February, 2016    Volume 23, No. 2

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The Rise Of The American 'Precariat': Globalization And Outsourcing Have Created A Combustible Political Culture

By Richard A. McCormack

The effects on the U.S. economy caused by 30 years of offshore outsourcing of production and jobs is starting to drive major changes in the American political system. The rise of a "precariat" class of Americans -- those who are living "precarious" lives -- has created a populist movement that shows no sign of acquiescing to the "establishment" in both the Democratic and Republican parties.

The new precariat comprises a growing class of people who are going nowhere in their jobs, who are insecure and unstable. The group is "experiencing the breaking apart of the American Dream, which is what historically held the country together -- the rise of the middle class, with everyone doing better," notes visiting scholar John Russo of Georgetown University's Kalmanovitz Initiative for Labor and the Working Poor. "It's not working that way any more."

Driving the rise of the precariat is a society that is not generating enough wealth. De-industrialization, the shift of major goods-producing industries to foreign nations, and both the Republican and Democratic establishment's embrace of free trade, are leading to a populist uprising.

The precariat is becoming one of the largest classes of Americans, encompassing far more than blue-collar workers who have been slammed by economic forces outside of their control. It now includes millions of Americans with college degrees who are under compensated or can't find full-time employment with benefits.

As white-collar jobs have been outsourced, Americans with more than high-school degrees are starting to see their prospects "mirror those of the working class," says Russo. "That insecurity and instability is now part of their life. That is why this new group is not yet a class in itself. It hasn't defined what it is going to be."

It is fragmented, but it is big, and much of it is angry. The conservative side of the precariat is driving the 2016 presidential campaigns of both Donald Trump and Sen. Ted Cruz. The liberal side is driving presidential hopeful Sen. Bernie Sanders.

The Republican establishment has tried to derail Trump and Cruz, but so far with little impact.

The conservative precariat isn't listening to the "establishment." Conservative columnist George Will "called Trump a 'bloviating ignoramus,' " to which Trump responded: George Will is the " 'dumbest and most overrated political columnist of all time,' " Russo notes. Moderate Republicans "understand that the party's working-class base has been programmatically ignored."

The Democratic establishment has had similar difficulties dislodging Bernie Sanders, whose campaign is based on addressing inequality and rejecting a powerful oligarchy. Hillary Clinton is viewed as paying lip service to the rise of populism driven by the liberal precariat. She said she is against the Trans Pacific Partnership "for now." Such language is viewed as being deceitful, further exacerbating the distrust she holds among voters.

"The Democratic establishment doesn't worry about Clinton's occasional forays in populist campaign rhetoric, which they see as political maneuvering," says Russo. "As Politico has reported, 'None of them think she really means her populism.' "

Russo notes that the rise of the new populism has not been seen since the late 1920s and early 1930s with the Weimar Republic, and it is potentially dangerous. Given their ideological differences, it is hard to see how the conservative and liberal sides of the precariat become a unified force.

The media and establishment politicians also have not yet embraced the term "precariat," and have been slow to recognize its scope and the power behind the economic and societal shift.

The precariat is comprised of self-employed workers doing informal work such as day care, tutoring and driving for Uber. It includes millions of contractors for intermittent jobs with substandard wages. "As steady formal work has been disappearing over time, informal work began to move beyond traditional concepts such as consulting, internships, subcontracting, privatization and intermittent employment," Russo explains. "Rather than the continued rise of the formal economy, it is the informal economy that is growing."

The precariat is "potentially all of us united by the fear of insecurity," he notes. It is made up of "individuals living precarious and insecure existences lacking employment security, job security, income security, skill security, occupational security and labor market security."

This is no longer the underground economy, but includes displaced individuals from the public and private sectors, millennials dealing with mountains of student debt, and baby boomers forced into early retirement without enough savings to support themselves.

There is little public assistance for the precariat class and "they're not making demands to get better wages or improved benefits [because they] are replaced easily," Russo notes.

A host of factors continues to drive the growth of the precariat: downsizing, restructuring, outsourcing, lean management techniques, irregular and long hours, increased productivity caused by advanced technologies, electronic monitoring, the avoidance of unions and workplace protections and the growing use of independent contractors. The U.S. workforce looks like it is built on a house of cards, Russo notes.

The liberal establishment rationalizes the rise of the precariat by stating that young workers will have five jobs by the time they are 35, allowing them to develop many different skillsets. It is okay that millennials lack job and income security because, liberal apologists reason, they do not want to live the same type of life as their parents, stuck in a cubicle behind a computer screen for years; that they are consciously "opting out" of materialism by embracing affordable living, sustainability and subsistence.

Conservatives rationalize the growth of the precariat by "insisting that collapsing employment reflects only a diminished desire to work, rather than a shortfall in demand," an idea promoted by University of Chicago economist Casey Mulligan. Charles Murray, American Enterprise Institute scholar and author of Coming Apart, says the decline in labor force participation and shorter work weeks among the employed is a sign that the white working class has lost its "industriousness."

According to Guy Standing, the former International Labor Organization economist who coined the term, the precariat is a "class in the making, increasingly able to identify what it wishes to combat and what it wants to construct."

The subtitle of his 2011 book The Precariat is "The New Dangerous Class."

He describes the new class structure that has emerged globally. At the very top is the "Elite," or the "absurdly rich global citizens lording over the universe with their billions of dollars"); followed by the "Salary Class" (or "Salariat" that is well entrenched in large corporations and government bureaucracies with benefits, pensions and paid holidays). Below those two highest classes, there is a class of "Proficians" (or highly compensated consultants and specialists); and then the "Working Class" (described as the "rump of the old working class, with secure jobs but with dropping wages and benefits"). Below the working class is the Precariat, larger than the four "upper" classes and residing just above the "Underclass," made up of the unemployed (or the "lumpen or proletariat, the foundation of the informal economy"). Finally, there is the lowest and largest class -- "the social misfits living off the dregs of society."

The result of all this is the rise of a "politics of resentment" within the working class, precariat and the underclass, says Russo.

At this point, it isn't clear if the rise of the precariat will be transformative. "Can it move beyond its anger and provide a real economic and political agenda?" Russo asks. "Does the precariat have the power to move politics, especially labor and work, beyond incremental change?"

The precariat does not yet know how to vote in its own self interest, but it has created a colossal political upheaval. "The traditional institutions are really in trouble," says Russo. "The Democrats are in trouble and the Republicans are in trouble."

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