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NEXT: A Precarious Economy?

David Staley David Staley NEXT: A Precarious Economy?
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I was having lunch with a colleague the other day, when he told me about a plumbing problem that required an emergency visit by a plumber. The plumber immediately diagnosed the problem before it got worse, told my colleague the solution, and said it would cost $300.

What was interesting, he said, was the way the plumber delivered this news. The plumber said it in an apologetic, I’m-sorry-to-have-to-do this-to-you kind of way. Frankly, my colleague was expecting to pay a lot more, and was grateful the problem could be so easily solved for only $300. He was somewhat puzzled why the plumber presented the news to him in such a grave manner.

“That’s because,” I offered, “the plumber assumed this would be a shock and a hardship for you.” Which it wasn’t for my friend, who is a professional—a lawyer—and for whom an emergency $300 plumbing bill is not a cause for worry.

My lawyer friend could very well become the exception in this country. The Federal Reserve began a survey in 2013 that has been asking respondents what they would do if they had to pay for a $400 emergency. 47 percent of respondents said that they would either have to borrow the money or they would not be able to pay it at all.

Because that percentage is so high, it is clear we are talking about more than simply the poor or those in the lower 20th percentile: many middle class families are included in this 47 percent. Thus, while they might seem to be economically stable—they have jobs, pay mortgages, send their kids to college—the inability to come up with $400 in an emergency suggests that these families are living on an economic knife’s edge.

When we, today, talk about income inequality and the social and economic problems this is causing, we may be overlooking this dimension: that almost half of the country seems to be living in a state of economic precariousness.

This is a $400 emergency. What about an emergency of greater magnitude, like a significant medical expense? This is why the debates about health insurance are so significant. If nearly half of the country is so economically precarious, then what might happen if there was another economic calamity, not even one as catastrophic as the Great Recession? That is, what if the nation collectively suffered something like a $400 emergency? What might the effects be?

Economist Guy Standing has identified a new class system. At the top are the elite, or the plutocracy. Think of the Koch brothers and other super-wealthy individuals, who make up a very small part of the world’s population. Then there is a class Standing calls the “salariat:” professional people who are paid a regular salary and who work under long-term contracts with their employers or under the expectation that they are permanent employees. A class of “proficians” appear very much like those engaged in the “gig economy.” Proficians work for themselves, quickly moving between short-term projects and gigs, usually by choice. The “proletariat” are what we associate with traditional blue-collar labor.

At the bottom of this newly emerging class system, according to Standing, are the class he terms the “precariat:”

“The precariat consists of people living through insecure jobs interspersed with periods of unemployment or labour-force withdrawal and living insecurely, with uncertain access to housing and public resources. They experience a constant sense of transiency.”

I note that Standing draws a distinction between the proficians and the precariat—even though they might appear the same–between those willing participants in the gig economy versus those who have no choice but to submit to the powerlessness and insecurity of the precariat. I’ve not seen any specific numbers attached to this, and so I do not know what percentage of the world lives in the precariat class, but given the uncertain nature of many household finances, I wonder if we will see the ranks of those living under conditions of precariousness grow over the next 10 years.

The Dow has reached 22,000, unemployment is dropping toward 4 percent, and many other economic signs look very positive. However, underneath these optimistic figures lies a potential economic tsunami that we should all be watching very closely.

David Staley is interim director of the Humanities Institute and a professor at The Ohio State University. He is president of Columbus Futurists and host of CreativeMornings Columbus.

The next Columbus Futurists monthly forum will be Thursday August 17 at 6:30 p.m. at the Panera Bread community room (875 Bethel Rd.). The topic for the evening will be “The Future of Commerce.”

The next CreativeMornings Columbus will be Friday August 18 at 8:30 a.m. at Land-Grant Brewing Company. Timothy “Wolf” Star will speak on the theme “Genius.”

For more information, visit their website or Facebook page, or follow 
@davidstaley8.

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