion within a single large multinational company.

With this peek inside what she calls the corporate “black box,” Haegele has discovered that, at the company she analyzed, much of the lack of gender equity in management resulted from the fact that many women weren’t applying for their first management-level positions, even when they were well-qualified for the job. This disparity in the promotion chain then has long lasting consequences for employees’ careers, such as reduced lifetime earnings and additional gender disparities in upper management.

“Women and men make different choices when it comes to internal applications,” Haegele said about her findings. “Women apply more for lateral positions and they are less likely to apply for higher ranking positions than men. Since these differences in applications have large effects on employees’ promotion outcomes, I decided to focus on understanding what leads to these choices”

Haegele, a German native, is sifting through data that previously had not been available to economists, such as internal application and hiring data. With those data, she is able to follow the career paths of thousands of employees and calculate the probability that they’ll be promoted during their time at the organization.

Haegele then built upon this dataset by surveying 17,000 employees about their choices to apply or not apply for more senior positions, and what they thought about their chances of advancing. The responses – she received a nearly 50% response rate to the survey - revealed that men and women react to job ads differently. Women have a strong preference for jobs that offer a high degree of flexibility, for example, suggesting that companies seeking to diversify their management staff may need to tailor how those positions are designed in order to make them more appealing to women.

In addition to the broader insights this work is generating, it is also providing concrete opportunities for Haegele’s corporate research partner to implement and test new HR policies in response to her findings. “We’re trying to see if, by providing tailored career assistance, we can support women’s career development,” Haegele said. And as part of her next phase of research, she will be running text analyses on 16,000 job ads at the company to help determine whether men and women are motivated to apply for different sorts of job openings. That analysis will help her identify language that may potentially appeal differently to men and women applicants.

Working with Economics professor Patrick Kline, Haegele said she was regularly encouraged to ask big questions in her research. “There are still a lot of things about organizations, career progression and management practices that we as economists don’t know,” Haegele said. “I am currently working on a separate project...that tries to trace out how career paths change over the employee life-cycle and what that teaches us about an aging workforce. I am very enthusiastic about conducting research on how organizations are designed and how this impacts labor market outcomes and I am looking forward to many more projects like this.”

The Impacts of Raising the Minimum Wage

Can a higher minimum wage reduce “deaths of despair?” And who benefits most when the minimum wage goes up?

Michael Reich has spent much of his career researching how minimum wage policies impact low-income Americans. His work has changed policy, having been cited by former President Barack Obama in a State of the Union speech and contributing to labor reforms across the country. Most recently, he helped advise New York City in regulating how Lyft and Uber drivers should be paid.

Over the past year, Professor Reich has co-authored two new studies examining how minimum wage policies affect specific groups of low-income Americans. One report, co-written with UC Berkeley colleagues William Dow, Anna Godoey and Christopher Lowenstein, asks whether increases in the minimum wage and the Earned Income Tax Credit (EITC) can reduce the numbers of “deaths of despair” – from alcohol, drugs or suicide – among low-wage workers. The team found that higher minimum wages do in fact lower deaths from alcohol and suicide but do not lower the number of drug-related deaths. The study also found that a higher EITC does not significantly reduce deaths of despair as much as minimum wage increases do.

Another study with Godoey examined how increasing the minimum wage to a $15 an hour level impacts low-wage workers at sub-state levels such as counties. The study didn’t just look at the effect of an increase in the absolute wage rate, but also at the effect of raising the relative minimum wage, or how the minimum wage in an area compared to its median wage. The report found that higher minimum wage levels, even in low-wage areas, don’t raise unemployment among low-wage workers even when the relative minimum wage was above 80%. The study also found that those who benefitted the most from increasing the minimum were less-educated workers living in areas with high relative minimum wages – in general, poorer regions with lower overall incomes.

These studies are particularly timely, as momentum has grown around efforts to raise the federal minimum wage to $15, and with nearly all of the 2020 Democratic presidential candidates supporting such an increase.  They also build upon a long and influential body of research on the minimum wage coming out of UC Berkeley, from David Card’s widely-cited work to Claire Montialoux and Ellora Derenoncourt’s more recent contributions on the role of the minimum wage to promote racial equity.

In February, the Opportunity Lab discussed some of this recent work on the minimum wage with Professor Reich at the Institute for Research on Labor and Employment (IRLE), where he serves as the co-chair. Here is an edited record of that interview.

What are the innovations of your latest research on relative minimum wage increases?

Michael Reich: I’ve been studying low-wage labor markets for most of my career. My past work with other co-authors has been influential in turning around the academic community, the economics community, on the effects of the minimum wage on unemployment and showing in a more rigorous way than any before that the moderate minimum wages we had in effect through the 2000s and the policies since then have not really had a significant effect on unemployment. Theory tells us that minimum wage increases should hurt the number of jobs, but that’s a very incomplete model partly because there are all kinds of frictions in labor markets - the cost of hiring people, the cost of employers and employees looking for a good match. We want to look for the effects of a policy on a whole economy and not just in one labor market. People are mainly affected by the minimum wage in just a few industries - restaurants, retail, childcare, elder care, janitors; there can be adjustments in prices in those industries.  If the price in restaurants goes up a little bit, you would not expect jobs to have to disappear. Heads of lots of burger companies have said, “I would rather sell more hamburgers than fewer. If I have more workers I can sell more burgers.”

