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Reviews in American History 32.2 (2004) 214-222



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Privatizing Economic Security:

The Fate of New Deal Liberalism and The American Welfare State

Jennifer Klein.For All These Rights: Business, Labor, and the Shaping of America's Public-Private Welfare State. Princeton, N.J.: Princeton University Press, 2003. xiii + 354 pp. Figures, notes, bibliography, and index. $35.00.

Jennifer Klein's brilliant study analyzes how and why a job-based private system of health insurance and pensions emerged and developed in tandem with the American welfare state. Adding to a growing literature that has examined the relationship between welfare capitalism and the American welfare state, For All These Rights offers fresh insights into our most pressing policy issues today. Klein's compelling introduction reminds us just how much Americans have come to rely on private welfare schemes for security and just how precarious that security is. The bankruptcies of Enron, Lucent Technologies, WorldCom, and Bethlehem Steel, among others, left tens of thousands of Americans without the company-funded health care or pension benefits promised to them. Companies had either funded benefits with stock that soon became worthless, as was the case with Enron, or they had failed to leave sufficient funds in reserve to cover retirees. The promise of security from company-funded welfare programs has become shallow indeed, and in large part, Klein argues, because the contraction of the public welfare state since the 1980s has given firms the political and ideological space to retrench on their own private programs of supplemental security.

Klein's research focuses on the decades between 1910 and 1960, and this enables her to chart continuities in private provision of social benefits while highlighting how the New Deal's politics of security created new expectations among workers and new corporate strategies to temper union demands and stave off government regulation. After the New Deal, workers came to see social benefits as an employee right rather than a measure of the employer's largesse. Firms responded to the expansion of public welfare not by shrinking their own private programs, as some historians have assumed, but rather by expanding their commitment to corporate social welfare programs. Klein argues that employer provision of private pensions and medical insurance [End Page 214] shifted the balance of power in management's favor to help produce a more fragmented welfare state. Klein not only analyzes the motivations and behavior of firms, state agencies, and policymakers, but she also examines how unions and grassroots organizations during the 1930s, 1940s, and 1950s pressed firms and the state to embrace broader social democratic notions of social welfare. Management, however, ultimately prevailed in the struggle to define the ideological meaning of security. Employer-based social welfare provision narrowed conceptions of security by shifting responsibility for security from the state to the firm. As Americans came to see their interests more aligned with the private sector than with the state, demand for the expansion of public benefits in turn dropped.

Klein's story of how public and private security have expanded together and unraveled together presents an especially compelling way to think about the rise and fall of New Deal liberalism. But she wisely begins in the 1910s, when commercial life insurance companies created group life insurance plans that laid the foundation for more extensive private social welfare programs after World War I. Selling group insurance was partly an effort to rationalize the insurance business, since group plans enabled life insurance companies to reach more workers at lower administrative costs than they could by selling individual policies door to door. Insurance companies, fearing that the state might replace private carriers as providers of social welfare, also embraced group insurance as a strategy to limit the growth of a regulatory welfare state. Business managers, too, saw the need for preemptive action. Not only were social reformers pressing for child labor laws, antisweatshop laws, factory inspections, minimum wages, workers' compensation, and maximum hours for women, but social scientists, intrigued by social welfare innovations in Britain and Europe, were also...

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