The gig is up: America’s booming economy is built on hollow promises
Contract workers prop up big earners but under Trump’s anti-labor administration are ruthlessly exploited themselves
Uber just filed its first quarterly report as a publicly traded company. Although it lost $1bn, investors may still do well because the losses appear to be declining.Uber drivers, on the other hand, aren’t doing well. According to a recent study, about half of New York’s Uber drivers are supporting families with children, yet 40% depend on Medicaid and another 18% on food stamps.
It’s similar elsewhere in the new American economy. Last week, the New York Times reported that fewer than half of Google workers are full-time employees. Most are temps and contractors receiving a fraction of the wages and benefits of full-time Googlers, with no job security.
Across America, the fastest-growing category of new jobs is gig work – contract, part-time, temp, self-employed and freelance. And a growing number of people work for staffing firms that find them gig jobs.
Estimates vary but it’s safe to say almost a quarter of American workers are now gig workers. Which helps explain why the standard economic measures – unemployment and income – look better than Americans feel.
The jobs problem today isn’t just stagnant wages. It’s also uncertain incomes. A downturn in demand, change in consumer preferences, or a personal injury or sickness, can cause future paychecks to disappear. Yet nearly 80% of Americans live paycheck to paycheck.
According to polls, about a quarter of American workers worry they won’t be earning enough in the future. That’s up from 15% a decade ago. Such fears are fueling working-class grievances in America, and presumably elsewhere around world where steady jobs are vanishing.
Gig work is also erasing 85 years of hard-won labor protections.
At the rate gig work is growing, future generations won’t have a minimum wage, unemployment insurance, worker’s compensation for injuries, employer-provided social security, overtime, family and medical leave, disability insurance, or the right to form unions and collectively bargain.
Why is this happening? Because it’s so profitable for corporations to use gig workers instead of full-time employees.
Gig workers are about 30% cheaper because companies pay them only when they need them, and don’t have to spend on the above-mentioned labor protections.
Increasingly, businesses need only a small pool of “talent” anchored in the enterprise – innovators and strategists responsible for the firm’s competitive strength.
Other workers are becoming fungible, sought only for reliability and low cost. So, in effect, economic risks are shifting to them.
It’s a great deal for companies like Uber and Google. They set workers’ rates, terms, and working conditions, while at the same time treating them like arms-length contractors.
But for many workers it amounts to wage theft.
If America still had a Department of Labor, it would be setting national standards to stop this.
Yet Trump’s Anti-Labor Department is heading in opposite direction. It recently proposed a rule making it easier for big corporations to outsource work to temp and staffing firms, and escape liability if those contracting firms violate the law, such as not paying workers for jobs completed.
On the other hand, California is countering Trump on this, as on other issues.
Last Wednesday, the California assembly passed legislation codifying an important California supreme court decision: in order for companies to treat workers as independent contractors, the workers must be free from company control, doing work that’s not central to the company’s business, and have an independent business in that trade.
(The bill is not yet law. It still has to pass the California Senate and be signed by the governor. And businesses are seeking a long list of exemptions – including ride-share drivers and many of high-tech’s contract workers.)
Whatever national rule eventually emerges for defining gig workers, they’ll need a different system of social insurance than was the case when steady full-time employment was the norm.
For example, they need income insurance rather than unemployment insurance. One model: If someone’s monthly income dips below their average monthly income from all jobs over the preceding five years, they automatically receive half the difference for up to a year.
They’ll also need a guaranteed minimum basic income – a subsistence-level cushion against earnings downturns. And universal health insurance and more generous social security, to make up for the unpredictability of work.
All of this should be financed by higher corporate taxes, ideally in proportion to a corporation’s use of gig workers.
Gig work is making capitalism harsher. Unless government defines legitimate gig work more narrowly and provides stronger safety nets for gig workers, gig capitalism cannot endure.
- Robert Reich, a former US secretary of labor, is professor of public policy at the University of California at Berkeley and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. He is also a columnist for Guardian US
Republican 2017 Tax Cut Was Biggest Theft In US History
June 1st, 2019 by Steve Hanley, Clean Technica
We should have known the 2017 tax cut was 100% Grade A horsepuckey as soon as Paul Ryan posted this tweet.
While Republicans in Congress were crowing about how their temporary tax cuts for working people were putting a few pennies in their pockets, they were performing an act of congress (See Cambridge Dictionary, definition 2) on the American people by enacting permanent tax cuts for corporations and oligarchs.
Many bold statements were made about how the new tax act would help make America great again, but in truth, it did little other than fatten the wallets of those who already qualify as some of the richest people in history. Now the non-partisan Congressional Research Service has released a scathing report confirming what most of us knew all along.
Relatively Small Effect
Written by economists Jane Gravelle and Donald Marples, the report claims, “On the whole, the growth effects [from the cuts] tend to show a relatively small (if any) first-year effect on the economy. Although examining the growth rates cannot indicate the effects of the tax cut on GDP, it does tend to rule out very large effects in the near term.”
