Worki ng and Livi ng i n the Shadow of Economi c Fragi lity

1
Working and Living in the Shadow
ofEconomic Fragility
Edited by
Marion G.Crain
Michael Sherraden
1
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Library of Congress Cataloging-in-Publication Data
Working and living in the shadow of economic fragility / edited by Marion G. Crain, Michael Sherraden.
pages cm
Includes index.
ISBN 9780199988488
1. United StatesEconomic conditions2009 2. United StatesEconomic policy2009
3. UnemploymentUnited States. 4. Working poorUnited States. 5. RecessionsUnited States.
I. Crain, Marion G. II. Sherraden, Michael W. (Michael Wayne), 1948
HC106.84.W67 2014
330.973dc23
2013033915


9 8 7 6 5 4 3 2 1
Printed in the United States of America
on acid-freepaper
v
Contents
Illustrations vii
Abbreviations ix
Contributors x
Introduction xiii
Marion G. Crain and Michael Sherraden
1. Te Continuing Unemployment Crisis:Causes, Cures, and Questions for
FurtherStudy 1
Christina D. Romer,
Response by Marion G. Crain,
Response by Steven M. Fazzari,
Response by William R. Emmons , and
Response by Michael Sherraden
2. Too Much Spending or Too Little Income? Te Macroeconomics of
Household Spending and Debt in the ConsumerAge 36
Barry Z. Cynamon and Steven M. Fazzari
3. Financial Fragility, Medical Problems, and the Bankruptcy System 53
Melissa B. Jacoby and Mirya R. Holman
4. Te Afordable Care Act and Low-Wage Workers 70
Timothy D. McBride
5. How Will Employers Respond to National Health Reform? Lessons fom the 2006
Reform Initiative in Massachusetts 82
Sharon K. Long , Karen Stockley , Heather Dahlen , and Ariel Fogel
Contents
vi
6. Unionism, Law, and the Collective Struggle for Economic Justice 101
Marion G. Crain and Ken Matheny
7. Te Limits of Voluntary Employer Action for Improving Low-LevelJobs 120
Susan J. Lambert
8. Economic Security and the American Dream 140
Mark R. Rank and Tomas A. Hirschl
9. Guardianship and the New Gilded Age:Insular Politics and the Perils of Elite
Rule 157
Joe Soss and Lawrence R. Jacobs
10. Keep Government out of My Medicare:Te Search for Popular Support of Taxes
andSocial Spending 176
Gillian Lester
11. A Model of American Inequality, Opportunity, and Political Power 194
Jared Bernstein
12. Te Challenge of Creating GoodJobs 213
Michael Lind
Notes 233
Index 245
vii
Illustrations
Figures
2.1. Income share earned by the top 5percent in the UnitedStates 39
2.2. Alternative measures of the relationship between household demand and
spendableincome 40
2.3. Disaggregated demand rates for bottom 95percent and top 5percent 42
2.4. Household debt as a share of disposableincome 43
2.5. Debt-to-income ratios across incomegroups 44
2.6. Adjusted saving rates for aggregate US economy, bottom 95-percent, and top
5-percent incomegroups 45
2.7. Estimated demand loss if the bottom 95percent saved at the benchmark bottom
95-percentrate 46
3.1. Out-of-pocket medical expense not covered by insurance in the 2years prior
tofling 58
3.2. Respondents in each group of out-of-pocket medical expense in the 2years
prior to fling who indicate a medical bill is the reason forfling 61
3.3. Payment methods for out-of-pocket medical expenses incurred within 2years
prior to bankruptcy 62
3.4. Percentage of respondents using each method who did not use additional
methods 64
4.1. Employment compensation:Annualized change in total compensation, wages,
and benefts, by quarter,19822012 72
4.2. Health insurance coverage of the nonelderly by poverty level,2011 74
4.3. Composition of insurance coverage among the nonelderly, 19992010 75
11.1. Income gains widely shared in early postwar decadesbut not sincethen 197
11.2. Income gains at the top dwarf those of low- and middle-income households 198
11.3. Factors behind the change in poverty rates, 19792000 199
11.4. Percentage in top and bottom quintiles that moved more than one quintile over
10-yearperiod 201
Illustrations
viii
11.5. Taxes and transfer less inequality reducing over time:Percent change in Gini
Index, 19792007 204
11.6. Democratic and Republican senators responsiveness to incomegroups 206
Tables
3.1. Strategies to make ends meet (percentages) 59
4.1. Annual percentage change in average hourly wages, benefts, and compensation,
19482000 (2001 dollars) 73
5.1. ESI availability and take-up for workers ages 1964 in Massachusetts, all
workers and workers in small frms, 20062010 87
5.2. ESI availability and take-up for workers ages 1964 in Massachusetts, young
workers and low-income workers, 20062010 89
5.3. ESI premiums for workers ages 1964 with ESI coverage in Massachusetts, all
workers and workers in small frms, 20062010 92
5.4. Scope of coverage under health plan for workers ages 1964 with ESI coverage
in Massachusetts, all workers and workers in small frms, 20062010 93
5.5. Confdence in the future for workers ages 1964 with ESI coverage in
Massachusetts, fall2010 95
8.1. Cumulative percentage of American adults experiencing various dimensions of
economic insecuritybyage 146
8.2. Years of economic insecurity between the ages of 25and60 147
8.3. Percentage of American adults experiencing various dimensions of economic
insecurity across age categories 148
8.4. Cumulative percentages of American adults (ages 2564) experiencing various
dimensions of asset poverty 151
11.1. Average annual growth and inequality, two diferent regimes 196
ix
Abbreviations
ACA Patient Protection and Afordable Care Act of2010
AFL-CIO American Federation of LaborCongress of Industrial Organizations
BLS Bureau of Labor Statistics
CCC Civilian ConservationCorps
CEA Council of Economic Advisers
CBP Consumer Bankruptcy Project
ESI Employer-sponsored insurance
FLSA Fair Labor Standards Act of1938
FPL Federal povertyline
FTE Full-time-equivalent employee
GDP Gross domestic product
HIRE Hiring Incentives to Restore Employment Act of2010
IBEW International Brotherhood of Electrical Workers
IWW Industrial Workers of theWorld
MHRS Massachusetts Health ReformSurvey
NIPA National Income and Product Accounts
NLRA National Labor RelationsAct
NLRB National Labor RelationsBoard
OUR Walmart Organization United for Respect at Walmart
PCE Personal consumption expenditure
PSID Panel Study of Income Dynamics
QE Quantitativeeasing
x
Contributors
Marion G. Crain , JD, is vice provost, Wiley B.Rutledge Professor of Law, and director of
the Center for the Interdisciplinary Study of Work and Social Capital at Washington
University School of Law. Prior to her appointment at Washington University, Crain
served as director of the Center on Poverty, Work and Opportunity at the University
of North Carolina at Chapel Hill. Her scholarship examines the relationships among
gender, work, and class status with a particular emphasis on collective action and labor
relations law. She is the author or coauthor of Labor Relations Law:Cases and Materials
(with Teodore J. St. Antoine and Charles B. Craver); Work Law: Cases and Materials
(with Pauline T. Kim and Michael Selmi); Ending Poverty in America: How to Restore
the American Dream (with John Edwards and Arne L. Kalleberg); numerous scholarly
articles; and several book chapters. Professor Crain is chair of the Labor Law Group,
an international collective of professors who work collaboratively to improve labor and
employment law pedagogy through the production of course materials and other schol-
arly works. She also serves on the editorial board of the Employee Rights and Employment
Policy Journal .
