A 2019 American Payroll Association survey found that more than 74 percent of Americans who earn a paycheck find themselves financially dependent on their next immediate check. This cannot be explained by saying we’re all just collectively lazy. Instead, it’s a clear failure of the system.
The professions included in this study arguably require the most work in our society, such as teachers, waitresses, nurses and construction workers. These are jobs that include people from all walks of life, and capitalism leaves them out in the cold. But while it’s an indictment of our society that we allow this to continue, we must first ask ourselves: How does this byproduct of capitalism affect our freedoms?
In short, freedom is limited. To understand how, we must look critically at what freedoms capitalism promises us, most importantly the false promise that we have the freedom to choose where to work and live.
One of our biggest and most important expenditures as a country is health care. With employer-sponsored health insurance being the most common source of health care coverage in America, the fact that 74 percent of workers also are still living paycheck to paycheck is worrying. The 155 million people in America who rely on their boss for health insurance are effectively stuck at their job. Sure, you may have some “choice” in your health care plan, but at the end of the day the choice of whether you actually have adequate coverage is up to your employer. If you’re working paycheck to paycheck and want better, capitalism says, “Too bad, you’re stuck,” because if you leave, you risk living without insurance while between jobs. This is especially harmful if you are a person with a condition that requires regular attention, like diabetes. In that case, you have no time to be uninsured — making access to health care a life and death matter that has already begun killing Americans unable to afford inflated insulin costs.
Between living for the next paycheck and relying on your place of work for health care, you are robbed of your choice of where to work and live because leaving your job, and health care, is that much harder. For these people, the capitalist rhetoric to “pick yourself up by your bootstraps” doesn’t apply. Moving to new cities for better opportunities, not an uncommon suggestion made to those who want better work, is impossible when you can’t save the money because you’re living paycheck to paycheck. Data from the American Moving & Storage Association states that “the average cost of an intrastate move is $1,170, and the average move between states costs $5,630.” Saving thousands isn’t realistic for those living paycheck to paycheck. Capitalism necessitates a focus on the short term, which limits your future choices. For example, more than 41 percent of people who moved out of New York state in 2018 earned $150,000 or more. That statistic for those making under $50,000 was just 8.4 percent. The rich have freedom of movement; they can afford to think in the long term. Why can’t the rest of us?
Another economic consequence that prevents self-sufficiency is the potency of intergenerational wealth. A New York University study ranked different jobs on an 100-point socioeconomic scale, with higher values meaning higher prestige and pay, and looked for a relationship between participants’ job scores and their parents’. They found that “half of the Americans surveyed whose parents held top-tier occupations worked in jobs ranked at 76 or higher … Half of those whose parents’ jobs were in the bottom tier were in jobs that scored 28 or under.” With the job market partially dependent on the economic standing of your parents, it’s difficult to argue that this product of the free market is giving people “more choice” in their lives.
This aspect applies not only to jobs, but to net worth as well. Research shows that millennials have on average 40 percent and 20 percent less net worth than Generation X and baby boomers, respectively, at the same age. As it becomes harder to accumulate enough wealth to be self-sufficient, our ability to make choices is diminished.
So, how do we give people greater choice in their lives? The answer lies in socialized medicine and worker cooperatives. If people have health care regardless of their employment, they’re free to pursue education and move. By socializing medicine, workers finally gain the freedoms capitalism promised them. Worker cooperatives, a business structure that emphasizes profit sharing and democratic decision-making, reduce income inequality and allow more people to build wealth in their communities. According to The American Federation of Labor and Congress of Industrial Organizations, the average CEO-to-worker pay ratio in the United States is 373-to-1, while it is only 9-to-1 in the largest cooperative in the world, Spain’s Mondragon Corporation. Encouraging worker cooperatives and getting health care through the government can greatly increase workers’ freedom because they’ll have more accumulated wealth and therefore be less tied down to their jobs.
Under our current economic system, jobs that are necessary for society to function aren’t paid well enough to maintain freedom of choice for all. People tell you to save; they say, “If only you would save your money you could buy what you want, live where you want and be as healthy as you want.” The problem is, if you can’t save money, like most workers, you’re left behind. The inequality that results from capitalism doesn’t afford greater freedoms to most Americans — it only confines their ability to choose where they live and work.
Michael Levinstein is a senior double-majoring in political science and economics.