Archives: Reg Murphy Pubs

When economics goes wrong

Here’s a question. Which embodies a greater amount of knowledge — cellphone technology or the price of a gallon of ice cream?

A cellphone is a marvel indeed. It took the human race a long time to figure out how to make a cellphone.

But, in an important way, the knowledge embodied in the price of a gallon of ice cream far exceeds cellphone technology.

The price of a gallon of ice cream is the result of countless choices by many millions of individual people in unique, local circumstances. Every gallon brought to the market embodies the knowledge behind the decisions made by thousands and thousands of entrepreneurs, workers and resource owners in figuring out the best and most efficient ways to produce, transport and market ice cream, and every gallon purchased expresses an individual buyer’s unique preferences and circumstances.

Each retail seller of ice cream wants to sell what they bring to the market at a price that yields profit. But buyers are finicky, and competition is fierce. Choosing the price is no small matter.

In other words, a market price is not arbitrary or coincidental. Behind the price of a gallon of ice cream is the knowledge behind the countless decisions of the buyers, entrepreneurs, workers and resources owners that are in any way associated with producing and consuming ice cream. It’s a mind-blowing amount of particular and highly dispersed knowledge.

And it’s all processed in the vast and complex network we call the ice cream market.

The market for a resource — a piece of land, a piece of equipment, the skills of a worker — is also a network. The market for a resource transmits knowledge about the value of the resource in competing uses. But it does more than that. The market produces that knowledge. And the knowledge is conveyed by the price of the resource.

Without markets for resources — without entrepreneurs competing to employ resources in their particular lines of production — knowledge about the value of resources in competing uses would not exist. And without that knowledge, there is no way to determine the best and most efficient way to produce a good or service.

Those insights — that a market price embodies an enormous amount of knowledge and that markets produce knowledge that otherwise would not exist — are the most important insights in economics.

When those insights are disregarded, economics goes wrong. Examples abound. The most important is socialism.

Socialism is a system in which the government owns the vast bulk of land, natural resources and capital in an economy. Almost all production is undertaken by the government, and almost every worker is a government employee. The only private businesses a socialist government allows, if it allows any at all, are very small scale.

Socialism has serious flaws. One that is often overlooked is socialism’s built-in inability to produce anything efficiently. Even if all socialist leaders, bureaucrats and workers were supremely dedicated to the socialist good, they would have no way to figure out how to produce goods efficiently.

That’s because, under socialism, there are no markets for resources. No markets for resources means no resource prices and no way to know the value of resources in competing uses. That knowledge goes unproduced.

It’s not just socialists who fail to appreciate that prices embody knowledge that only markets can produce. Advocates of economic nationalism, minimum wage laws and antitrust suits against big tech, as well as those who think imports are bad for an economy, make a version of the same error.

I’ll address each of these and more in future columns.

  • Don Mathews
  • Reg Murphy Center

The Need for Increasing Diversity in Economics

This paper has a large readership with diverse educational backgrounds. The subset of those readers who also will read this column is smaller, but you likely still possess a range of levels of educational attainment in a range of fields and from a range of institutions.

Many of you, though, will have taken at least one course in economics, either at the high school level or above. And if you think back on those courses, chances are almost all of your economics professors had something in common—they weren’t black.

According to the most recent data published by the American Economics Association’s (AEA) Committee on the Status of Minority Groups in the Economics Profession (CSMGEP), only 5.16% of Bachelors Degrees in Economics, 7.43% of Economics Masters Degrees, and 2.8% of PhDs in Economics were awarded to Black or African American scholars. In fact, African Americans and other minority groups have lower representation in Economics than in STEM subjects at all degree levels.

The New York Times reported this month that across all of its branches and the board of governors, the Federal Reserve employs 870 Ph.D. economists, only 11 (1.3%) of whom are Black, single-race. Six (0.7%) are two or more races, races not specified.

The Times article also rightly points out that is a pretty big problem in a field responsible for advising policymakers on how best to allocate resources.

It is tempting, as an economist, to think that since what we do is focused on data-driven fact-finding, it does not matter who the economist is, what they look like, or what their background is. We all should arrive at the same advice for policymakers if what we are doing is simply describing what is and not what should be.