Michael Sherraden , PhD, is Benjamin E.Youngdahl Professor at the George Warren Brown
School of Social Work, and founder and director of the Center for Social Development,
Washington University in St. Louis. Sherradens research has received widespread rec-
ognition for testing innovations and impacts on public policy. He is a leading scholar in
asset building by the poor, with books including Assets and the Poor (1991), Inclusion in
the American Dream (2005), Can the Poor Save? (with Mark Schreiner, 2007), and Asset
Building and Low-Income Families (edited with Signe-Mary McKernan, 2008). He is
also engaged in research on civic service and engagement, with books including National
Service (with Donald J.Eberly, 1982), Te Moral Equivalent of War (with Donald J.Eberly,
1990), Productive Aging (with Nancy Morrow-Howell and James Hinterlong, 2001), and
Civic Service Worldwide (with Amanda Moore-McBride, 2007). Sherraden has advised
heads of state and other policy leaders in the United States and many other countries. In
2010, Time Magazine named him among the 100 most infuential people in the world. He
earned his AB at Harvard University and his MSW and PhD at University of Michigan.
Jared Bernstein , PhD, is a senior fellow at the Center on Budget and Policy Priorities. He
has served as executive director of the White House Task Force on the Middle Class,
Contributors
xi
a member of President Barack Obamas economic team, and chief economist and eco-
nomic policy adviser to Vice President JosephBiden.
Barry Z. Cynamon received his AB from Washington University in St. Louis and MBA
from the University of Chicago. His early research on the Consumer Age was published
just as the risks he identifed therein struck the economy. Cynamon is visiting scholar at
the Federal Reserve Bank of St.Louis.
Heather Dahlen , MA, is pursuing her PhD in applied economics at the University of
Minnesota. An adjunct instructor at the University of St. Tomas, she holds bachelors
degrees in international economics and business administration from St. Norbert College
and a masters degree in applied economics from San Diego State University.
William R. Emmons , PhD, is an economist with the Federal Reserve Bank of St. Louis and
adjunct professor of fnance in the Olin Business School at Washington University in St.
Louis. Prior to joining the Federal Reserve, Emmons served on the faculty of the Tuck
School of Business at Dartmouth College.
Steven M. Fazzari , PhD, is professor of economics and associate director of the Weidenbaum
Center on the Economy, Government, and Public Policy at Washington University
in St. Louis. Professor Fazzaris research explores two main areas: the foundations of
Keynesian macroeconomics and the fnancial determinants of spending on investment,
research, and development.
Ariel Fogel , a research assistant in the Urban Institutes Health Policy Center, holds a bach-
elors degree in behavioral economics and music from Muhlenberg College.
Tomas A. Hirschl , PhD, is professor in the Department of Development Sociology at
Cornell University. His research focuses on social class diferentiation in contemporary
society. In employing a life-course approach to identify the economic, social, and health
correlates of social class, he is developing a new method for measuring socialclass.
Mirya R. Holman , PhD, is an assistant professor in Florida Atlantic Universitys Political
Science Department. Her research focuses on the politics of gender, race, and ethnicity,
as well as on local politics and policy implementation. Her work appears in numerous
journals, including the Journal of Urban Afairs; Journal of Women, Politics and Policy;
and Social Science Quarterly .
Melissa B. Jacoby , JD, is the Graham Kenan Professor of Law at the University of North
Carolina at Chapel Hill. Jacobys research takes multidisciplinary approaches to exploring
a range of bankruptcy, debtor-creditor, and commercial-law problems. She is co principal
investigator of the 2007 Consumer Bankruptcy Project, a nationally representative data
set on families in bankruptcy.
Lawrence R. Jacobs , PhD, is the Walter F. and Joan Mondale Chair for Political Studies
and director of the Center for the Study of Politics and Governance at the University of
Minnesota. Arecipient of numerous awards for his research, he has published extensively
on elections, politics, policy, and public opinion.
Susan J. Lambert , PhD, is associate professor in the School of Social Service Administration
at the University of Chicago. Her felds of special interest include low-skilled jobs and
low-wage workers, work-life issues, and organizational theory and management.
Contributors
xii
Gillian Lester , JSD, is acting dean, Alexander F.and May T.Morrison Professor of Law, and
Werner and Mimi Wolfen Research Professor at the University of California, Berkeley,
School of Law, where she teaches contracts, employment law, and seminars on social wel-
fare and employment policy. Her research explores distributive justice and social welfare
policy, tax policy, workplace intellectual property, and other topics.
Michael Lind , MA, JD, is a cofounder of the New America Foundation and policy director
of its Economic Growth Program and Next Social Contract Initiative. He is author of
numerous works, including Land of Promise: An Economic History of the United States
(2012).
