Collective Risk Shift: Commodifying Social Inequalities with Risky Healthcare, Risky Retirement, and Risky Credentialing

The Mass Transformation of Other People’s Risk Into Profit” reminded me of Tressie McMillan Cottom’s writing on “risk shift” in “Lower Ed”, “Where Platform Capitalism and Racial Capitalism Meet”, and “The University and the Company Man”.

Lower Ed refers to credential expansion created by structural changes in how we work, unequal group access to favorable higher education schemes, and the risk shift of job training, from states and companies to individuals and families, exclusively for profit.

Yale political scientist Jacob S. Hacker says the new economy marks both an economic change and an ideological change, each characterized by the “great risk shift” of corporate responsibility to workers and families.

Source: Lower Ed: The Troubling Rise of For-Profit Colleges in the New Economy | The New Press

The so-called 1099 workforce represents a collective risk shift from firms to individuals (Cottom 2017; Hacker 2008) that extends beyond employees to obfuscating the idea of employee altogether. Digital technologies abet that risk shift through the sociopolitical regime of platform capture. That platform capture effectively transforms workers into independent contractors.

Source: Where Platform Capitalism and Racial Capitalism Meet: The Sociology of Race and Racism in the Digital Society

In his 2006 book, The Great Risk Shift, Jacob Hacker explores “the new economic insecurity and the decline of the American dream” by measuring the shift of risk from corporations to individuals. He focuses on three trends: the erosion of company-paid pensions, the declining value of corporate-subsidized health benefits, and the use of layoffs to manage company bottom lines. To take the example of pensions: the National Institute on Retirement Security reports that in 1975, 88 percent of private sector employees had a pension plan wherein the company guaranteed benefits, but by 2005 that number was 33 percent. Rather than eating the cost of the company man’s inevitable aging, the private sector shifted the costs of old age onto individual workers, replacing pensions with individual worker-funded investment accounts like 401(k)s and the security of the organization with the volatility of the stock market.

In The Two Income Trap: Why Middle Class Parents are Going Broke, Elizabeth Warren and Amelia Warren Tyagi describe how this shift of risk to workers has changed our family lives, with rising child care and education costs driving middle-class families into economic crisis. The continuing downward pressure on wages has made things look even worse today than in 2004, when the book was first published: Warren and Tyagi didn’t consider the extra costs borne by families paying not only for their children’s tuition but their own further education, in order to stop the decline in their wages.

For the rest of us, the prescription for insecurity is more college, but colleges do not know what work to prepare us for. In the 1950s the labor market presented us with a social contract, and higher education responded. But the economic forces that brought us the great risk shift killed the company man. For those of us looking for economic security who are not fortunate or able enough to be fast-tracked into the good jobs, there isn’t much college can do.

Source: The University and the Company Man

We can’t endure the great risk shift, as noted by Sarah Kendzior in “The View from Flyover Country”.

Failure, in an economy of extreme inequalities, is a source of fear. To fail in an expensive city is not to fall but to plummet. In expensive cities, the career ladder comes with a drop-off to hell, where the fiscal punishment for risk gone wrong is more than the average person can endure. As a result, innovation is stifled, conformity encouraged. The creative class becomes the leisure class – or they work to serve their needs, or they abandon their fields entirely.

People go to college because not going to college carries a penalty. College is a purchased loyalty oath to an imagined employer. College shows you are serious enough about your life to risk ruining it early on. College is a promise the economy does not keep – but not going to college promises you will struggle to survive. In an entrenched meritocracy, those who cannot purchase credentials are not only ineligible for most middle-class jobs, but are informed that their plight is the result of poor “choices”. This ignores that the “choice” of college usually requires walking the road of financial ruin to get the reward – a reward of employment that, in this economy, is illusory. Credentialism is economic discrimination disguised as opportunity.

Source: The View from Flyover Country | Sarah Kendzior | Macmillan

“Risky credentialing” is explored by both “The View from Flyover Country” and “Lower Ed”.

Hacker identifies two major areas where American workers feel these effects: healthcare and retirement. He calls the shift from corporate responsibility for workers through pensions and health insurance to personal responsibility “risky healthcare” and “risky retirement.” To that I would add, “risky credentialing,” or Lower Ed. Declining investment in social insurance programs that, by design, diffused the individual risk of old age or health episodes exacerbates the risks associated with sickness and old age. In the same way, declining investment in public higher education exacerbates the risks associated with labor market shocks. As social insurance policies like healthcare and pensions declined, so too did public investment in higher education. Traditional colleges shifted more of the cost of a credential (or risk) to students and families with more loans and fewer grants offered, even as steep price discounting fought to hold individual costs down.

