Book Review: Nickel and Dimed – On (Not) Getting By in America

Most of the books I review on Bankers Anonymous purport to give insight, for the non-financier, into how Wall Street works, a main theme for this site.  This book review, however, aims to give Wall Streeters insight into the life of the woman who cleans your house.

Barbara Ehrenreich engaged in stunt journalism in order to write Nickel and Dimed: On (Not) Getting By in America.  She temporarily shed her middle class, educated life in order to understand the working poor.  Over the course of six months, she worked minimum wage jobs and tried to pay for shelter, groceries and other expenses on only her monthly take home pay – an impossible task for her.

She apologizes upfront for the stunt by acknowledging the artificial short-term nature of the experiment as well as her advantages over the typical working poor in the United States.  She is white, native English-speaking, highly educated, in excellent health, and very motivated.  And yet the challenges she faces in paying for basic food and shelter would – if we are honest with ourselves – break most of us down.

Ehrenreich works for $2.43 an hour – plus tips – at her first job in Key West, FL at a hotel restaurant.   Next she moves to Portland, ME to juggle a maid job at $6.65 per hour with a similar low-paying job in a nursing home.  Later she works in the ladies clothing department at a Minneapolis Wal-Mart.  Typically, a single job leaves her short on rent and food money at the end of the month, although she lives in low-rent places such as a cramped, out-of-the-way cabin, a weekly-rate hotel, and a dingy, off-season trailer park.  Juggling two jobs, a theoretical solution, leaves her exhausted and physically unable to perform the first job.  It never quite works, and there’s seemingly no way to get ahead for the working poor.

Ehrenreich’s prose is funny[1] enough to lighten the burden she feels at the indignities of pee-testing, preposterous middle management patronizing, personality testing, and polyester uniforms.  She illustrates in specific ways[2] how the poor live in a parallel universe from you and me, even though they are stocking shelves or pouring coffee right next to us.

Ehrenreich’s writes about her experience during a boom time in America – 1998 – when unemployment reached a record low and corporate America complained about a dearth of workers.  This makes her narrative all the more compelling today, as in even the best of times the working poor have little chance to afford basic material necessities.

Although I read the book years ago when I worked on Wall Street, during the past few years of the Great Recession I’ve thought frequently about Nickel and Dimed.  We often hear a television commentator or political leader speak ruefully about the “middle class jobs lost,” as if that’s the national tragedy.[3]

It really gets up my nose, however, that we find tragedy in “educated, middle class people being out of work,” but we don’t focus on the persistent national tragedy of people who have been in recession all along.  Yes, the Great Recession threw a high number of white collar folks out of a job.  But the GR narrative stresses ‘white color’ jobs, by which I mean the image of ordinarily highly employable people suddenly struggling, rather than the large number of long-term working poor or under-employed people.

I really do not mean to sound indifferent about the tens of thousands of wonderful finance jobs lost in the Great Recession, or the millions of middle class folks who have struggled in recent years, but I do find the obsession with the middle class, rather than the working poor – the true underclasses in the United States – a curious omission in our American economic narrative.

The national unemployment rate rose from a low of 4.5% in 2007 just prior to the Great Recession to a current rate (in mid-2012) of 8.2%.  The African-American unemployment rate meanwhile has remained high at 8.3% and 14.4% respectively, nearly twice the national rate in 2007 and in 2012.

Are the 30% of Americans in a persistent state of underemployment, unemployment, and poverty invisible?  Yes, they are.  In this Great Recession, we just ignore them, because their situation is assumed to be unchangeable.

Both political parties shy away from acknowledging the working poor or people in chronic poverty. It seems only the “middle class jobs lost” are worth lamenting.

From the Obama “Jobs and Economy” page: “For years before the economic crisis, middle-class security had been slipping away. Wages stagnated while health care costs soared.”

From the Romney “Jobs and Economic Growth” page, we get a helpful “Middle-Class Promise Gap: Unemployment“ [LINK has been taken down with the end of the campaign.]

You will not find either candidate for President discussing the working poor or the persistent underclass in the United States.  I guess the working poor and unemployed don’t vote in sufficient numbers?  They certainly don’t donate enough to campaigns to matter.

The cone of silence increasingly ignores the American reality of wealth stratification.[4]

I currently live in the one of the poorest large cities in the United States, an urban environment with persistent poverty rates around 25% of the population.  For children under age 10, closer to 30% are growing up in households below the poverty line with a similar rate of undernourishment.  Their poverty was real before the Great Recession, it is real now, and because few leaders seem concerned about the issue, it will be true for the whole next generation to come.

In my hedge fund business, I invested extensively in municipal tax liens[5] in upstate New York.  Many upstate New York cities barely noticed the Great Recession.  Instead, decades prior to the recession, the regional Rustbelt deindustrialization kept them in a depression characterized by high rates of poverty, declining population, and falling real estate values.[6]

A permanent recession in some regions and in some population groups is the real story.  Nickel & Dimed is the real story.

My guess is anybody who reads this book review lives well ensconced in the middle class or above, and spends little time thinking on a daily basis about the working poor or the nation’s chronic underclass.  I’ll be the first to admit I certainly don’t.  Instead, my day – like yours – is full of what may be called ex-banker problems, and of course, cat videos.

Ehrenreich’s Nickel & Dimed gave me insight into the way millions of my fellow citizens live.   If more people should understand how high finance works, it’s even more essential that high finance folks understand how millions of their fellow citizens are getting by, or not, in America.

Please see related post: All Bankers Anonymous Book Reviews in one place.




[1] In writing this review I found myself struggling unsuccessfully to find something funny to say on the topic of the working poor and underclass in America.  Her specific experiment had light moments, but humor kind of eludes me on this one.

[2] Multiple restaurant co-workers live out of their cars because they can’t afford the rent anyplace near their place of employment.  Grocery shopping for healthy perishables proves impossible without a real refrigerator or kitchen.  Working slowly can be rational when you’re paid by the hour.  Neglecting antibiotics or doctor’s visits because of the cost can be devastating to your health and ability to work.

[3] It is certainly terrible to lose one’s job, and I do not mean to be callous about middle class folks who got laid off in the last few years.  The great risk for a middle class person who joins the unemployment ranks is really falling into the huge underclass, at which point he will be effectively forgotten in the national narrative.

[4] Which is why I was happy to interview a member of the 1% to speak candidly about his life here.

[5] As an investor, I purchased from municipalities a lien representing a senior claim on real estate for which the property owner had not paid City or County or School or Water taxes.  After the expiration of a statutory period of time, my firm had the right to foreclose on the real estate.  Many municipalities in upstate New York have a constant need to sell tax liens because of persistent tax delinquencies.  That of course reflects the relative poverty and declining real estate values in the cities and towns of the region.

[6] For investors who would like to know just how depressed the situation is in some upstate New York cities, perhaps my real world example will provide a point of comparison.  I sold a seven-unit residential building (acquired via tax lien foreclosure) in January 2011 for $75,000.  While two of the units needed a little improvement, three of the units had renters, providing cash flow on the building.  And I was happy to sell the building just to be rid of the risk.  That upstate New York city is not coming back any time soon.

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