Precariat- Learn this word

No, precariat is not a misspelling of a group of single celled organisms.  It’s a very disturbing word, an ominous word, a word that has already arrived here in the United States and is slowly moving up the food chain:

Precariat- a social group consisting of people whose lives are difficult because they have little or no job security and few employment rights

It’s a portmanteau of “precarious” and “proletariat”.  A precariat is a person who doesn’t have a reliable job.  Precariats initially were service workers who may have been working a 40 hour work week, but maybe not.  A precariat could be called in to work a 6 hour shift, every other day and one long 12 hour day at some other point in the week or come to work expecting a full 8 hours but sent home after 2.  The amount of work can vary from day to day, week to week.  This worker typically has no benefits.

I think most of us can see right away the limitations of the precariat world.  If you can’t say for sure how many hours you’ll be working each month, can you afford to rent a nice apartment or buy a house?  Can you buy a new car?  If you have children, how do you schedule and pay for their child care?  Can you depend on your paycheck to feed them?  Work and living become precarious.  Here is a video about the precariat from The Precariat: the New Working Class:

Precariats usually spring up in countries where workers are not protected by unions or strict labor laws.  Right now, the UK is starting to come to terms with the precariat but in a way, the Welsh precariat has it good compared to the American version.  Here in the US, there is no national health care system or reasonably priced, government subsidized schools of higher education.  So, the land of opportunity in America is starting to look like the last place you want to live if you are forced into precariatism.

Another feature of precariatism is the appearance of the middle man hiring agency.  That agency stands between the employer and you.  The employer hands off responsibility of hiring and paying the worker.  The worker becomes a true human resource to be hired when needed and laid off when not.  Benefits and risks are born by the employee.  The hiring agency takes a cut of the worker’s pay, I hesitate to call it a salary because that would imply some kind of security and regularity.

A couple of years ago, we who were salaried employees would have looked down on the precariat with pity.  Now, we are one.  From my vantage point, this is the way the pharmaceutical industry has decided to handle its well educated, experienced workforce.  We are now service workers.  More and more of us can only find contract work.  The work is parceled out in 3, 6 or 12 month contracts.  There are no benefits.  In some cases, the worker pays both sides of the social security tax.  It is hard to plan where to live because you don’t know if you’ll be able to pay the rent.  You can’t make any major purchases on credit because there is no guarantee that you’ll be able to afford the car payment.

One of the reasons I suspected that the McKinsey reports of employers dropping health insurance coverage for their employees after the passage of the Affordable Care Act was true was because it fits so well with the precariat worker norm.  Since a universal mandate meant that workers would be legally compelled to spend whatever the insurance companies could charge for health insurance, the employer could cut this benefit out of their compensation packages guilt free. To escape the employer mandate, all the employer would have to do is make many of its permanent employees into contractors.  The number of layoffs would be expected to increase. Responsibility and risk would now be transferred to the employee.   You don’t have to be a highly paid consulting company or economist to see how this would work.  All you have to do is think a couple of steps ahead. Mandatory universal coverage without a public option or a single payer system that requires employers to pay in puts much of the American workforce at risk of falling from the middle class into the precariat.

The new middle man hiring agency becomes the new growth sector.  Expect to hear more horror stories of foreign students brought to the US by a hiring vendor promising that they will learn English only to spend their summer in a chocolate factory in Pennsylvania doing manual labor for subsistence wages.  Expect Hershey the company to deny all responsibility.  Or Amazon.  Or {{your company name here}}

It’s hard to say whether Barack Obama was onboard with this or whether he was so overwhelmed by his job that it never was evaluated properly.  But I think we can say pretty unequivocally that the acceleration of the expansion of precariatism within the American culture is related to the measures that were  or weren’t taken in the wake of the financial collapse.  So much attention was focused on shoring up the banks at taxpayer expense that homeowners were allowed to foreclose, jobs were allowed to disappear and healthcare reform was rushed through to score political points without much thought of how  those reforms would affect the workforce.  In fact, hardly any thought at all has been spent on the workforce.  Well, Elizabeth Warren was thinking about it for years but as Adam Davidson pointing out in that blistering Planet Money interview from 2009, Warren’s opinions didn’t really count because she wasn’t a “serious” person.  Did Davidson see the rise of the precariat?  Does he know that free lancing is going to appear at an NPR station near him someday?

If the US economy is in a slump right now, it may very well be because there are so many more precariats where once there were college educated salaried people.  In my own sphere, precariatism is the norm these days, not the exception.  It wasn’t like this before 2008.  But now, if you’re a precariat, you can not plan for the future.  There IS no future.  Everyday is a struggle and stress about where the next mortgage payment will come from, what will happen if the car breaks down, how to pay for the plumbing that keeps getting backed up or the last of the orthodontic appointments.  It’s the reason why so many grocery stores are shuttering their stores and why Lowes is laying off workers in the northeast and why people are hoarding their money instead of spending it.  And it will get worse until more working people realize what is happening to them.  The people who are kissing the whip today are going to be tomorrow’s precariats.