The risk for changing jobs and moving up the professional ladder has shifted to individual workers across race, class, and gender. That risk makes credentials valuable only insofar as those credentials are easy to start, easy to fit into complex lives, and easy to pay for. For-profit colleges nail that trifecta for millions of people who are similarly vulnerable in this new economy of risk shift, declining job tenure, and insecurity.

Source: Lower Ed: The Troubling Rise of For-Profit Colleges in the New Economy | The New Press

Today, creative industries are structured to minimize the diversity of their participants – economically, racially and ideologically. Credentialism, not creativity, is the passport to entry.

One would suspect that a college student who can pay $22,000 to work 25 hours a week for free in one of the most expensive cities in the world needs little help making connections. But that misconstrues the goal of unpaid internships: transforming personal wealth into professional credentials. For students seeking jobs at certain policy organizations, the way to get one’s foot in the door is to walk the streets paved in gold. In the post-employment economy, jobs are privileges, and the privileged have jobs.

What they are defending is a system in which wealth is passed off as merit, in which credentials are not earned but bought. Aptitude is a quality measured by how much money you can spend on its continual reassessment.

Namely, they have raised the price of the credentials needed to participate in the new meritocracy by such dramatic measures that it locks out a large part of the population while sending nearly everyone else into debt.

Source: The View from Flyover Country | Sarah Kendzior | Macmillan

A broad theme I take away is the commodification of inequality by shifting risk.

Lower Ed is, first and foremost, a set of institutions organized to commodify social inequalities…

Source: Lower Ed: The Troubling Rise of For-Profit Colleges in the New Economy | The New Press

More selections on risk shift from Lower Ed:

we have a labor market where the social contract between workers and the work on which college has previously relied has fundamentally changed and makes more workers vulnerable.

The new economy makes one overriding demand of education: constantly and consistently retrain millions of workers, quickly and at little to no expense for the employer. The new economy is marked by four characteristic changes to the relationships that underpin our social contract: people are frequently changing jobs and employers over their working lifetimes (job mobility); firms place greater reliance on contract, term, and temporary labor (labor flexibility); there is less reliance on employers for income growth and career progression (declining internal labor markets); and workers are shouldering more responsibility for their job training, healthcare, and retirement (risk shift).

Risk shift for those with good jobs means greater competition for less stability but still high status. Risk shift for those with bad jobs means more of the same poor labor market outcomes and fewer ways to work one’s way into a good job.

This risk shift has created an ascendant new work contract that provides fewer buffers to help workers navigate life shocks.

But as one river, these streams flow through a single valley—a time trap where the risk shift of educational costs outstrip social insurance programs like affordable childcare, the viability of investment vehicles like education savings accounts, and employer security like promotions and wage increases. For millions of people, the time trap makes a for-profit college your only practical choice for labor market entry, stability, or mobility.

Now Senator Elizabeth Warren and Amelia Warren Tyagi called this the “middle-class squeeze” in their book The Two-Income Trap. Hacker calls this the “risk shift.” Sociologist Arne Kalleberg, in his book on good jobs and bad jobs, talks about the “hollowed out middle” class jobs.8 Of course, poor people and the working poor have long felt this squeeze, absorbed this risk, and stared down the gulf between themselves and their dreams. Essentially, even those with good jobs don’t feel like those jobs buy the same quality of life as they once did. They are right.

Source: Lower Ed: The Troubling Rise of For-Profit Colleges in the New Economy | The New Press

Lower Ed, Paying the Price, and Weapons of Math Destruction

Lower Ed shows exploitation of vulnerable. Paying the Price tells how we fail them. Weapons of Math Destruction outlines tools we made to do it.

Source: Kyle Johnson on Twitter

Indeed. These three great books provide a systems view of higher education and its intersections with tech and algorithms. Below, I excerpt from their introductions and book blurbs, provide chapter lists, and select a handful of tweets from authors Tressie McMillan CottomSara Goldrick-Rab, and Cathy O’Neil. They are all active on Twitter and well worth a follow.

