Beyond the Debt-Labor Analogy

At base, the provocation of a labor union is that, as individuals, workers are at the mercy of their bosses, but together they can exercise power over their workplace — and, in a social justice union model, far beyond that. The provocation of a debtors’ union is analogous. As individuals, debtors are at the mercy of their creditors (banks, landlords, the government, hospitals, insurers, courts, bail companies), but together we can exercise power over the creditor class.

The two modes of organizing have different targets but complementary aims. Where labor unions focus on sites of production, debtors’ unions focus on circulation, or how money flows and to whom. Labor organizing targets the employer, demanding higher wages, benefits, and more. Debtor organizing targets the creditor (which, in the era of neoliberalism, is also often the state). It fights against predatory financial contracts and uses debt as leverage in the fight for the provision of reparative public goods, including health care, education, housing, and retirement, so that people don’t have to go into debt to access them.

Who better than medical debtors, student debtors, tenants, or carceral debtors to exercise collective leverage over the systems that exploit them — and to use that power to demand health care for all, housing for all, education for all, and incarceration for none?

Under finance capitalism, debt has replaced wages as a form of social provision. Therefore, workers and debtors (who are often the same people) must work together to exercise our leverage in concert, in no small part because debts are wages of the future.

One need only look at how people spent their pandemic stimulus checks to see the intimate relationship between debt and wages or other forms of income. The New York Fed reported that US households spent an average of one entire stimulus payment paying down debt. Households making less than $40,000 annually used 44 percent of the checks to pay down debt, compared to just 32 percent for households making over $75,000.

Universal basic income (UBI) programs run the same risks of merely serving as debt-repayment programs. Debts for everything from education to incarceration disproportionately impact poor people of color; as a result, UBI money would likely pass through the fingers of lower-income people of color and, in the case of carceral debts, “into the coffers of jurisdictions most aggressively criminalizing poverty.” In other words, without debtors’ unions, what gets offered as “relief” for the working class just becomes a gift to the creditor class.

Similarly, unless we change how we provision our basic needs, any broad victories won by a rising labor movement (a $20 federal minimum wage, for example) will result in more money trickling up into the hands of the creditor class instead of a better standard of living for workers. If housing remains horrifically expensive, if adequate medical care remains out of reach for most without incurring deep debts, and if even public college demands skyrocketing tuition and fees, then increased wages will simply mean increased capacity for debt repayment.

So while labor unions are using their leverage to fight for imperative minimum wage increases, debtors’ unions must use their leverage at the same time to fight for publicly funded housing, health care, and education.

The Company Store

There is a final, structural connection between workers and debtors. Financialization has not only been a public policy shift — in which services once provided or subsidized publicly through the social safety net (even as its benefits, often withheld from or inaccessible to marginalized people, were never truly universal) were transformed into private contracts and individual obligations — but also a shift in corporate practices. If workers once shared factory floors while debtors shared creditors, today the corporation is often both factory floor and bank — both an industrial and financial entity at once.

For instance, every time I’m at Target the cashier asks me if I want to sign up for a Target credit card. In fact, cashiers are required to try to sell customers company cards at often exploitative rates. The Gap has a 21.7 percent starting interest rate on its credit cards, and $27 to $37 late payment fees for debtors who fall behind on payments.

Target and the Gap are not alone among retailers. Macy’s raked in $771 million worth of credit card revenue in 2019, accounting for more than half of the company’s operating income. The company’s profit model is twofold: both conventional retail, in which Macy’s workers sell clothing at a profit that accrues to the store’s owners, and financialized, in which Macy’s workers sell credit to consumers at a profit that accrues both to Macy’s owners and to the banks that issue the cards on Macy’s behalf.

Even in the archetypal industrial capitalist firm, the car manufacturer, we see this same shift toward financialization. General Motors’ financial services arm, the General Motors Acceptance Corporation (GMAC), was involved in everything from financing customers’ new and used vehicles to loaning money to their own dealerships and to the mortgage market. Strapped for cash during the mid-2000s downturn, General Motors sold GMAC to a private equity firm in 2006, and still couldn’t avoid bankruptcy in 2008. But this has not deterred the company from betting again on the financialized business model, buying up AmeriCredit (renamed GM Financial) in 2010. In 2021, GM Financial’s net income surged 89 percent, to $3.8 billion.

Many firms today are making money by both lending money and producing commodities. As a result, labor unions have less power over the means of production than they did before, since much of their bosses’ profits come from credit, not production. But when workers’ unions and debtors’ unions organize in concert, then financialization becomes a new source of leverage for the working class.

For example, in 2019, we saw a nationwide GM strike across fifty sites, concentrated in Michigan, Indiana, and Ohio. Workers won some demands and lost others. Now imagine if all GM debtors — those who had financed their new and used vehicles through GM — were in a debtors’ union and could withhold their auto loan payments in solidarity with workers’ demands. This would exercise far more material leverage over the corporation, and make workers’ demands that much harder to ignore. Finance would no longer be a secondary profit stream over which workers had no power.

And this brings us back to Amazon. As we support Amazon workers in their struggle to unionize warehouses, let’s also remember that Amazon offers not one but four distinct credit cards. Credit extended to Amazon Prime customers alone, via JPMorgan Chase, totals roughly $20 billion. These kinds of credit card deals between major brands and major banks are “some of the most hotly contested contracts in the financial world . . . because they instantly give the issuing bank a captive audience of millions of loyal customers who spend billions of dollars a year.”

Now imagine if those “loyal customers” were unionized. Not only could they renegotiate the terms of their own credit contracts, or use their debts as collective leverage to push Amazon in all kinds of directions, but they could also use their leverage to support the demands of unionizing workers. Down the line, this powerhouse combination could even leave the company vulnerable to a worker-debtor takeover.

And that — the socialization of Amazon — is a worthy horizon for workers and debtors to imagine and organize toward this May Day.