In keeping with my point that I'm NOT involved in candidate advocacy, I want to point out a major substantive initiative that I think Obama could take on quite readily, even though it might at first seem a more natural fit for Edwards. The issue is laid out in a recent book by Jacob S. Hacker, a Yale University political scientist, The Great Risk Shift: The Assault on American Jobs, Families, Health Care, and Retirement--And How You Can Fight Back. In it, Hacker argues that the greatest economic challenge facing Americans today is not economic inequality-though he doesn't seek to downplay that-but rather the shifting burden of economic risk. And that what's most needed in the 21st Century is a new orientation to bringing risk back under reasonable control.
It's not simply a matter of protecting folks at the bottom, Hacker argues-effective dealing with risk is vital for creating an environment in which people feel secure enough to take on the sort of voluntary risk that helps drive the economy forward-what's often called "entrepreneurial risk," but that includes a wide range of choices to invest resources of time, money and effort in future possibilities that by their very nature cannot be certain. These include investments in eduction, training, changing careers, starting a new business, etc. In short, Hacker argues, a security orientation is not the polar opposite to an opportunity orientation-it is a vital aspect of an opportunity orientation. And it's this latter argument that gives Hacker's point about countering the Great Risk Shift a potential bipartisan cross-over appeal that fits perfectly with Obama's articulated intentions.
Here's a rundown of some of the basic facts Hacker cites to lay the foundations for his argument:
The size of swings of pre-tax family income from year to year has tripled since the early 1970s. This sort of income instability-how far people move up and down the income ladder from year to year - has grown faster than income inequality-the gap between people on different points on the income ladder.
The chance that a person with average demographic characteristics will experience a 50 percent or larger drop in income over a two-year period has risen from 7 percent in the early 1970s to 17 percent in 2002.
Personal bankruptcy has gone from a rare occurrence to a routine one. In 2005, more than 2 million Americans filed for bankruptcy-up from fewer than 300,000 in 1980.
Income instability has risen just as quickly among the well educated as among the less well educated. As a result, college-educated workers today experience instability as great as workers without a high-school degree experienced in the 1970s.
Parents with kids are much more likely than other adults to say they don't have enough financial resources to support themselves if they lose their jobs. All told, more than 70 percent of Americans say they could last no longer than 4 months without their current income before experiencing "significant financial hardship."
Married couples with kids are twice as likely to file for bankruptcy as are married couples without kids.
Families with children are more likely than other family types to lose their homes. Since the early 1970s, the mortgage foreclosure rate has increased fivefold. Each year in the last few years, roughly one in sixty households with a mortgage have fallen into foreclosure.
Workers are scared. In 1982, amid a severe recession that had pushed the unemployment rate up to nearly 10 percent, a poll by the private business research firm ISR found that 12 percent of workers were "frequently concerned about being laid off." In 2005, with the unemployment rate down to 5 percent, the number of Americans worried that they would lose their jobs was 35 percent.
Although the unemployment rate has remained low, the rate of involuntary job loss has actually been steeply rising. In the 2001 recession, the rate of involuntary job loss was essentially the same as the levels reached during the deep downturn of the early 1980s. And the costs of job loss for workers are actually above the levels of the early 1980s, particularly for more educated workers.
A major reason for the divorce between the unemployment and job-loss figures is that many of those displaced from jobs are not counted as unemployed, because they have stopped their employment search out of discouragement. In 2005, the "shadow unemployed" consisted of as many as 5.1 million men and women, which would raise the official unemployment rate to 8.7 percent.
Long-term unemployment-that is, unemployment lasting longer than six months-is three times as high at the peak of the business cycle as it was in the 1960s. During economic downturns, the picture is even more worrisome. Long-term unemployment has been unusually high in each of the last two recessions, and educated and professional workers are most likely to experience it.
46.6 million Americans lack health insurance, up from around 24 million in 1980. All of the decline is due to a drop in the scope and generosity of employer-provided health coverage. In 1980, the majority of employers at medium-to-large companies paid 100 percent of the premium for family health coverage. Today, fewer than a quarter do.
