Average Workers Can’t Bear Any More Risk
As economies reopen across the United States, tens of millions of Americans who can’t work remotely have become armchair actuaries, forced to figure out for themselves just how risky clocking in to their jobs might be. Of course, for many, the calculation is largely hypothetical. In April, President Donald Trump signed an executive order that declared virus-plagued meatpacking plants “essential infrastructure,” pressuring employees to return to work. The president also promised that his order would “solve any liability problems” plants might face.
The legal grounds for the president’s order are shaky. Yet it encapsulates the grim bargain more and more Americans will face. Whether deemed essential or not, workers are being pushed by public policy and financial necessity back into restaurants, bars, stores, offices, warehouses, work sites, and factories. Expanded unemployment benefits are set to end well before the threat of COVID-19 does, and many states are poised to cut off benefits for workers whose employers are operating, no matter how dangerous those operations might be. And if workers get sick? Well, that’s not their employer’s problem—at least not if elected officials heed corporate lobbyists’ call for immunity from legal claims related to on-the-job infections.
Liability relief has become the Republicans’ “red line,” according to Senate Majority Leader Mitch McConnell—the one thing he’s “going to insist” on as a condition of additional federal assistance, including aid to battered states and localities. The president has said much the same, and White House officials have even suggested they could indemnify companies without congressional action (legal experts say otherwise). If corporate America gets what it wants, not only will employees who become sick lose a means of legal recourse, but employers will also have less incentive to make workplaces safe. A huge set of life-or-death risks will fall on workers and their families, rather than being shared more broadly across our society.
If that happens, it won’t be new. Over the past generation, a transformation that I have called the “great risk shift” has played out in nearly every domain of economic life: job security, work-family balance, retirement, health care. The growth of contingent employment, the rise of dual-earner and single-parent families who must juggle work and caregiving, the decline of employment-based health benefits, and the near-extinction of defined-benefit pension plans have all forced working Americans to take on responsibilities that corporations and government once bore jointly. Although public policies have occasionally pushed in the other direction—as with the broadening of health insurance under the Affordable Care Act—the trends have mostly pointed one way: toward making workers and their families bear more risk and responsibility on their own.
Now, in the midst of the greatest economic catastrophe since the Great Depression, this rapidly accelerating risk-shifting presents the United States with a fateful choice. We can ensure we really are all in this together. Or we can allow the risk-pooling systems that sustain a modern market economy to collapse, with all the fallout that would cause.
Workers’ situation today may seem unprecedented. But in fact, it’s strikingly similar to Americans’ grim realities at the end of the 19th century. As the United States rapidly industrialized, workplaces became sites of death and disability on a scale that’s now hard to fathom. According to the legal historian John Fabian Witt, high-risk industries had an annual death rate from 3 in 1,000 (railroads) to an almost unbelievable 60 in 1,000 (anthracite-coal mining). In all, roughly 1 in every 1,000 Americans died as the result of a workplace accident each year. That’s higher than the death rate from COVID-19 in any country today. (As of May 28, Belgium had the highest coronavirus fatality rate, at 0.82 deaths per 1,000 people.)
In one respect, however, the state of affairs for workers back then may have been better than it will be for workers who face the risk of COVID-19. At the dawn of the last century, wage earners and their families could sue their employers over workplace deaths and injuries, and many did. Big judgments were rare, settlements the norm, and the large majority of accidents never litigated. Still, mounting liability costs were a major reason employers swung behind the nation’s first system of “social insurance” for wage earners: Workers’ compensation programs were passed in almost all states by 1920. More than a decade before Social Security, in short, the United States socialized most of the responsibility for workplace death and disability—the very responsibility that corporations and Republicans are eager to shift back onto workers today.
Of course, those workers’ compensation programs still exist. But they were set up for easy-to-verify workplace injuries, not the ambiguity of virus transmission. Workers’ compensation typically doesn’t cover community-borne illnesses, and even some health-care facilities are fighting claims from employees who have contracted COVID-19. Indeed, at the same time that business groups have lobbied for liability relief, they’ve resisted state-level efforts to ensure that employees who become sick can receive compensation. If employers achieve broad immunity from claims and preserve the status quo for workers’ comp, they will have transported the nation a long way back toward the risks of early industrial America.
The history of workers’ compensation, regardless of its shortcomings in the current crisis, lights another path. The welfare-state breakthroughs of the 20th century—unemployment insurance, old-age protections, disability insurance, Medicare—showed that protection for those hit by largely unavoidable economic shocks could be effectively provided through public programs paid for by contributions from those potentially affected. In theory, individual employers and employees could all buy enough private insurance to cover all potential workplace injuries. In practice, however, the usual alternative to social insurance is a system in which workers and their families bear all the risks, with profoundly dislocating and unequal consequences.