Sharon K. Long , PhD, is a senior fellow in the Urban Institutes Health Policy Center and
recipient of AcademyHealths 2012 Health Services Research Impact Award. Aprofessor
at the University of Minnesota from 2010 to 2012, she worked on health reform issues at
the State Health Access Data Assistance Center.
Ken Matheny , JD, is an administrative appeals judge with the Social Security Admin-
istration. He holds degrees from West Virginia Wesleyan College and West Virginia
University. He is the author or coauthor of several articles on labor law, social security
disability, and Catholic social thought.
Timothy D. McBride , PhD, is professor in the Brown School at Washington University
in St. Louis. McBride is an infuential health-policy analyst and leading health econo-
mist shaping the national agenda on health reform, health insurance, rural health care,
Medicare and Medicaid policy, and health economics.
Mark R. Rank , PhD, the Herbert S. Hadley Professor of Social Welfare in the Brown
School of Social Work at Washington University in St. Louis, is a widely recognized
expert on issues of poverty, inequality, and social justice. He is author of One Nation,
Underprivileged:Why American Poverty Afects Us All (2004).
Christina D. Romer , PhD, is the Class of 1957Garf B. Wilson Professor of Economics
at the University of California, Berkeley, and former chair of the Council of Economic
Advisers. She also serves as codirector of the Program in Monetary Economics at the
National Bureau of Economic Research and as a member of the Business Cycle Dating
Committee.
Joe Soss , PhD, the Cowles Chair for the Study of Public Service at the University of
Minnesota, holds positions in the Hubert H.Humphrey Institute of Public Afairs, the
Department of Political Science, and the Department of Sociology. His research explores
the interplay of democratic politics, socioeconomic inequalities, and public policy.
Karen Stockley is pursuing her PhD in economics at Harvard University. Prior to return-
ing to graduate school, she was a research associate in the Urban Institutes Health Policy
Center, where her work focused on the population impacts of the Massachusetts health
reforms.
xiii
Introduction
Marion G. Crain and Michael Sherraden
Economic insecurity plagues American families. Rising income and wealth
inequality, an inadequate social safety net, and uncertain protection against potentially
catastrophic health care costs combine with a weak labor market and persistently high
unemployment and underemployment to keep middle- and working-class families in
a state of economic fragility, teetering on the edge of poverty. Working and Living in
the Shadow of Economic Fragility explores the causes and consequences of this economic
status. Te contributions use data and analysis drawn from multiple disciplinary per-
spectives. Areas of emphasis include the applied social sciences, interactions of markets
and social policies, and professional perspectives in law, social work, and health care.
Our contributing authors combine an analysis of macro-level phenomena, such as ris-
ing income inequality and growing poverty rates, with a micro-level focus on the resis-
tance to expansion of the social safety net. Tis focus leads them over a broad terrain that
includes income support programs, health care reform, bankruptcy protections, labor
and employment law, and tax mechanisms designed to fund unemployment and Social
Security benefts. Teir premise is that economic fragility is linked to a set of economic
and labor policy choices that structure workers lives. Tis economic fragility interacts
with the powerful ethos of individualism and ideals of self-suf ciency and autonomy.
Te interaction of fragility with those foundational elements characterizes US capitalism
in the late twentieth and early twenty-frst centuries, creating a political majority with
limited visibility and voice. In short, a silent crisis is underway. Te social and economic
costs for the nation are enormous.
Tis book asks how the crisis came to pass and what its efects are on people and com-
munities. Undaunted by their own assessments and a depressing, ever-lengthening list
Introduction
xiv
of harms, our authors ofer insightful analysis and constructive suggestions for ways to
build an economy and a set of public policies that enable working people to fourish.
Tey make several distinctive contributions:(1)broad understandings of work and links
between work and well-being and democratic engagement, (2) incisive explanations of
the long-term consequences of the current crisis, (3) discussion of the values that drive
policy choices in the United States and explanation of how those choices link to leg-
islative enactments, (4) a focus on how these policies afect the middle class as well as
those in poverty, (5)lively interdisciplinary perspectives, and (6)an emphasis on poten-
tial solutions. Te larger purposes of this book are to inform both academic and public
understanding, and to place the challenge of jobs and the policy response at the center of
discourse and action.
Economic Inequality, Insecurity, and Fragility
Since the 1970s, the United States has experienced growing income and wealth inequal-
ity. Nearly all of the economic gains over the last 35years have been concentrated in the
upper ffh of the income and wealth distributions; many are concentrated near the very
top (Stiglitz, 2012). By contrast, the opposite pattern characterizes the previous 5 decades
(1930slate 1970s); wealth became more evenly dispersed or remained stable, particularly
at the top end of the scale (Noah, 2012). Over the past three decades, however, tens of
millions of Americans have been hard at work only to fnd themselves falling fnancially
further behind.
Te Great Recession that took hold of the United States in 2008 has prompted many
thoughtful analyses of how this pattern of inequality led to instability, an instability that
has become so volatile that all American households are at risk. As several commenta-
tors explain, stagnant incomes led consumers to take on debt in order to fnance rising
costs of living and to cover health care and retirement costs. Political pressure rose on
government to increase access to credit, and when it complied, consumption rose. For
a while, access to credit masked the problem of stagnant income, but the Wall Street
bubble, fnanced by the dramatic increase in consumer debt, eventually burst. Te conse-
quences have been dramatic and far-reaching for the United States and for global markets
(Cynamon, Fazzari, & Setterfeld, 2012; Rajan, 2010). Te economics of inequality thus
evolved into an economics of instability (Galbraith, 2012, p.18).
Accompanying increasing inequality and wage stagnation has been a rising tide of
economic risk and vulnerability resulting in large part from a weak labor market. Not
since the Great Depression of the 1930s has the United States faced such a prolonged
period of high unemployment and underemployment. Recovery has been painfully slow.