Lower Ed: The Troubling Rise of For-Profit Colleges in the New Economy

Years later, I would also realize how Jason could think that the Technical College was God’s will, as education gospels converge with our articles of faith in individual work ethic, self-sacrifice, and gendered norms about being the head of a household. A college education, whether it is a night class in auto mechanics or a graduate degree in physics, has become an individual good. This is in contrast to the way we once thought of higher (or post-secondary) education as a collective good, one that benefits society when people have the opportunity to develop their highest abilities through formal learning. Despite our shift to understanding higher education as a personal good, we have held on to the narrative of all education being inherently good and moral. Economists W. Norton Grubb and Marvin Lazerson call this the education gospel: our faith in education as moral, personally edifying, collectively beneficial, and a worthwhile investment no matter the cost, either individual or societal. Grubb and Lazerson aren’t the only ones to allude to education as a faith-based institution. All institutions require our collective faith in them for them to work. We call that legitimacy. But I like Grubb and Lazerson’s construction of the education gospel, in part because it speaks to the contradictions in that faith. The gospel was critical to higher education’s shift to its vocational promise. That is, the idea that higher education is a moral good is allowable only insofar as higher education serves market interests. Education is good because a good job is good. The faith breaks down when we divorce higher education from jobs. The contradiction is that we don’t like to talk about higher education in term of jobs, but rather in terms of citizenship and the public good, even when that isn’t the basis of our faith.

Based on the education gospel, we increasingly demand more personal sacrifice from those who would pursue higher education: more loans, fewer grants; more choices, fewer practical options; more possibilities, more risk of failing to attain any of them. We justify that demand by pointing to the significant return in higher wages that those with higher education credentials enjoy. And we imply that this wage premium will continue in the “knowledge economy,” where twenty-first-century jobs will require everyone to have some post-secondary education to do highly cognitive work. The gap between the education gospel and the real options available to people—those who need a priest but who instead get a televangelist—is how we end up with Lower Ed.

Lower Ed refers to credential expansion created by structural changes in how we work, unequal group access to favorable higher education schemes, and the risk shift of job training, from states and companies to individuals and families, exclusively for profit. Lower Ed is the subsector of high-risk post-secondary schools and colleges that are part of the same system as the most elite institutions. In fact, Lower Ed can exist precisely because elite Higher Ed does. The latter legitimizes the education gospel while the former absorbs all manner of vulnerable groups who believe in it: single mothers, downsized workers, veterans, people of color, and people transitioning from welfare to work. Lower Ed is, first and foremost, a set of institutions organized to commodify social inequalities (see Chapters 3 and 4) and make no social contributions beyond the assumed indirect effect of greater individual human capital. But Lower Ed is not just a collection of schools or set of institutional practices like profit taking and credential granting. Lower Ed encompasses all credential expansion that leverages our faith in education without challenging its market imperatives and that preserves the status quo of race, class, and gender inequalities in education and work. When we offer more credentials in lieu of a stronger social contract, it is Lower Ed. When we ask for social insurance and get workforce training, it is Lower Ed. When we ask for justice and get “opportunity,” it is Lower Ed.

Source: McMillan Cottom, Tressie. Lower Ed: The Troubling Rise of For-Profit Colleges in the New Economy (Kindle Locations 190-220). The New Press. Kindle Edition.

More than two million students are enrolled in for-profit colleges, from the small family-run operations to the behemoths brandished on billboards, subway ads, and late-night commercials. These schools have been around just as long as their bucolic not-for-profit counterparts, yet shockingly little is known about why they have expanded so rapidly in recent years-during the so-called Wall Street era of for-profit colleges.

In Lower Ed Tressie McMillan Cottom-a bold and rising public scholar, herself once a recruiter at two for-profit colleges-expertly parses the fraught dynamics of this big-money industry to show precisely how it is part and parcel of the growing inequality plaguing the country today. McMillan Cottom discloses the shrewd recruitment and marketing strategies that these schools deploy and explains how, despite the well-documented predatory practices of some and the campus closings of others, ending for-profit colleges won’t end the vulnerabilities that made them the fastest growing sector of higher education at the turn of the twenty-first century. And she doesn’t stop there.

