Jacob S. Hacker - The Great Risk Shift: The Assault on American Jobs, Families, Health Care and Retirement and How You Can Fight Back

THE GREAT RISK SHIFT

The Assault on
American Jobs, Families,
Health Care, and Retirement
And How You Can Fight Back

Jacob S. Hacker

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Copyright 2006 by Jacob S. Hacker

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Library of Congress Cataloging-in-Publication Data
Hacker, Jacob S.
The great risk shift : The assault on American jobs, families, health care, and
retirement and how you can fight back / Jacob S. Hacker.
p . cm.
ISBN-13: 978-0-19-517950-7
ISBN-10: 0-19-517950-1
1. Economic securityUnited States
2. United StatesEconomic conditions.
3. United StatesSocial policy.
I. Title.
HD7125.H24 2006
330.973dc22
2006015484

9 8 7 6 5 4 3 2 1
Printed in the United States of America
on acid-free paper

To my mother and father

THE GREAT RISK SHIFT tells a story that more and more of us are coming to know and yet few of us still fully comprehendthe story of growing economic insecurity in the United States. The story is elusive for many reasons: It is so starkly at odds with our nations evident prosperity. It reaches across so many different areas of our livesour jobs, our families, our retirement, our health care. And its a story we have heard only in terms of single issues: how we are more at risk of job layoffs than we once were, or how we are increasingly responsible for our own retirement, or how Health Savings Accounts might make us sole providers for our own health care. But while we know something larger is going on, we have no common language and few reliable indicators for linking these fragmented pieces together and understanding why they make us feel so insecure.

I wrote this book to change that. Using new evidence that unlocks the puzzle of growing insecurity, I show how more and more economic risk has been offloaded by government and corporations onto the increasingly fragile balance sheets of workers and their families. This fundamental transformation, which I call the Great Risk Shift, has affected Americans of every walk of life, class standing, and political persuasion. It connects the insecurities of the new workplace, the strains facing modern families, the rising uncertainties of retirement, and the growing gaps in American health insurance. It is at the root of Americans rising anxiety about their economic standing and future. And it is at the heart of the biggest debates over domestic policy that now dominate our polarized politics.

The Great Risk Shift is not just an economic change; it is also an ideological change. For decades, Americans and their government were committed to a powerful set of idealsnever wholly achieved, never without internal tensionthat combined a commitment to economic security with a faith in economic opportunity. Animating this vision was a conviction that a strong economy and society hinged on basic financial security, on the guarantee that those who worked hard and did right by their families had a true safety net when disaster struck. Social Security, Medicare, private health insurance, traditional guaranteed pensionsall sent the same reassuring message: someone is watching out for you, all of us are watching out for you, when things go bad.

Today, the message is starkly different: You are on your own. Private employment-based health plans and pensions have eroded, or been radically transformed, to shift more and more risk onto workers shoulders. Government programs of economic security have been cut, restructured, or simply allowed to grow ever more threadbare. Millions of Americans lack health insurance. Millions more lack guaranteed retirement benefits. Our jobs and our families are less and less financially secure.

And yet what do our political leaders tell us? They tell us we need to take ownership of our economic future, giving up the security of insurance in favor of individualized private accounts that leave us at the mercy of market instabilities precisely when we most need stability. They tell us that millions of middle-class Americans who are declaring bankruptcy or losing their houses are failing to take personal responsibility for their lives. They tell us the economy is strong and getting stronger, when for most of us it has only grown more uncertain and insecure. Or they tell us, with a fatalism that scarcely befits a nation built on optimism and hope, that there is nothing that can be done. Our economy is insecure. Deal with it.

It is indeed time to deal with it. But the solution is not to shift more and more risk onto Americans already burdened shoulders. I wrote this book because there is a real alternative to the Great Risk Shift, a vision that I call an insurance and opportunity society. An insurance and opportunity society is based on a simple but powerful notion: We are most capable of fully participating in our economy and our society, most capable of taking risks and looking toward our future, when we have a basic foundation of financial security. Economic security is not opposed to economic opportunity; it is its cornerstone. And restoring a measure of economic security in the United States today is the key to transforming the nations great wealth and productivity into an engine for broad-based prosperity and opportunity in an ever more uncertain economic world.

To see the future, however, we must first understand the past. For more than a decade, I have been studying the history and structure of Americas distinctive framework of economic security: how it came into being, why it differs from what is found in other nations, what its strengths and weaknesses are, and how it can be made stronger. I have surveyed the experience of other nations and delved into our own conflicted history. I have amassed statistics and stories that show how our system of economic protection works, and why it sometimes works so poorly. I have talked with experts and everyday people about where we have come from and where me might yet go. And I have been shocked by how swiftly our framework of economic security is crumbling in the face of changing realities and fierce but largely misdirected criticism. If we do not make the investments necessary to build an insurance and opportunity society today, we will face far higher costs and far greater social dislocation in the years to come.

An insurance and opportunity society does not mean clinging stubbornly to institutions of the past when they no longer work. It does not mean insuring Americans against every contingency or ignoring the need for responsibility and thrift. What it calls on us to doall of usis to reconstruct our framework of economic security on a new and stronger foundation for the twenty-first century, so that every person stirred by the promise of this great nation can have the confidence to reach for and achieve the American Dream.