But, anyone who has worked much with data or even has watched news reports of data knows this is not true. Two economists, equally skilled and equally committed to fact-finding, can analyze the exact same data and come to different conclusions.

Every model and every study begins with a set of underlying assumptions. Those assumptions can differ depending on the researcher’s knowledge, experience, and training. Often, a researcher considers many possible starting assumptions before deciding on the most appropriate assumptions on which to found their model. Increasing diversity among researchers increases the pool of assumptions considered and increases the likelihood of producing the most accurate analysis and interpretation of data.

Perhaps an even greater reason to work toward increased diversity among economists is a need for greater interest in and ability to study issues of concern to minority populations. According to Newsweek, less than half of one percent of all articles published in the top five economics journals between 1990 and 2018 addressed issues of race or ethnicity.

This blows my mind! We know there is a strong correlation between race/ethnicity and economic outcomes. And we know, theoretically, that markets do not discriminate on race/ethnicity. The economics profession must commit ourselves to studying the historical interaction between race and market outcomes and understanding where reality deviates from theory. Only then can we rightly advise policymakers on how to improve outcomes for minority individuals and families.

Recruiting diversity into the profession is the best way to begin to see this change.

So, what are we doing about it? The AEA has stated its intention to focus on diversity initiatives and has begun to do so.

But, for us, the effort begins at home. Students in the School of Business and Public Management at College of Coastal Georgia are diverse in race and ethnicity, and most of them are required to take at least one, usually three, economics classes before graduation. We are intentional to include in these courses a diversity of perspectives as well as topics of special interest to minority students. And when we notice that student of any race or ethnicity has a knack for the subject, we encourage that student to consider an economics concentration and possibly graduate school in economics.

We are committed to joining with the AEA in increasing diversity in economics. The future of the field depends on it.

————-

Dr. Melissa Trussell is a professor in the School of Business and Public Management at College of Coastal Georgia who works with the college’s Reg Murphy Center for Economic and Policy Studies. Contact her at mtrussell@ccga.edu.

Senate Filibuster: A check on power or a tool for gridlock?

Hidden beneath a second Presidential impeachment, calls for the censure of a GA Congresswoman, and ongoing Capitol riot aftermath, lies a simmering debate waiting to happen: the removal of the Senate filibuster.

The U.S. Senate filibuster is an institutional rule that has been around long enough that it effectively feels like part of our Nation’s founding. It is not in fact; the filibuster emerged in 1806 and has no Constitutional origins.  Some scholars argue that the U.S. Constitution lays out an “implicit premise of majoritarianism” (Chafetz 2011) and, therefore, the filibuster with its ability to increase minority power, is unconstitutional.

The filibuster is the ability to block legislative action through lengthy debate. Until 1806, debate in the Senate could be ended with a simple majority vote. Once the filibuster was in place, a 2/3 majority (later changed in 1975 to 3/5 or 60 votes) was required to end debate on legislation and nominations (this is called cloture) thereby creating a larger role for the minority party in blocking or assisting in decision-making.

By and large, the filibuster has historically been used sparingly. The notable instances of its use have included large displays of long, or even silly, speeches to draw out and ultimately block a vote. Notably, it is the filibuster that was a favorite tool of southern Senators from the 1920s to 1960s as they aimed to block legislation to protect civil rights. This included anti-lynching bills, bills prohibiting poll taxes, and anti-discrimination bills. As such, the filibuster holds a certain historical reputation. Former President Obama has referred to it as a “Jim Crow relic.”

For much of this rule’s history, it has either been used sparingly or, the mere mention of filibuster was enough to block a debate. During the Obama administration, however, it became a heavily relied-upon tool by the Republicans in the Senate to obstruct everything from court nominations to legislative proposals. At the time, Democrats had 55 votes in Senate – just short of the 60 needed to invoke cloture. In 2013, Democratic Senators changed the filibuster rule to allow a simple majority vote (51) on nominees to courts and other federal offices. The rule was not changed for Supreme Court nominations nor for legislation.

Today, there are calls to eliminate the filibuster rule entirely while others warn that the filibuster serves to balance majoritarian power. For instance, former Senator and Vice-Presidential candidate Joe Liberman cautions that the 60-vote filibuster serves as an incentive for both parties to work in a bipartisan fashion toward common goals. Several Democratic Senators meanwhile, criticize the rule as a mechanism for gridlock that prevents the work of the people from getting done.

