[Marxism] The Economy Is Strong. So Why Do So Many Americans Still Feel at Risk?

Louis Proyect 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 
been steady.

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 
largely hide.

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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