WIUM Tristates Public Radio

The Gray Economy – Inequality for All

Sep 24, 2014

Workers who used to be on the edges of the economy – day laborers and temps, freelancers and adjuncts, independent contractors and contingent employees – are closer to the core.

Powerful, for-profit corporations in general and near-monopolies in particular benefit from wage stagnation and deteriorating job benefits that have left U.S. workers “confused, angry, frustrated and scared,” AFL-CIO President Richard Trumka recently told the Steelworkers convention.

Lynn Stuart Parramore from AlterNet dubs it a “gray economy,” saying, “The gray economy is trapping millions of Americans in a dark world of haphazard and insecure jobs, few or no benefits, nonexistent chances for advancement, and little recourse if they get screwed. [Several] factors … have shifted power away from workers and toward employers who seek their short-term advantage no matter what the social and economic costs.”

The shift to job insecurity has been propelled by a bad blend of business globalization, outsourcing, corporations’ focus on short-term profits, Wall Street’s financial shenanigans, and the erosion of labor law. Also, author Barry Lynn in his book “Cornered: The New Monopoly Capitalism and the Economics of Destruction” explains how the top-down economic trend isn’t as obvious as in the past, when a company like Standard Oil or Bell [Telephone] operated. Today, companies that seem to be competitors can all be controlled or owned by the same conglomerate – like Lenscrafters, Pearle Vision, Sears Optical and Sunglass Hut, which are all part of the Italian company Luxottica.

Lynn says. “Monopoly doesn’t mean that a company controls 100 percent of the marketplace. [It’s] that a company has sufficient control of the market to shape the outcomes of that market to its own advantage – to shape pricing, [even] reduce our liberties. As workers, one of the things you prize is an open market where you can sell your work to many potential buyers, many potential employers. If there’s a lot of consolidation nationally in your industry, or even your town, you may find yourself with really only one or two buyers for your work. That means that you have less ability to negotiate higher wages. It also means that you have less real freedom: you can’t just pick up and leave if you get a bad boss.”

Economic inequality is connected, too, he says, writing, “Back in the origins of anti-monopoly law in America, the people who wrote those laws … aimed at inequality because they saw monopolists as using their power to grab all of the opportunity and all of the wealth in a particular human activity and not leave anything over for other people. A generation ago, tens of thousands of families in America were in the business of selling groceries. Now, there are just a few companies that sell groceries in America.”

The gray economy also has correlations that are less obvious. Social consequences range from the loss of tax revenue that could be used for infrastructure, education and so on, to difficult business climates in which honest employers must compete, to workers’ health. According to a recent University of Michigan study, chronic job insecurity was a stronger predictor of poor health than either smoking or hypertension, potentially shaving years off people’s lives.

Bill Knight

A responsive, responsible government could be part of a solution, Lynn said.

“The reason we founded government is to break up dangerous concentrations of power at home and abroad,” he said. “You might not want to use government to fix all your ills – you might not want to use government to fix even most of your ills. But you need to have government to keep yourself free. To keep markets open. If you don’t have government, then every single system will be taken over by a private monopolist – which really means private government.”

People “have two choices,” he continued. “They can either sit back and do nothing and allow [a] company to manipulate [a] marketplace, or they organize and they can fight.”

Trumka, from the labor federation, said, “From fast food to forged steel, and everywhere in between, more and more people talk about economic inequality, people who never spoke the words before. The public is debating big issues, like a living wage and collective bargaining.”

The opinions expressed are not necessarily those of Tri States Public Radio or Western Illinois University.

Contact Bill at Bill.Knight@hotmail.com; his twice-weekly columns are archived at billknightcolumn.blogspot.com