The War on Normal People_The Truth about America’s Disappearing Jobs and Why Universal Basic Income Is Our Future Read online

  The logic of the meritocracy is leading us to ruin, because we are collectively primed to ignore the voices of the millions getting pushed into economic distress by the grinding wheels of automation and innovation. We figure they’re complaining or suffering because they’re losers.

  We need to break free of this logic of the marketplace before it’s too late.

  We must reshape and accelerate society to bring us all to higher ground. We must find new ways to organize ourselves independent of the values that the marketplace assigns to each and every one of us.

  We are more than the numbers on our paychecks—and we are going to have to prove it very quickly.

  PART ONE:

  WHAT’S HAPPENING TO JOBS

  ONE

  MY JOURNEY

  I grew up a skinny Asian kid in upstate New York who was often ignored or picked on—like one of the kids from Stranger Things but nerdier and with fewer friends. It stuck with me. I’ve never forgotten what it felt like to be young. To be gnawed at by doubts and fears so deep that they inflict physical pain, a sense of nausea deep in your stomach. To feel like an alien, to be ignored or ridiculed. I didn’t think it was possible to forget all that. But it turns out that most of us do. In movies, they show children going through formative experiences at home. The protagonists go back where they came from later to make it better. In real life, none of us goes back.

  My parents valued education deeply. My father, who immigrated from Taiwan, worked in the research labs of GE and IBM. He got his PhD in physics from Berkeley and generated 69 patents over his career. He met my mom, also from Taiwan, while in grad school. She has a master’s in statistics and worked as a computer services administrator at our local university before becoming an artist. My brother became a professor, which is kind of the family business. Being the first generation born in this country gave me both a fierce love for the United States and a deep sense of what it means to struggle to fit in.

  I was one of the only Asians in my local public school. That didn’t go unnoticed. Classmates offered frequent reminders as to my identity:

  “What’s up, chink.”

  “Hey… you… wanna fight?” said with mouth moving but no sound coming out, to imitate a kung fu movie with bad dubbing.

  “Ching chong ching chong.”

  “Hey, you know what Chinese use for blindfolds? Dental floss!”

  “You see that?” Demonstrates a blank face. “That’s the way the gook laughs.”

  “Hey, Yang, you hungry? You want a gook-ie?”

  “Hey, Yang. I see where you’re looking. No interracial dating.”

  “Hey, Yang, what’s it like having such a small dick? Everyone knows Chinese guys have small dicks. Do you need tweezers to masturbate?”

  Most of this was in middle school. I had a few natural responses: I became quite self-conscious. I started wondering if I did indeed have a small dick. Last, I became very, very angry.

  Perhaps as a result, I’ve always taken pride in relating to the underdog or little guy or gal. As I grew up, I tried to stick up for whoever seemed excluded or marginalized. I became a Mets fan. I’d go to a party and find the person who seemed the most alone or uncomfortable and strike up a conversation. I worked out a little too much in college.

  I grew up and found that my zeal extended into my professional life. I love small companies and helping them grow. After five months as a corporate lawyer, I co-founded an Internet company when I was 25, back in 2000. After it went bust, I worked at a medical records software company, and then helped a friend, Zeke Vanderhoek, with his GMAT prep company when he was starting out as a solo tutor in a Starbucks. He eventually asked me to take over as CEO. Between the two of us and our team, we grew the company to become number one in the country.

  By 2010 I was riding high. Our company, Manhattan Prep, had been acquired by the Washington Post Company’s Kaplan division for millions of dollars. I was 35 years old, the head of a national education company that I loved, living in New York City among family and friends, and engaged to marry my fiancée the following year. I was on top of the world.

  And yet, something bothered me that I couldn’t let go. I’d trained hundreds of young people—as CEO of Manhattan Prep I’d taught the analyst classes at Goldman Sachs, McKinsey, J.P. Morgan, Morgan Stanley, and many other companies. These college graduates often seemed disenchanted with their careers; they were looking to go to business school to take a break and find the next step. Many of them hailed from other parts of the country—Michigan, Ohio, Georgia—and had come to Wall Street for better opportunities. When I talked to them after class, they seemed to be searching for some higher purpose that had eluded them. They reminded me of myself a decade earlier, when I had started my career as an unhappy corporate lawyer.

  I thought, “Wow, we have a ton of smart people doing the same few things in the same few places.” I imagined what the best use of their talent would be. One weekend I was back on campus at Brown and met an entrepreneur in Providence, Charlie Kroll, who had started a local company with 100 employees instead of heading to Wall Street. I arrived at a vision: an army of smart, enterprising graduates building businesses in Detroit, New Orleans, Providence, Baltimore, Cleveland, St. Louis, and other communities that could use a boost. New companies have accounted for all domestic job growth the past 20 years. More people building things in areas of need would inject vitality, create opportunities, and help regional economies become more dynamic. Cities like Detroit and New Orleans seemed to me to be the ultimate underdogs.

