This October, Stanford University’s Dr. David Grusky visited Oklahoma for a talk at the University of Tulsa. Dr. Grusky’s books include Social Stratification, Occupy the Future, The New Gilded Age, The Great Recession, The Inequality Reader, and The Inequality Puzzle. His presentation at TU was titled, “A Blueprint for Ending Poverty… Permanently.” Dr. Grusky also spent some time with OK Policy’s staff discussing how the research on poverty and inequality is inspiring an ambitious new effort to end poverty in California.
You can download the podcast here, play it in your browser, or read a lightly edited transcript below:
Gene Perry: This is Gene Perry from OK Policy, also here with Kara Joy McKee, Tyler Parette, and DeVon Douglas. We are speaking with David Grusky. David, can you introduce yourself and tell us a little bit about what you work on?
David Grusky: Sure, I direct the Stanford Center on Poverty and Inequality, and I am also a professor of Sociology at Stanford University. The Center is mainly focused on building a better infrastructure for monitoring poverty and inequality and other labor market outcomes in the United States. We have an infrastructure that has been built long ago, is often antiquated, and doesn’t exploit new developments — most especially the rise of administrative data. So we are focused on the administrative data revolution and trying to use it to better monitor poverty and inequality outcomes such as social mobility and many others. We also do some work on policy front, and what I just discussed yesterday at TU was a plan in which we were involved to try to substantially reduce poverty in California through an approach that exploits key junctures in the life course and then deploys tried and true interventions that can equalize opportunities in each and every one of those junctures.
Gene Perry: When you say antiquated, could you tell us a little bit more about that? What have we been basing our attempts to fight poverty on and what do we know more about now that really makes a big difference?
David Grusky: I’ll give you one example. This is a country that commits to the principle that everyone, no matter how rich or poor their parents might be, should have the same opportunities to get ahead. We are committed to the principle of running a high mobility economy and yet, and I think this is quite extraordinary, we don’t have the infrastructure for monitoring whether or not we are living up to that commitment. The last social mobility survey was undertaken in 1973. We are trying now to monitor trends in social mobility based on very small surveys, like the panel study on income dynamics. It has been exceedingly difficult even for the very best econometricians and statisticians to make inferences about trend in social mobility with such small surveys.
In the last several State of the Union addresses, President Obama openly worried about a decline in social mobility. It was one of his featured worries, and yet we can’t assess with any great reliability whether or not we indeed ought to be worried, whether or not there is a decline in social mobility.
There has been some very important work using tax data to try to make assessments of mobility by Raj Chetty, Nathan Hendron, and Emmanuel Saez. That is immensely important work. We are trying to get the Center to build an infrastructure that would take advantage of those types of data.
Gene Perry: What do we really know more now about social mobility and what are some things you are learning from that?
[pullquote]”There is this wide range of opportunities in the United States that depend upon the luck of where you were born — not of course just the luck of how rich or poor your family might be, but also the luck of the neighborhood into which you were born.”[/pullquote]David Grusky: There’s a very influential body of research, again by Raj Chetty… And his work has shown, for example, that there are substantial differences across neighborhoods in the likelihood of someone born into the bottom quintile reaching the top quintile. If you are born in some parts of the country, your likelihood of making that transition, of actually being upwardly mobile, are as high as one might find in any other country in the world. In other places in the United States, opportunities for mobility of that sort are as bad as it gets, as bad as found in any other country in the world.
So there is this wide range of opportunities in the United States that depend upon the luck of where you were born — not of course just the luck of how rich or poor your family might be, but also the luck of the neighborhood into which you were born. If you use the stork metaphor, you’ve just been born, and the stork is taking you to your new house, you should whisper in the stork’s ear that you care not just about being dropped off to as high an income a family as possible because that will help you down the road, but he should take into account the neighborhood, too. If you are going to get dropped into a neighborhood of low-income households, at least get me into a neighborhood where opportunities for upward mobility are in place.
Gene Perry: So what do we know about those places where we want the stork to drop you off, and what do we know about those places where it really is hard to rise from the bottom?
