Down The Up Ladder

A diagnosis for the age of income anxiety

by Richard McLachlan

Claire Underwood, the blonde, patrician House of Cards co-star is in a café. She holds out the payment for her latté and watches impassively as the electronic till defeats the middle-aged woman behind the counter. The woman’s humiliation is magnified by the arrival of a much younger employee who shows her with a few quick finger taps how it is done.

Just earlier Mrs. Underwood had ‘let go’ her highly engaged but no-longer-young office manager, condemning her to probable late-career job insecurity and reduced income in the years before retirement. The woman’s dismissal came immediately after she had, at Claire’s direction, and much against her will, terminated the employment of 50 percent of the staff in their ‘at-will employer’ organization. With a ‘flexible’ labor force, such arbitrary layoffs are commonplace.

According to Guy Standing, in his 2011 book The Precariat, people losing jobs as a result of recession often move into less secure positions with lower pay rates and a lack of union protection – their situation becomes more precarious. The 2008 Global Financial Crisis eliminated 8.4 million jobs in the US. Economists believe many of these jobs will not return.

Whether as a result of recession or of successive hare-brained restructurings in the public service, many lives once assumed to be predictable or at least sustainable are becoming precarious. In addition outsourcing of production and services, imposed casual employment arrangements, and lack of appropriate work for large numbers of graduates is creating a significant and financially very insecure class – a precariat. It is a group with diverse interests and political affiliations, but with casual, short-term employment arrangements and financial insecurity in common.

You only have to go to parts of the Bronx or East New York to realize there has been a precariat since well before 2008. A precariat has always been evident in the huge cities of the colonized third world: Djakarta, Sao Paulo, Bombay, Cairo – it’s a long list – and on top of that are the huge refugee camps that exist for years on the borders of many nations. But especially since 2008 a new precariat has been emerging in the US and Europe – economic injustice has come home to roost among the middle classes.

As distinct from the traditional proletariat, the precariat’s essential character “is being a supplicant, a beggar, pushed to rely on discretionary and conditional hand-outs from the state and by privatized agencies and charities operating on its behalf.”

This has become clear with the large numbers of employed Americans relying on some form of subsidy or state support such as Food Stamps and Medicaid just to be able to support their families. The changes in income and labor relations may not be a temporary phenomenon. It is possible that we are looking at a much longer-term reconfiguration of incomes and expectations. There are now “100 million people — one in three Americans — either in poverty or in the fretful zone just above it.”

Running for office, Obama has remained on message, consistently referring to “the middle class and those folks trying to get into it.” Most Americans regard themselves as middle class; defined by the New York Times as a household income between $36,000 and $100,000. Many, many people’s incomes are closer to the lower figure. Sixty-two percent of the 130 million jobs in the US pay less than $20. Forty-two percent of all US workers earn under $15 per hour for fulltime work ($31,200 before tax) – many of them are being paid half of that. Women, African Americans, and Latinos are overrepresented. Over 46 percent of this group is 35 or older, suggesting that a career trajectory is not among their expectations.

The US real median household income has dropped steadily since 2007 – by 8.3 percent. Government subsidies paid to the middle class have increased by 25.9 percent since 2007, but its tax payments have fallen by 24.4 percent. Around 45 percent of the middle income group in the EU-28 (countries) report difficulty making ends meet. The figure is considerably higher in some countries. is considerably higher in some countries.

Guy Standing lays the recent expansion of this new anxious and unstable class at the feet of the questionable emphasis on growth – driven by market competitiveness, and supported by a ‘flexible’ labor force and widespread privatization. This unsophisticated and profoundly divisive approach to social relations is still avidly espoused in Australia, New Zealand, Canada, the UK, the US, and much of Europe.

Real wages for most US workers have hardly changed since the early 1970s, but wages for the top one percent of earners have risen 165 percent, and wages for the top 0.1 percent have risen 362 percent. The size of these increases have been determined less by market forces and more by ‘eroding social norms’ – or what it is possible to get away with.

The neo-liberal economic worldview looks more and more like religious ideology – the evidence is not especially strong but it remains unassailable anyway, a clear alternative is not easily to hand, and it keeps elites in power.

The erosion of trust in a social compact in which most parties benefit at least somewhat from prosperity has been widespread. The financial industry consistently disregards the transparency and adherence to agreed rules on which market mechanisms are supposed to function successfully. Younger people are not investing in equities. In the past five years, surveys have consistently shown that less than 15 percent of 18-29 year olds trust Wall Street “to do the right thing all or most of the time.’