Unfortunately, as simultaneous health and economic catastrophes lay bare the long erosion of American social insurance, that’s the alternative we’re facing today.
COVID-19 has hit the American safety net like an asteroid striking Earth. Despite recent state and federal efforts to improve protections for families, the system’s weaknesses have become all too apparent. No one should be surprised that the unemployment-insurance system, which reached fewer than 1 in 3 unemployed workers in 2018, would struggle to meet an unprecedented spike in joblessness, or that most Americans’ dependence on their employer for health coverage would create a crisis when work disappeared just as the need for health insurance swelled. These were glaring problems before the pandemic. Without fundamental reforms, they will be only worsen.
During the pandemic, the great risk shift continues in other ways. Since the 1930s, the United States has had a basic public pension that provides a floor of protection for older Americans. Yet Social Security has been in a holding pattern since the early ’80s, while the private retirement system that was supposed to build on that floor has radically changed, offloading what were companies’ responsibilities onto workers. Most employees are left to fund an adequate retirement by themselves. Those nearing retirement are facing a one-two punch of market declines and the loss of their job, and many will have to labor long after they expected to retire.
To make matters worse, economic shocks tempt workers to tap into their retirement accounts, sinking their post-work plans to stay afloat in the present. Indeed, Congress essentially ratified this Hobson’s choice in its March relief bill. The law waives the penalty for early withdrawals from retirement accounts, actively encouraging laid-off Americans to cash out up to $100,000 in retirement savings. More recently, Republicans floated the idea of offering people immediate cash relief in return for lower Social Security benefits in the future. That idea—so toxic it was immediately shelved—only replicates a feature of our private retirement system: If Americans need help now, they are free to mortgage their future well-being.
The current crisis has underscored other weaknesses in America’s safety net. With regard to child care and paid leave, the United States is a stark outlier among rich democracies. That adequate child care is essential to keeping the economy growing should now be evident to every parent of young kids who is trying to work remotely. Those who are sick should not be struggling to go to work for fear of termination or immiseration, endangering their fellow workers in the process. And those who care for others—whether younger children or older parents—should not have to choose between helping their family and feeding it.
All these problems were on vivid display before the first case of COVID-19, and the reforms required are no secret: universal health insurance, universal paid leave and sick pay, a broader and more generous unemployment-insurance system, improved Social Security benefits, and measures to make private retirement plans universal, automatic, and secure. All these ideas would reverse the risk shift. All are popular. And all of them have plenty of backers in government—just not enough within the party that controls the White House and Senate.
But nothing guarantees that our nation will heed these calls for expanded social insurance. As business’s hunt for liability relief today suggests, the United States could follow a different and much darker path.
The expert advice about reopening is simple: The economy won’t really get going again unless Americans feel secure. So long as people face enormous risks, they won’t be confident about investing in new skills or new businesses or big purchases or, indeed, even about showing up to work. A safety net that reassures workers they won’t face devastation isn’t a barrier to economic opportunity. It’s a precondition for it.
This isn’t something unique to a pandemic. It’s always been true, and the countries that have most successfully combined free markets and social insurance—particularly the Scandinavian societies of northern Europe—have proved it. These countries have big welfare states, strong economies, and happy, healthy, highly educated citizens who accept and thrive amid the creative destruction of capitalist markets. “Not only are sound safety nets popular,” the former libertarian Will Wilkinson has written, “but they also increase the public’s tolerance for the dislocations of a dynamic free-market economy.”
The flip side is that a dynamic free-market economy without sound safety nets breeds backlash. And if that backlash doesn’t deliver social insurance—because, say, the party in power is hostile to the welfare state—it will deliver social discord instead. Denying risks doesn’t make them disappear. It just puts democracy and markets on a collision course.
Which brings us back to that darker path. As in the late 19th century, corporations have gained enormous sway over workers, and they have turned to government to reinforce that sway. Americans are learning again that laissez-faire is anything but free. It requires the coercive power of government to enforce the unjust and to hold at bay those who would demand something better.
If Americans are forced back to work without assurances, while those who direct and profit from their labor receive immunity, Americans will be on a road to serfdom very different from the one feared by the libertarian right. Armed with digital tools for monitoring workers even when they’re not at work—tools honed during the pandemic—employers will seek to extract more from employees while providing less: less pay, less safety, less security, and, yes, less freedom.
In the early 20th century, a strengthened democracy ensured that government and business worked together to protect citizens against the biggest risks they faced. If government and business work together today to achieve the opposite, the greatest risk will be to our democracy itself.