Not surprisingly, one’s view of the filibuster seems to change depending on their party affiliation and the party that holds a Senate majority at any given time. Those in the minority consistently support the filibuster while those in the majority (particularly when it’s a very slim majority) decry it as obstructionist.

This politically-motivated position may lead to short-sighted thinking. While eliminating the filibuster now would allow Democrats to pass a wide range of progressive bills, they won’t hold the majority forever. In fact, in just two years Senator Warnock (D-GA) will be up for re-election along with 13 other Democratic senators and 20 Republican senators. The balance of power can shift very quickly. The result of course is that we could experience a dramatic pendulum swing when it comes to legislative direction in the country. Much like President Biden essentially reversed all of Donald Trump’s Executive orders in his first weeks, thereby swinging those policies to the other end of the pendulum, without the filibuster Senate Republicans will undoubtedly push through extremely conservative legislation once they regain Senate control in 2, 4, 6…years. The result would be policy fluctuation but not any meaningful progress. Democrats, therefore, should think very carefully before making such a bold procedural move and perhaps consider if rules such as the special Reconciliation rule that was just used for the COVID relief package might be a viable alternative for getting things done. Or, perhaps more radically, Senators from across the aisle might just have to figure out how to work together again.

Dr. Heather Farley is Chair of the Department of Criminal Justice, Public Policy & Management and a professor of Public Management in the School of Business and Public Management at College of Coastal Georgia. She is an associate of the College’s Reg Murphy Center for Economic and Policy Studies.

Economics at its best

Last week, Dr. Skip Mounts began his From the Murphy Center column with an ironic quip. He wrote that while he believes “there is no such thing as macroeconomics,” he wanted to talk about it anyway. So he did. The entire column after that introduction was about macroeconomics.

My colleague’s quip might have appeared to be a playful inside joke among economists, but behind his quip is the most important insight that economics offers.

Economics is fundamentally a way of thinking about the choices individual people make. People choose among alternatives. Economics pays careful attention to alternatives. Good economics thinks about every choice in terms of alternatives.

Of course, people make the bulk of their choices in relations with each other. Economics thinks long and hard about choices of that sort.

For example, consider the market for ice cream in the U.S.

In 2019, people in the U.S. consumed 4 billion pounds of ice cream. In addition to the millions of buyers, the U.S. ice cream market consists of many thousands of retail sellers, wholesalers, producers and their workers. Thousands of other firms are associated with the market: dairy farmers, transport firms, producers of freezers, cartons, ice cream scoops, dispensers, conveyor belts, sugar, flavorings, and on and on and on. The amount of resources that are in some way engaged in the ice cream market is staggering.

Ever go to an ice cream shop that was out of ice cream? A grocery store that was out of ice cream?

Every once in a while an ice cream shop might run out of a flavor, and occasionally some ice cream goes to waste. But those glitches are short-lived and utterly puny compared to the amount that is produced and consumed.

And consider this. No one designed the ice cream market. There is no plan for the market. Nor is there a goal. No one oversees or manages the market to make sure that the quality, flavors and amounts of ice cream that buyers want are produced, and produced economically.

The ice cream market is millions of individual people – buyers, entrepreneurs, workers and resource owners – each of whom makes their own choices subject to their own unique circumstances.

Millions of people and vast resources engaged in an activity for which there is no design, plan, goal or oversight. Yet the result is not chaos but order: enormous amounts of a product whose quality, variety and economy in production improve year after year.

Now, take the intricacy, complexity and magnitude of the network of localized decision-making in the ice cream market and multiply it by, oh, somewhere around a gazillion, and you have the economy as a whole.

And what is true of the ice cream market is true of the U.S. economy. No one designed the U.S. economy. It has no plan or goal. And no one – not the president, not Congress, not the bureaucracy, not the Fed, not “elites” or big corporations – oversees or manages the U.S. economy. 

The most important insight that economics offers, the insight behind Dr. Mounts’ quip about macroeconomics, has two parts. The first part is understanding that a market or market economy is an enormous and enormously complex network of individual people making countless decisions in their own local circumstances. The second part is understanding why such arrangements, with no design, plan, goal or management, produce order and enrichment rather than chaos and stagnation.