Approximately 27million adults currently lack employment or are underemployed (i.e.,
working part-time but wanting to work full-time). Tese adults comprise approximately
15 percent of the labor force. At this writing, 12 million workers are unemployed and
Introduction
xv
8 million are underemployed part-time workers (Bureau of Labor Statistics, 2013b). In
addition, a signifcant number have given up looking for work but still report wanting
a job. Tese workers, which the Bureau of Labor Statistics (2013a) categorizes as mar-
ginally attached to the labor force, include all those who desire employment and have
searched for a job within the prior 12months but have given up looking for work in the
4weeks preceding the survey. Asubset of these workers is of cially categorized as dis-
couraged workers, because they specifcally state that the reason that they ceased looking
for work was the belief that no jobs were available or there were none for which they
would qualify (Bureau of Labor Statistics, 2013a; Evangelist & Christman,2013).
Te number of workers who are marginally attached to the labor force and desire work
but who are not counted in of cial estimates of unemployment is of particular concern.
Te fact that these workers are not counted in the of cial unemployment statistics efec-
tively understates labor market weakness, and what look like improvements in the unem-
ployment rates are in fact discouraged job seekers dropping out of the labor force. Worse,
for many of these workers during and afer this recession, the duration of unemployment
is unprecedented:4 in 10 jobless workers have been unemployed for 27 weeks or longer,
and the average duration of unemployment is 37 weeks, 16 weeks longer than the aver-
age during the recession of the 1980s (Evangelist & Christman, 2013). Finally, these lost
workers are likely to swell the of cial numbers of the unemployed and underemployed
when the economy fnally improves and they rejoin the of cial ranks of those seeking
work. Estimates suggest that if the missing workers rejoined the ranks of job seekers,
unemployment would rise to 9.8percent from its current rate of 7.6percent, pushing the
United States close to the peak rate of 10percent in 2009 (Swisher,2013).
Nor have the consequences of labor market weakness been visited equally on all workers.
Heavily concentrated in the public sector, minority and female workers have dispropor-
tionately sufered the results of austerity measures and budget cutting by states and the fed-
eral government. Older workers have been forced into unwanted retirements and appealed
in disproportionate numbers to the Social Security Administration for disability benefts,
an efective substitute for a nonexistent retirement fund or a suitable job (Jofe-Walt,2013).
Te current generation of high school and college graduates (the Millennials) is per-
haps most at risk. Te unemployment rate for US youth aged 1624 is 16.2percent, more
than twice the national rate of unemployment. Worse, evidence is mounting that the
widespread unemployment will have long-term efects on this generation of workers:Te
Center for American Progress estimates that, because missed opportunities to garner skills
and work experience haunt individuals in their subsequent jobs, they will lose $20 bil-
lion in earnings over the next decadeapproximately $22,000 per person (Ayres, 2013).
Further, the travails of Millennials will be felt not only by the Millennials themselves but
also by their families. Acollege degree is considered critical to employment security and
prosperity now (although increasingly it is no guarantee of either one), but tuition levels
have risen dramatically to a point where many middle-class families cannot aford college
tuition. In 2005, tuition at public and private colleges and universities averaged 10percent
Introduction
xvi
and 45 percent (respectively) of median family income (Noah, 2012, p. 92). Tuition has
been on the rise since then:Te average published price for tuition, room, and board has
increased by 27percent since 20078 (Baum & Ma, 2012). Te parents of Millennials as
well as the graduates themselves will shoulder the burden of that debt, ofen for decades
(Emmons & Noeth, 2013). Ultimately, all American households will feel the pain as eco-
nomic growth slows:Millennials are delaying marriage and childbearing, living with their
families of origin, and delaying home and other major purchases. Tey are forgoing retire-
ment savings in order to make the payments on burgeoning studentdebt.
Economic conditions are likely to remain fragile, and employment challenges may
persist for many years. At best, recovery is projected to remain sluggish over the coming
decade as the US economy grows more slowly than it did prior to the Great Recession.
Te Congressional Budget Of ce projects that real gross domestic product will grow at
an average annual rate of 2.3percent, a marked contrast to its previous average of 3.2per-
cent between 1950 and 2012 (Congressional Budget Of ce, 2013). Estimates of labor mar-
ket recovery vary, but at the current rate of job growth, it would take 10years for the labor
market to fully recover from the recession (Swisher, 2013). At worst, another economic
shock could send the economy back into recession.
It is disturbing to note that, where job growth is occurring, it appears to be concen-
trated in low-wage work rather than in mid-wage or high-wage occupations. Astudy by the
National Employment Law Project fnds that low-wage occupations account for 21percent
of job losses during the recession but comprise 58percent of recovery growth. By compari-
son, mid-wage jobs represent 60percent of recession losses but make up only 22percent of
recovery growth (Evangelist & Christman, 2013). Tis phenomenon is explained in part by
job losses in the highly unionized manufacturing sector, where workers enjoy a union wage
premium of roughly 13.6percent (Mishel, 2012; Mishel, Bivens , Gould , & Shierholz ,2012).
Te concentration of growth in low-wage occupations combines with the collapse of
internal job ladders and a lack of opportunities for growth and skill-building in many
low-wage sectors, such as retail and fast food. Together these factors freeze the class status
quo, undermining the American Dream of upward mobility. Multiple studies demonstrate
that Americans now enjoy less economic mobility than do their peers in Canada and the
United Kingdom (e.g., DeParle, 2012; Jntti etal., 2006). Mobility is least present at the
top and bottom of the income scale, which tend to be relatively stable:Close to one-third
of Americans born in the top 20percent of households by income maintained that status
or dropped no more than another 20percent, while almost one-third born in the bottom
20percent maintained that status or rose no more than 20percent (DeParle,2012).
Worker Agency and Political Participation
An important factor contributing to both economic insecurity and political powerless-
ness is the dramatic decline in labor union density. Union density has plummeted to its
Introduction
xvii
lowest level since 1916just 11.3 percent at the end of 2012 (6.6 percent in the private
sector, 35.9percent in the public sector). Tat illustrates a marked decline from the height
of union membership in the 1950s, when unions represented approximately one-third
of the eligible population. It also refects a precipitous decline from the 26.7 percent
of eligible workers that unions represented in 1973 (Bureau of Labor Statistics, 2013c;
Greenhouse, 2013). Forces infuencing the erosion of union density include job losses
in manufacturing, a historical union stronghold; the concentration of growth in such
low-union-density sectors as retail and fast food; retrenchment in state legislation deau-
thorizing public-sector collective bargaining and in the passage of so-called right-to-
work laws, particularly in the Midwestern union strongholds of Wisconsin, Indiana, and
Michigan; expansion by large manufacturers like Boeing and Volkswagen in nonunion
states; competition from global markets; and a hostile political and legal environment
that incentivizes employer resistance to unionization.
i

Te diminished union density has a direct efect on economic security. On average,
unionized workers earn $23.02 per hour and nonunion workers earn $19.51. Even more
important is the diference in beneft levels. Unionized workers enjoy substantially better
benefts, including health, disability, and life insurance; paid leave; and retirement plans.
