False promises to the jobless

baitandswitchLooking over Barbara Ehrenreich’s Bait and Switch, a 2005 exposé on the decline of the middle class, I found descriptions of the following three alternatives for the downsized corporate manager.

  • Franchising, also known as “buying yourself a job,” is the purchase of the right to operate a local franchise of a major corporation. Most of these businesses fail, apparently at an even higher rate than other small businesses. A 2002 study found that franchisees had a success rate of about 25 percent and an annual income averaging less than $30,000. Those “be your own boss” sales pitches don’t tell the whole story.
  • Commission-only sales employs many millions in what are often pyamid marketing schemes — so rewards depend on recruiting new people to fill in the lower reaches of the pyramid. Commercials and promotional literature for these schemes typically imply that you can make $30,000 a month or more without lifting a finger. In fact these jobs offer few or no benefits, with high start-up costs (e.g., purchasing a supply of the product, attending mandatory meetings, or paying fees to an organization). Usually there is no guarantee that your “employer” will not insert competing sales reps into your territory. Five years ago, about half of these direct-sales jobs made less than $10,000 a year, and only 8 percent — the tip of the pyramid — earned $50,000 or more.
  • Real estate, the traditional fall-back career, looks less promising than ever with the collapse of the housing market. But even in its salad days, when we all believed home values would rise forever, only about 14 percent of those who obtained a real estate license actually stuck with the profession for more than one year. Of those, only 30 percent made more than $30,000 a year.

What all these jobs have in common is that the employer has successfully shifted the risk of taking on a new hire, along with the expense of health care, insurance, and retirement benefits, to the employee.

Ehrenreich also found that a sizable proportion of unemployed managers and professionals end up in “survival jobs” — temp jobs or entry-level positions at places like Wal-Mart, Best Buy, and Home Depot. These people are not officially classed as “underemployed” as long as they are able to work full time. As far as the Bureau of Labor Statistics is concerned, a move from a corner office to unemployment, and from there to a job grooming dogs at PetSmart, is a successfully concluded job search.

Source: Barbara Ehrenreich, Bait and Switch: The (Futile) Pursuit of the American Dream, New York: Henry Holt & Co., 2005 (ISBN 978-0-8050-8124-4), pp. 181-186, 189-190, 205-210.

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