Racial and Economic Inequality From the Great Migration to Covid-19

Many studies have come out suggesting a disproportionate burden of illness and death among racial and ethnic minority groups during this Covid-19 crisis. And certainly one cannot attribute this phenomenon simply to the virus itself, but much due to the underlying structural fractures of the American society in its treatment of racial and ethnic minorities for years and decades. In this interview, Dr. Ellora Derenoncourt of UC Berkley and Princeton provides a detailed historical analysis on racial and economic inequality since the days of the Great Migration and discusses possible post-Covid policy measures to address those critical concerns. Her fascinating research on the Great Migration shows that the beautiful idea of "moving to opportunity" for black families no longer holds true, as the Great Migration cities have typically responded to the influx of black migrants with increasing segregation and spending on policing. The dynamic response from local residents and governments paint a gloomy picture on whether migration can actually lead to better outcomes for black households. We also dive deep into another strand of her research – the effect of federal minimum wage on the black-white earnings gap. Because many minorities work retail jobs, the increase in minimum wage might simply encourage employers to adopt automation and replace the workers. Therefore, the adoption of minimum wage may further incentivize companies to automate away jobs and increase the racial earnings gap. Lastly, Ellora talks about how WWII is analogous to our current crisis, as consumer production was also slowed to benefit the war effort then, similar to the current economic freeze. What policy prescriptions should we yield from this analysis? Is it safe to expect a post-pandemic boom similar to that of the postwar era? Is this analogy complicated by the fact that there is no war effort toward which we are redirecting economic output that could serve to stimulate the economy? We discuss how the government can incorporate racial and social considerations when enacting fiscal policies and the wider impacts of our decisions today on inequality. Ellora Derenoncourt is an incoming assistant professor in the Department of Economics and the Goldman School of Public Policy at University of California, Berkeley. Her research interests lie in labor economics, economic history, and inequality.