Te average worth of those benefts is $14.67 per hour as contrasted with only $7.56 per
hour for nonunion workers (Bureau of Labor Statistics,2012).
Te diminishing power of unions has efects more profound than its impact on wages
and benefts. First, strong unions set powerful norms not only for how workers will be
compensated but also for how they will be treated. Job security protections, progressive
disciplinary systems, seniority systems, apprenticeship and training programs, and inter-
nal job ladders are all major achievements of labor unionism. Tese benefts spread to the
nonunion workforce through norm-setting processes and because of the threat efect
that unions pose to nonunion employers. Tese indirect efects and unionizations direct
efects together account for one-ffh to one-third of the growth in income inequality
from 1973 to 2007 (Freeman, 2007; Noah, 2012; Western & Rosenfeld,2011).
Furthermore, union density has historically been linked to political participation. By
fostering democratic principles of self-governance within the workplace, unions teach
workers how to be efective advocates for themselves and aford members a sense of polit-
ical agency (Lofaso, 2011). Moreover, union membership correlates positively with voter
turnout in political elections (Radclif & Davis, 2000). Indeed, Senator Robert Wagner,
a principal proponent of the National Labor Relations Act at the time of its enactment,
ii

defended the labor laws on exactly this basis, arguing that they would reinforce the larger
political democracy:
Under modern conditions government by the people is not so simple. Politics in
the narrower sense is becoming impersonalized. People cannot all join in as they
joined in the old New England town meeting. Te country is too large, its prob-
lems too complex, the pace of life too rapid. For the masses of men and women the
Introduction
xviii
expression of the democratic impulse must be within the industries they serveit
must fall within the ambit of their dailywork.
Tat is why the struggle for a voice in industry through the processes of collective
bargaining is at the heart of the struggle for the preservation of political as well as
economic democracy in America. Let men become the servile pawns of their mas-
ters in the factories of the land and there will be destroyed the bone and sinew of
resistance to political dictatorship.
Fascism begins in industry, not government. . . . But let men know the dignity of
freedom and self-expression in their daily lives, and they will never bow to tyranny
in any quarter of their national life. (Wagner, 1937,p.23)
A Policy of Risk Shifting
As commercial hands have gained greater control of the polity and political participa-
tion by working people has diminished, the social safety net has frayed. Middle- and
lower-income families have endured retrenchments in social and economic protections.
Cutbacks have occurred in social programs, and at this writing, more Americans lack
health insurance than at any time since World War II. Since 1980, public policy has exac-
erbated inequalities by generating large income tax cuts for the wealthy along with highly
regressive asset-building subsidies for homeownership, retirement savings plans, college
savings plans, and other social purposes (such subsidies now exceed $400 billion per
year; Woo, Rademacher, & Meier, 2010). Middle- and lower-income families beneft very
little or not at all from these massive asset-building subsidies.
A number of commentators note the powerful trend toward risk shifing. Costs once
borne directly by the public through the tax structure or indirectly through subsidies to
employers are now shifed onto the backs of individuals and families. Changes in retire-
ment savings and health care plans are the most obvious examples of these shifs (e.g.,
Hacker, 2006), but the shifs can also be seen in the costs of higher education. Tuition at
public universities has risen in part because of the need to ofset declining public fund-
ing. Te share of public university revenues derived from tuition and fees rose to 47per-
cent in 2012 from 23percent in 1987 (Lewin,2013).
Te quality of health care and access to it are areas of particular concern.
Notwithstanding signifcant scientifc advances and unprecedented expenditures in the
feld of medicine, the United States lags behind the rest of the developed world; a recent
Commonwealth Fund study fnds that the quality of the American health care system
ranks low in comparison with that of systems in other industrialized countries. Many
disadvantaged populations struggle to live healthy and productive lives and may not
have quality medical care. In what many hope will be a positive step forward, the Patient
Protection and Afordable Care Act of 2010 will greatly increase access to health care
(Pub. L.No. 11-148, 124 Stat. 11). But at this writing, the acts implementation and efect
on spiraling health care costs remain unclear. Tere is some indication that employers are
Introduction
xix
shifing risks. To avoid the acts requirements that they provide health insurance coverage
for full-time employees, some employers are hiring part-time workers in lieu of full-time
ones, and others are reducing the schedules of full-time employees to fewer than 30 hours
per week (Rampell, 2013).
iii

The Way Forward
Te Livable Lives Initiative at Washington University
Tis collection is a product of the interdisciplinary Livable Lives Initiative at Washington
University in St. Louis. In the context of rising inequality and fragile labor markets, an
important challenge facing the United States and many other nations is to create con-
ditions in which low- and moderate-income families can amass the stability, support,
and fnancial resources suf cient to ensure basic well-being (shelter, nutrition, health,
and education); satisfaction in life; success in raising and educating their children; and
a sense of agency important to democratic participation. Amajor goal of public policy
should thus be to foster livable livesthat is, lives imbued with reasonable degrees of
social, health, and economic security. Te term livable lives extends beyond the basic
consumption orientation of traditional social welfare policy, focusing attention on posi-
tive conditions that are essential to foster economic stability, social development, and
political engagement.
