Topic 2 Posts

labor

Grasping the true scale of inequality

There's a problem with understanding inequality at the modern scale.

Our minds struggle to make sense of a "billion" things. Much less tens or hundreds of billions of things. Our minds further struggle to compare how a billion of this might compare to a million of that.

As a result, the everyday person has no idea just how much more money the wealthy have:

The average American believes that the richest fifth own 59% of the wealth and that the bottom 40% own 9%. The reality is strikingly different. The top 20% of US households own more than 84% of the wealth, and the bottom 40% combine for a paltry 0.3%. The Walton family, for example, has more wealth than 42% of American families combined.

This viral video tries to visualize the drama:

There have been more attempts to make the differences tangible. For example, you've probably seen the viral TikTokker who quantified extreme wealth with grains of rice. For example, if a single grain is worth $100,000, Jeff Bezos has 58 pounds of the stuff.

I'd like to offer an alternative to these laudable approaches to solve this difficult problem.

Inequality is foremost a matter of time

Work is a trade: time and energy for some amount of money. We give up irreplaceable time in our lives to pursue the goals of someone else. In exchange, we get enough money to, we hope, pay for our basic necessities: food, shelter, clothing, medical care. If we're very lucky, we make more than we need, and can use the rest for comforts and saving.

In the United States, one year of work yields $70,784 in the median case.

Aside: median vs average

As a refresher, the median value in a set of numbers describes where the middle is. In other words, there are as many values that come before as after. Medians can be helpful in statistics around inequality because they prevent extreme values at either edge from disorting the picture.

Median annual income as the unit of time-for-work

So at the middle of the pack, $71k isn't quite prosperous, but it is enough to rent a one bedroom apartment in every US state.

Like grains of rice, we can use this number to slice up inequality into numerical scales we can actually understand. So for every $71k you have stored up, that's a year of self-determination or leisure time available to you. A year buffering you from poverty and desperation.

Time leverage by annual compensation

To start, let's look at annual compensation as it yields a unit of median US income. In other words, how much does a year of work buy you in terms of the power not to work if you don't want to?

Elon Musk is doing pretty well: in just a year he was paid 142 millennia of median income. In other words, Elon made enough leisure money for 23x the duration of all human civilization.

Musk is an outlier, certainly, but you can find plenty of other dramatic examples.

Tim Cook made enough in a year for 12 millennia of leisure, and Sundar Pichai got enough for 40. Dave Clark has 800 years of leisure time at his disposal, while Satya Nadella gets 700.

Parasitizing the American healthcare system isn't a bad gig, either. CVS CEO Karen Lynch has almost three centuries of leisure coming her way, as does UnitedHealth CEO Andrew Witty. This makes sense: people will do anything to keep themselves and their loved ones alive. It's a profitable protection racket.

Everyday workers, meanwhile, earn less. Walmart, Amazon and McDonald's workers' median incomes are less than half of the national median, while Apple's is 80%.

As Starbucks workers fight, often successfully, to build a union, it's worth noting that the CEO there gets almost three centuries of leisure, while the typical barista scrapes by with only half the national median income.

Dave Clark gets eight centuries of leisure in a year while half his workers don't even get a single year. In fact, it's worse than that, because working in an Amazon warehouse can cost future earnings, due to injuries and fatalities.

I'm comfortable with the argument that being an executive of a public company takes certain specialized skills not everyone has, and therefore is due certain additional rewards. But centuries of leisure potential every year? While the typical worker doesn't even hit the median income, much less stack up any extra? That's taking so much and leaving so little.

Time leverage by wealth

But annual compensation inequality is nothing compared to wealth inequality.

During the 2016 campaign, Trump argued that he received a "small loan" of $1 million from his father, and that he'd worked hard for his wealth. Let's take the claim at face value, ignoring all his other generational advantages. That's 65 years of income, or more than an entire lifetime. Imagine what you could build with an entire lifetime of income loaned to you at the beginning of your career.

Meanwhile, back to Musk. He has 2.7 million years of buffer time stored up. That's more time than has passed since the first humans evolved. Bezos, Buffet and Gates each have around 1.5 million years.

If it sometimes seems as though Nancy Pelosi—disdainful as she is of progressive policy goals—is out of touch with the typical American, it's worth noting she has as much as 15 centuries of cash. That's enough money to last from the fall of Rome until today. McConnell isn't doing too badly, either, with 500 years stashed away. Joe Biden could retire, meanwhile, for over a century on his current haul.

AOC, it should be noted, may still be in the red thanks to student loans. She's much closer, therefore, to the typical American, which has just two years of cash buffer. It's harder for those who didn't attend high school: they have almost no buffer, at median net worth of $20k. Having a college degree, meanwhile, brings the median to four years of buffer.

This doesn't even touch the mechanics of financialization, like stock buybacks. Apple has transferred 132,000 lifetimes of wealth in this form, or 5.9 million years of the median US income.

Inhuman leverage

So we have some people, in American society, with almost no buffer at all.