As if further grounds for mistrust were needed, $5.7 billion in fines has recently been levied on six banks admitting to rigging foreign exchange markets in what the US Attorney General describes as an act of “breathtaking flagrancy”. As the retiring head of the NYC Department of Financial services said, Barclays “engaged in a brazen ‘heads I win, tails you lose’ scheme to rip off their clients”. It looks more and more like straightforward gangsterism by men in suits who pay their banks’ multi-billion dollar fines with other people’s money as part of the cost of doing business.

The New York-based Center for Work-Life Policy found employees professing loyalty to their employers fell from 95 to 39 percent from June 2007 to December 2008. Trust in their employers also plummeted – from 79 to 22 percent over the same period.

According to one workplace expert, “employee loyalty has been killed off through shortening contracts, outsourcing, automation and multiple careers.”

The lack of trust, it seems, is mutual: an acquaintance recently laid off here in New York by a boss with whom he thought he had a good relationship, was told he was no longer wanted, then escorted to his workstation by a security guard to clear his desk and leave the premises immediately. His career ended that way.

Guy Standing likens the pervasive surveillance of our daily activities to Jeremy Bentham’s late 18th century ‘panopticon’, the central observation tower from which prisoners were observed and kept anxious – never knowing exactly when they were being watched – and docile. He gives examples of intrusive workplace surveillance using readily available forms of spyware to track the movements and habits of employees, including email content and individual keystrokes. Here in the US, the hidden nanny cam is the distasteful surveillance tool of those sufficiently well off to employ in-home childcare.

Women are disproportionately represented in precarious employment in Europe, America, Japan and South Korea. In Germany and France they comprise 80 percent of all part time employees, earning a quarter less than men. Young people (16-25) are staying at home because they cannot afford to leave. In the workplace they are subjected to probationary periods and increasingly expected to work as unpaid interns. In some parts of Europe youth unemployment is extreme – fifty three percent in Spain, almost fifty percent in Greece and just under 44 percent in Italy. As of April 2015, it is 11.6 percent in the US.

There is a significant ‘youth bulge’ in parts of the Middle East – in Egypt 30 percent of the population is under 30. Educated young people are faced with jobs, if they can get them, for which they are wildly over-qualified. Widespread discontent over unemployment and low living standards contributed to the ‘Arab Spring’ uprisings in the region.

The elderly, a population set to increase by 181 percent in the next 35 years, are moving into the precariat in increasing numbers and are, in some cases, willing participants immediately post-retirement. But as a source of cheap and undemanding labor their presence has tended to reduce leverage and depress wages for others who are beginning their working lives.

With 4.4 percent of the world’s population and 22 percent of its prisoners, the US has the world’s highest incarceration rate. This population feeds the precariat – more than one in fifty Americans has a criminal record, thus compromising their ability to find work. This has played out recently in the news coming from Ferguson Missouri where officials were deliberately criminalizing the populace to provide city income. Large numbers of otherwise law-abiding African American citizens were ending up in the precariat – and then in prison – because of their inability to pay large fines for spurious offenses.

Immigrants, both legal and undocumented, are a large part of the global precariat. There were an estimated 12 million undocumented migrants in the US in 2008 – up 40% since 2000. Twelve million European citizens live in a European country other than their own. Migrants are vulnerable to job insecurity and aggression from local populations. The Berlusconi and Sarkozy governments’ treatment of Roma migrants in Europe are a disturbing example of this. Here in New York on certain street corners it is common to see groups of Latino men waiting to be picked out as casual day labor by drive-by employers.

Finally, it is important to acknowledge the growth, into the many millions, of refugees in Asia and Africa. This illustrates the precariat at its most extreme. For reasons of space and complexity, they are largely excluded from this Euro/American discussion of the precariat. The so-called ‘developed’ world is heavily implicated in this catastrophe.

Rapidly developing machine-learning software and advanced robotics are increasingly able to perform tasks usually associated with skilled humans. Anxiety about jobs being lost to advances in technology has a long and contested history. The ‘lump of labor’ notion of a fixed amount of work available has been widely dismissed by economists. Fears about massive job loss have not always been realized. This history has allowed concerns to be dismissed without closer scrutiny of technological advances that are of quite a different character. These advances are not necessarily linear, but rather what mathematicians call ‘combinatorial’ – driven by a multitude of factors that can create unexpected discontinuities in which the science fiction can become fact far sooner than we thought possible.

US productivity and investment in machinery and, in particular, corporate profits, have increased significantly in the last decade – but numbers of jobs have not. Software-driven machines are replacing blue-collar jobs, and increasingly sophisticated computing is replacing middle-range white-collar jobs. Growth and employment are diverging in advanced countries.