Te goal of creating conditions that will support livable lives thus encompasses a full
range of social conditions and policy supports that can make life with a low or moderate
income stable, secure, and satisfying. Te emphasis on livable lives suggests understand-
ing individual and family function across the life course, including how people deal with
life challenges, overcome dif culties, and move ahead. We ask what conditions are nec-
essary to enable individuals and families to fourish, achieve their dreams, and live out
their biographies to the fullest extent. Although there are no clear boundaries on what
might fall within a livable lives framework, the framework should at least incorporate
the following major areas of focus:(1) fnancial matters , including income, savings, asset
holding, and fnancial capability; (2) employment and productive engagement , includ-
ing especially jobs that ofer meaningful opportunities to contribute to society, decent
working conditions, adequate compensation, benefts, and possibilities for growth and
advancement; (3) physical and mental health , including nutrition, public health, and
health care; (4) housing , including both adequate rental housing and prospects for
homeownership; (5) child development and education , including preschool, primary and
secondary school, and postsecondary enrollment and degree attainment; (6) community
well-being , especially social engagement that honors diversity; (7) political access and
representation , particularly civic engagement and voting; and (8) environmental sustain-
ability in the form of responsible consumption, because externalities that damage the
environment cannot be ignored.
Introduction
xx
Both public policy and private actionguided by informative researchhave major
roles to play in fostering this fundamental goal of creating basic well-being, social and
economic stability, and active, engaged citizenship. Tus, the Livable Lives Initiative
at Washington University has a positive and activist orientation that rests on three key
assumptions: (1) livable lives are within reach, (2) conditions sometimes must be cre-
ated to make this possible, and (3)both public policy and private action are required to
achieve this goal. We are committed to documenting conditions that inhibit or foster
the achievement of livable lives, designing policies and practices that may promote more
livable lives, and studying the impacts of these policies and practices.
Although the Livable Lives Initiative can be supported on social-justice grounds (tra-
ditionally a concern shared by most religions, social justice is incorporated into profes-
sional values in social work, law, medicine, public health, engineering, and other applied
sciences), there exists an equally strong and perhaps more broadly accepted rationale:Te
entire society has a very practical stake in ensuring that the next generation is socially and
civically engaged and economically productive. Te long-term well-being of the United
States and every other country depends uponthis.
Tis Volume
Tis volume has its origins in collaboration by major research centers at Washington
University in St. Louis, all of which are af liated with the Livable Lives Initiative. Te
Center for Social Development at the Brown School of Social Work; the Center for
the Interdisciplinary Study of Work and Social Capital in the Law School; the Center
for New Institutional Social Sciences; and the Weidenbaum Center on the Economy,
Government, and Public Policy joined forces to plan a series of events that explored the
causes and consequences of the Great Recession, particularly its impact on employment
and on working families. We began in April 2011 with a lecture at Washington University
by Christina D. Romer, the Class of 1957Garf B. Wilson Professor of Economics at
the University of California, Berkeley, and former chair of President Barack Obamas
Council of Economic Advisers. Professor Romers service in the White House during
the depths of the Great Recession afords her unique insights into the US governments
policy responses to the challenges of unemployment and underemployment as US labor
markets staggered to recover from the sharp economic downturn. A panel of scholars
from Washington University responded by ofering questions and critiques to Professor
Romers lecture. Teir disciplinary perspectives range from economics to law to business
to socialwork.
Professor Romers speech and the multidisciplinary responses to it spurred additional
work on employment challenges and employment policy. Te Livable Lives Initiative
capitalized on this energy to commission key papers and to host a conference, Work
and Livable Lives , which addressed US employment-related challenges more broadly.
Participants in the February 2012 conference considered how US labor policies limit the
Introduction
xxi
ability of households to lead secure and stable lives, raise children successfully, and con-
tribute to the community and to the polity. Conference participants included leading
scholars and applied policy proponents with expertise in political science, social work,
law, economic theory, and sociology. Tis volume collects the papers from both the 2011
lecture and the 2012 conference.
Following this introductory chapter, the book proceeds to the Romer lecture and the
remarks from the panel discussion that followed. Each of these contributions assesses
the causes of the Great Recession and its consequences, particularly for employment.
Chapter 1 opens with Te Continuing Unemployment Crisis: Causes, Cures, and
Questions for Further Study, Christina Romers thoughtful analysis, which is followed
by the responses of Marion G. Crain, Steven M. Fazzari, William R. Emmons, and
Michael Sherraden. Romer discusses the Obama administrations response to the unem-
ployment crisis, highlights policy tensions within the White House, and predicts future
trends. She also outlines potential policy responses as well as areas where further research
is needed. Te short, pithy, and insightful responses by the panelists address key aspects
of employment conditions, labor law, macroeconomic analysis, and employment policy.
We turn next to the macroeconomy. In chapter2, Too Much Spending or Too Little
Income? Te Macroeconomics of Household Spending and Debt in the Consumer Age,
authors Barry Z.Cynamon and Steven M.Fazzari present an incisive analysis of the possi-
ble causes of the Great Recession. Te United States experienced an unprecedented boom
in consumer spending and borrowing from the mid-1980s through 2007. Cynamon and
Fazzari explore the role of household spending and debt in the US macroeconomic his-
tory of the past quarter century. Tey identify three possible sources for the dramatic fall
in the American saving rate:(1)social forces that encouraged greater spending, (2)sig-
nifcant increases in access to household borrowing, and (3)a shif in the income distribu-
tion away from the middle class. Te authors preliminary estimates imply a remarkable,
unsustainable trend in the savings rate of the bottom 95percent of the income distribu-
tion. Tey assert that this trend accounts for about 10 percent of aggregate demand by
2005 and for 2030percent of demand growth over the Consumer Age period from
1984 to 2005. Tese estimates lead to the striking conclusion that, other things equal,
the entire middle-class spending boom could have been fnanced without any drop in
the middle-class saving rate if the lower 95 percents average income share from 1969
through 1984 had remained stable in subsequent years. Tus, the Consumer Age period
can be interpreted as an era of insuf cient middle-class income growth rather than exces-
sive middle-class spending. Te authors conclude that the loss of middle-class demand
growth is a primary factor in the unusual sluggishness of the US economy since the Great
Recession, and they explore structural changes that could revive future demand growth.