  I knew building a new company was a very tall order for any recent graduate. But I had learned a lot from working with more experienced CEOs and teams; I believed this apprenticeship model was the best way to develop, since that’s the way that I’d learned throughout my twenties. Win or lose, they’d get stronger. They’d also likely reflect a different set of values after having worked in a startup in an emerging city for a few years.

  I became fixated on the idea of training hundreds of enterprising college grads and sending them to startup companies in other U.S. cities to promote job growth and innovation in regions across the country. We would provide an accelerator and seed fund to help them start businesses after two years. Our goal would be to help create 100,000 new U.S. jobs by 2025. I called the organization Venture for America. People loved the idea. Many said they would have done something like Venture for America if it had existed when they had graduated from college.

  I took my first trip to Detroit in 2010 to see if there were businesses there that could use talent to help them grow. The city was just beginning its descent into bankruptcy—I remember the cold, empty streets feeling abandoned. I joked with a friend, “I felt like running red lights as soon as I got here, it’s so empty.” The city has come a long way since those low points. I met with several local entrepreneurs who said they’d jump at the chance to hire energetic recent grads who wanted to get their hands dirty. The same was true in Providence, New Orleans, and Cincinnati. Meeting with the entrepreneurs in these cities convinced me that I was on the right track.

  In 2011 I donated $120K and quit my job to start Venture for America, with the mission of revitalizing American cities and communities through entrepreneurship. That first year our budget was about $200K.

  In 2018, our budget is more than 25 times higher and we’ve recruited and trained hundreds of young up-and-coming aspiring entrepreneurs from around the country out of thousands of applicants. Supporters include CEOs, celebrities, entrepreneurs, major companies, foundations, and even the state of Ohio. Our efforts have helped create over 2,500 jobs in 18 cities and our alums have started dozens of companies. Out of our last class, 43 percent were women and 25 percent were black or Latino. I wrote a well-received book, and a documentary, Generation Startup, followed six of our entrepreneurs as they started businesses in Detroit.

  I’ve seen dozens of idealistic 22-year-olds evolve into founders and CEOs of scrappy young companies that touch thousands o
f lives. I’ve seen and helped hundreds of little startups grow into mature companies with hundreds of employees. I’ve seen neighborhoods on the edge of desolation become filled with people and new businesses. I’ve worked with some of the most idealistic and noble people in the country making great things happen in unlikely places. My work with Venture for America opened new doors, and people sought out my advice on innovation and entrepreneurship. Here’s me explaining Venture for America to President Obama in 2012:

  I was riding high. My personal life progressed as well in these years. My wife and I got married, and we now have two sons who occupy many of our waking hours. Being a parent is much harder than I ever thought it would be but brings its own sense of fulfillment.

  And yet in 2016 something started bothering me—a feeling I couldn’t seem to shake. As I crisscrossed the country, I often found places that seemed to be in the midst of long-term decay. I ate in diners where I was one of very few customers they’d see all day, drove past boarded up businesses and FOR SALE signs, walked into derelict buildings and factories, saw the looks of resignation on people’s faces. The overall feeling was one of defeat and downtroddenness. The entrepreneurship messages of “take risks” and “it’s okay to fail” seemed ridiculous and misplaced in many of these contexts. It felt like the metaphorical water level in many places had risen and overtaken whole communities. I would often fly back to Manhattan or Silicon Valley after a trip and think, “I can’t believe I’m still in the same country.” I’d sit down for dinner with my friends and feel like a character in a play about people who ate well while the world burned, struggling to understand and share what I’d seen.

  It was less the buildings and surroundings and more the people. They seemed despondent and depressed, like their horizons had been lowered to simply scraping by.

  As for me, I had gone from being an underdog to one of the guys with the answers, from finding the most marginalized or excluded person in the room to finding the richest person and making him or her feel special. The mechanics of growing a nonprofit made me into the head of an establishment, which in turn made me more responsive to resource-rich institutions and people. I spent a lot of time with people who had already won, which was not what I’d envisioned.

  I began to see the limitations of what was then happening in the entrepreneurship, nonprofit, and government sectors. I would be invited to high-level conferences or design sessions, only to have colleagues—even people who were considered the most successful in the field—confide to me that they didn’t believe they were meaningfully addressing the problems they set out to solve, that they would need 10 or 100 or 1,000 times the resources to have a chance to do so. People were clapping us on the back, congratulating us on our accomplishments, and we were thinking to ourselves, What are you congratulating us for? The problems are just getting worse.

  This sense of unease plagued me, and I became consumed by two fundamental and uncomfortable questions: “What the heck is happening to the United States?” and “Why am I becoming such a tool?” I began to feel that my life more closely resembles a dream life in a bubble than the experience of the average American, and that too much of our human and financial capital is flowing to just a handful of places doing things that are speeding the machine up rather than fixing what is going wrong. I was also morphing from the guy who wanted to fix the machine into an add-on to the machine. I love Venture for America. It was the culmination of my life’s work. But it needed to be much, much bigger to stem the tide.

  I started digging into research about trends in the labor market and talking to friends to better understand the long-term shifts happening in the American economy. I wanted to know what the challenges were. Donald Trump’s election in late 2016 heightened my sense of urgency; it felt like a cry for help.

