Informal Economies

Informal Economies

My last post was about the high costs of work and how we often fail to fully consider the high costs of work for people in the deepest poverty when we criticize them for relying on government aid for survival. This post looks at what people living in poverty do to make money when they don’t engage in formal economies or work traditional jobs. For the individuals chronicled in Kathryn Edin and H. Luke Shaefer’s book $2.00 A Day, informal work is how most of them make any money, as the costs of formal employment can make working in the formal sector prohibitive.
“The more employment in the formal labor market proves perilous – with low pay, too few hours, and crazy schedules – the more untenable it is for a parent trying to raise kids. And the weaker the government safety net, the more the informal work described here will proliferate.”
Informal work can be dangerous, hazardous, and unpredictable, but often it is one of the only options available to people in poverty who can’t get a foothold in more traditional labor markets. If you can’t afford to live near a job, if that job changes its schedules unpredictably, and if you are generally taken advantage of in a low-wage work situation that doesn’t ensure you won’t go hungry or without water or power, then why risk putting in the effort to find and maintain a job in the formal economy? Why not fall back on what little social support and government aid there is and hope for odd jobs in the informal economy instead? At least those jobs will provide some measure of autonomy, can be done close to home or with reasonable transportation provided, and at least they will pay quick cash.
This is the calculation many living in poverty face each day, but there are long term costs to relying on an informal economy. The authors write, “the replacement of a formal economy with an informal one – unregulated and unpoliced – may have a self-perpetuating effect of pushing the $2-a-day poor further and further out of the American mainstream.” Informal jobs are not enough to help people escape poverty, build skills or a resume for the future, or find stable and solid footing. Informal economies meet the immediate needs of the day sometimes better than formal jobs, but they don’t provide the stability and support necessary to plan for a future and build a road toward success.
However, as my first few paragraphs show, we cannot simply blame the individual for opting out of the formal economy for informal jobs that don’t provide long-term benefits. The formal economy can also be unpredictable, can deliberately schedule too few hours or change hours last minute, and also may not provide many long-term benefits to help someone live with any stability. These are large structural issues with the way our economic system has developed. Forces beyond an individual’s work ethic and self-control are shaping the environment, the cost/benefit calculations, and the opportunities for both formal and informal work. All of this creates a self-perpetuating cycle between informal economies and formal work for the poorest people in our country. Removing the little support that exists for the poor and criticizing them for not having a formal job and for engaging in informal economies will never be enough to improve the situation for more than a minimal percent of those living in deep poverty.
Economic Segregation and Poverty

Segregation & Poverty

Raj Chetty, a prominent economics professor at Harvard University, has done fantastic research that shows how varied the level of upward mobility is across the United States. According to Chetty, you can see differences in the level of upward mobility and map those differences onto specific factors about areas at the level of zip codes and neighborhoods. This is an important aspect of poverty to consider, because it means that opportunities and success in life are influenced by social factors that are specific to the places where we grow up. It reveals the danger of economic segregation and the importance of finding ways to work together to address problems of poverty.
Kathryn Edin and H. Luke Shaefer address this point in their book $2.00 A Day by writing about the work of sociologist William Julius Wilson. They write, “Wilson argued that the reason poverty had persisted in America even in the face of the War on Poverty declared by President Lyndon Johnson in 1964 was that in the 1970s and 1980s, poor African Americans had become increasingly isolated, relegated to sections of the city where their neighbors were more and more likely to be poor, and less and less likely to find gainful employment.”
Opportunity is somewhat dependent on the people around you. That is the lesson from Chetty and from Wilson as presented in $2.00 A Day. If opportunity, success, and upward mobility were entirely within the control of the individual, then we would expect to see uniform mobility across the country. Instead, we see areas where people are more able to advance economically, and areas where almost no one advances.
When you are in a ghetto you are segregated from opportunity. Everyone you know is also likely in the same economic position that you are in. You don’t know anyone who can inspire you to go to school, work hard, and seek out a meaningful career that is a good fit for you. The failure to advance is not a failure of you personally, or even of your family and the people around you. The failure lies with the larger society which allows pockets of deep inequality and economic segregation to persist.
I am not currently part of the solution. My wife and I have chosen to live in a suburban neighborhood where most people presumably are in pretty similar economic states as we are. We are as economically segregated as anyone else in the nation. It is hard to tell people to not chose to economically segregate themselves, and efforts that bring more low-income (or even just affordable) housing to high price neighborhoods are often voted down and rejected. I don’t have a solution to the economic segregation problem, but the research from Chetty and the lessons from Wilson show that it is clear that economic segregation decreases economic mobility, placing the belief that anyone can succeed as long as they work hard enough on shaky ground.
The Long Lasting Legacy of American Racism