We have been subjected to years of politicians relaxing the rules for the 1% and tightening the rules for everyone else.  The rise of the number of precariats can be attributed to the politicians who let this happen.  We need to replace as many of them as possible.  Because it wasn’t too long ago that Americans were pretty cool with capitalism.  When we were all making money and productivity gains went to the middle class, we had a vibrant, robust economy.  But when the rules went out the window and labor came under attack from the superwealthy and the whip kissers who brainlessly listen to Rush Limbaugh, Glenn Beck and Fox News, an opportunity arose to force many of us to live on the edge of a knife.  Now, those of us who didn’t necessarily want to be rich but wanted to work for its own sake are considered losers.  And the infection of the precariat is bound to spread.  There is no profession that is safe.  Once the public unions are broken, precarianism will be the norm, not the exception.  Your degrees cannot protect you.  Even senior citizens are not sheltered from the effects of precariatism because as the salaries disappear to be replaced with lower, precarious wages, the tax base will continue to shrink.  It won’t be that we don’t want to pay for social security. It will be that we just can’t anymore.

The 99% don’t want to live a precarious life.  We know who was responsible for the ruination of the American middle class.  We focus on the robber barons of Wall Street now but come November 2012, with a handful of notable exceptions in Congress, they ALL have to go, Obama included.

What the OccupyWallStreet protestors object to is the increasing economic injustice forced on the precariat and what they demand is that it stop.

Saturday Morning Dithers

New and improved! We have turned on a new feature that allows for threaded comments 5 levels deep.  So, if you’ve been waiting to tell someone off, personally, here’s your chance!

If you’re looking for a topic, try the newest podcast from Planet Money on mortgage renegotiations.  Bottom line:  the Obama proposal is designed to help homeowners with their interest.  It won’t address principal on a house that was overvalued when it was bought in the first place.   (Another Obama proposal that misses the point until it’s too late) The mortgage industry has fought hard against principal renegotiation clauses in the past for good reason.  But in this current economic climate, that may cause strapped homeowners to walk away from their homes with underwater equity.  It’s a short podcast and there’s some “twitter” stuff too.  Is anyone interested in twittering The Confluence?  Let us know in the threads!

In other news:

“First you say you will, and then you won’t.  And then you say you do, and then you don’t.  You’re undecided now, so what are you going to do?”

The AP reports this morning that Obama did not say he was going to nationalize the banks.

WASHINGTON (AP) — The White House on Friday insisted it’s not trying to take over two ailing financial institutions, even as stocks tumbled again. On Wall Street, talk of nationalization of Citigroup Inc., and Bank of America Corp., prompted investors to continue to balk, worried that the government would have to take control and wipe out shareholders in the process.Citigroup fell 20 percent, while Bank of America fell 12 percent in afternoon trading but also came off their lowest levels.

“This administration continues to strongly believe that a privately held banking system is the correct way to go, ensuring that they are regulated sufficiently by this government,” White House press secretary Robert Gibbs said when asked about nationalizing the banks.

“That’s been our belief for quite some time, and we continue to have that,” Gibbs said

…

When a reporter suggested Gibbs could do that by saying point bank that Obama would never nationalize banks, Gibbs would not make that statement, but emphasized: “I think I was very clear about the system that this country has and will continue to have.”

Uh-huh.

This reminds me of the comments that Bush and Cheney made about Americans and their propensity to buy large, oil guzzling vehicles and how this was a uniquely American cultural thing and that no long-haired, hippy type, pinko fag, treehugger (and by this, I think they meant *us*, Oh Best Beloveds), was going to change us.  And how did that work out?

Paul Krugman writes about the fear of nationalization in his blog, The Conscience of a Liberal:

We are not talking about fears that leftist radicals will expropriate perfectly good private companies. At least since last fall the major banks — certainly Citi and B of A — have only been able to stay in business because their counterparties believe that there’s an implicit federal guarantee on their obligations. The banks are already, in a fundamental sense, wards of the state.

And the market caps of these banks did not reflect investors’ assessment of the difference in value between their assets and their liabilities. Instead, it largely — and probably totally — reflected the “Geithner put”, the hope that the feds would bail them out in a way that handed a significant windfall gain to stockholders.

What’s happening now is a growing sense that the federal government, in return for rescuing these institutions, will demand the same thing a private-sector white knight would have demanded — namely, ownership.