When that insight is disregarded, economics goes wrong.  We’ll discuss that in my next column.

  • Don Mathews
  • Reg Murphy Center

Problems with Estimating Multiplier Effects

Last month, I used this space to write about the multiplier effect associated with government spending. Theoretically, each dollar spent by the government—or anyone else, for that matter—is multiplied in its impact on the economy.

Last month, I provided two examples:

1) SNAP benefits, commonly known as food stamps, have been estimated to have a multiplier effect of about 1.5. This means that $1 billion in government spending on SNAP benefits results in a $1.5 billion increase in GDP, as each dollar spent on groceries through SNAP is multiplied as wages for individuals working in food production, sales, and transportation.

2) The CARES Act, passed early in the pandemic to provide cash relief to each American household, is estimated to have a multiplier close to 1. Our GDP will regain almost exactly what was spent in stimulus.

Today, with all due respect to my fellow economists who spend countless hours analyzing data to arrive at these multiplier estimates, I am going to walk this back a little.

Among economists, there actually is a good deal of debate about multiplier effects. Economist Daniel Carroll of the Federal Reserve Bank of Cleveland describes the reasons for this debate in a 2014 article, which I summarize below.

Theoretically, there is some dispute about the existence of a multiplier effect. This goes back to the definition of GDP. GDP is the sum of Consumption, Investment, Government spending, and Net exports. Although an increase in government spending is a direct increase to GDP, that spending must be financed somehow, either through increased taxes, increased government debt, or monetary expansion. Any one of these three options has the effect of decreasing private consumption or investment, or both.

An increase in government spending will only increase GDP if the increase in spending more than offsets the effects of financing that spending.

Generally, I think most folks agree that there probably is some positive multiplier effect on government spending. However, the details of how we assign a value to that multiplication are always in contest. As Carroll points out in his article, and I can attest from my own experience, measuring money multiplication empirically is no simple task and almost always involves making assumptions and doing a lot of guess work.

A major difficulty with estimating the size any economic relationships is that economics studies changes in the real world, and we can rarely observe these changes in a vacuum. In the case of multipliers, it is really hard to tell whether a change in GDP is a result of a specific spending policy, whether the change in spending is a result of the change in GDP, or whether both the changes in GDP and spending are results of some third variable. In fact, it is very likely that all three of these relationships occur at once.

This difficulty establishing causality would tend to lead to overestimations of multipliers should we assume that GDP changes result from spending changes.

Another issue with empirically measuring the size of multipliers is that changes to government spending often are debated and publicized for long periods of time prior to their being enacted. This gives businesses and individuals time to anticipate future increases in their cash flow and change their behavior prior to the actual implementation of the new spending policy.

This anticipation problem would tend to lead to underestimates of multipliers if we cannot measure the extent to which prior GDP changes are related to future government spending.

And all of this is complicated by the fact that there is no single multiplier for government spending. The size of the multiplier depends on the strength of the economy at the time of the spending as well as where the money is spent.

In sum, I believe spending is multiplied, and I believe attempting to measure the size of multipliers is useful for informing policymaking. But, I do not envy those whose job it is to do the estimating. It’s a tough, if not impossible, job.

————-

Dr. Melissa Trussell is a professor in the School of Business and Public Management at College of Coastal Georgia who works with the College’s Reg Murphy Center for Economic and Policy Studies. Contact her at mtrussell@ccga.edu.

Risk Assesment and Public Policy

As I am writing this in mid-December, the first 100,000 or so doses of the Pfizer COVID-19 vaccine have arrived in Georgia and have begun their deployment to hospitals and long-term care facilities around the state. Just because it’s here, however, does not mean it’s being administered as readily as public health officials might have liked. For instance, I heard from one local physician who indicated that even within the healthcare community in Glynn County, there is some skepticism over the safety of a vaccine that is being released so quickly. Not all healthcare workers who are eligible to receive the vaccine are ready to do so. Likewise, in a  recent McKinsey and Company consumer survey (2466 respondents) more than half the respondents in the United States report they are likely to delay or decline vaccination despite regulatory approval, with safety concerns being the main driver of vaccine hesitancy.

