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Contemporary Sociology: A

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 DOI: 10.1177/0094306114539639b

2014 43: 490Contemporary Sociology: A Journal of ReviewsKevin T. Leicht

Are Average People Doomed? Recessions, Inequality, and Jobs  

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history to illustrate how gambling addictionemerges and is facilitated by cultural, resi-dential, historical, legal, political and famil-ial contexts that all interact and change incomplex ways. In that respect, it representsan engaging exercise in the sociologicalimagination. The second is that the authorinvites the reader to better appreciatethe immediate and long-term effects of

gambling addiction as they ripple throughthe family, the neighborhood, the workplace,and the wider community. By using her per-sonal experience to illustrate those, Dunlapreminds us that addictions victimize manymore individuals than just the addicted per-son. In this respect, those individuals mightalso find this book particularly insightfulabout the family nexus of addiction.

Are Average People Doomed? Recessions, Inequality, and Jobs

KEVIN T. LEICHT

University of Iowakevin-leicht@uiowa.edu

The 2008–2009 Recession has been labelled‘‘Great’’ for justifiable reasons. The economicdownturn was the most devastating in theUnited States since the Great Depression ofthe 1930s. The volume of capital wealthdestroyed, the number of jobs lost, the num-ber of bankruptcies and foreclosures, and thegeneral heartache and suffering were easilythe worst in a generation and pale in compar-ison to even the deep, manufacturing-basedrecession of the early 1980s.

Comparisons with the Depression of the1930s are natural and expected. The 1930sDepression brought with it an unprecedent-ed wave of government intervention in theform of New Deal programs, all designedto put average people back to work. U.S.involvement in World War II brought stillmore economic intervention to spark thewar effort. The U.S. economy boomed.When the war was over the United Stateswas literally the ‘‘last man standing’’ ina slugfest that finally rid our world of thelast vestiges of pre-enlightenment culturaland national values (or so we thought!). Fur-ther, we had millions of deserving soldiersand sacrificing families who had experi-enced quite enough excitement (thank youvery much!) and were looking to settledown and start families. We invested exten-sively in this large group of people becausewe thought they deserved our gratitudeand we were worried about the effects ofa post-war recession on the future economichealth of the country. And we needed thesepeople—men and women who could fix

things, build things, think up new things,invest in things, and otherwise make Amer-ica great. The top marginal income tax rate inthe mid-1950s (under a Republican Presi-dent who was a World War II hero) was 91percent. At almost no time did anyone pub-licly or privately suggest that Mr. and Ms.Average were undeserving, lazy, immoral,or less than human—they certainly werenot defined as ‘‘takers’’(!). We defeated theGermans and Japanese together, and wewere going to move forward as a nationtogether.

That world is not the world describedmost competently and extensively by DavidGrusky, Bruce Western, Christopher Wimer,and Arne Kalleberg. The contrast is stark.There are numerous well-reasoned mes-sages backed by copious amounts of well-presented data in both of these books. Butthe overwhelming impression one comes

The Great Recession, edited by David B.Grusky, Bruce Western, andChristopher Wimer. New York, NY:Russell Sage Foundation, 2011. 329pp.$37.50 paper. ISBN: 97808711544216.

Good Jobs, Bad Jobs: The Rise of Polarizedand Precarious Employment Systems in theUnited States, 1970s to 2000s, by Arne L.Kalleberg. New York, NY: Russell SageFoundation, 2011. 292pp. $37.50 cloth.ISBN: 9780871544315.

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away with is that we are not all in this together.The very types of people we once went outof our way to help we now go out of ourway to fleece for the benefit of the few. It isa depressing picture to be sure. More impor-tantly both books led me to think about thefate of Mr. and Ms. Average in an economicsystem that does not recognize theirhumanity.

Grusky, Western, and Wimer, in The GreatRecession, focus on the immediate economicand social aftermath of the great recession.Unlike many edited volumes, the chaptersin this book are consistently of the highestquality, very accessible, very readable, anduniformly formatted. The authors wereclearly given a mandate and a set of strongguidelines from the editors and the endresult is better for it. The book was producedright as the recession was declared officially‘‘over’’ (c. 2010) and the predictions in thebook are, from the standpoint of mid-2013,eerily accurate.

While much of the terrain covered by theauthors is familiar by now, there are somegems in here that are worth mentioning.Neil Fligstein and Adam Goldstein locatethe source of the meltdown by going all theway back to the 1960s desire to expandhome ownership and financially underwriteit using the Federal Government as a guaran-tor of mortgage liquidity. The new informa-tion that Fligstein and Goldstein provide isthat the conventional mortgage marketstarted to saturate in the mid-1990s andbanks and other lenders started to look fornew sources of profits. Those new profitscame from subprime lending, which Ilearned constituted up to 70 percent of allnew mortgages between 2003 and 2007(yikes!). The search for profits put the entirefinancial system at risk because every playerbelieved that housing prices would continu-ally rise. Once the housing bubble burst, Mr.and Ms. Average were left with little housingwealth, devastated retirement accounts, andunderwater mortgages.