  What I found shocked me and verified my experiences on the road. America is starting 100,000 fewer businesses per year than it was only 12 years ago, and is in the midst of shedding millions of jobs due primarily to technological advances. Our economic engine is stalling out in many places, and automation is eliminating livelihoods for hundreds of thousands of the most vulnerable Americans in regions across the country. New jobs are less numerous, are most often created in towns located far from those most hard hit, and require far different skills than the ones that are being lost. Technology is about to reach a point where it won’t just be folks in the interior that are threatened, but many white-collar and educated workers as well.

  I remember the moment it finally sank in completely. I was reading a CNN article that detailed how automation had eliminated millions of manufacturing jobs between 2000 and 2015, four times more than globalization. I had walked through many of the cities that had previously been home to those jobs—Cleveland, Cincinnati, Indianapolis, Detroit, Pittsburgh, St. Louis, Baltimore, and their surrounding areas. I knew what my friends were working on and what was coming down the road. As I felt the pieces fall into place, my heart sank and my mind raced. Nothing will stop us. We had decimated the economies and cultures of these regions and were set to do the same to many others.

  In response, American lives and families are falling apart. Rampant financial stress is the new normal. We are in the third or fourth inning of the greatest economic shift in the history of mankind, and no one seems to be talking about it or doing anything in response.

  I spent the past six years trying to address these problems by helping growth companies create jobs in different regions and training entrepreneurs. It has been my job for the past six years to create jobs. I’m about to lose—we’re all about to lose—on an epic scale. I’m now certain that the wave—the Great Displacement—is already here and is having effects bigger and faster than most anyone believes. The most pernicious thing about this wave is that you can’t really tell who it has hit as it grinds up people and communities.

  I’ve switched gears. My goal now is to give everyone a sense of what’s coming and then prepare us to fight for the version of the future that we want. It will be a massive challenge. It’s up to us; the market will not help us. Indeed, it is about to turn on us. The solutions aren’t beyond us yet, but it’s getting late in the day and time is running short. I need you to see what I see.

  TWO

  HOW WE GOT HERE

  The Great Displacement didn’t arrive overnight. It has been building for decades as the economy and labor market changed in response to improving technology, financialization, changing corporate norms, and globalization.

  In the 1970s, when my parents worked at GE and Blue Cross Blue Shield in upstate New York, their companies provided generous pensions and expected them to stay for decades. Community banks were boring businesses that lent money to local companies for a modest return. Over 20 percent of workers were unionized. Some economic problems existed—growth was uneven and inflation periodically high. But income inequality was low, jobs provided benefits, and Main Street businesses were the drivers of the economy. There were only three television networks, and in my house we watched them on a TV with an antenna that we fiddled with to make the picture clearer.

  That all seems awfully quaint today. Pensions disappeared for private-sector employees years ago. Most community banks were gobbled up by one of the mega-banks in the 1990s—today five banks control 50 percent of the commercial banking industry, which itself mushroomed to the point where finance enjoys about 25 percent of all corporate profits. Union membership fell by 50 percent. Ninety-four percent of the jobs created between 2005 and 2015 were temp or contractor jobs without benefits; people working multiple gigs to make ends meet is increasingly the norm. Real wages have been flat or even declining. The chances that an American born in 1990 will earn more than their parents are down to 50 percent; for Americans born in 1940 the same figure was 92 percent.

  Thanks to Milton Friedman, Jack Welch, and other corporate titans, the goals of large companies began to change in the 1970s and early 1980s. The notion they espoused—that a company exists only to maxim
ize its share price—became gospel in business schools and boardrooms around the country. Companies were pushed to adopt shareholder value as their sole measuring stick. Hostile takeovers, shareholder lawsuits, and later activist hedge funds served as prompts to ensure that managers were committed to profitability at all costs. On the flip side, CEOs were granted stock options for the first time that wedded their individual gain to the company’s share price. The ratio of CEO to worker pay rose from 20 to 1 in 1965 to 271 to 1 in 2016. Benefits were streamlined and reduced and the relationship between company and employee weakened to become more transactional.

  Simultaneously, the major banks grew and evolved as Depression-era regulations separating consumer lending and investment banking were abolished. Financial deregulation started under Ronald Reagan in 1980 and culminated in the Financial Services Modernization Act of 1999 under Bill Clinton that really set the banks loose. The securities industry grew 500 percent as a share of GDP between 1980 and the 2000s while ordinary bank deposits shrank from 70 percent to 50 percent. Financial products multiplied as even Main Street companies were driven to pursue financial engineering to manage their affairs. GE, my dad’s old company and once a beacon of manufacturing, became the fifth biggest financial institution in the country by 2007.

  With improved technology and new access to global markets, American companies realized they could outsource manufacturing, information technology, and customer service to Chinese and Mexican factories and Indian programmers and call centers. U.S. companies outsourced and offshored 14 million jobs by 2013, many of which would have previously been filled by domestic workers at higher wages. This resulted in lower prices, higher efficiencies, and some new opportunities but also increased pressures on American workers who now had to compete with a global labor pool.