The skepticism, as I understand it, largely revolves around the time that it took for the vaccine to be tested and then released. For a typical vaccine, according to Pfizer’s website, Phase 1 of a clinical trial includes about 100 participants and takes 1 week to several months to complete. Phase 2 includes several hundred participants and takes up to 2 years, Phase 3 can include up to a few thousand participants and takes 1 to 4 years. And the final Phase 4 includes several thousand participants and takes over a year to conclude. In total, at best a typical trial period would take about 3 years. The Pfizer COVID-19 vaccine trial took under a year but did include a similarly large participant pool of 42,000 people.

The big public health and public perception question is, “were corners cut in this modified timeline?” When reviewing the Food and Drug Administration panel’s comments on the Pfizer and Moderna vaccines, I saw a lot of discussion about cost benefit and risk analysis. According to a National Public Radio report, one committee member, Dr. Paul Offit director of the Vaccine Education Center at Children’s Hospital of Philadelphia, framed it this way: “The question that’s being asked [of] us is do we have enough evidence in hand to say that the benefits of this vaccine outweigh what, at the moment as far as severe safety issues, are theoretical risks. I think the answer to that question is clearly yes…The question is never when do you know everything, it’s when do you know enough.”

This kind of risk assessment and reasoning sounded very familiar. My field of study is environmental policy, and in this field risk assessment is an important part of the regulatory and law-making process. Human activities almost always carry an environmental or human health risk; developing policy around human activities, therefore, requires risk assessment. The challenge is to determine what constitutes “acceptable risk.” Carcinogens, for instance, are generally regarded as having no acceptable threshold of exposure, and yet even The Food Quality Protection Act (FQPA) of 1996 simply requires “reasonable certainty that no harm will result from aggregate exposure,” not zero tolerance. The reason for this is twofold: uncertainty is inherent in modeling future events, and “sufficient information will rarely be available to permit an accurate assessment of environmental health risks…uncertainties arise at all stages of risk assessment” (James E. Anderson, 1984).

These same ideas surround the vaccines. When the vaccines were released in the UK, there were some adverse immuno-responses that were not observed in the trials. Why then did UK health officials release the vaccine? Because uncertainty is inevitable in risk assessment and they (along with the FDA) found the potential risks are outweighed by the benefits – namely high efficacy rate, increased population immunity, and decreased death rates.

Finally, it’s worth mentioning that two terms – efficacy and effectiveness – are often used interchangeably to talk about the vaccine performance, but they have different meaning. Efficacy is the percent reduction of the disease in the optimal clinical conditions. Effectiveness is how the vaccine operates “in the real world” (different primary care settings, broader population) after it is released to the consumer population. In one’s own assessment of risk, these are important to understand.

Whether you feel comfortable taking this early vaccine or not is ultimately a personal choice. While public health policy is based as much on politics as it is on science, we have not yet heard anything on a federal level that indicates that our country will have compulsory participation. Instead, it will be up to us as individuals within the community to read the science, review the assessments, and determine if we are ready to take on the inherent risk in order to reap the anticipated benefits.

Dr. Heather Farley is Chair of the Department of Criminal Justice, Public Policy & Management and a professor of Public Management in the School of Business and Public Management at College of Coastal Georgia. She is an associate of the College’s Reg Murphy Center for Economic and Policy Studies.

Climate trends and the Pandemic

In late spring of this year, several articles suggested that the global pandemic, and the drastically reduced travel that accompanied it, might actually help “heal” the earth. The assumption was that we would potentially see a reduction in CO2 emissions because people were staying home more and not traveling by plane. Indeed, plane travel has dropped by around 95% and at least 61 million Americans have stopped commuting during the pandemic. These trends are similar globally. News outlets have been reporting that people can actually see and feel the impact, particularly with less smog and cleaner air in large cities like Los Angeles and Mumbai where previously cloaked vistas are now visible. Given that just one roundtrip flight from New York to London generates as much CO2 as the CO2 generated by the average Nicaraguan annually, it is not surprising that these predictions of a “healing earth” were being made.

