For Forbes, I dug into a disturbing trend: workers being asked to sign “Training Repayment Agreements” to repay the (putative, highly inflated, and sometimes completely fabricated) cost of their on-the-job training if they quit or are fired within a set time period. In some cases, the TRAs take 3 years or longer to expire, and can involve $70,000 or more in debt.
For The Nation, I interviewed philosopher Jennifer Morton about her new book Moving Up Without Losing Your Way: The Ethical Costs of Upwardly Mobility. Morton explains the rich don’t just have more stuff — capitalism also forces them into fewer dilemmas about whether to prioritize their own interests, or those of their loved ones.
For Slate, I wrote about the growing number of Americans going without health insurance. Immigrant children have been particularly hard-hit by this trend.
We need to do a better job of supporting parents, whether they’re working, in school, or taking care of children full-time.
At the federal minimum wage, paying for child care for one child would take the first 26 hours of wages in a 40 hour week (if it’s an infant, the first 32 hours of wages). All 50 states have some amount of federally-funded assistance to help parents afford child care, but in many states these programs have long wait lists, or have extremely limited eligibility. In Iowa, parents lose all assistance at 145% of the federal poverty line (an income of around $25,000 per year for a parent with one child). My piece for TalkPoverty explores what this means for children, parents, employers and the community.
In personal news, I’m now in Oregon. Tomorrow I’ll be heading to Crater Lake National Park. My next stops after that are Sacramento and then the Bay Area.
I’m now on Day 9 in the Twin Cities, by way of Milwaukee, Springfield, St. Louis, South Bend, Chicago, and Cleveland, but this story will talk about Day 2, Detroit.
My first stop was the Heidelberg Project, an art installation where Tyree Guyton has used a city block to reflect on time, hope, and community. Guyton grew up on Heidelberg Street, and returned to it as an adult to find vacant lots and a neighborhood where poverty is deepening.
Detroit is a city whose population is only 40% of what is was at its peak. There is no way you can drive around Detroit, at least the neighborhoods where I visited and stayed east of I-75, and confuse it with most other parts of the country. Obviously, every city in our country has people struggling to get by, and neighborhoods that don’t get their fair share of the investment, the roads, the sidewalks, or the playgrounds they deserve from their city government.
But the physical landscape of Detroit was different from anything I’ve seen before. When a city shrinks by as much as Detroit did, you face a nearly impossible challenge: how do you keep up all the roads, the sewers, the water lines, the sidewalks that you once had, provide schools, police and firefighters to all the neighborhoods? You can’t, at least not well.
The Heidelberg Project is interesting for a lot of reasons, one of which is that the project was possible specifically because of the abandonment of that block. It is an opportunity that came out of the challenges Detroit faces, and I saw that thread everywhere I went: a proliferation of seemingly fly-by-night galleries, theaters, street art that leveraged the empty space.
To me, opportunity is one part the chance toachieve stability and one part the chance to express creativity. When we talk about the shrinking middle class, like Dan Kaufman and Latoya Ruby Frazier’s great piece about the closure of the GM plant in Youngstown, Ohio, we mostly talk about how economic changes have made it harder for people to achieve stability: the conditions you need to raise a family, in a house where you won’t get evicted, at a job where you are treated with dignity, with a little bit of money left over to celebrate birthdays and weddings and to give your kids the chance to see the ocean. But opportunity is also about the chance to make art, to invent things, to start a community organization or a business. While those things are never easy to do if you’re hungry, there are ways in which a kid born in Detroit might have more of those chances than a kid born in Washington, D.C., where the amount of money you would need to scrape up to do anything that requires physical space is daunting even for the privileged. I don’t want to glorify or gloss over the challenges Detroit has faced. And yet, it is undoubtedly the case that people have found possibilities in Detroit’s unique landscape.
Lending, of course, is all about opportunity — at its best, it expands possibilities for people.
When I asked David, a 47-year old man in the community of Hamtramck, whether he thought banks made it too easy for people to get into debt, or too hard for people to access credit, he didn’t hesitate before saying it was too hard for people to get credit.
The last loan David applied for was as a younger man — he was trying to pull together the money to rent a place to live, and his loan application was declined. I asked him how he thought his life would be different today if he had been approved.
