The Economy Is Strong. So Why Do So Many Americans Still Feel at Risk? – The New York Times

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 alone.

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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