Cleaner daily air quality, however, seems to be the most encouraging metric; other correlations and data trends do not paint quite as rosy a picture. One data trend that was expected to be a little more encouraging is greenhouse gas concentrations. At the risk of stating something you’ve heard ad nauseum, let me break down for you how greenhouse gas concentrations operate. Greenhouse gases are substances like carbon dioxide (CO2), methane and nitrous oxide. When released into the atmosphere, these gases trap heat and drive up temperatures close to the Earth’s surface. Atmospheric concentrations are cumulative meaning they result from both past and present emissions and are measured in parts per million (ppm). A recent report from the World Meteorological Organization (WMO) suggested that while carbon emissions fell by 17% in early 2020, the overall effect on atmospheric concentrations is very small; again, this is because concentrations are cumulative and so we have only slowed the rate of increase, but we are still increasing. In other words, it will take many more years of continued reductions in emissions to slow the rate of concentration growth from year to year in a meaningful way.

There is also a connection between rising temperatures and the ranges of zoonotic pathogens. I know that was a sentence-full of jargon, but the idea is that as temperatures increase, many of the carriers of pathogens such as dengue fever, zika, west nile, or Lyme disease, can increase their habitable area and increase the spread of these pathogens. Mosquitoes like warmer temperatures. For example, before 1970 the World Health Organization recorded 9 countries with dengue epidemics. In 2019, that number rose to 128 countries as mosquitoes have been able to move northward and into higher elevations due to rising temperatures.

Finally, there is a single business case that I think represents a larger economic issue during the pandemic. Exxon Mobil Corp. owns a complex of pipes, tanks, and pumps over the geological Madison formation in Wyoming where they have been extracting natural gas and helium for more than 30 years. In this process, they have also been dumping CO2, which is also contained within the Madison formation, to the tune of about 300,000 car’s worth of emissions annually. The company was set to start construction in the summer of 2020 on a carbon capture and sequestration project that would have locked away enough CO2 to essentially zero-out the facility’s climate impact. In April, however, amidst falling share prices, the company announced that the project will be on hold indefinitely. The story here is as follows: Company finds a profitable process, company creates externalities (carbon pollution) through the process, company finds a way to mitigate the externality using technology and government programs (tax credits), economy plummets, project is tabled, and the company’s efforts toward climate mitigation are foiled. And Exxon is not simply going back to regular operations. In fact, not only are they not advancing their climate plan, but they are ramping up their core business through a pricey expansion of crude oil operations. The result will be sharp increases in their carbon emissions rather than significant reductions as a reaction to the pandemic-induced economic downturn.

As COVID-19 vaccines are deployed over the next 12-18 months, we will be glad to get “back to normal.” We would be wise, however, to consider whether the pre-COVID normal is exactly what we want to return to from a climate change mitigation perspective. If we return to normal levels of commuting, air travel, and fossil fuel use, we will have missed an opportunity to move climate trends in a positive direction and our friends in big cities will undoubtedly lose their newly-acquired views. Wouldn’t it be nice if some good came out of this pandemic? I hope we will attempt to embrace a new normal instead. Likewise, this is an opportunity for government to consider how the market has impacted business decisions and how COVID relief packages can be developed to promote and incentivize climate-positive actions.

Dr. Heather Farley is Chair of the Department of Criminal Justice, Public Policy & Management and a professor of Public Management in the School of Business and Public Management at College of Coastal Georgia. She is an associate of the College’s Reg Murphy Center for Economic and Policy Studies. For more information on the Reg Murphy Center, please visit www.ccga.edu/murphycenter .

Equity, Diversity, and Inclusion in Hiring. Part II: Doing the Work

In my last article for this column, I discussed systemic and institutional racism in organizational hiring and urged organizations to be wary of pitfalls such as quotas. As I stated in the last article, it’s no wonder why organizations may instinctually turn toward quotas when developing diversity and inclusion plans, but it’s a pitfall that could land an organization in muddy waters at best and the courtroom at worst. If we shouldn’t set aside positions for Black, Indigenous, and People of Color, what should we do? I committed to writing a part 2 that outlines some of the best practices in diversity, inclusion, and equitable hiring and to that end, I spent some time examining resources and approaches to improving diversity and inclusion in the workplace.

First, it’s important to recognize that hiring an individual from a certain demographic into a spot on your team does not a diversity plan make. Creating diversity on your team by using inclusive approaches is a method that is meant to build a group, not check off an individual’s box on an application. Viewing it in this way helps you avoid individual biases.

Next, don’t shy away from the idea that we all have biases and make judgements. It is part of our nature. That does not mean, however, we have to blindly accept these biases. Instead, talking about them within the organization and developing strategies to avoid hiring biases is a good first step. Likewise, discuss the ways in which diversity is a value within your organization and be sure this is explicitly included in job descriptions.