“I might’ve had a house […] I might’ve been with my first baby’s mama. I might’ve not had felonies on my arrest record. A lot of things could have happened [for me].”
Of course, if he had gotten the loan and then had trouble repaying it there would have been a different set of negative repercussions — a lower credit score, the possibility of eviction from the apartment, or future garnished paychecks, although, in his case, it’s hard to imagine that would have been any worse than the counterfactual.
Working in lending for as many years as I did, the idea of people like David is always in the back of your head. This loan is only profitable at a 29% interest rate. My models say this person will accrue tons of late fees on top of that high interest rate, and there’s a 1 in 3 chance they’ll eventually default on the loan, tanking their credit score — hurting their chances at finding housing or a job. Do I lend to them? If everyone’s story was like David’s, the answer would always be yes. David is the case for doing subprime lending, even at disturbingly high interest rates, because it’s hard to anticipate all the ways that saying ‘yes’ when someone has come to you asking for your help could change that person’s life.
I’ve asked the question, “Do you think banks make it too easy for people to get into debt, or too hard for people to get credit?” to a lot of people in a lot of places, and Detroit was a place where most people felt strongly that the answer was the latter.
Of course, not everyone’s story is like David’s — interviews I’ve done sincein St. Charles, Missouri, and South Bend, Indiana have made that clear.
I stayed at Hamtramck Hotel and Hostel, which had a mix of travelers, long-term Detroit residents, and people coming through looking for work. Reportedly, at least one person has lived at the Hamtramck Hotel and Hostel for 50 years. I talked to a man who had come from Greenville, South Carolina, a growing city about two hours west of my hometown of Charlotte, hoping that Detroit would offer both a job and cheaper rent.His strategy is probably the inverse of what a lot of people have tried — according to American Community Service numbers, about 40% more people have moved from Detroit to Greenville than from Greenville to Detroit in the last several years.
But there’s no single roadmap for how to get by in America, and we’re all relying on our own sources and accumulated knowledge. Sociologist Beth Redbird has found that when a profession becomes licensed, more people enter it, specifically because it creates a “clear path” to join and gain credibility — a fact that makes me think about how often the specific keys to getting money and making money are shared only locally, between parents and children or between people of similar backgrounds.
I’ll be in Minnesota and Iowa for a while, before getting to Omaha on May 16th.
In the Wealth of Nations, Adam Smith imagined a pin factory with ten workers, and predicted that capital owners would be on the factory floor doing manual labor alongside their employees. Instead, Amazon packs thousands of workers into each of its warehouses, and some of those workers reportedly pee into plastic bottles for fear of getting disciplined if they “waste time” on bathroom breaks. Meanwhile, Jeff Bezos is a millionaire, 151,000 times over.
In my latest essay for The Outline, I talk about how the custom that job candidates should send thank-you notes to their interviewers fits into a long history of workers being placed socially and culturally beneath management.
This piece was a lot of fun to write. I’ve been very inspired by philosopher Elizabeth Anderson recently, and I’m excited to keep exploring her ideas.
In last week’s episode of a Me and a Bunch of White Girls, Laura, a diversity and inclusion consultant, described how her experiences in the financial sector motivated her to tackle D&I work:
America has so many problems, and this [lack of diversity] is one of them. We continuously keep these spaces so white. [….] Especially in the financial industry, there’s not enough black and brown people. The wealth continues to circulate within white cultures and white groups. Black and brown people aren’t making it into these spaces to influence where the money flows, or to get the money themselves.
Obviously, those who want to dismantle capitalism itself would critique her argument – why should women and people of color choose to participate in an extractive system? In that way of thinking, trying to make banking more diverse is one of those ‘surface-level’ fixes that might entrench inequality even more deeply (re: this Onion article – “Shocking: The Average Female CEO Only Makes 258 Times What Her Employees Make”).
Laura draws a brilliant connection between the internal problems that banking has with diversity and inclusion and the failure of those institutions to systematically improve the lives of ordinary Americans. A more diverse banking sector wouldn’t be good only for the women and people of color who would reap the professional benefits of membership – it’s also necessary for developing a financial sector that does more good than harm for the majority of people.
Banking fails to see the real value of diversity
When I worked at Capital One, I did ‘mock interviews’ for people (mostly students applying for their first job out of college) who had passed the resume screen and would be interviewed soon. Later, I conducted interviews for campus and professional hiring of analysts and product managers.
