[Marxism] The Economy Is Strong. So Why Do So Many Americans Still Feel at Risk?
lnp3 at panix.com
Wed May 22 09:35:01 MDT 2019
NY Times Op-Ed, May 22, 2019
The Economy Is Strong. So Why Do So Many Americans Still Feel at Risk?
By Jacob S. Hacker
President Trump is running for re-election on the strength of the
economy, and why not? The unemployment rate is lower than it’s been in
five decades. The stock market is booming. Overall economic growth has
There’s just one problem: Voters are not particularly enthused about it.
Recent polls suggest a substantial majority of Americans feel the
economy is working only for “those in power.”
A big reason for this disconnect is that many Americans feel insecure.
They may be doing well at the moment, but they fear that, however high
they are on the economic ladder, a single bad step or bad event could
cause them to slip. A booming economy hasn’t quieted these concerns,
because insecurity remains a huge and growing problem in ways that
voters and candidates instinctively get but the sunny job numbers
Insecurity is the broad challenge that all 2020 presidential candidates
must address — and it helps explain why Democrats are tripping over one
another to present bold plans for universal health care, public
retirement supplements, guaranteed jobs and a much higher minimum wage.
Even with unemployment at a 50-year low, the job market is failing to
reach millions of potential workers. That’s because those who aren’t
working or looking for work are left out of the unemployment statistics.
And the number of such workers has been growing: When unemployment was
last down near 3.5 percent, in 1969, virtually all men ages 25 to 54
were in the work force. Today, the proportion is below 90 percent, the
result of a long-term decline in work force participation that has hit
men most severely, but has recently affected women, too.
Other rich countries haven’t seen this troubling fall, in part because
they have policies that help workers find jobs, keep their skills
up-to-date and balance work and family. Unfortunately, the United States
hasn’t done much on any of these fronts. It once nearly led the world in
levels of work force participation; now it’s toward the back of the pack.
This reversal has had many bad effects. It’s reduced the incentive to
bid up wages, which used to be seen as the inevitable consequence of
tight labor markets. It’s also made unemployment less and less useful as
a measure of job security.
The basic problem is that most of the jobs offered today don’t provide
the guarantees that workers once expected. This transformation is
obvious in “gig economy” jobs like driving for Uber. But the gig economy
is still pretty small; for most Americans, the problem is that their
work has been gig-ified. Corporations used to pool major economic risks
within their labor forces. They did so because they could — the
pressures of financial markets and global competition were less
constraining. And they did so because they thought they had to if labor
unions were to remain satisfied. Now those risks are mostly on workers
These changes aren’t unique to the United States. Yet they’re uniquely
consequential because of how we safeguard economic security. The United
States spends more on social benefits than any affluent country besides
France once you take into account tax breaks and employer-sponsored
benefits. But there is a big difference: We have a system that is
premised on employers providing many of the benefits that governments
elsewhere provide directly.
In the mid-20th century, American corporations came to be seen as
mini-welfare states, providing workers not only with job security and
continuous training but also with generous health benefits and a secure
retirement income. That world is gone, and it’s not coming back.
In short, the implicit social contract that once bound employers,
families and government has unraveled, and nothing has taken its place.
This unraveling has taken different forms in different areas. In
metropolitan America, it’s seen in rising income volatility and the
disconnect between wages and the skyrocketing costs of housing, health
care and education. In rural and small-town America, the loss of
productive employment looms larger. But what I’ve called the “great risk
shift” is more or less universal for all Americans.
Which helps explain why ideas for tackling rising insecurity have broad
appeal. At a recent town hall with Bernie Sanders on Fox News, the host
thought he was setting a trap by asking audience members if they’d be
willing to give up their employer-sponsored insurance for Medicare — and
the audience cheered.
Universal health care would go a long way toward strengthening economic
security (I’ve advocated achieving universality through a big expansion
of Medicare). Moreover, Medicare’s ability to contain costs is so
superior to the private sector’s that a broadened Medicare program would
ultimately free up enormous amounts of state and federal spending to
tackle insecurity in other domains.
Equally important are new measures to help people cope with an insecure
labor market. Candidates running to unseat Mr. Trump have presented a
range of ideas — from the familiar (ensuring unemployment insurance
reaches all workers and limiting employers’ ability to classify their
workers as independent contractors) to the pathbreaking (a federal
system of paid family leave and a retraining and jobs guarantee to draw
discouraged workers back into the labor market).
Similarly, young Americans need a system for financing college that does
not leave them deeply in debt. In an age in which the returns to college
are not only higher but also more variable, it makes no sense to have
young adults borrowing heavily to make a risky investment. Fortunately,
proposals for debt-free college and income-contingent repayment of
student loans are at the top of candidates’ agendas, too.
Forty years of risk-shifting won’t be reversed easily or quickly. The
jury-rigged system that is crumbling still has powerful defenders, and
it still works tolerably well for advantaged workers. Most daunting of
all, it’s still far too easy to scare Americans into thinking that
extending security to those historically denied it will make them worse
off, rather than better protected.
In an era in which trust in the public sector has plummeted, restoring
economic security will require rebuilding that trust — and increasing
the capacity of our governing institutions to earn it. But if Americans’
unease amid affluence tells us anything, it’s that we won’t fix what’s
ailing our economy until we rebuild our fraying social contract.
Jacob S. Hacker, a professor of political science at Yale, is the author
of “The Great Risk Shift: The New Economic Insecurity and the Decline of
the American Dream.”
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