The other contributions to this volumepaint a familiar story but do so in waysthat reveal some hidden gems of knowledgewhose cumulative effect is startling. ByMarch 2010, unemployed college graduateshad been looking for work an average ofthirty-five weeks (almost 8-and-a-half

months). Home equity declined almost 40percent in two years. That’s a lot of wealthfor a lot of average people. The amount ofmoney in retirement accounts dropped by$3 trillion from 2007 to 2009. The effects ofthe recession on consumption have been,historically, catastrophic: Mr. and Ms. Aver-age are afraid of the future and hold on towhat little money they have because of it.There is no rising tide of supporters for oragainst government intervention to dosomething about the recession. Many of thelong-term trends in family life were simplyreinforced by the recession as long-termtrends were moving away from marriageand marital-based fertility. The federal stim-ulus helped to (at least) prop up the econo-my during the recession and preventeda much greater tragedy. The lack of publicconfidence in these programs only servesto prove the adage that ‘‘no good deedgoes unpunished.’’ Americans’ historic com-mitment to charity and giving were notdamaged by the Great Recession and, if any-thing, were strengthened.

Taken together, this book is the result ofserious scholarship by serious people withsome strong guidance by the editors. Theonly minor liability to this volume is that ithas a ‘‘reverse weight-loss clinic’’ feel to it.Before the recession things were apparentlygreat (‘‘we were thin and sexy. . . ’’). It’sonly been since the recession that the eco-nomic and social life of the United Stateshas gone to hell (‘‘now we’re fat andunhealthy. . . ’’). But for Mr. and Ms. Averagebelow the top 10 or 15 percent of the incomedistribution, the pre-recession U.S. economywas scarcely better than the recession econo-my and its aftermath. This might account forsome of the non-findings in this volume. Dowe really think that after 30 years of almostuninterrupted supply-side economics thatthe average person is going to rally to theidea that government will help them?? Theempirical disconnect between the clear eco-nomic disaster (big trends) and the opiniondata (essentially no trend beyond changesin party identification) should give pauseto the idea that the American economy wasdoing right by average people prior to theGreat Recession.

Arne Kalleberg, in his excellent volumeGood Jobs, Bad Jobs, goes a long way toward

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addressing this deficiency at least withrespect to job creation, job availability, andjob quality. This book received the BestBook Award from the Poverty, Inequality,and Mobility Section of the ASA and it’snot hard to see why. The book is a broadindictment of rising inequality addressedthrough the lens of job quality.

The cumulative results of the book areespecially devastating. The standard waysmost people would think of a good job—reasonable pay, an opportunity for earningsto increase over time, health insurance andretirement benefits, some autonomy andcontrol over work activities, some flexibilityin scheduling, and some control over jobtermination—now seem more elusive thanever. What Kalleberg documents is nothingshort of a wholesale decline in most dimen-sions of job quality for most workers, accom-panied by growing polarization in the labormarket between high quality, highly skilledjobs that pay well and have fringe benefits,and jobs with relatively little to offer beyondsomething to do for inadequate, poverty-level pay, irregular hours, and no job stability.

Kalleberg takes extensive care to docu-ment that the major culprit in the overalldecline of job quality is the decline in institu-tional protections for average workers. Herethere are a familiar set of culprits, but Kalle-berg does a very good job of pointing to theimplications of each for declines in institu-tional protections that propped up the qual-ity of jobs in the United States. Globalizationand spatialization allowed employers andinvestors to move production and work-related activities to any place in the worldand to sell goods or services anywhere elsein the world. This has led to everythingfrom the familiar ‘‘sweat shop’’ shoe factoryin Indonesia to outsourced legal services and‘‘medical tourism’’ in India. The ability ofcompanies to ship their products anywhereat low costs increased price competitioneverywhere and drove profit margins torazor thin levels. The expansion of globalfinance as an end in itself, and its corre-sponding role in corporate governance andpolitical economy led to a push towardshort-term profit margins and away fromlong-term production and profit goals. Onecould add, that tying CEO compensation tocorporate stock options created the incentive

to do anything to increase short-term share-holder value at the expense of long-runviability.