One mock interview I did stood out to me. The student was a senior at Duke, and a member of Mi Gente, the school’s Latin/x organization. His public high school in Los Angeles was primarily Mexican-American and predominantly low-income.
Like many banks and consulting companies, we used ‘case interviews’ to screen candidates. Prospective analysts were given a business problem to solve in a way that usually has a ‘right answer.’ Our mock interviews use cases that were several years old and had been retired out of the old interview pool.
This case asked candidates to evaluate whether a sandwich shop should run a promotion to price their 12-inch sandwiches at $5. In the case, you’d consider things like whether demand increases enough to offset the lower prices, and what happens if customers shift their mix of purchased sandwiches from cheap ingredients like tuna to more expensive ingredients like steak as a result of the promotion. To start you’re told only the basics and are asked: “What types of things should the sandwich shop consider before running the promotion?”
The student answered, “They should think about what $5 means in the context of the neighborhoods where they’re located. At Duke, a $5 sandwich would be a relatively good deal, but where I grew up, that would be a pretty expensive lunch.”
His answer exactly illustrated what banking needs more of:people who can contextualize what business decisions will mean in the lives of the communities that banks need to better serve. Like many companies, Capital One had programming to encourage applications from underrepresented minorities – things like funding diversity scholarship, and hosting events with black and latino student organizations – but they were missing a framework for recognizing organizational blind spots, and seeing how people of color and women could eliminate those blind spots. I think most of corporate America has some basic diversity awareness, roughly at the level of: ‘oh, wow, way less than half of Americans are white men so if we only hire white men suuuurely we must be missing out on at least a few qualified people.’ But predominantly-male and predominantly-white workforces miss out on so much more than ‘extra people.’ There needs to be spaces on both our literal and metaphorical talent rubrics for the people who can come and explain to everyone else what they’ve been missing.
Banking and other ‘elite’ professional cultures continue to be exclusive
Louis Hyman’s 2018 book Temp discusses the stratification into the workforce into secure and contingent employment, and in it, he chronicles how the rise of consulting firms helped created that economic order. In doing so, he also highlights the social culture of consulting, and his description still rings true for the cultures in ‘elite’ professions like banking, consulting, and law:
As much as consulting was mental, it was also athletic. The consulting life was hard and the consultant needed stamina […] Spending ten to fourteen hours in a day in a room with colleagues you had never met before was a recipe for disaster unless the associates had exceptional social skills or similar social backgrounds. By recruiting from the same elite schools, McKinsey helped reinforce a shared social background. Bower said that in the 1940s he would only hire an associate he ‘would be glad to go on a tiger hunt with.’ Self-presentation mattered as much as ideas. Even though Bower believed in intellectual iconoclasm, he also believed in social conformity. McKinsey men did not look better or worse than their clients. Conformity in style meant the clients would listen to new ideas.
A 2016 randomized controlled trial published in the American Sociological Review found that top law firms penalized candidates that appeared to be from poorer class backgrounds:you were better off having been a ‘peer mentor for first year students’ than a ‘peer mentor for first-generation college students’, for having done sailing rather than track and field, and for having received a generic athletic award rather than an award for outstanding athletes on financial aid. And of course, hiring discrimination against women and people of color is also well-documented.
Questions like “is this person a culture fit?” mean so much more than “let’s make sure we don’t hire someone who’s a massive jerk” but also “does this person conform to my subtle expectations for how the people around me should speak and look and act?”
I’m not especially optimistic about this changing – even if it would be in firm’s best interest to do so. Part of this is a ‘management capitalism’ versus ‘shareholder capitalism’ problem – e.g. that employees desires to work with other people of the same racial and class background is strong enough that they’ll discriminate at their company’s expense. Banking has such an incredibly profound impact on Americans lives though, so I hope Laura and others will keep trying.
When we talk about economic mobility (or the lack of it) in the United States, it’s easy to get lost in the statistics — missing what life is like for those who make it from one rung of the economic ladder to the next.
As you gain new opportunities, you face new conflicts — in my piece for The Outline, I talked to first-generation college graduates to understand what it’s like to bridge ‘different worlds.’