In chapter 3, Financial Fragility, Medical Problems, and the Bankruptcy System,
Melissa B.Jacoby and Mirya R.Holman address some of the key causes and consequences
of household fnancial fragility. Asubstantial body of research documents the volatility of
household income and assets over the life cycle, and the US bankruptcy system is among
Introduction
xxii
the policy interventions designed for such disruptions. Te several million people who pass
through this system every year generally are members of the middle class (as measured by
homeownership, occupational prestige, and educational levels) but have very low incomes
at the time they fle. Te authors use data from the 2007 Consumer Bankruptcy Project, a
nationally representative data set based on court records, written questionnaires, and tele-
phone surveys. Tis chapter examines the credit and debt management choices made by
fnancially strapped households before they take the ultimate step of fling for bankruptcy.
It focuses particularly on the management of medical bills not covered by insurance. Afer
reviewing key fndings, the chapter considers implications for improving fnancial security.
Health care quality and costs are the elephant in the room in the US political econ-
omy. Te US achieves mediocre health quality with exorbitant costs, which are near
17percent of the US annual gross domestic product. In chapter4, Te Afordable Care
Act and Low-Wage Workers, Timothy D.McBride takes up the Afordable Care Act of
2010. Te United States is in the midst of incredible growth in income inequality, and
that growth profoundly afects the health status of individuals. Researchers have long rec-
ognized the need to address the problems of income inequality and poverty as well as the
complex and interrelated health and social problems. Tis chapter assesses what may be
the most important piece of social legislation passed in the last several decades. It focuses
on health insurance exchanges, Medicaid expansion, and the acts potential impacts on
the health and well-being of low-income Americans.
Te discussion of health policy reform continues in chapter5, How Will Employers
Respond to National Health Reform? Lessons from the 2006 Reform Initiative in
Massachusetts. Sharon K.Long and colleagues provide a foreshadowing of the function-
ing of the Afordable Care Act. Intended to bring about the most extensive changes to
the US health care system since the introduction of Medicare and Medicaid in 1965, both
the systems public and private components, the act builds on and attempts to expand the
employer-based system of insurance coveragethe foundation of the US system of cov-
erage. Tere has been much debate as to how employers and their workers will respond
to the act and about the implications of their responses. Estimates vary widely concerning
the acts likely impacts on employer-sponsored coverage; some predict little change, and
others anticipate relatively modest reductions in such coverage. Still others forecast sub-
stantial drops as large shares of employers stop ofering insurance to their workers. Current
estimates, which are based on surveys of employers about their expected responses to
health reform and on microsimulation models that analyze past behaviors, attempt to
predict likely employer and worker responses under the radical new environment created
by the Afordable Care Act. Making such predictions is a challenging endeavor. Tere
is uncertainty about how the act will roll out as it moves from theory to reality, and the
changes being introduced are considerable in scope. Tis chapter capitalizes on the real
world experience under health reform in Massachusetts, an efort that served as the tem-
plate for the Afordable Care Act, to examine how employers responded to that states
2006 health reform initiative. Although the details of the employer requirements in the
Introduction
xxiii
national legislation difer somewhat from those in the version enacted in Massachusetts,
the response by employers in Massachusetts provides objective evidence of the potential
response by employers to the national legislation.
We turn next to the role of labor and employment law and policy. In chapter 6,
Unionism, Law, and the Collective Struggle for Economic Justice, Marion G. Crain
and Ken Matheny begin by explaining how labor unions have historically been a major
force for wealth redistribution. By mobilizing the collective power of relatively unskilled
workers, unions brought the working class a livable wage and a safety net of basic eco-
nomic beneftsincluding health insurance and pensions. Spillover efects on corporate
welfare policies spread these benefts up the economic ladder, creating a vibrant middle
class. Aided by the National Labor Relations Act (which protects the right to organize
and collectively bargain), organized labor became a political fxture and a powerful voice.
Te act has enabled labor to advocate for the creation and expansion of statutory protec-
tions for individual workers. Tose protections secured and extended gains made at the
bargaining table, gains that include legislation guaranteeing the minimum wage, over-
time pay, unemployment insurance, Social Security, workplace health and safety, and
antidiscrimination protections.
Managerial opposition to unions and political shifs led to changes in the labor laws.
Tese changes exclude large categories of workers from eligibility to unionize, make orga-
nizing more dif cult, and eliminate sources of union leverage in collective bargaining.
For their part, unions have pursued ever-narrower agendas. Public opinion of organized
labor declined, and union political leverage eroded. Gains made at the bargaining table
were erased. Union density began a free fall that continues to this day. As the threat efect
of unionism declined, income inequality grew. Despite the correlation between declin-
ing union density and increasing income inequality, however, political prescriptions
for reducing income inequality rarely include a re-enervation of unions or progressive
reform of labor law. Tere is a critical need for a new legal rubric designed to further
worker agency, but it should recognize the wide range of actors that now represent work-
ers: workers centers, plaintifs lawyers, community organizations, and government
agencies. Te authors argue for a re-energized labor movement and propose new fed-
eral legislation grounded in an expanded understanding of the constitutional protection
aforded to the freedoms of assembly and association. Such legislation is necessary to
provide protection and breathing space for multiple forms of worker activism.
Continuing the focus on employment, Susan J. Lambert examines hourly labor in
chapter 7, Te Limits of Voluntary Employer Action for Improving Low-Level Jobs.
In these jobs, labor rates are primarily a function of benefts, hourly wages, and hours
worked. Seeking proft through cost-containment strategies, employers strive to mini-
mize all three. Specifcally, large employers restrict benefts at the corporate level by condi-
tioning eligibility on job classifcation (salaried vs. hourly, regular vs. temporary) and job
status (part-time vs. full-time). Similarly, corporate policies curb work hours by assigning
managers a particular number of hours to divide among their staf. Tese assignments are
Introduction
xxiv
typically based on corporate projections of consumer demand for that month, week, day,
or even hour. Frontline managers use a variety of strategies in their quest to meet produc-
tivity targets while also staying within hours. Tese cost-containment practices erode
the livability of todays hourly jobs by creating job conditions that make it dif cult for
workers to earn an adequate living and to secure supports through social policy. Drawing
on comparative organizational research of hourly jobs lodged in several industries (retail,
hospitality, fnancial service, transportation) as well as on national survey data, the
author ofers examples of a set of these problematic job conditions:scarce, unstable, and
unpredictable work hours (and earnings); limited job seniority; within-job stratifcation
that concentrates instability on the most vulnerable workers; minimal access to employer
benefts defned in frm policy; and monotonous work that is closely supervised. Te
chapter concludes with a discussion of the challenges these job conditions create for
safety net policies intended to protect low-income families from the risks of the market.