David Grusky: That’s a big new line of research that I do not think has been fully mined. One line of argumentation that again Raj Chetty has pursued is that those states that have a commitment to delivering the Earned Income Tax Credit, that supplement the pay of those people who are at work through the Earned Income Tax Credit, actually have delivered opportunity to a greater extent than other states.
Now, it may be a direct effect of the Earned Income Tax Credit itself, because we know that cash matters. When you deliver cash to families, then parents can use that cash to effectively buy opportunities for their children. It also might be that those states that are delivering the Earned Income Tax Credit at high levels are also doing other things that provide for opportunities for low-income children.
Gene Perry: Could you tell us a little about what you are working on in California to address some of these issues?
David Grusky: Some of the stuff we are doing in California of a more direct policy sort is just on the measurement front. So, the Center on Poverty and Inequality developed the California Poverty Measure, which again exploits administrative data on program use in California to get a better, more reliable measure of who is and who isn’t in poverty in California. We are putting that out every year now.
It is being used for the purposes of, for example, carrying out counter-factual analyses where we can allow legislators and other policymakers to ask important policy questions like, “If we were to increase the Earned Income Tax Credit by this amount, what would it mean for poverty in California?”, or “If we were to change the way in which food stamps were dispersed, if we were to get higher coverage, for example, what would it mean for California?”
We can actually stop running policy in the blind and run policy knowing what the implications of the decision might be. So part of it is just measurement, because measurement matters in a big, big way. It just allows policy to be employed in a more informed way. But then as I was talking about yesterday, we are also engaged in other sorts of policy analysis where we try to put together the best evidence out there in terms of what works and what doesn’t in reducing poverty and put it together into a plan that would work for California.
Gene Perry: When you say what works and what doesn’t, have you hit on some key interventions that are the most cost effective or just plain effective things you can do?
David Grusky: Yeah, I should say that what we put together is not just a compendium of what works. Other constraints are reasonably taken into account. That is, we wanted to build a safety net in California that Californians would love and cherish and call their own… [a safety net] they can be proud of that resonates with their most fundamental rights So, we went around and talked to Californians all over the state and asked them what kind of safety net they would want. Two principles surfaced in that discussion. One was that they were deeply committed to a safety net that would ensure that everyone has opportunities. [They want to make equal opportunity] a living, breathing reality… not just be a lip service commitment, but something that should be realized.
[pullquote]”We know so much about what works, there is an embarrassment of riches when it comes to choosing from one of those programs that work. The real trick is to choose ways that we can develop a safety net that people would call their own, not think it is just an artificial grafting of, say, Sweden on top of California.”[/pullquote]The country has done some great things in the past in living up to its principles and commitments. It has also failed to do so in some dramatic ways, on many fronts. This is a principle to which they thought we ought to really make an investment and convert our lip service commitment to a real one.
So, that was one we saw. Making meaningful our commitment to equal opportunity. The other was making work pay.
People thought that if you are going to work 40 hours, 50 hours, 60 hours per week, you ought not be in poverty. This is a country that is also founded on the principle that hard work ought to pay off. If people are working really, really hard, we ought to at least make sure that they are not in poverty. So, those two principles informed our choices.
There are lots of things that work. One might say that we know so much about what works, there is an embarrassment of riches when it comes to choosing from one of those programs that work. But, the real trick is to choose from those programs and choose ways that we can develop a safety net that people would call their own and commit to and not think it is just an artificial grafting of, say, Sweden on top of California. That’s not what the people want. They want true, authentic California institutions to which people can commit. I think we can do that. I think it would be good
Gene: What do the people of California want then? What are you hearing on that research?
David Grusky: What they want are reforms that ensure that work will pay. That if you work hard, you are going to get enough money to at least make sure you are not in poverty. And, reforms that ensure that all children, no matter how poor their parents might be, can have access to opportunities like high quality to early childhood education and high quality primary and secondary schooling. That ought to be a birth right. So, you don’t sell opportunity.
You know, there are a lot of things the market does a great job of distributing. And, the market principle is very, very fundamental… everyone believes it in this country, most everyone. But we have always said that there are several things so sacred that you don’t want to disperse them to the market. One thing is opportunity. We don’t want to sell opportunity. All children should have opportunities.