Laws raising the minimum wage to $13 go much higher than what previous research has looked at, so in our paper on minimum wage effects in low-wage areas, we were concerned with saying what happened when the relative minimum wage is much higher than what we’re used to, not 35% or 40% but 50%, 60% even 80%. If the minimum wage went up to $15 federally in the whole U.S., which was the bill the House (of Representatives) passed, then the ratio of the minimum wage to the median wage would be 80% in Alabama. That sounds scary to many people including economists. How could an economy withstand such a policy effect without a negative effect on employment? We looked at sub-state levels and what we found is that when we just looked at the counties where the ratio of minimum wage to median wage was 83%, the highest quartile of the most affected counties, the minimum wage did not have an effect on unemployment.

“Even in counties – not just in Mississippi or Alabama but some in Fresno or rural parts of many states – where the minimum wage relative to the median wage was 80%, it did not have a negative effect on employment

The big take-away is that even in counties – not just in Mississippi or Alabama but some in Fresno or rural parts of many states - even when the minimum wage relative to the median wage was 80%, it did not have a negative effect on employment.

There are other effects besides the employment effect. One of the outcomes we look at is child poverty and we find that an increase in the minimum wage has a big effect on child poverty and that’s as important as whether it has an effect on jobs.

How has the low wage labor market changed?

Reich: The federal minimum wage is still stuck at $7.25 where it’s been for 11 years. That’s a decline of 30% in real terms. That’s pretty shocking to have a minimum wage that goes down over time in real terms. On other hand, 24 or 25 states are raising the minimum wage above the federal level and in some states, cities can do that as well. In California, it’s over two dozen cities. The cities are showing the way, showing it’s possible. The sky didn’t fall and that gives more courage to state level policymakers and same with the state to the feds.

How has the labor market changed over time? Over 10 and 20 years, it’s changed from being much less a youth market, so the stereotype that many opponents have is that most minimum wage workers are young people in high school, in their first job, gaining skills and discipline and you don’t want to discourage that by raising the minimum wage but in fact the composition of the low wage labor force has changed. Ninety percent of low wage workers are now over 25, quite a few are women and quite a few have children. It means that the importance of raising the minimum wage is greater for families and for their children.

Are there any reasons behind the changing demographics of minimum wage workers?

Reich: My sense is there’s a decline in the real value of the minimum wage. People are more desperate, adults are more desperate and need to take jobs. Something like 10% to 20% of the fast food work force have college degrees. On the other side, with teens, they’re staying in school longer so they’re not taking jobs after school. They are going to summer programs so there’s been a real fast decline in teen employment.

What about Uber drivers and others working in the gig economy? How much are they earning in relation to the minimum wage?

Reich: We found that drivers in New York City, quite a few working full time are making less than the minimum wage. They’re making more like $12 an hour after expenses. There’s just a lot of people willing to work for less because they’re desperate.

Do minimum wage increases impact people earning just above the minimum wage?

Reich: When the minimum wage goes up, we do see increases in pay for people who are above the new minimum because you want to keep some equity. If you’re an assistant manager of a fast food store and you’re paid $15.50 an hour and the new employee gets $15, the employer will want to raise your pay to keep some kind of equity because you’ve been there a while. That effect tends to evaporate just a couple of dollars above the new minimum wage but it still has an effect on reducing wage inequality.

What were the advantages of using more localized data in your study?

Reich: In each state, there are well-off and less well-off counties. There’s a big difference between Fresno and San Francisco in minimum wages. In most states, there’s one minimum wage in the entire state so this gave us more variation to work with. Particularly, all states that don’t go above $7.25, they weren’t playing a role in other people’s studies because there was no minimum wage change there but because we were using the ratio (of minimum wage to median wage), which is affected by the median wage, we could exploit the variation that existed, say, between Philadelphia and rural Alabama.

The second study taps into the larger question of rising death rates in the U.S. What is the impact of the EITC or minimum wage on that?

“Ninety percent of low wage workers are now over 25, quite a few are women and quite a few have children. It means that the importance of raising the minimum wage is greater for families and for their children

Reich: Deaths of despair just cried out to be looked at because of public awareness of how U.S. life expectancy rates are in decline and the big jumps in death rates especially among mid-wage people and not just in rural areas. The longer-term outcome is wages haven’t been rising very much for men.

They’ve been rising for women but not enough. Our question isn’t as much ‘What’s causing deaths of despair but what can we do about them?’

We found really positive effects of both the minimum wage and the EITC on reducing suicides especially among women. We did not find many effects on drug overdoses. We used many tests to make sure we’re looking at causal effect and not correlation.

What are some of the key policy implications of this research?

Reich: Minimum wage is not a panacea. Housing costs are rising really fast. The minimum wage isn’t going to have an impact on that. When the labor market is tight anyways and there’s any loss of jobs and immigrants are being scared away to work in restaurants or landscaping or construction, I would think the minimum wage isn’t so binding. Many restaurant workers are paid well above the minimum wage because employers have to keep people.

The big policy context is that there are many states that have passed high minimum wage laws, that Democrats are pretty united among presidential candidates to raise the minimum wage from $7.25 to $15 but that would be phased in over 15 years. The entry level wage is higher in many places than the minimum wage. The entry level wage is well above the $7.25 minimum wage, more like $9 for very recent high school grads. So the jump to $15, if it was phased in and starting from an entry level wage, is not all that steep as a lot of people think and it does have these positive effects including on health. It’s an issue that the Democrats and Republicans are divided on and it’s going to come up as an issue in the fall and it’s on the ballot in Florida, where there’s an initiative to go to $15. We’re concerned about inequality, and the minimum wage is the most effective tool in terms of the number of people who are covered.

“We’re concerned about inequality, and the minimum wage is the most effective tool [for reducing it] in terms of the number of people who are covered.