The algorithms that facilitate machine learning are creating software that is challenging routine middle income jobs previously thought inviolate because they involved the mind rather than the limbs: “around 47 percent of total US employment is in the high risk category . . . jobs we expect could be automated relatively soon, perhaps over the next decade or two.” Whether whole new areas of employment emerge remains to be seen.

Robots run on software and benefit from the impact of Moore’s law in which the number of transistors in a dense integrated circuit doubles approximately every two years. Advances in robotics are thus linked with those in software. The value of machine learning in this case is not that the computer-driven equipment is vastly superior to humans. Just being ‘good enough’ at the job still looks like a better deal to employers than the cost of labor, health and retirement plans, irrational behavior, unions, sick days, pregnancies, office politics and other humanoid inconveniences.

One of America’s fastest-growing startups is Affectiva, set up to pursue emerging commercial opportunities for facial recognition software. Years of careful recording (early work began in the sixties) and then digitizing of facial expressions has brought us to affective computing. Among the results is Mindreader facial recognition software. Mind Reader’s originator, Rana el Kaliouby, foresees a near future where communication with our computers will be via facial expressions. Emotional processing software “can now outperform most people in distinguishing social smiles from those triggered by spontaneous joy, and in differentiating between faked pain and genuine pain.”

Initially aimed at helping autistic children learn how to interact with others, Affectiva’s work has veered almost entirely toward market research and other uses where ‘reading’ peoples’ unconscious reactions have commercial significance. Initially a team at MIT’s Media Lab, Affectiva is the product of a ‘spin-off’ to the business world to cope with massive commercial interest in these developments.

For example, at the Mexico/US border they are testing a machine that can detect the veracity of responses to questions customarily asked by a border guard. So far the embodied avatar kiosk performs significantly better than humans. The avatar is (currently) a two-dimensional young man with an Elvis hairdo who ‘interviews’ those wanting to cross the border. Suspicious candidates are referred to a human border guard for closer examination.

Google claims to be within a decade of machines with ‘common sense’ or reasoning. By using algorithms that can encode thoughts as sequences of numbers they are developing machines people can ‘relate with’. Google’s Geoff Hinton is clear that mastering literal communication is the initial goal. Teaching machines irony will have to come later he says, “but then Americans don’t get irony either. Computers are going to reach the level of Americans before Brits.”

A critical turning point in AI has been the field of deep learning, based on neurological research, in which machines learn by drawing from enormous datasets – available to Google thanks to our enthusiastic and ongoing use of its search engine and email programs – rather than via a set of inflexible rules. We have happily provided the vast universe of raw material that feeds the machine-learning project. With that foundation, can they do other than mimic us? Spike Jonze’s movie Her looks increasingly plausible.

One of the anticipated growth areas for robotics is care of the burgeoning elderly population. Japan is the leading edge. Robots with real looking skin and humanoid faces are considered easier for older people to relate to – we are still waiting on the encoded reasoning. ‘Pepper’, a humanoid robot about to go on sale for $1900, is intended as a “medical worker, party companion, or even a babysitter” that will eventually be able to read and express emotions. The prospect of machines, consciously or otherwise, manifesting the inchoate resentment of millennials for a huge cohort of dependent boomers is a comedy – or a cheesy horror movie – waiting in the wings.

These cascading developments point to our future. Judging by our infatuation with and growing dependence on ‘smart’ machines, we have already lost any desire, and probably foregone our power, to reject them. They’re part of our social and emotional architecture. The problem is not sophisticated machines – it’s about whose interests are served by the people who finance their development. Or as Guardian correspondent Hannah Devlin puts it, “Given that we’re bound to lose this race against the machine, isn’t it time we began thinking of how we might harness it to improve the quality of our lives, rather than merely enrich the corporations that own it?”

Here in New York the precariat is everywhere. Its existence feels more like dynamic evidence of transition than a sullen defeat. Imagine the situation in Germany before Martin Luther challenged the hegemony of Rome. It’s our articles of faith that need a Reformation. We’ve being paying reluctant fealty to an idea and a repressive economic system whose legitimacy is waning fast. It no longer serves a growing mass of people whose circumstances are changing. Fear of system failure, or “banks draining credit from the economy” inhibits the application of criminal justice to its agents. We are only constrained from imagining the future by timorous and ossified notions of what is possible.

Footnotes :

1. Guy Standing, The Precariat: The Dangerous New Class (London, Bloomsbury Academic, 2011)

2. Nicholas Carr, The Glass Cage: Automation and Us (New York: W. H. Norton, 2014) p30