[The situation we are in now is that] opportunities are bought and sold on the market, that you have to buy a high-end fancy house in a fancy neighborhood to get access to great public schools… That’s not right. That’s not how this country was supposed to have been run. It is supposed to be that anyone could have opportunity.
Any reform that works, that can show a strong evidence base behind it, and will ensure that everyone has opportunities, California is all for it.
Gene Perry: Does that mean a strong education focus then?
David Grusky: Yes. Not exclusively, not at all. But, yeah, a primary way we all know in which opportunity is secured and people can get ahead is having access to high quality early childhood education, primary education, secondary school education. We know now that’s certainly not the case in California. There are wide disparities across families in access to high quality education, starting at early childhood education and beyond. And so equalizing that access, making sure everyone has access to higher education is job one. It’s not all you have to do, but it is a very important starting point.
Kara Joy McKee: Are there other opportunities you’ve looked at? Like opportunities for employment, different access to jobs, and job training? What else have you looked at in that regard?
David Grusky: So I’ve talked a lot about the supply side and just making sure everyone has access to training opportunities, but another important part of the equation is setting up a labor market in which fundamental types of discrimination aren’t in play. Discrimination on the basis of race, discrimination on the basis of gender, discrimination on the basis of motherhood status — these problems have been shown to be very, very profound.You can work long and hard at making sure that opportunities for training are equal, but if on the other end if you don’t have an employment regime in which people are getting rewarded in accord with their investment, then you’ve got problems. You have to take care of that end of the equation, as well.
The other big part of it, beyond equalizing access to training, is equalizing protection, if you will, from incarceration. In the simulations that we ran, that differential exposure to incarceration proves to be very, very important. How are you going to get people to make investments in training when there is very little likelihood that those investments will get paid off? If you are incarcerated, you aren’t going to get a return on investment. If you are from a neighborhood where incarceration rates are so high, where you would reasonably think, “That’s likely where I’ll end up,” that it is going to undermine investments and training.
Gene Perry: Oklahoma definitely faces a lot of issues like that. We have the 4th highest rate of incarceration for men and the highest incarceration rate for women. On the education side, there’s been some serious concerns about underfunding of schools. But, we actually have really good adoption of universal early childhood education… the highest rate in the country because we have all public schools basically offering a 4-year-old program. Some, I think, are talking about 3-year-old programs. One concern from that: though it has been pretty clearly shown in studies that early childhood education does have benefits when they become adults, including going into less debt, being more likely to have a job, less likely to be incarcerated, the particular reading scores boost that you get can peter out by the third grade, even though you see these other life benefits. Are there other kinds of interventions that you see really are important to carry on the gains from the early childhood education program?
David Grusky: That is a really important point. The approach that underlies this plan is that you need to identify the full gamut of junctions in which important, life changing decisions are made. Start even prenatally and identify children that are at risk, and then deliver the kinds of information about helpful practices that will ensure that full capacities are developed. So, you need intervention very early. That’s a critical juncture; it’s been shown to be a critical juncture. And home visiting programs have been shown to help also to ensure that capacities are well developed. So you start there. That’s one key junction.
There is of course early childhood education. And there is another key juncture, when you move beyond and in fact hand off early childhood education programs to subsequent programs. There is a whole key range of junctures in which you have to maintain the gains that have been secured through these earlier interventions.
One of them is simple information intervention — delivering information to poor, very talented kids, kids with great grades, who have high test scores and hence could be admitted to top colleges. Just give information to them that indicates that’s possible. That’s a choice they could make. They would likely be admitted to these institutions. They would likely get financial aid to make it possible to attend these institutions. That’s a choice that you’d then consider. That then ramps up the proportion of such kids who go to the kinds of colleges that will exploit their capacities. You’ve got to keep at it throughout the life course because there is unequal opportunity at many, many junctures in the life course. The point of this plan is to address as many of those junctures [as we can].
Kara Joy McKee: Could you say more about what you’ve discovered and how to make work pay? I get that hard work ought to pay off. How are you addressing that specifically in the plan?