With sharp insight and deliberate acumen, McMillan Cottom delivers a comprehensive view of postsecondary for-profit education by illuminating the experiences of the everyday people behind the shareholder earnings, congressional battles, and student debt disasters. The relatable human stories in Lower Ed-from mothers struggling to pay for beauty school to working class guys seeking “good jobs” to accomplished professionals pursuing doctoral degrees-illustrate that the growth of for-profit colleges is inextricably linked to larger questions of race, gender, work, and the promise of opportunity in America.

Drawing on more than one hundred interviews with students, employees, executives, and activists, Lower Ed tells the story of the benefits, pitfalls, and real costs of a for-profit education. It is a story about broken social contracts; about education transforming from a public interest to a private gain; and about all Americans and the challenges we face in our divided, unequal society.

Source: Lower Ed | The New Press


  • Introduction: The Education Gospel
  • The Real
  • The Beauty College and the Technical College
  • Jesus Is My Backup Plan
  • When Higher Education Makes Cents
  • Where Credit Is Due
  • Credentials, Jobs, and the New Economy


Paying the Price: College Costs, Financial Aid, and the Betrayal of the American Dream

There is a new economics of college in America. In the past, students and families who worked hard stood a real chance of attaining a college degree, a ticket to the good life. But then the world shifted. Today, the promise of a college degree in exchange for hard work and dedication no longer holds true. Instead, students encounter a price so high that it has changed what it means to attend college.

Unfortunately, many people don’t know this. Millions enroll in higher education with plans to work, borrow, and save, only to find that their funds still fall short. Even living on ramen, doubling up with roommates, and working a part-time job isn’t enough to make ends meet. Many who start college can’t afford to complete their degrees. Others take on huge debt that either they cannot repay or limits their future opportunities. And this is occurring at a time when diplomas matter more than ever.

What happened? Just as Americans decided that college was essential, states began spending less on public higher education and the price of college rose. At the same time, the financial aid system, long intended to make college affordable, failed to keep up with growing student and family need. Student loans became the stopgap. And, to make matters worse, for nearly 80 percent of the public, family income declined.

What does this mean for students facing the new economics in public colleges and universities? How are they managing to make it through higher education today, and where are they falling short? This book is the result of my six-year-long effort to find out. As you will see, the statistics and stories make one thing quite clear: college students are paying a hefty price.

Source: Goldrick-Rab, Sara. Paying the Price: College Costs, Financial Aid, and the Betrayal of the American Dream (Kindle Locations 53-65). University of Chicago Press. Kindle Edition.

If you are a young person, and you work hard enough, you can get a college degree and set yourself on the path to a good life, right?

Not necessarily, says Sara Goldrick-Rab, and with Paying the Price, she shows in damning detail exactly why. Quite simply, college is far too expensive for many people today, and the confusing mix of federal, state, institutional, and private financial aid leaves countless students without the resources they need to pay for it.

Source: Paying the Price: College Costs, Financial Aid, and the Betrayal of the American Dream, Goldrick-Rab


  • Introduction
  • Possible Lives
  • The Cost and Price of a College Education
  • Who Gets Pell?
  • Making Ends Meet
  • On Their Own
  • Family Matters
  • Making the Grade
  • City of Broken Dreams
  • Getting to Graduation
  • Making College Affordable


Weapons of Math Destruction: How big data increases inequality and threatens democracy

And then I made a big change. I quit my job and went to work as a quant for D. E. Shaw, a leading hedge fund. In leaving academia for finance, I carried mathematics from abstract theory into practice. The operations we performed on numbers translated into trillions of dollars sloshing from one account to another. At first I was excited and amazed by working in this new laboratory, the global economy. But in the autumn of 2008, after I’d been there for a bit more than a year, it came crashing down.

The crash made it all too clear that mathematics, once my refuge, was not only deeply entangled in the world’s problems but also fueling many of them. The housing crisis, the collapse of major financial institutions, the rise of unemployment— all had been aided and abetted by mathematicians wielding magic formulas. What’s more, thanks to the extraordinary powers that I loved so much, math was able to combine with technology to multiply the chaos and misfortune, adding efficiency and scale to systems that I now recognized as flawed.

If we had been clear-headed, we all would have taken a step back at this point to figure out how math had been misused and how we could prevent a similar catastrophe in the future. But instead, in the wake of the crisis, new mathematical techniques were hotter than ever, and expanding into still more domains. They churned 24/ 7 through petabytes of information, much of it scraped from social media or e-commerce websites. And increasingly they focused not on the movements of global financial markets but on human beings, on us. Mathematicians and statisticians were studying our desires, movements, and spending power. They were predicting our trustworthiness and calculating our potential as students, workers, lovers, criminals.

