“Wealth work” is one of America’s fastest-growing industries. That’s not entirely a good thing.
By Derek Thompson – In an age of persistently high inequality, work in high-cost metros catering to the whims of the wealthy—grooming them, stretching them, feeding them, driving them—has become one of the fastest-growing industries.
The MIT economist David Autor calls it “wealth work.”
While there are reasons to be optimistic about this trend, there is also something queasy about the emergence of a new underclass of urban servants.
Wealth work falls into two basic categories. First, full-time retail and service jobs at places like nail salons and spas. “You’re talking about people with $30,000 incomes that are often employed in high-wealth metro areas, or resort economies,” Muro said.
Because they often cannot afford to live near their place o-f work, they endure long commutes from lower-cost neighborhoods. These arrangements aren’t merely time-consuming; they can also be exploitative. For example, New York City nail salons are notorious for flouting minimum-wage laws and other labor regulations, and massage parlors across Florida have served as fronts for human trafficking.
A second category is the “Uber for X” economy—that nebulous network of people contracted through online marketplaces for driving, delivery, and other on-demand services.
Optimistically, these jobs offer autonomy for workers and convenience for consumers, many of whom aren’t wealthy. But the business models that keep these firms aloft rely on the strategic avoidance of laws like the Fair Labor Standards Act, which regulates minimum wage and overtime pay. These laborers often do the work of employees with the legal protections of contractors—which is to say, hardly any. more>
Posted in Business, CONGRESS WATCH, Economy, Education, History, How to, Media, Technology
Tagged Capital, Gig Economy, Inequality, Internet, Jobs, Wealth, Work
Worsening economic inequality in recent years is largely the result of policy choices that reflect the political influence and lobbying power of the rich.
By Jayati Ghosh – Since reducing inequality became an official goal of the international community, income disparities have widened. This trend, typically blamed on trade liberalization and technological advances that have weakened the bargaining power of labor vis-à-vis capital, has generated a political backlash in many countries, with voters blaming their economic plight on ‘others’ rather than on national policies. And such sentiments of course merely aggravate social tensions without addressing the root causes of worsening inequality.
But in an important new article, the Cambridge University economist José Gabriel Palma argues that national income distributions are the result not of impersonal global forces, but rather of policy choices that reflect the control and lobbying power of the rich.
The driving force behind these trends is market inequality, meaning the income distribution before taxes and government transfers. Most OECD countries continually attempt to mitigate this through the tax-and-transfer system, resulting in much lower levels of inequality in terms of disposable income.
But fiscal policy is a complicated and increasingly inefficient way to reduce inequality, because today it relies less on progressive taxation and more on transfers that increase public debt. For example, European Union governments’ spending on social protection, health care and education now accounts for two-thirds of public expenditure, but this is funded by tax policies that let off the rich and big corporations while heavily burdening the middle classes, and by adding to the stock of government debt. more>
Posted in Business, EARTH WATCH, Economic development, Economy, Education, History, How to, Media, Net, Technology
Tagged Business improvement, Capital, Inequality, Internet, poor, Rich, Wealth
By Sanjukta Paul – Where does economic power come from? Does it exist independently of the law?
It seems obvious, even undeniable, that the answer is no. Law creates, defines and enforces property rights. Law enforces private contracts. It charters corporations and shields investors from liability. Law declares illegal certain contracts of economic cooperation between separate individuals – which it calls ‘price-fixing’ – but declares economically equivalent activity legal when it takes place within a business firm or is controlled by one.
Each one of these is a choice made by the law, on behalf of the public as a whole. Each of them creates or maintains someone’s economic power, and often undermines someone else’s. Each also plays a role in maintaining a particular distribution of economic power across society.
Yet generations of lawyers and judges educated at law schools in the United States have been taught to ignore this essential role of law in creating and sustaining economic power.
Instead, we are taught that the social process of economic competition results in certain outcomes that are ‘efficient’ – and that anything the law does to alter those outcomes is its only intervention.
These peculiar presumptions flow from the enormously powerful and influential ‘law and economics’ movement that dominates thinking in most areas of US law considered to be within the ‘economic’ sphere.
Bruce Ackerman, professor of law and political science at Yale University, recently called law and economics the most influential thing in legal education since the founding of Harvard Law School.
The Economics Institute for Federal Judges, founded by the legal scholar Henry Manne, has been a hugely influential training program in the law and economics approach. more>
Posted in Banking, Book review, Broadband, Business, CONGRESS WATCH, Economic development, Economy, Education, History, How to, Net, Technology
Tagged Business improvement, Capital, Congress Watch, Government, Inequality, Internet, Law