The American Precariat

 

Precarity (also precariousness) is a precarious existence, lacking in predictability, job security, material or psychological welfare. The social class defined by this condition has been termed the precariat. (Wikipedia)

If the quality of life of the majority is tanking, all the glowing economic statistics in the world are nothing but the self-serving bleating of financial toadies, apparatchiks and sycophants who are part of the problem, not the solution, as all the statistics they tout are misdirections.

Small business owners face a particularly intense level of precarity due to their responsibilities for employees and high fixed costs. This is common in the world of small businesses: after paying your crew, there's nothing left for you. The reality is even outwardly successful small businesses are going broke and the owners are burning out. Expenses are increasing in leaps and bounds, but there's only so much you can charge customers. So small business owners sacrifice themselves to try to make it work - something that is increasingly impossible.

'Doesn't make financial sense': Michelin-starred SF restaurant calls it quits. "Even with the busiest the restaurant's ever been, it just doesn't make financial sense," Stowaway said. "We've done a lot of great things and we're proud, but the financial instability starts to affect everyone, and you have to make big changes."

We hear that high-paying jobs are stressful. Yes, they are, but precarity is stressful without the reward of ample compensation. Most people working for a living are stressed out, and so anti-anxiety/anti-depression meds, pain-killers, etc., are part of the self-medication menu, along with supplements. But no med or supplement can fix what's actually broken - our economy and society.

Beneath the endlessly hyped "growth" of the economy, precarity and immiseration are the order of the day for the bottom 60% as wages' share of the national income has continued its 50-year decline.

Where did the trillions of dollars of "growth" go? To those who own capital, not wage earners. That's the only possible outcome of the system in its current configuration.

The reality of the American economy is people earning $22/hour and $24/hour are living in their cars/vans because rents are unaffordable. People experiencing homelessness have to sleep in their cars in wealthy ski town in Colorado, but only if they have a job.

So much for trickle-down: the Federal Reserve gooses M3 money supply, and guess who gets the "free money": $1 Trillion of Wealth Was Created for the 19 Richest U.S. Households Last Year. The richest of the rich in America control a record slice of nation's wealth. (WSJ.com)

Here are the facts: the bottom 50% own a wafer-thin $4 trillion (2.5%) of the nation's $160 trillion in household net worth. The top 10% own $107 trillion and the top 1% own $49.4 trillion--more than ten times the net worth of half the households in America.

The bottom 50%'s share of income-producing assets is signal noise. The real money is made not by owning a depreciating vehicle or a family home, it's made by owning income-producing assets such as stocks, bonds, rental housing, etc., and 90% of income-producing assets are owned by the top 10%.

Since the bottom 60% earn such a modest share of the nation's income, they pay only a sliver of the total federal income tax. So cutting taxes doesn't boost the bottom 60% at all; it simply diverts more of the national income to the 10% who collect the lion's share of both income and capital gains.

Favoring capital over wage earners is the long-established policy of both political parties. One study found that $80 trillion in capital gains has been sheltered from taxation by policies that reward the already-rich.

The taboo that can't be acknowledged lest the status quo collapse is that the only way to reduce the precarity of the bottom 60% is to restore the balance between labor and capital by shifting the gains of the economy to wage earners at the expense of the owners of capital.

If we can't manage this restoration, then the status quo will collapse anyway. When people can no longer make enough to pay for essentials, history is rather definitive on the outcome: the status quo is overthrown, and nobody will care whether the nobility is Democrat or Republican.

from the blog of Charles Hugh Smith at oftwominds.com on May 14, 2025