The Long-Lasting Legacy of American Racism

If you are white and don’t make an effort to study the history of racism in the United States it can be hard to imagine just how serious the country’s racist past is. In an age where a black man has been president, where black sports stars have multimillion dollar contracts, and when clear outward displays of racism are (almost) universally condemned, it is easy to believe that racism is a problem of the past. In our country we place a lot of weight on the idea that the individual is responsible for their own success. Whether it is their financial success, their physical shape and weight, or their intelligence, we put the determination and responsibility of the individual at the center of how we understand people, and that doesn’t leave room for racism. We look at successful black people and argue that racism can’t be a problem now, because clearly some black people have become successful. Racism, our current ideology says, can’t be holding people back anymore. The only thing that can be holding them back is a failure to take responsibility for their own actions. Racism is simply an excuse in this view.
However, if you are not white or if you make any effort to study racism in the United States, you see the long lasting legacy of American racism and how it continues to shape the lives of people today. Exclusionary housing policies of the past, policing policies, and education policies are areas where racism deliberately impacted the lived experiences of black people in the United States, clearly limiting opportunity and less clearly limiting the potential to pass on wealth and knowledge to future generations. The results of this discrimination never truly left us.
In his biography of 20th century cartoonist George Herriman, Michael Tisserand explores how the long lasting legacy of American racism can be seen in the life and work of George Herriman. Writing about New Orleans around the Civil War, a time when Herriman’s grandfather and father lived in the city, Tisserand writes, “From 1879 to 1917, there were no city-run public high schools available for blacks. Robert Mills Lusher, the state superintendent of education, infamously declared that the purpose of education was for white students to be properly prepared to maintain the supremacy of the white race.”
Herriman’s family left New Orleans for Los Angeles when he was 10, but throughout his life he hid the fact that he was of black and Creole descent. His light skin color allowed him to pass as white, and opened the door to a career in newspapers and comics. Without having light skin, and without having a family that could move him away from New Orleans, Herriman certainly wouldn’t have had the opportunities he did in California, and racism would have been the limiting factor.
Without studying American racism, it would be easy to look back at a time when there were no city-run public schools for blacks about a hundred years ago and dismiss that fact as irrelevant for the world today. If it had simply been an omission to teach black children, then the situation could have been rectified relatively easy, and black education could have gotten underway to prepare black children for the future. However, the quote shows that benign neglect was not there reason why there were not any schools for black children. It was deliberate racism, in full force from the highest levels of education in the state, that limited the educational opportunities for black people. This malignant attitude created the lack of schools, and it was not simply a matter of establishing schools to facilitate black education.
Opening schools would have been step one, but this would have been done 100 years ago in a climate that was actively hostile toward black students. It is not hard to imagine that high quality materials, resources, and educational opportunities, the things we would all want in our own children’s education, would have been rare among any black schools opened in this type of climate. Once you see the type of animosity that American racism fostered, by influential individuals like Robert Mills Lusher (who there is still a school named after), it is not hard to understand the long lasting legacy of such racism. Deliberate efforts to hold people down and create a system of supremacy for white people is not easily overturned, even 100 years later. The deliberate delays of educating black people has long-term consequences, as it takes time for educational opportunities to come along and for the people who receive good education to grow, accumulate wealth and power, and further invest in their communities. White people had this opportunity starting well over 100 years ago, but black people did not. Black people could not pass on their knowledge, could not connect their children with people to help advance their careers, and could not take on jobs that would help them build wealth that would support their families for generations to come. Instead they were constantly put down, blamed for their own failure, and never give the public support that while people developed for themselves and over time restricted under the premise of conservatism.

The Challenge of Trying to Enlarge the Pie

I often feel that we are moving so fast toward the future that we are advancing beyond our means. I think we are in some ways exceeding the capacity that we have evolved to fit, and this is creating great challenges for humans across the globe. We have new technologies, new social structures, and new understandings of our places in the world and in the universe more broadly that exceed the type of living that we evolved to succeed with.

 

A passage from Kevin Simler and Robin Hanson’s book The Elephant in the Brain highlighted this for me. They write, “Despite the fact that it’s possible to cooperate, politically, in ways that “enlarge the pie” for everyone, this is the exception rather than the rule – especially for our distant ancestors. In most contexts, for one coalition to succeed, others must fail. Importantly, however, members within a coalition can earn themselves a larger slice of the pie by cooperating – a fact that makes politics such an intoxicating game.”

 

The line about our ancestors being incapable of expanding the pie for everyone is important. Without much technology, without shared languages and translation, and in a state of constant threat from nature, it is easy to see why our early ancestors were limited to a state of competition with each other for social status, sex, and politics. There simply were too few humans, too few easily accessible resources, and too few scalable technologies for everyone to be sufficiently comfortable and connected.

 

We now live in a new world, where literally 7.5 million people in the San Francisco metropolitan statistical area are constantly thinking about ways to build new technology to scale to improve the lives of all people, not just the people they are connected with. We understand that our actions can have global manifestations, and that we need global solutions to address climate change and other existential threats. Our technology and ways of thinking have surpassed the world our ancestors lived in, and have created a new game for us to play, however, we are still stuck in the zero-sum mindset of our ancestors, asking what we can do to get a bigger share of the pie for our narrow coalition.

