The Pandemic Risk Shift

The Pandemic Risk Shift

In the face of COVID-19, the political response has been at best temporary relief and at worst indifference. What we need going forward is not just better public health measures, but a response to the economic insecurities and policy failures that it laid bare.

In modern liberal democracies, social policies reflect a moral commitment to the dignity and well-being of those residing within their borders; a promise of mutual aid against threats to our security and from forces or risks that are beyond our control. Social policies, in turn, are shaped by how we conceive of those risks, and by how we respond to them. Policymakers assess the character of the risk, who might be exposed to it, who bears responsibility for creating and mitigating it, and who is deserving (or undeserving) of protection. They decide not just who gets protected but how—rewarding some claimants, while disciplining or excluding others.

In turn, policymakers must be responsive to changes in the underlying conditions—to the wax and wane of existing risks, and to the emergence of new ones. These “risk shifts” expose the poverty of existing policies and demand new political solutions. They may occur slowly, as with subtle changes in patterns of work or family or social organization; they may occur abruptly, as with a market crash or an outbreak of war. They may happen to us, as with a drought or hurricane; they may be done to us, as with choices made by policymakers or employers. By any measure, the COVID-19 pandemic and its accompanying recession is just such a moment—demonstrating an urgent need to recalibrate our social policies for both the new world of risk represented by the coronavirus, and an older world of risk that we have too long neglected.

Social policies offer protection whenever other means of support or sustenance—family, community, market—prove insufficient. But such policies do not just insulate citizens from the cruelty or vagaries of the market. They also challenge its primacy in ordering social relations and rewards. The point is not just the right to “a modicum of welfare and security,” as T.H. Marshall argued, but “the right to share to the full in the social heritage and live the life of a civilized being according to the standards prevailing in society.” Social services, social supports, and public goods should “uphold a socially acceptable standard of living independently of market participation,” as the Danish sociologist Gøsta Esping-Andersen puts it. Social policies, in short, are not just insurance against hard times or bad luck; they are an expression of social solidarity and collective responsibility.

We sustain these policies because the risks posed by modern society are social risks: they flow from the ordering of that society and not from the personal capacities or failings of its members. “When, in a city of 100,000, only one man is unemployed,” as C. Wright Mills famously observed, “that is his personal trouble. . . . But when in a nation of 50 million employees, 15 million men are unemployed . . . the correct statement of the problem and range of possible solutions require us to consider the economic and political institutions of society, and not merely the personal situation and character of a scatter of individuals.” These social risks also have social consequences. The benefits of mitigating them accrue not just to the direct recipient, but to society as a whole. High quality preschool contributes to child development and to the productivity of the larger economy. Paid sick leave protects both workers who are able to stay home and the public health of the rest of us.

In the modern era, the character of these risks and their accompanying social policies have shifted a number of times, although not always in ways that are neatly aligned. In the United States, the first shift came with urbanization and industrialization in the half century after the Civil War. Urbanization increased reliance on monetary earnings and consumption rather than on household production and undercut reliance on extended family networks. Industrialization exposed workers and their families to new structural and environmental sources of economic insecurity and to all of the risks that flowed from the loss of “breadwinner” wages due to unemployment, injury, illness, or retirement.

The U.S. government’s most notable national response to all of this, forged during the Great Depression, was the New Deal. Organized modestly around the goal or ideal of security, the New Deal set out to mitigate or minimize a wide array of social and economic risks, knotting together safety nets for industrial workers, single mothers, the disabled, bank depositors, mortgage lenders, and many others. At the center of this project was a combination of labor rights, labor standards, social insurance, and policies designed to establish a floor under the incomes of the working class—or to enable them, through collective bargaining, to secure that floor themselves. As John Dewey put it in Liberalism and Social Action (1935), the goal was not liberation from serfdom or slavery or despotic rule, but “liberation from material insecurity and from the coercions and repressions that prevent multitudes from participation in the vast cultural resources that are at hand.”