In terms of recruitment, ensuring that your post is getting out to a diverse pool of applicants may require that you evaluate your communication strategy and adjust as needed. For instance, advertising through social media or different professional organizations may help to broaden your reach.

As your organization reviews applications, you might consider building a search committee that includes both members of the department you are hiring for and external members who can help offer an outside perspective. Blind resume review is another way to avoid perpetuating bias. Remove names and dates of degrees before the committee considers the interview pool to avoid the implicit bias I outlined in the last article. Then, provide a rubric of key skills the committee can use to evaluate the qualifications of applicants.

Once a candidate is selected for interview, standardize the interview process and agenda to ensure equity. Focus on interview questions that are competency-based and focus on the outcomes necessary to be successful in the role.

Finally, once a candidate has been selected, evaluate your success. Take time to hear back from applicants about the process through survey or other methods and adjust your process based on feedback from those who experienced the hiring process.

Hiring is not a one and done process but an ongoing and evolutionary process that requires planning, evaluation, feedback and redesign. Try to avoid thinking of hiring as fixed, but rather use it to develop as an organization.

Dr. Heather Farley is Chair of the Department of Criminal Justice, Public Policy & Management and a professor of Public Management in the School of Business and Public Management at College of Coastal Georgia. She is an associate of the College’s Reg Murphy Center for Economic and Policy Studies.

Avoiding legal pitfalls in addressing organizational equity

I spent some time last month working with a non-profit organization that has been developing their Equity, Diversity, and Inclusion (EDI) plan. In light of the social justice issues that have gained prominence and public attention this year, the organization is seeking to improve their operations, mission, and hiring practices to ensure that they are not contributing to systemic racism. Quite simply, they are trying to “do better.” It is important work that needs to be done.

I realize the idea of systemic racism has become contentious for some, so before I get to my main point, I would like to take a moment to define what that term means and what it does not mean. Systemic racism, also called institutional or structural racism, is the processes, systems, and structures that create disadvantages for Black, Indigenous, or People of Color (BIPOC). Here are some examples to illustrate what this means. Statistically in the U.S., unemployment is about two times higher among blacks than whites. This holds true no matter what is going on in the economy as a whole and even when we compare similarly-qualified groups (college graduates of different races, for instance). Similarly, when you are applying for a job, research has shown that you are 50% more likely to get an interview with a “white sounding” name versus a “black sounding” name. Again, this holds true when all other factors (like qualifications) are held constant. This does not mean that those engaged in the processes have any particular racial motivation; in fact, people may not even be conscious of race in their decision-making, but the decisions themselves perpetuate racial inequality. There may be a perfectly rational reason or incentive to make these decisions, but the result is the perpetuation of disadvantage. 

So, knowing this, it is not surprising that many businesses and non-profit organizations are seeking to address these issues by intentionally bringing them into focus in their planning. In fact, addressing systemic racism isn’t anything new from a policy perspective – we have been grappling with it since the 1960s when Kennedy introduced the idea of affirmative action in an Executive Order.  Since then, the implementation of affirmative action has taken place in the courts rather than legislatures. In other words, as a policy, it has been refined through the legal system as opposed to the development of new laws.

Employment discrimination laws were introduced in the Civil Rights Act of 1964 through Title VII. The 1976 Supreme Court case, McDonald v. Santa Fe Trail Transportation Co., ruled that “discriminatory preference for any [racial] group, minority or majority” violates Title VII (employment discrimination). This extends to favoring minority employees over White employees as well. Throughout the 1960s and 70s, educational institutions, in particular, began using minority quota systems to improve minority admissions into schools. This was ruled illegal by the Supreme Court in 1978, but consistent and clear rulings on affirmative action have not been the norm from that point on. Two cases in 2003 and 2016 upheld the idea that race can be a consideration in hiring and admissions decisions, but designating spots or quotas is not. This is about the extent of the guidance on affirmative action and diversity/inclusion in hiring.

Interestingly, in talking with the non-profit I was working with, the approach they are taking in their EDI is to include quotas in their hiring to ensure that they have adequate BIPOC representation in the organization. They are hoping to create more diversity in the organization through inclusive hiring practices (necessary and admirable), but the tool they used throughout the plan was quotas (X% of people hired in this area will be BIPOC, for instance).