It is true that GDP rose 2.9% for calendar year 2018, but Gravelle and Marples say that performance was due mostly to economic factors already in place and had little to do with the tax package. In fact, it can be argued the economy was responding to sensible policies initiated by the Obama administration after the last time Republican led fiscal irresponsibility burned down the global economy in 2008.
According to CNBC, the CRS report says the changes rammed through by Republicans contributed only marginally to the overall economic economic gains — about 0.3% as a “feedback effect.” To pay for themselves as Trump and Republican leaders promised they would, GDP would have to rise by 6.7%.
Wages did advance by about 3% last year but the tax cut had little to nothing to do with it, the report goes on to say. “This growth is smaller than overall growth in labor compensation and indicates that ordinary workers had very little growth in wage rates,” Gravelle and Marples wrote.
Damn Lies & Statistics
The effective tax for corporations, or the level they pay after taxes, was 17.2% in the year before the tax breaks took hold. That plunged to just 8.8% in 2018. Individuals did indeed see a drop in their effective tax rate — from 9.6% in 2017 to 9.2% last year. Whoopee!
One of the lies told to the American public by Republican leaders was that corporations would use the extra money they got from the tax package to pay bonuses to workers. And they did. In all, about $4.4 billion in bonuses was paid out — an average of a whopping $28 per employee in the US. Gotta love those big-hearted Republicans looking out for long suffering American workers, huh?
What the corporations did do, however, was use $1 trillion of the windfall given them by Republicans to repurchase their own shares. Most C-Suite movers and shakers get paid in stock these days. Stock repurchase plans raise the price per share of the company’s stock, which in turns make the wealthy even wealthier.
The Biggest Heist In History
Steal from the poor, give to the rich. Are you beginning to understand the magnitude of the criminal intent behind the Republican tax scheme? When the wealthy own the government, any pretense of democracy goes right out the window. The hogs gorge themselves on massive tax breaks shoveled their way by the very people they paid to get elected. If that’s not a criminal enterprise, it’s hard to imagine what is.
Meanwhile, a man in Arizona is on trial this week, charged with a felony for providing food and water to illegal immigrants. He is facing up to 20 years in prison for the crime of having compassion for other human beings. And America continues to pretend it is is a Christian nation? How fucked up is that?
The last promise from Republicans was that US corporations would repatriate trillions of dollars parked in other countries and use the money to invest in America. Wrong! While $664 billion was returned to the US after the tax giveaway, “the evidence does not suggest a surge in investment from abroad in 2018,” the report says. Dave Roberts, a/k/a Dr. Vox, sums up the report this way.
Absolutely brutal. The GOP’s latest massive tax cut for the wealthy didn’t pay for itself, didn’t boost growth, didn’t raise wages, didn’t do shit, really — it was garbage policy transparently designed to put a big windfall in oligarch pockets.Harry Stein@HarrySteinDC
Congressional Research Service—which is nonpartisan, independent, and highly-respected—just published a report that dismantles claims that the GOP tax law is doing much good for the economy. https://www.everycrsreport.com/reports/R45736.html …
Here are some quotes…
Upward Mobility Is Dead
There is a lot of anger in the United States at the moment, much of it directed at black people, brown people, Mexicans, Central Americans, Sikhs, Hindus, immigrants, asylum seekers, DACA kids and anyone else who can’t trace their lineage back to the Mayflower. People from so-called “shithole countries” are especially despised.
Everyone is pissed off that the Great American conveyor belt of upward mobility has been shut off. There was a time when everyone expected their children to be better off, to have more opportunities, and to thrive. There was a time when some bumpkin born in a log cabin in Illinois could grow up to become president. None of that is true any more.
Young people today do not have the boundless enthusiasm about the future their grandparents had. They are going home to live in their parent’s basement to save money. Many are burdened with crushing college loan debt that will take 50 years to pay off. People without health insurance die sooner because they cannot afford the medical care they need to stay healthy.
The Republican mantra is that all those people have done this to themselves by making poor choices and deserve to be punished for their misdeeds. The loving God of the New Testament has been replaced by the angry, punishing God of the Old Testament. Any pretense that the United States today is a Christian nation that values the teachings of Jesus is a comfortable but inaccurate myth.
The Great Divergence
America was great once, and that period of greatness was marked by a vibrant middle class. It was an era when no one was talking about wage inequality. Yes, capitalists and business owners made 40 times more than workers but today they make 1,000 or even 10,000 times more. Thomas Friedman describes the 50 years between the New Deal and the advent of Reaganomics as the Great Compression. But since then, America has experienced the Great Divergence.
What happened between the New Deal and Reagan? The rise of the “government is evil” myth created by Fred Koch and the John Birch Society and amplified by his sons, Charles and David, who used their enormous wealth to fund dozens of tax exempt “think tanks” to bombard the news media and members of Congress with their “small government” philosophy. Few people know or care that Fred Koch made his fortune providing gasoline to Stalin and Hitler. His hatred of the US government knew no bounds and he instilled his bitterness in his children.
