Session 4: The Risk Shift by Jacob Hacker

Posted March 9, 2011 in Learning. Tagged: ,

In the last forty years, many of the common security institutions that previous generations created have been dismantled.  Large corporations used their power to weaken employee protections, cut taxes, shift costs and reduce employee benefits.  These things have slowly chipped away at our economic security.  Jacob Hacker calls this the Great Risk Shift, as risk has shifted more and more onto individuals.

Income Insecurity

  • The political scientist Jacob S. Hacker writes that a Great Risk Shift has moved economic security “from the broad shoulders of government onto the fragile backs of American families.”  In the thirty years after World War II (1947 to 1977), economic security increased for many (but not all) people.  The social safety net was strengthened, even as our economy was dynamic and growing.
  • Now, with wages stagnant and falling, many households have had to involuntarily work more hours –and have more members of the family enter the paid labor force.
  • More women entered the paid workforce, which is a good thing in terms of choice and options.  But having multiple income earners masked how bad the economy really was.
  • The meaning of a “steady job” has shifted.  For many households, there have been enormous income swings from year to year, creating instability.
  • Personal bankruptcy – once a rare occurrence – Is now more routine.

Family Insecurity

  • Parents with children are much more at risk of insecurity – facing bankruptcy and foreclosure at higher rates than households without children.
  • Single parents, operating in a system that assumes two incomes to survive, are even more at risk.

Support systems for families – like extended families – are less strong as people have become more mobile and geographically separated.

Job Insecurity

  • Most workers don’t know where they will be working in five years or three years – much less stability compared to a generation ago.  Many more workers feel the sands shifting below their feet.
  • Fewer workers have “long term employment” and more are working as “temp” or contract workers or other forms of part-time or contingent labor.  Frequently, there are no benefits attached to these types of jobs.
  • A higher percentage of workers are involuntarily underemployed, working part-time, when they need full-time jobs.
  • Reported unemployment rates would be much higher if we counted discouraged workers (those who have given up looking for work) and involuntarily part-time workers.

Health Insecurity

  • More and more Americans are “on their own” in terms of health insurance.  The percentage of jobs with health insurance as a benefit has declined.
  • Statistics:  48 million Americans lack health insurance, up from around 24 million in 1980.  All of the decline in health coverage is due to a drop in the scope and generosity of employer-provided health coverage.  In 1980, the majority of employers at medium-to-large companies paid 100 percent of the premium for family health coverage.  Today, fewer than a quarter do.
  • Over a two-year period, more than 80 million adults and kids – one out of three nonelderly Americans – spend some time without health insurance and the protection it provides against ruinous health care costs.  More than 50 million are uninsured for more than six months.
  • One out of six working-age adults carry medical debt, and medical costs and crises were a factor in as many as 700,000 personal bankruptcies in 2001.

Retirement Insecurity

  • More and more families are “on their own” to figure out their retirements, with the decline of employer-based pension plans and the expansion of individualized plans such as 401(k) plans and IRAs.
  • Statistics:  In 1980, more than 80 percent of large and medium-sized corporations offered traditional “defined-benefit” pensions that provide a predetermined monthly benefit for the remainder of a worker’s life. Today, less than a third do.  Instead, companies that provide plans now offer “defined-contribution” plans, such as the 401(k), in which returns are neither predictable nor assured.