Friday, November 13, 2015

November 13, 2105--Uber

In Aftershock: The Next Economy & America's Future I think it was Robert Reich who wrote about how the middle class has struggled to adapt to the new service economy by a variety of responsive strategies.

In the old economy, with well-paying manufacturing jobs economically anchoring millions of families, it was men primarily who worked in factories and offices while women stayed at home and worked there to maintain the household and assume primary responsibility for raising the children.

At that time, for most the jobs available to middle-class men were enough to sustain their families and provided enough so the next generation could do better than their parents.

But then the compounding affect of inflation and the decline in the number of these good jobs made it impossible to maintain families' life style with only one job and only one person working outside the home.

So men added part time jobs to help them keep even. And more and more women began to work outside the home and struggled both to do that and continue to take primary responsibility for childcare.

But 10-15 years ago this also began not to work.

To compensate families next turned to debt financing.

The one appreciated asset many families had was the rising value of their homes. Those who owned one. And so to maintain their financial status millions refinanced their dwellings. The loose lending environment was such that it was easy to get financing for more than real estate was worth, and families used that extra money--extra debt--to finance their lives and life styles.

Then everything collapsed and millions found themselves under water.

Looking around, they couldn't figure out what to do. Some decided to defer or even not have children. Others turned to the underground economy. More depended on various forms of government subsidies.

And yet others found ways to turn their only two remaining assets into income--

They earned extra money by renting their homes, apartments, and spare bedrooms via Web-based operations such as airbnb and turned their cars into taxis via Uber.

When this no longer works to keep families afloat, what will be next?

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