How Inequality Hurts

Guard Labor: Inequality’s Hidden Price Tag

What happens to societies that don’t share the wealth? They spend — and waste — a fortune guarding it.

By Sam Pizzigati

The Great Recession seems to have America’s CEOs spooked. Corporate spending  on executive security, already high before hard times hit, is climbing still higher — at the same time corporations are slashing payroll and trimming worker benefits.

Since 2007, Starbucks has shelled out $1.6 million to protect CEO Howard Schultz. In 2009 alone, the Las Vegas Sands gaming giant paid $2.45 million to secure the person and property of CEO Sheldon Adelson. And Oracle software has shoveled $4.6 million, over the past three years, into a “residential security program” for billionaire CEO Larry Ellison.

All these totals, amazingly enough, understate the corporate CEO security tab. None of these totals, for instance, count spending on corporate jets. IBM, Dupont, and many other major corporations require their top execs, as a security precaution, to fly by private corporate jet, even for personal travel.

What’s driving all this corporate security spending? Have top executives gone paranoid with guilt? Are they having nightmares about unemployed peasants with pitchforks massing outside their executive suites? Or is the FBI actually reporting an uptick in credible threats?

Either could be true, or both. But we really don’t need to guess at the security surge we’re now watching. Rising CEO security spending merely reflects a wider, entirely predictable social dynamic: Societies, as they grow more unequal, always spend more on what economists have come to call “guard labor.” 

This “guard labor” phenomenon encompasses far more than uniformed security personnel. Guard labor, as University of California at Chico economist Michael Perelman notes in a recent Dollars & Sense analysis, appears “everywhere.”

Lobbying outlays

Even on store shelves. At consumer electronics outlets, for instance, all those layers of impenetrable — and aggravating — plastic that encase small items force guard labor. To help retailers deter theft, Perelman observes, consumers have to spend time “guarding” what they buy “by putting up with the nuisance of tediously extracting the commodity and disposing of the wasted materials.”

And the “guard labor” for this security packaging also involves everyone from the workers who manufacture the excess packaging material to the truck drivers “who finally haul away the extra garbage.”

But even if we limit the definition of “guard labor” only to those who literally “guard,” the amount of guard labor in the United States has reached astonishing levels. By 2012, the U.S. Department of Labor predicts, the nation will boast more private security guards than high school teachers.

Overall, economists Samuel Bowles and Arjun Jayadev have calculated, at least a fifth of U.S. workers spend their days — or nights — in guard labor.

All societies, of course, do need some level of guard labor. No decent society can possibly stand by and let people be mugged and robbed. To be productive, after all, people need to be safe. Resources spent keeping people safe do make an economic contribution, and a necessary one at that.

But the resources we devote to security also exact a price. Societies fixated on protecting wealth are not creating wealth. The more societies have to spend on security to keep people safe, the less their capacity to help people become more productive. Societies that don’t have to devote massive resources to security clearly have an leg up on societies that do.

And some societies in the world today — the world’s more equal societies — are definitely not devoting massive resources to security. In Sweden, economists Bowles and Jayadev estimate, the guard labor share of the workforce comes in at “less than half” the U.S. level.

Why might inequality and guard labor go hand in hand?

“Two decades of behavioral experiments,” Bowles and Jayadev note, “have provided convincing evidence that humans in diverse cultures are inequality-averse, and that violations of fairness or reciprocity norms provoke costly conflicts.”

“Illegitimate inequalities,” they note, will always be “costly to sustain.”

Wealth that concentrates, in other words, must be guarded, and that guarding takes a heavy toll — on us all.

Sam Pizzigati edits Too Much, the online newsletter on excess and inequality published by the Washington, D.C.-based Institute for Policy Studies. Too Much appears weekly. Read the current issue or sign up to receive Too Much in your email inbox.

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