Over a two-year period, more than 80 million adults and kids-one out of three nonelderly Americans-spend some time without the protection against ruinous health care costs that health insurance offers, and more than 50 million are uninsured for more than six months.
One out of six working-age adults are carrying medical debt, and medical costs and crises were a factor in as many as 700,000 personal bankruptcies in 2001.
Medicaid is now officially available to every poor child in America; yet the share of children who are uninsured has barely dropped and is still well above its level in the late 1970s. Only about 60 percent of poor children had health insurance coverage in 2002, and most of those who were uninsured lived in working families.
With the exception of the recent prescription drug bill, Medicare coverage has remained largely unchanged since the 1960s, and still does not include a cap on catastrophic costs. As a result, seniors are actually paying a larger share of their income on medical care today than they did at the time of Medicare's passage.
In 1980, more than 80 percent of large and medium-sized corporations offered traditional "defined-benefit" pensions that provide a predetermined monthly benefit for the remainder of a worker's life. Today, less than a third do. Instead, companies that provide plans now offer "defined-contribution" plans, such as the 401(k), in which returns are neither predictable nor assured.
Between 1989 and 1998-a decade in which 401(k) coverage exploded and the stock market boomed-the share of families nearing retirement that found themselves likely to live on less than half of their prior income in retirement increased by a third, to more than 40 percent.
Roughly three-quarters of 401(k) account holders in 2002 had less than the widely cited average of $47,000 in their account. The median among account-holders-which is a better measure of what's typical-was around $13,000. And all these figures include only those who have 401(k)s. Only 53 percent of workers have access to a defined-contribution pension plan, and only 42 percent contribute to one
More than $100 billion dollars a year in lost income tax revenues is used to subsidize 401(k)s and other pension plans. Two-thirds of this total goes to the richest 20 percent of Americans, only 12 percent to the bottom 60 percent of Americans on the income ladder.
And here's what the book description says:
America's leaders say the economy is strong and getting stronger. But ordinary Americans aren't buying it. They see what the rosy statistics hide: We are all struggling under the weight of terrifying economic instability. No matter how well educated and hard working we are, we know that the bottom can fall out at any moment. Meanwhile, the safety net that once protected us is fast unraveling. With retirement plans in growing jeopardy while health coverage erodes, more and more economic risk is shifting from government and business onto the fragile shoulders of the American family. In The Great Risk Shift, Jacob S. Hacker lays bare this unsettling new economic climate, showing how it has come about, what it is doing to our families, and how we can fight back.
Behind this shift, he contends, is the Personal Responsibility Crusade, eagerly embraced by corporate leaders and Republican politicians who speak of a nirvana of economic empowerment, an "ownership society" in which Americans are free to choose. But as Hacker reveals, the result has been quite different: a harsh new world of economic insecurity, in which far too many Americans are free to lose. The book documents how two great pillars of economic security--the family and the workplace--guarantee far less financial stability than they once did. The final leg of economic support--the public and private benefits that workers and families get when economic disaster strikes--has dangerously eroded as political leaders and corporations increasingly cut back protections of our health care, our income security, and our retirement pensions.
Hacker concludes by advocating an "insurance and opportunity society" that would safeguard economic security and expand economic opportunity, ensuring that all Americans have the basic financial security they need to reach for and achieve the American Dream. Jacob Hacker brings into focus as never before the pressures that the Great Risk Shift exerts on our pocketbooks and on our lives. Blending powerful human stories, big-picture analysis, and compelling ideas for reform, this remarkable volume will hit a nerve, serving as a rallying point in the vital struggle for economic security in an increasingly uncertain world.
If Obama were to embrace Hacker's ideas, and make them his own, he would clearly add substantial substance to his brand as an agent of change, new ideas, and reaching across old boundaries to find new solutions. Simply reframing our view of the economic issues faced by average Americans would be an enormous, potentially game-changing contribution. The fact that he has not already done so is the sort of thing that continues to give me pause. But I remain open to persuasion. The ball is in Obama's court.