David Grusky: So, again, there is not much in this plan that might be understood as “creative.” You don’t want to be creative. We want to exploit what has been shown to work. You are talking about using the people’s money for equalizing opportunity. So, there has to be a profound commitment to doing what has been shown to work. On that front, we are using tried and true methods that have been demonstrated to be very powerful in their effects, and so most importantly is the Earned Income Tax Credit. We need more state supplementation. [California] just voted in some state supplementation but not enough. This is a part of that commitment to making work pay. So, that would be a very important key part of this program.
Over time, when kids who have been exposed to early childhood education, to these prenatal interventions, to these middle school interventions, the numbers that will need the Earned Income Tax Credit will go down. We will be paying out less that way. But it will take 20 years to get there.
Kara Joy McKee: I know that in Oklahoma we have a large portion of adults who are working very low-skill, low-wage jobs, minimum wage jobs, but they are working 60, 70, 80 hours per week. That is where the Earned Income Tax Credit can really benefit them — if they know they have access to it, and if they claim that access.
David Grusky: Many people think one of the great interventions coming out of the U.S. is the Earned Income Tax Credit. It is being reported in many other countries because it has been such a success.
Gene Perry: Oklahoma has one that is at 5 percent of the federal level, so we do a little bit on that.
Kary Joy Mckee: We could probably do more.
David Grusky: We didn’t have anything until just recently when that decision was made.
Tyler Parette: Oklahoma has a pretty large rural population. Did you address any opportunity for urban vs. rural populations in California?
David Grusky: The way in which this plan has been set up is that it allows each county or other regional entity to devise a delivery plan for the services that are best suited to the circumstances of that area. So, you can imagine that in some areas you might take a Promise Neighborhood type formulation in which you have a very organic collection of organizations that come together and work together to deliver the resources in a comprehensive way. But I would imagine in other rural areas, that might not work as well. In some rural areas, other types of more centralized forms of delivery might be the way. The basic idea is that you let each county or regional area figure out, given the circumstances of the area, how best the delivery should occur. So, it is very decentralized in that way, recognizing that it would be a mistake to have a top down orchestration in the process. That you need allow the local situation to dictate how that work outs.
Gene Perry: So, you’ve got this big proposal in California. Coming from a state that is pretty far from California, geographically and especially politically, what kind of lessons do you hope other states might take from what we are seeing in your state, or what potential do you think there is for the federal government to adopt these policies and bring it to a place like Oklahoma?
[pullquote]”My view is, and I think that all evidence points to sustain this view, that if you can incorporate poor people into the economy, rather than often warehousing them in prisons, but truly incorporate people consistently into the American Dream, then you’ll have an economy that flourishes and will be a model for what we can do.”[/pullquote]David Grusky: Well part of the vision of the United States was, from the get go, a decentralized vision. It’s often been pointed out that the great asset of this formulation is that some of that state experimentation could occur. California has often been involved in that experimentation, and this will hopefully be another example of where California stakes out a position on how you can run a high performing economy. My view is, and I think that all evidence points to sustain this view, that if you can incorporate poor people into the economy, rather than often warehousing them in prisons, but truly incorporate people consistently into the American Dream, then you’ll have an economy that flourishes and will be a model for what we can do. My hope is that we run this experiment, and it’s an experiment founded on lots of evidence, and we show that there is a way to be a high-producing economy and not have lots of poverty. In fact, eliminating poverty is the way to be a high-producing economy. So then, other states will look to California.
That’s the hope, that is the vision. We will be one of the many experiments. Each state is forging their own path through what is a very complicated economic terrain and we’ll see who wins. My view is that if California does that, we will win. We will have an economy that will be the envy of other states. And then, they might say, “Well, what did California do that’s right?” And, one thing that California did right was to actually incorporate people so that they become part of this vision of the economy, not warehouse them and waste their talent but incorporate them. That’s the vision, that’s the hope, and I think there is a chance we will get there.
Kara Joy McKee: It’s an inspirational vision. I’m excited to see how this experiment turns out. David, thank you for spending time with us today.
David Grusky: Thank you. It was great.