My warning to them, and to other CEOs and Executive Directors, is this: do not rush blindly into anti-discrimination initiatives that may result in violating anti-discrimination laws. While the work of affirmative action must happen to address systemic racism, organizations also need to be wary of violating existing law.

Now, if an organization or individual wishes to challenge these laws, they certainly could by taking cases to the court system. Otherwise, other methods will need to be employed as we navigate trying to improve systemic racism in our businesses and communities. The U.S. Equal Employment Opportunity Commission (EEOC) along with several organizational success stories offer some good guidance in this regard. I’ll take up the topic of effective, legal, affirmative actions in my next column and I hope it will be useful in both illuminating the legal landscape on this issue and helping to give organizations some ideas on how to “do better.”

Dr. Heather Farley is Chair of the Department of Criminal Justice, Public Policy & Management and a professor of Public Management in the School of Business and Public Management at College of Coastal Georgia. She is an associate of the College’s Reg Murphy Center for Economic and Policy Studies.

Millennials: It’s Time we Stopped “Waiting on the World to Change”

I am a millennial. Technically, I am what some people refer to as an “Xennial”; these are individuals in the micro-generation right between gen-X and Millennials who bridge the gap between strictly analog generations and digital generations. We have been described as having “both a healthy portion of Gen X grunge cynicism, and a dash of the unbridled optimism of Millennials” (Anne Garvey, 2015).

I was recently listening to a fellow-Xennial, John Mayer’s, 2006 song “Waiting on the World to Change” and was thinking about the lyrics. In the song, Mayer laments that Millennials are “misunderstood,” that we “feel like we don’t have the means to rise above and beat it,” and so we “keep on waiting on the world to change.” He ends by saying that “one day our generation is gonna rule the population.” Technically, John, we have reached “one day.”

This election year, Millennials (27% of eligible voters) combine with new voters in Gen Z (born between 1996 and 2002) will make up nearly 40% of the electorate. This is noteworthy not because it makes me feel special as a Millennial, but because it highlights an important phenomenon; the slow unfolding of a changing electorate. It’s a fascinating thing to watch in an election year, because it can mean that every election has the potential to be surprising and interesting depending on who actually shows up to the polls.

In years past, the Baby Boomers have been the demographic that matters most in an election. They are large in numbers, they have a longer life expectancy than any time in history, and they show up to vote. As recently as 2012, they made up half of the electorate and they vote consistently. As such, savvy politicians have spent a great deal of time ensuring that their messaging resonates with those born between 1946 and 1964. This generation will remain the leaders in expected voters in 2020, but Millennials and Gen Z are hot on their trail – in number at least. Their willingness to actually vote is unclear.

Gen Z, in particular, is going to be much more racially diverse when compared to the older electorate – they are comprised of 55% white and 45% nonwhite eligible voters compared to a 74% white Baby Boomer electorate. Younger voters are also far more likely to vote Democrat as we saw in the 2018 midterms where they voted for Democratic candidates almost three to one.

Those kinds of numbers should be very exciting for Democrats, except for one major problem – this population doesn’t show up to vote. Non-voters in the 2018 midterms were young and racially diverse. Only 11% of actual voters (as opposed to eligible voters) in 2018 were under 30 years of age. The same group who now have clear advantages in numbers, don’t exercise that advantage and so the impacts of the changing electorate remain slow.

Now for my anecdotal observations. I have taught and listened to students in this younger population for the last ten years in my classes. They consistently report that they haven’t really paid much attention to current events until they were forced to do so in college. They overwhelmingly get their news from social media, which of course comes with a whole host of problems in an election environment tainted by foreign interference via social media. They have good ideas, they are problem-solvers, and they know what they care about it when they see it, but they haven’t yet discovered their strength and potential as a democratic voting body. If they do in 2020, there will be significant changes on the horizon. But, if they continue to stay home and not vote, they will continue to “wait on the world to change.”

Dr. Heather Farley is a professor of Public Management in the School of Business and Public Management at College of Coastal Georgia and Chair of the Department of Criminal Justice, Public Policy & Management. She is an associate of the College’s Reg Murphy Center for Economic and Policy Studies.