Grusky, Western, and Wimer are light onpolicy prescriptions because their book isa play-by-play account of the effects of therecession on different areas of social life asevents unfolded. Kalleberg’s discussion ofgood and bad jobs is far less shy becausethe problems he addresses have been brew-ing for a long time and the recession (if any-thing) only brought a set of long-term trendsto a head. In particular, Kalleberg advocatesfor flexicurity of the kind one finds in Den-mark and the Netherlands. There particularjobs are not secure but social insurance andjob retraining help to move workers fromone realm of productive work to another,while minimizing the damage caused byemployer job flexibility. Setting labor marketstandards and reforming the immigrationsystem will keep a floor below which jobswill not fall and keep employment in theformal sector of the economy. Most impor-tantly, he points to the need for a newsocial contract of the kind Robert Reich andothers discuss: in the end, we would allbe better off in an economic system that pro-vided steady, well-compensated, high-productivity employment and invested ina workforce that could continually stay ontop of their game.

Taken together, Kalleberg provides a com-prehensive empirical study of the causesand consequences of precarious employ-ment. Western, Grusky and Wimer have pro-vided a comprehensive view of the effects ofthe Great Recession. What is missing in thisoverall picture? In a word, not much but Ido have a few suggestions that come frompondering the message of both books.

Ultimately, the problem of bad jobs andthe problem of the recent economic collapsestem from the same long-term source: thefinancialization and casinoization of the Ameri-can economy. Financialization did two things,both of which have been very corrosive tothe American way of life and the well-beingof Mr. and Ms. Average. Economically, finan-cialization turned financial transactions intoends in themselves rather than a means foraccomplishing or producing somethingelse. Culturally, financialization set the stagefor the subsequent degradation of work and

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the cultural trivialization of those that do it.Both of these consequences are connected.If investors can make money withoutemploying anyone and there is no directconnection between the employee’s well-being and employer’s profits, then jobs forMr. and Ms. Average are not necessary atall. As jobs decline in quality, only stigma-tized people will do them. I actually thinkthat there is a significant cultural relation-ship between the decline of conventionalwork, conventional mobility avenues, andthe rise of high-stakes televised competitionsthat take average people and showerrewards on them if they can sing, dance, orotherwise make fools of themselves (butthat’s a matter for cultural sociologists toaddress).

Financialization and casinoization arerelated to a series of other trends that theauthors mention in passing. But I wouldargue these trends are more central to theiraccount than they appear. The first of theseis the almost total collapse of inter-generational mobility in the United States.Making money in a financialized worldrequires. . . well. . . . Money (!). Those whohave it can make more of it. Those withoutit have difficulty investing very much andmaking very much, and they certainly can-not reliably make a fortune in a housing bub-ble that is deliberately arranged to make bil-lions of dollars for a small set of people.

Second, and to their credit, the authors donot fall for the standard ‘‘get more education’’bromide that journalists and others resort to asa solution to all our problems from urban povertyto tooth decay. Employers can treat educatedworkers just as badly as uneducated work-ers. The labor market links between educa-tion and work in the United States are themost obscure in the industrialized world.The ‘‘education premium’’ here is driven asmuch by the downward earnings trajectoriesof the uneducated as it is by the upwardearnings trajectories of the educated. Andwhat happens when ‘‘everyone’’ has thesame education? The labor market value of

that education falls to zero! In the end, it isno more true that poverty and inequalitywould be eliminated if everyone had an edu-cation (because education currently carriesa wage premium) than it is that povertyand inequality would be cured by gettingsingle mothers to marry (because marriedpeople are currently better off than singlepeople). Yet the ‘‘get more education’’ storygets a free pass by many and the ‘‘just marrythe man’’ story is interpreted as racist (atworst) or empirically suspect (at best). Theauthors here tell an education story but (totheir credit) don’t buy into this kind of hype.

Third, both volumes underplay the role of ris-ing consumer debt in keeping the economy goingpre-recession. Without the ability to borrowmoney easily, get new credit cards, and bor-row against the equity in houses the Ameri-can economy would have come to a screech-ing halt long before 2008. The ability of con-sumers to borrow more money and notprove they could pay it back severed the his-toric link between quality employment forthe masses and profits for the elite. This, asmuch as anything else, doomed Mr. andMs. Average. The ability to ship jobs andgoods around the world only exacerbatedthis problem—but it is completely possibleto run a domestic, closed economy thisway, too, with the right politicians in power.

So, are Average people doomed?? If thereis no relationship between financial profitsand average people’s work, and no meansof accessing income from non-work sources,then the answer is yes. We need to eitherreinvest in social insurance systems thatmake unstable employment economicallytolerable for Mr. and Ms. Average (as Kalle-berg suggests) and/or find ways to uncon-centrate wealth and give more people accessto income streams from investment andfinancialization. In the end, if the spendingof average people is a public good (like trashcollection and fire protection) then themeans of supporting it need to be treatedlike a public good and (ultimately) fundinglike one, too.

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