Te author argues that making the business case for improving the quality of low-level
jobs is not likely to produce signifcant results because within-job stratifcation and work
routinization sharply limit the value of individual workers to frms ofering such jobs.
Laws and unions are needed to ensure that basic employment standards cover all jobs and
all workers. Te chapter outlines new labor standards that could help make hourly jobs
more livable and the safety net more efective for low-income workers and their families.
What are the costs of fnancial fragility among US households? In chapter 8,
Economic Security and the American Dream, Mark R.Rank and Tomas A.Hirschl
suggest that the American Dream has served as a roadmap for how Americans envision
their lives. Te rules of the game are well known, as is the bargain that is struck. For those
willing to work hard and take advantage of their opportunities, there is the expectation
of a prosperous, fulflling, and livable life. Te United States has long been epitomized as
a land of equal opportunity, where hard work and skill can result in personal success and
fulfllment, regardless of ones station in life. Although the specifcs of each dream vary
from person to person, the overall vitality of the American Dream has been fundamental
to the nations identity. Yet in recent years, there have been serious questions regarding
the American Dream and its applicability to everyday men and women. Many individu-
als today are working harder and for longer hours only to fnd themselves falling further
behind. Tis chapter contrasts the Dream with the realities experienced by individuals
and households making their way across the American life course.
Continuing this discussion, Joe Soss and Lawrence R. Jacobs take up the political
dynamics that have accompanied rising inequality. In chapter9, Guardianship and the
New Gilded Age:Insular Politics and the Perils of Elite Rule, they start with the devel-
opments that have driven a wedge between governance and the needs and aspirations of
ordinary people. Te rules of the game that enabled the American Dream were toppled
by a two-prong assault that stripped most Americans of political infuence as well as
social protections and supports. One side of this assault emerged as the power of business
interests and the af uent grew in American political life. Te authors analysis focuses
Introduction
xxv
on the less widely noted second side:the growing leeway and insularity enjoyed by elites
who make governing decisions in critical institutions of business, government, and civil
society. Soss and Jacobs begin by clarifying who the governing elites are and how elite
actions have played a key role in undermining the American Dream. Te authors then
examine the major arguments used to justify forms of elite management at the expense
of more democratic modes of governance. Finally, to make the argument more concrete,
the authors present a brief case study of elite governance in the arena of fnancial regula-
tion during the Great Recession. Te decisions that have made life less livable for ordi-
nary Americans in recent decades, they conclude, can be traced to the astonishing failures
of elite rule amid a deep crisis of American democracy.
Next, in chapter10, Keep Government out of My Medicare:Te Search for Popular
Support of Taxes and Social Spending, Gillian Lester explores American workers per-
ceptions of the justice of paying taxes. In particular, she examines the connections they
draw between the taxes they pay and the maintenance of programs that supplement
wage earning in supporting family economic security (e.g., unemployment insurance,
Social Security, and Medicare). Te chapter focuses particularly on the perceptions of
middle- and lower-income working people who might especially beneft from such pro-
grams. Americans favor income redistribution in the abstract but have more complex
views when they consider the matter in light of their own tax burden and their personal
obligation to assist in fnancing redistributive social programs. A growing body of lit-
erature on tax salience explores how critically important framing is to public support
for diferent forms of revenue raising. In chapter10, the author links the insights of this
literature on the psychology of taxes with the context and framing of the liberal and
conservative populist movements that have emerged in the current political landscape
(the Occupy Movement and the Tea Party). She asks how the framing of certain aspects
of taxation can critically afect the publics willingness to support them and how populist
social movements have capitalized or failed to capitalize on this potential.
What are the policy implications of these analyses? Chapter11, A Model of American
Inequality, Opportunity, and Political Power, by Jared Bernstein, briefy describes the
major economic trends over the past 30 years from the perspective of low-income and
middle-class families. Bernstein argues that these trends have led to a situation in which
(1)economic growth is necessary but not suf cient to lif these families living standards
in ways commensurate with reasonable expectations and (2)the extent of inequality and
immobility threatens such families access to opportunities that could improve their
chances of upward mobility. Te author notes that public policy has played and contin-
ues to play a role in these outcomes, interacting with inequality itself to concentrate not
just income but power among a relatively narrow group. He asks how policy and power
can be recalibrated to provide middle- and low-income families the opportunities they
need and deserve.
In the concluding chapter, Michael Lind takes the very long perspective. Chapter12,
Te Challenge of Creating Good Jobs, addresses both short- and long-term challenges
Introduction
xxvi
in creating new jobs. How they are addressed depends as much on choices among politi-
cal and moral values as on neutral, technical considerations. Te short-term challenge is
reducing the mass unemployment that resulted from the fnancial crisis and the Great
Recession. Te appropriate mix of policies is well-known: Public infrastructure spend-
ing and attempts to increase exports are examples of policies that could compensate for
the collapse of private consumer demand during the period necessary for households to
work down their excessive debt overhang (a period that can be accelerated by policies like
debt restructuring). Here the barriers to efective action are political and ideological. Te
longer-term challenge is to combine new jobs with adequate compensation. One option
is to tolerate low wages but to supplement them with social subsidies, such as the Earned
Income Tax Credit or a universal negative income tax. Tis has been the dominant bipar-
tisan consensus in recent decades. Another approach would be to mandate a high mini-
mum wagea living wageand to address any unemployment this causes by providing
subsidies to some private employers, expanding public employment, or both. Although
the debates over these options are ofen cast in terms of pure instrumental rationality, the
author argues that they refect two infuential views of political economy:utilitarianism,
which is most infuential among economists and other social scientists; and democratic
republicanism, a value system that infuences much of the American public. Tese two
diferent approaches have very diferent implications for the dignity and independence
of American workers.
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