Meanwhile, some among us have so much excess power in the form of time that they'll die centuries before they could come anywhere close to using all of it. This is disorting our world in dramatic ways, between the chaos of the Twitter acquisition to the fallout of Citizens United, to the ongoing consolidation of essential services.

As a whole, we're able to produce so much wealth. Does it really make sense for the most powerful among us to be so gluttinous with the rewards? Does Elon need 61,000 lifetimes of wealth? Do Bezos, Buffet and Gates need 30,000 lifetimes of wealth?

What would happen if they shared the pie a little more? How would the resulting tax revenues improve our communities through infrastructure and education spending? How would everyday lives improve with less stress, more leisure time, more time with our loved ones?

It's helpful for the wealthy that the numbers are so incomprehensibly big it takes a whole spreadsheet just to begin the conversation.

When your salary requires you not understand the labor movement

I’ve been reading Daring Fireball for something like 18 years now. I appreciate John Gruber’s insights on Apple, and find him more right than not in analyzing their products, strategy and motivations. Hell, I survived a layoff in 2020 by buying an ad on his site.

But I’ve been scratching my head at this recent remark about union drives at Apple’s retail operation:

This public enthusiasm for labor unions is manifesting in high-profile unionization drives at big companies like Starbucks, Amazon, and now Apple.

This is a strange logical construction to me, but it mirrors a larger challenge I find among pundits in understanding the current moment and movement in labor.

In one of my favorite quotes of all time, noted 20th century troublemaker Upton Sinclair wrote “It is difficult to get a man to understand something, when his salary depends upon his not understanding it!”

The most insightful people in the game are struggling to make sense of a resurgent labor movement. But it’s not that hard to follow—if your incentives aren’t too bound up in the interests of the people who already have a lot of money.

Trouble is, that’s a hard line to walk while getting paid to write. I'm sympathetic—and unaffected. Maybe I can help.

Unions aren’t forming because they’re popular; they’re popular because they’ve become urgently needed and they’re forming for the same reason

In most people’s interactions with a workplace, the company takes too much and gives too little. The only recourse for labor is to form structures of counter-power to try and balance the equation.

You can stop reading there. All I’m going to do next is prove the point several ways, but if you came here to understand why unions are both forming and popular, you’re good to go.

CEOs, as agents of Wall Street and other financial interests, are paid hundreds of times what their workers make every year. In Apple’s case, Tim Cook took home $100m in 2021 alone. The typical Apple Store employee, making $22 an hour, would need to work 2,367 years to match Tim’s compensation.

This isn’t unusual to Apple, though. CEO pay is at an all-time high, but that’s not even the worst part. When workers create profits for corporations, what doesn’t go to the CEO is too often sucked up by shareholders in the form of stock buybacks.

Supporters of the status quo will argue that guys like Tim Cook create outsized value for companies, and deserve outsized compensation as a result. I can accept that Cook is a uniquely talented person with unique insights. Gil Amelio, Michael Spindler and John Sculley are proof enough that not everyone is suited to run Apple.

Nevertheless, I struggle with the idea that Cook deserves that much more of the pie than the people who make it possible for him to move the vast quantities of hardware and services that allow Apple to post its billions in quarterly profits.

This isn’t an argument in the abstract, either. It’s becoming harder and harder to afford the basics of life—housing, food, transportation, childcare—in the United States, precisely because of this inequality. For example:

The people with money are living the high life while wage workers are struggling to get by. But this is about more than money. Employees of large corporations are separated from decision makers by enormous gulfs of reporting structure and policy, with limited say in their day-to-day work.

Apple’s workers don’t just want more money, they want things like better scheduling and career advancement. The timing of when you work is everything: it impacts your ability to rest, to be with friends and loved ones, to meet educational goals, and otherwise determine the course of your life.

Scheduling in a recurring theme in many recent retail labor disputes, as in the case of Starbucks.

Amazon presents perhaps the most extreme example of how precarious today’s workers are. Six warehouse workers died when a tornado struck a distribution center in Illinois last year. Desperate drivers with no slack in their schedules have to piss in a bottle to meet their delivery quotas, as the company admitted to lawmakers. The company’s idea of worker well being is, in a bit that would go too far even for Severance, a phone booth-sized cubicle where workers can watch mindfulness propaganda.

Self-determination is an issue for wage earners across many sectors. The US sits on a knife’s edge as rail workers—over-scheduled and fighting for the basic right to do things like visit the doctor once in awhile—contemplate a nationwide strike that would grind logistics infrastructure to a halt. Those guys, at least, have a union.

To recap, workers are struggling with:

  • The basics of reliable scheduling and paid time off
  • Soaring costs of the essentials
  • Their ability to advance their careers
  • All the surplus value they create going to CEOs and Wall Street

In an economy that has produced enormous gains over the last decade, all of the fruits are going to the richest people in the system. After a global pandemic, in which frontline workers kept entire global economic order afloat, the rich are richer than ever, while workers are scrambling to pay the bills.

That’s why unions are popular. That’s why unions are happening.

There’s just no other recourse for such a wide-ranging, unfair, structurally entrenched bargain.