Old Assumptions, New Realities: Ensuring Economic Security for Working Families in the 21st Century

1. Old Assumptions, New Realities

CHAPTER 11 OLD ASSUMPTIONS, NEW REALITIES MARCIA K. MEYERS, ROBERT D. PLOTNICK, AND JENNIFER ROMICH In an era of rapid technological change and continuing globalization of labor, capital, and product markets, old economic notions of a tradeoff between “efficiency” and “equality” have been replaced by a more nuanced understanding of the interdependence of economic and social development. Governments in all industrialized countries balance economic imperatives to increase the size, efficiency, and productivity of their economies, with social imperatives to promote individuals’ productivity, economic opportunity, economic security, and social inclusion in their communities . Although governments are charged with achieving these social goals for all populations in their countries, it is particularly critical to assure the health and security of working age adults, who as workers are the engines of economic productivity and as parents are the means for social reproduction. Governments manage economic imperatives through fiscal, monetary, trade, regulatory, and other policies aimed at growing the economy. They advance social goals by providing income support, health and other programs that cushion temporary or permanent loss of market income, assure minimum levels of income and of essential goods and services, facilitate employment, improve the skills of the workforce, protect the health and 1 1 2 Old Assumptions, New Realities safety of workers, expand social and economic opportunities, and meet the special needs of particularly vulnerable populations. Debates about whether the United States has a welfare state are long over; the U.S. has a large and complex array of social, health, family, and employment policies designed to address these social imperatives. The scholarly debate about whether the U.S. welfare state is big enough, or too big, is also winding down in the wake of new analyses that suggest that social and health spending is more similar than different across the mature welfare states (Garfinkel, Rainwater, and Smeeding 2010). The current questions for scholars and policymakers are: Do U.S. income support, social, health, and employment policies meet the needs of the country and its residents? If not, why not? How could they be improved? Events in the first decade of the twenty-first century suggest that the answer to the first question is no, particularly for working-age individuals and their families. Even before the Great Recession of 2008, the U.S. trailed other rich countries on many indicators of social and economic security for families and children, with higher poverty rates, greater economic inequality, worse school and health outcomes, more individuals lacking health care, and a larger share of the workforce in low wage jobs than in most other OECD (Organisation for Economic Co-Operation and Development) countries (OECD 2007). As the economy slid into recession in 2007 and 2008, rising unemployment compounded these and related social problems. The response of U.S. policymakers to the economic downturn reinforces our pessimistic conclusion about the current capacity of the welfare state to support workers and their families. Response to the financial dimensions of the downturn was swift and dramatic. Response to social and economic dislocation was slow and hesitant. As record numbers of families lost their jobs, incomes, health care, homes, retirement savings, and other assets, the vast system of federal and state welfare and employment programs was able to do little to prevent dislocation. Nonprofit and charitable organizations that provide emergency assistance were overwhelmed. Policymakers at the federal level responded with short-term extensions of unemployment insurance and food assistance and temporary stimulus spending to jumpstart recovery. State policymakers, forced to balance budgets devastated by declining income and sales tax revenues, cut back on essential social and health services even as demand for these services was growing. Debates about health-care reform, arguably the most important social legislation of the decade, swung wildly off topic even as rising unemployment put more Old Assumptions, New Realities 3 families at risk, but ultimately culminated in the March 2010 passage of the Patient Protection and Affordable Care Act. Many of the inadequacies in the nation’s response to the social and economic dislocations of the Great Recession can be traced to structural features of the welfare state put in place more than seventy years earlier. This motivates us to address the second and third questions posed above. If the American welfare state is not meeting the needs of working adults and their families, why not? And what can we do differently as we recover from the current economic crisis and move...