Jason Furman, President Barack Obama’s chief economist, spoke to a crowd of about 165 on public policy’s role in reducing poverty and the effect of certain Obama administration policies on income at the University of Michigan Monday.

During the talk, Furman said the United States has recently experienced a surprisingly strong recovery after the 2008 financial crisis, a worldwide economic downturn that resulted in mass job loss and decreased consumer spending.

In the years following the crisis, the unemployment rate has fallen below expectations, real wages —wages adjusted for inflation — have grown and income has increased for people in lower and middle classes. But Furman said despite these factors, the United States’ recovery is not complete.

He cited lowered productivity growth, which is the measure of efficiency of production, as a longer-term issue for the economy and said the decline seen in the the levels of firm entry and growth results in the decline of competition in the economy.

Furman also discussed increased inequality following the recession, which he said resulted from a rising demand for skilled labor and a slower increase in the rate of education. He added that an increase in unionization resulted in an increase in percentage of money going to the bottom percent, noting that the real value of the minimum wage has decreased.

“(The United States) is not just higher than everyone else in terms of the share when we talk 1 percent, but also has seen faster increase in inequality for the top 1 percent than in other countries,” he said.

Furman cited decreased labor force participation. Furman said the labor force participation as another barrier, saying the participation rate peaked in the 1950s, but has been declining ever since.

“For women, we saw this big increase which is what caused the overall increase, but that stopped around 2000, has declined since then, and there’s a huge gap between the trend we were on and what has happened since then,” he said.

Along with the economy, Furman discussed effects of policies enacted during the Obama administration. He said the Affordable Care Act, or “Obamacare,” has shrunk the uninsured rate to below 10 percent for the first time, and health care spending has grown slowly in both public and private sectors.

Rackham student Elird Haxhiu, an attendee, stressed the importance of learning about public policy, and said Furman brought up very interesting points about inequality, job growth and wage stagnation.

“I wasn’t aware that the female labor force participation had been declining since the 2000s; that was new to me,” Haxhiu said. “It was interesting to hear some of the policymakers reiterate some of the same things that we talk about. When we’re voting for leaders, I think it’s important to know that their proposals could actually go in practice and what effect those proposals might have.”

Public Policy graduate student Esi Hutchful echoed this sentiment, noting the overlap between material covered in the talk and her economics classes.

“That moment he talked about the thought experiment he did on his own, on what would have happened if productivity would have increased and everything else stayed the same, if wages increased and everything else stayed the same, etc., was really interesting,” Hutchful said.

She also said the talk highlighted importance of understanding public policy and how it can lead the nation to be more informed and participate in political discussions.

“Public policy really determines everything you can touch on and determines potential solutions to the problems we have now — it’s where we are able to define what exactly these problems are, who are going to be the winners and losers of any given policy,” Hutchful said. “Even if you’re not determining what the policy is, being able to understand that conversation is obviously really important.”

Leave a comment

Your email address will not be published.