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

The Mass Transformation of Other People’s Risk Into Profit

When these individuals look at risk, it’s not their job or in their self-interest to consider national risk. Whether it is national security, espionage, supply chain fragility or dependencies, or something else, the cost of this type of risk is completely invisible to them. The only risk that appears on their balance sheets is the risk to their own profits.

Source: The China Hack and How to Reverse It – The American Prospect

Though I hate the phrase, the real scandal isn’t what’s illegal, it’s what is legal. Bravo degraded the quality of software, which usually just means that people have to deal with stuff that doesn’t work very well, but in this case enabled a weird increase in geopolitical tensions and an espionage victory for a foreign adversary. It’s yet another example of what national security specialist Lucas Kunce notes is the mass transformation of other people’s risk into profit, all to the detriment of American society.

Source: How to Get Rich Sabotaging Nuclear Weapons Facilities – BIG by Matt Stoller

“The mass transformation of other people’s risk into profit, all to the detriment of American society” feels like an apt tagline for Republican capitalism with its regulatory capture, gleeful shitting of off-the-sheets externalities, and socialization of risk. See also the Texas mess.