Yes, it seems like the thing that bankers fear most from nationalization is that they aren’t going to be saved by the white knight.  They are going to have to eat $@%! and die and the American people will own them, at least for awhile until they can be restructured and sold again to private investors.  THAT’S what’s sending the stock market down.  Some very rich people are going to see the end of the gravy train.  It is most certainly not what they paid Obama to do.  And Obama dithers because he knows he can’t count on $600 million for his next election if he screws his backers, er, bankers.

Verily I say unto you, President Obama, you cannot serve two masters.  You took an oath to “preserve, protect and defend” the Constitution of the US “to the best of [your] ability”.  The fact that you have no experience, insight or coalitions earned over time to help you does not excuse you from fulfilling your oath.  You may be a weak president, by design (thank you David Broder and Karl Rove), but this is something you will have to overcome or you will be a one term African-American president who will have a worse legacy than George W. Bush.  Your new freshness ties your hands.  Too bad for you.  Do the right thing. Promote the general welfare already.

But what’s this?  Obama is holding a fiscal summit to reduce the deficit? I thought that putting the brakes on deficit spending is exactly what one does not do during a deflationary cycle.  (Hey, I’m not an economist so correct me if I’m wrong here)  Is this the same fiscal responsibility summit that is designed to cut social security benefits?  Because Social Security is practically the only government program that is working fine all by itself with little excess overhead and a record of outstanding value to the taxpayer?  Ohhhh, right.  It’s sitting on a big wad of cash, that surplus I’ve been paying into my entire working life (thank you Ronald Reagan for raising my payroll taxes).  Yes, let’s give that money to the bankers to play with.  We’re not going to just throw the baby out.  We’re going to harvest its organs first.  Nice going.

It sounds like Obama is Ok with The Shock Doctrine theory of cultural change.  Or he’s desperate for the money.  Or both.  Aren’t we all lucky to be living through such interesting times?  And we couldn’t have Hillary why, exactly?

Hillary Clinton in Indonesia (note all of the happy faces)

(Note:  Funny thing about that picture above.  It used to be attached to the NYTimes article on her stop in Indonesia but it was replaced by another one which shows her pretty much in isolation without the adoring crowds.  That was no accident.  The original picture above is stunning.  She *looks* like The Foreign President.  Well, we can’t have that.)

Tuesday: What’s the hurry?

The problem has been building for a long time.  Mortgage foreclosures have been on the rise for a couple of years now.  But precious little has been done about it except for the sanctimonious to shake their fingers at “those people” who got in over their heads.  Sure, there have been many people who built mansions they didn’t need and couldn’t afford or got in on flips that flopped.  But there were many other average Joe Bagodonuts for whom owning a home is a part of their lives they anticipate eagerly, like a sign of being an adult.  And there’s the mortgage interest deduction that you don’t get as a renter.  And home values only go up over time, right?

Well, sure they do.  That is, if wages also go up over time.  But what if they don’t?  Eventually, the supply exceeds the demands of people who just get priced out.  Then there are the risks of an overvalued house, a mortgage that balloons, an income that does not and suddenly, everything is at risk. One unexpected illness or layoff can land people in foreclosure.

But lawmakers didn’t worry overmuch about those “irresponsible” people who financed the American Dream with mortgages that were intended to turn a profit for someone else.  When the bank wants its money, average Joes have very few ways to plead for a little time or relief.  Bankruptcy is costly and punitive these days.  So when the foreclosure is iminent, many people leave everything behind and just walk away.  It’s just the way things were.  You win, you lose.  Those people were looooosers.  Too bad for them.  I got mine.

But now that the banks themselves have fallen on hard times, the milk of human kindness is oozing from the administration.  Not one second can be spared to relieve them of their bad decision making.  Their anxiety must be relieved, quickly.  “Hurry, HURRY!  Something dreadful may happen.  Like Weapons of Mass Depression.”

Hey, wait a minute.  If we’re headed for a Depression, then don’t we need to follow more tried and true formulas to get ourselves out?  Relief has to come from the bottom up, not just the top down.  Didn’t we debunk the “trickle down” theory during the Reagan/Bush era?  Voodoo economics, remember?

So, what’s really the hurry, guys?  With the election a little more than 40 days away, what are we really being set up with?  Anglachel has some theories and scenarios in Partisans and Pigs.  It sounds like a trap.  It’s a schadenfreudelicious trap in some respects, alarming in others.  I keep thinking it couldn’t happen to a nicer Product.  The NYTimes has an article on the Republicans cranking up their righteous indignation, right on schedule.

Meanwhile, Madame President of our Hearts, girds her loins and takes her case to the American people for a comprehensive, multi-faceted solution full of wonky goodness. With leadership and compassion, she’s remembering who really needs to be spared a dime. Besides, if you don’t have the time to do it right, when will you have time to do it over?