This was the Big Data economy, and it promised spectacular gains. A computer program could speed through thousands of résumés or loan applications in a second or two and sort them into neat lists, with the most promising candidates on top. This not only saved time but also was marketed as fair and objective.

Yet I saw trouble. The math-powered applications powering the data economy were based on choices made by fallible human beings. Some of these choices were no doubt made with the best intentions. Nevertheless, many of these models encoded human prejudice, misunderstanding, and bias into the software systems that increasingly managed our lives. Like gods, these mathematical models were opaque, their workings invisible to all but the highest priests in their domain: mathematicians and computer scientists. Their verdicts, even when wrong or harmful, were beyond dispute or appeal. And they tended to punish the poor and the oppressed in our society, while making the rich richer.

I came up with a name for these harmful kinds of models: Weapons of Math Destruction, or WMDs for short.

Equally important, statistical systems require feedback— something to tell them when they’re off track. Statisticians use errors to train their models and make them smarter. If Amazon. ​ com, through a faulty correlation, started recommending lawn care books to teenage girls, the clicks would plummet, and the algorithm would be tweaked until it got it right. Without feedback, however, a statistical engine can continue spinning out faulty and damaging analysis while never learning from its mistakes.

Many of the WMDs I’ll be discussing in this book, including the Washington school district’s value-added model, behave like that. They define their own reality and use it to justify their results. This type of model is self-perpetuating, highly destructive— and very common.

In WMDs, many poisonous assumptions are camouflaged by math and go largely untested and unquestioned.

This underscores another common feature of WMDs. They tend to punish the poor. This is, in part, because they are engineered to evaluate large numbers of people. They specialize in bulk, and they’re cheap. That’s part of their appeal. The wealthy, by contrast, often benefit from personal input. A white-shoe law firm or an exclusive prep school will lean far more on recommendations and face-to-face interviews than will a fast-food chain or a cash-strapped urban school district. The privileged, we’ll see time and again, are processed more by people, the masses by machines.

Source: O’Neil, Cathy. Weapons of Math Destruction: How Big Data Increases Inequality and Threatens Democracy (pp. 2-3, pp. 6-8). Crown/Archetype. Kindle Edition.

A former Wall Street quant sounds an alarm on the mathematical models that pervade modern life – and threaten to rip apart our social fabric

We live in the age of the algorithm. Increasingly, the decisions that affect our lives-where we go to school, whether we get a car loan, how much we pay for health insurance-are being made not by humans, but by mathematical models. In theory, this should lead to greater fairness: Everyone is judged according to the same rules, and bias is eliminated.

But as Cathy O’Neil reveals in this urgent and necessary book, the opposite is true. The models being used today are opaque, unregulated, and uncontestable, even when they’re wrong. Most troubling, they reinforce discrimination: If a poor student can’t get a loan because a lending model deems him too risky (by virtue of his zip code), he’s then cut off from the kind of education that could pull him out of poverty, and a vicious spiral ensues. Models are propping up the lucky and punishing the downtrodden, creating a “toxic cocktail for democracy.” Welcome to the dark side of Big Data.

Tracing the arc of a person’s life, O’Neil exposes the black box models that shape our future, both as individuals and as a society. These “weapons of math destruction” score teachers and students, sort résumés, grant (or deny) loans, evaluate workers, target voters, set parole, and monitor our health.

O’Neil calls on modelers to take more responsibility for their algorithms and on policy makers to regulate their use. But in the end, it’s up to us to become more savvy about the models that govern our lives. This important book empowers us to ask the tough questions, uncover the truth, and demand change.

Source: Weapons of Math Destruction


  • Introduction
  • BOMB PARTS: What Is a Model?
  • SHELL SHOCKED: My Journey of Disillusionment
  • ARMS RACE: Going to College
  • PROPAGANDA MACHINE: Online Advertising
  • CIVILIAN CASUALTIES: Justice in the Age of Big Data
  • INELIGIBLE TO SERVE: Getting a Job
  • COLLATERAL DAMAGE: Landing Credit
  • NO SAFE ZONE: Getting Insurance