It goes without saying, but you are probably either a colleague or employer, educator or classmate of those who grew up in very different economic circumstances than you — and to create opportunity, you have to understand how your actions either welcome others in or shut them out.
In a recent working paper for the Federal Reserve of Boston, Anat Bracha and Mary Burke find that 26% of gig economy workers would accept a lower hourly wage to be able to work hours at a formal job instead of in the informal economy — even if the formal job didn’t come with benefits. While informal and ‘gig’ jobs are sometimes presented as offering greater flexibility and autonomy, Bracha and Burke’s findings strongly suggest that many would gladly ditch gig work in favor of greater predictability.
Their working paper also finds that the census districts with the highest rate of informal and gig labor force participation have the lowest rates of wage growth. One likely reason why? In places with a lot of gig workers, there are a lot of people who would like to work more paid hours — and that competition to find work drives wages down. Importantly, they find that wage growth is much more negatively tied to gig labor force participation in census districts than it is negatively tied to the unemployment rate.
All-in-all, their work suggests that our low “headline” unemployment rate of 3.7% may be misleading — people who would have previously been counted as unemployed now have more opportunities to pick up hours delivering food, driving passengers or walking dogs.
Obviously for many people, that’s better than not earning any money, but we’re probably not at “full employment” yet when so many people wouldn’t count themselves as “fully employed.” That may indicate the Fed is moving too quickly in raising rates.
D.C. City Council held a hearing yesterday to consider overturning Initiative 77, which would gradually raise the tipped minimum wage for D.C. workers from $3.33 to $12.50, rising to $15 along with the base minimum wage in 2020.
Opponents of the Initiative claim to have the backing of not only the District’s restaurant owner and operators, but the city’s restaurant servers and bartenders as well. At yesterday’s hearing, Jill Tyler, Co-Owner of Michelin-starred restaurant Tail Up Goat in Adams Morgan said “by and large, the current system works,” resulting in workers “who can afford to buy a home, who can afford to raise a family,” noting that 40 of her 47 employees live in the District of Columbia, and nearly half live in Ward 1 where Tail Up Goat is located.
But supporters seeking to raise the tipped minimum wage state that many tipped workers have avoided speaking up publicly fearing retaliation from employers, and that those workers making poverty-level wages have less political and economic capital to make their voices heard. City Council Chairman Phil Mendelson noted “It’s hard for me to know what to do with the people who aren’t at the table.” But the easiest time and place for tipped workers to make their preferences was on Election Day itself, and while we don’t know how each person voted, it’s clear that the only neighborhoods that voted ‘No’ to raise the tipped minimum wage are the ones where very few restaurant workers live.
I matched U.S. Census Bureau data from the American Community Survey at the tract level with D.C. Board of Election data at the precinct level, and it tells a clear story.
Across the district, 5.8% of all employed adults are food or hospitality workers, but those workers aren’t even concentrated throughout the city. In the average precinct that voted ‘Yes’ for the Initiative, 6.7% of employed adults are food or hospitality workers, compared to only 3.5% in those that voted ‘No’.
Perhaps not surprisingly, the precincts with the lowest level of support for Initiative 77 are the ones where voters are very unlikely to have a neighbor who relies on tips. In Precinct 5, home to Georgetown Cupcake, only 1% of employed adults are food or hospitality workers — and only 37% of voters said ‘Yes’ to Initiative 77, the lowest rate of any precinct in the district. Virtually none of the cities’ food and hospitality workers live in the Potomac-facing western neighborhoods voting ‘No’ to raise the tipped minimum wage.
All 29 precincts where more than 10% of employed adults are food or hospitality workers voted ‘Yes,’ like Precinct 120, near the Congress Heights Metro Stop in Southeast D.C., where 74% of votes were to pass Initiative 77.
Recalling her experiences working at Hot Shoppes as a waitress in Washington D.C. in 1970, Angie Whitehurst of Ward 4, now a StreetSense vendor, described the barriers facing tipped workers, who make an average wage of $14.41 an hour including tips according to the Economic Policy Center. “Most tipped workers do not have the benefits that the top 1% in this city have. If they take a day off, that’s a day without pay. It costs too much money just to take the bus to and from work,” Whitehurst said. “It’s an unlivable wage, and it’s like gambling.”