Precarious Work and Precarious Welfare: How the Pandemic Reveals Fundamental Flaws of the U.S. Social Safety Net

Abstract

Almost all forms of social insurance in the United States are tied to employment, or to family ties to an employee. The employment link to social insurance has proved to be a catastrophe during the COVID-19 pandemic and the resulting economic downturn. Yet, however untenable it is in the modern economy and however much it exacerbates inequality, the employment link to social insurance is an institutional design choice that stems from a series of political compromises that were made when the Social Security Act was created in 1934-35, and from the ways that firms and state governments have responded to its requirements in the years since. The systemic weaknesses exist because the interests and voices of workers were largely absent from the program design and legislative debates.

The social insurance system built without the voices of workers has huge gaps even in good economic times. Only about half of unemployed workers receive unemployment insurance benefits (“UI”) when they lose their jobs, and only 12 percent of part-time workers received UI. In 2018, 8.5 percent of people lacked health insurance, often because they lived in states that did not expand Medicaid and earned slightly too much to qualify for subsidized insurance, or were immigrants. In July 2020, the percentage of uninsured adults nearly doubled, to 16 percent, on account of job losses and states’ failures to expand eligibility for Medicaid.

In this essay, we explain how the pandemic brought into sharp focus the institutional design flaws in tying the American social welfare system to employment. In contrast to experiences in other industrialized countries both before and during the pandemic, these design flaws have magnified hardship for the least privileged members of American society and amplified inequalities of race, class, immigration status, and gender. The pandemic-induced crisis of inadequate protections prompted Congress to pass legislation to address some of these problems of policy design, but most of these reforms are both temporary and inadequate. Much legislative work remains to be done, and we explore some possibilities that Congress and the White House should consider.

Keywords: employment, social insurance, pandemic