 

Understanding why we fall into thinking about narrow coalitions is important. Recognizing the way our brains work and why they are limited helps us see new potentials. Understanding how we can change our thoughts and how we and others will react in a world that offers so much more is key to actually living up to our new potential as a global species.

What Coaching Does

Michael Bungay Stanier explains why coaching is such a positive force for those receiving coaching, and why we should invest more of our time and effort into learning to be a great coach. He writes, “Coaching can fuel the courage to step out beyond the comfortable and familiar, can help people learn from their experiences and can literally and metaphorically increase and help fulfill a person’s potential.” The three areas he identifies in which coaching makes an impact on our life are key to growth and development and are some of the hardest areas in life to harness and improve.

 

Bungay Stanier’s book, The Coaching Habit, demonstrates ways to develop other people and outlines the benefits that coaches, teams, and individuals receive from good coaching. As I wrote before, it is not just the individual who benefits from good coaching, but also the coach who develops a stronger team and is able to empower the individual to do and take on more. Good coaching maximizes the individual and helps them take what are often scary steps toward improvement.

 

When I think about the three areas that Bungay Stanier identifies in good coaching, I think about how anyone becomes successful and how often as individuals we fail to take big steps toward our goals and fail to learn from our experiences. Research has shown that many people, particularly people of color, do not actually apply their talents to the best of their ability and do not step out to take on new and larger roles for themselves. I study political science and one of things that researches have found is that there are many good candidates out there from minority populations, but that many of them never think they have a chance and never run for office. A simple invitation and a little coaching to encourage political participation makes a big difference in terms of who runs for office and who steps out of their comfort zone to try running for office. Simply on our own it is hard to step forward and drive toward the things we want when the future is muddy and complicated.

 

I think we also fail to learn well from our experiences. It is not that we are ignorant, self-centered, and think we are flawless, but rather that life is busy and distracting, and pausing to think critically of an event from our past is hard to do. As Bungay Stanier explains, good coaches ask more questions than they provide answers, and their questions are often reflective in nature. Good coaches encourage us to think about our experiences in a way that we normally would not, and they help us make new connections and discoveries from the things we have done and experienced. Encouraging us to take chances and helping us think more critically about our past is what allows us to unlock our potential, and it is why good coaching is so valuable and should be practiced by more people.

Challenges Today

In Cory Booker’s United, the U.S. Senator relives moments from his past that shaped him and his politics. In his book he shares the story of a night when he and his father were out for drinks, and heard gunfire on their walk back home. Booker rushed toward the sound of the gunfire, arrived as one of the first people at the scene, and attempted to stabilize a man who had been shot. He explains the almost shock-like state that he was in following the incident, and examines a thought that he and his father wrestled with after the shooting.

Booker’s father was born in 1936 to a poor family. He was bright and hard working and rose to be a regional sales leader for a large company. Booker’s mother was also a trail blazer, running up the ranks in another company, and together Booker’s parents moved from poverty to wealth and to a suburb in New Jersey that had been almost exclusively white. Booker’s parents pushed to give their children new opportunities and pushed to make the United States better for black people, but the thought which challenged Booker’s father was this: “All this work, advancement, and progress, yet a kid like I was faces more challenges today than ever before. How could it come to this?”

It is very popular to write about the death of the American Dream and many people feel as though current generations do not have the same opportunity today to live better lives than their parents. Throughout American history my sense is that people believed their lives would be better than the lives of their parents, but this seems to no longer be the case, and seems to contribute to the sense that the American Dream is dead or dying. My personal sense is that this is especially true among black and minority families. The pressure we put on minority youth and the social decisions we have made regarding our responses to crime, education, and support have created a system where the American Dream is not equally encouraged and provided to everyone, but instead limited and offered to only a few.

I don’t want to say that any single factor has contributed to the sense that American across the country share regarding the death of the American Dream, and I don’t want to say that minority populations have a greater claim to the feeling of despair than others. I think we must take a more nuanced approach to the way we think about the opportunities we provide to children today, and recognize areas where we can make a difference. There is indication that we live in neighborhoods today that may be less racially segregated in the past, but are far more financially segregated, and research supports the idea that economic segregation leads to a stagnation in social mobility. There is also research suggesting that there are fewer social groups and community groups proving services, help, and support to people in local communities today, and this may further the isolation that so many people (especially young people) feel.

What is important to do in regards to our nations racial challenges, our sense of the decline in the American Dream, and the thought that Booker’s father wrestled with is to recognize that we are united, that we share a common future, and that we will be in that future with other people from our community. We must recognize and try to understand how people are thinking and feeling, even if we think their thoughts are misplaced. By learning to listen and understand others, by pushing past the urge to tell someone that their feelings and interpretations of the world are wrong, we can connect and begin to help and aid people in personal ways, even if that is just by listening and acknowledging the challenges they face.