The Kochs have bought entire university and law school curricula with their financial largesse, then directed those schools to indoctrinate their students in the Koch Brothers’ Way. Today, many of the people vying for federal judgeships have suckled at the Koch Brothers teat, including all five members of the conservative wing of the US Supreme Court. Think the courts will save us from the worst abuses of the Trump maladministration? Think again.
I have spoken before about the game called StarPower. Here is how one of the people involved in developing the game describes it:
First developed in the 1960s ….. Starpower creates a limited-mobility, three-tiered society based on differential wealth. Participants engage in “chip trading sessions” to increase their individual wealth and societal status. Variations in wealth are ostensibly based on “merit” (success at trading chips) but most members of each “strata” (called “Squares,” “Triangles,” and “Circles”) unknowingly receive different resources (trading chips) at the beginning of the game and at each subsequent “trading session.”
Thus, most participants remain in their original group throughout the game. To preserve the mobility premise, an occasional lower status person receives enough trading chips to allow a group change. After several trading rounds, the wealthy group (“Squares”) “earns” the right to make rules for the rest of the game. Trading continues under the new rules.
[The original] version assumes power inevitably corrupts and that the “wealthy group” will make unfair rules that generate frustration and even revolt by other groups. My experience shows that students respond in a variety of ways, sometimes opting to create an egalitarian society through rules that redistribute “wealth.” Perhaps their enrollment in a cultural anthropology class makes a difference! In any case, at some point, the
instructor ends the game and then facilities a discussion of the experience.
Student’s emotional responses and behavior are generally linked to their social position in the simulated society. The “Triangles” (lower class) become despondent, angry, self-blaming, self-critical, resentful, and often give up on playing the game, or sometimes simply cheat. Other groups also react in ways characteristic of the middle and upper classes.
The game illustrates the complex processes of economic, social, and political stratification, linkages between wealth and political power, the ways in which stratification is maintained and justified, and how stratification is experienced on a personal level by members of different “strata” and by different individuals within the
same strata. Starpower is effective because it allows students to understand howstratified systems “work” structurally and to experience how they “feel.”
I find Starpower particularly useful for demonstrating the subtleties of “meritocratic” political democracies like the United States, in which the rules seem “fair.” Yet, the unequal distribution of wealth assures that most “Squares” will end up “Squares” and most “Triangles” will remain “Triangles” regardless of their individual
merit and a set of equally applied rules for achieving “success” in society.
Starpower can also illustrate how race, ethnicity, gender, or other visible social identity markers function in stratified societies. Participants in each group sit separately and wear a visual symbol of their group membership as “Squares,” “Triangles,” or “Circles.” This will offer you an opportunity to discuss the role of visual markers in stratified societies, as both internal and external symbols of one’s identity that
facilitate differential treatment. Such visual markers can become potent symbols of group membership, substituting for and masking the class basis of the hierarchical system.
I participated in a StarPower exercise as part of a master’s program many years ago. I started as a triangle but bartered my way into the top group just prior to the time when the instructors changed the rules to allow us to dictate the rules for the rest of the game.
We were brutal. There is an old expression that says everyone wants to bar the door to the clubhouse as soon as they get in and that’s exactly what we did. By the end of the two hour session, there were some mighty pissed off people in the room and a hint of imminent violence was in the air.
A Lesson For Today
Any resemblance to America in 2019 is strictly intentional. The anger that stoked the ascent of a lying, cheating, philandering jackass into the White House is the same anger the lower classes in StarPower felt as that simulation progressed. The magic of the Trumpian plan was to leverage that anger to give wealthy people even more of an advantage over the lower classes. People are easily manipulated, as Trump and his Republican bedfellows have proven.
For more about the roots of this anger, curl up with J.D. Vance’s Hillbilly Elegy, a 264-page long scream of pain about how the poor Scots Irish immigrants of America have been horribly mistreated by black people, brown people, Mexicans, Central Americans, Sikhs, Hindus, immigrants, asylum seekers, DACA kids, and anyone else who can’t trace their lineage back to the Mayflower.
The Social Implications Of Inequality
There was a time when going to the ball park was an exercise in democracy. Bank presidents and letter carriers sat side by side in the stands. They rode to and from the park on the same subway trains. Not any more. Stadiums these days are festooned with luxury boxes, sky boxes, and other dedicated areas where the swells can hobnob over champagne and caviar while less fortunate folks get to swelter in the bleachers.
The lines of demarcation between the haves and the have-nots are so much a part of our culture today that nobody notices the walls that separate us, one from the other. As Robert Frost once wrote, “Before I built a wall I’d ask to know what I was walling in or walling out, and to whom I was like to give offence.” Few people know Frost’s Mending Wall any more. Fewer still recognize the subtle pun at the end of that quote.
What we, as a society, fail to appreciate is the damage inflicted on the national psyche when the upward mobility conveyor belt shuts down. Rome wasn’t built in a day but it was destroyed in a very brief period of time. History can tell us about how civilizations expand and contract but will anyone listen to the wisdom of the ages? Not when American Exceptionalism makes us believe we are immune to life’s cruelest lessons.
Let me leave you with this thought from Hubert Humphrey: “Compassion is not weakness and concern for the unfortunate is not socialism.” There is wisdom in those words.