Yet the policies of the New Deal era were limited in four fundamental respects. First, they had notable gaps, perhaps most importantly the omission of any whisper of public health insurance. Second, they were for the most part not universal. Coverage depended on an elaborate taxonomy of deservingness in which the aged, the poor, the disabled, children, mothers, veterans, and others were sorted into discrete programs. The New Deal offered more meager protections for people who policymakers believed could not or should not participate in the labor market themselves. Third, most programs—especially those for low-income families—were administered by state governments in ways that led to uneven generosity and inclusivity. And fourth, their commitment to decommodification was thin. U.S. social policies deferred to the market in the relative meagerness of their benefits (which pushed people to participate in low-wage labor markets), in how they tied social insurance to earnings, and in how they presumed (and subsidized) private job-based benefits as the foundation of social protection. The market was viewed as the natural and primary mechanism of social organization, and policymaking narrowed its attention to addressing its failures.

Each of these limits reflected the underlying racial logic of New Deal social provision. Through a combination of occupational exclusions and deference to state and local interests on key elements of eligibility and generosity, New Deal policies excluded much of the African-American and Latinx labor force and relegated family supports to a second tier of state-based programs. As the historian Jennifer Mittelstadt notes, “The architecture of protection for white men was built in part on the backs of those who were denied full economic and social citizenship.” While legal challenges and social movements expanded the reach of the New Deal over time, the racist logic and pattern of social policy—both in program design and at the point of provision—persisted.

In sum, New Deal policies privileged a particular population, a particular pattern of labor force participation, and a particular array of opportunities and risks: they prepared people (mostly white men) for the labor market, eased them out of it at retirement, and protected them from loss of earnings in between. All other claims were suspect or stigmatized (“pitied but not entitled,” in Linda Gordon’s apt phrasing), an assessment woven through all of our means-tested programs that only hardened in the decades that followed.

The next risk shift, as the work of Jacob Hacker and others has outlined, came as the economic and political logic of the New Deal began to unravel in the 1970s. Observers at the time described the transformation in a variety of ways: a “great U-turn” in economic fortunes and policy priorities, a “chain reaction” backlash against the civil rights movement, and descent into a post-growth “zero-sum” contest over economic rewards. The shift, however, was much less about changing economic circumstances than the character of the political response to them. The advance of market fundamentalism was marked by both a frontal assault on New Deal social policies and the embrace of market mechanisms—through privatization, financialization, and deregulation—in almost all arenas of social and economic life. This eroded social citizenship in two ways: It narrowed the range and legitimacy of claims to equal protection, as citizenship was increasingly conditional on labor market value and personal responsibility. And, in an era of unrelenting austerity, it eroded the capacity and willingness of the state (or the states) to offer meaningful protection.

The dramatic collapse of job security and quality in the new fissured workplace eroded the New Deal’s core assumption: that gainful employment could guarantee family security via high wages and public and private forms of social insurance. Instead, we got a combination of polarization and precarity. Wage growth slowed or stagnated for all but the highest earners, as the mechanisms for equitable distribution—like collective bargaining and robust labor standards—were dismantled. The reach of employment-based social insurance slowed too, widening inequality. For those who retained them, employment-based health and pension coverage became more costly and less secure. The cost of healthcare eclipsed the cost of lost wages when sick. Private-sector labor unions—the institutions most responsible for achieving and generalizing good wages and benefits—virtually disappeared: by 2020, just 6.3 percent of workers in the private sector were union members.

At the same time, more working families were relying on dual incomes, a pattern that introduced new costs and burdens (especially child care) and often simply doubled a family’s exposure to employment insecurity. New Deal policies premised on male breadwinner career employment in high-wage firms were either rolled back or became an increasingly poor fit for new economic and demographic realities. These policies were haphazardly retrofitted to make waged work the primary marker of the deserving citizen. Attention strayed from those most in need: the very poor, children, single mothers, and low-wage workers.

The policies that could have mitigated this post–New Deal world of risk were readily apparent—even if the political power to put them in place was more elusive. These included social policies that have been hollowed out in recent decades but also new policies to meet contemporary needs: robust labor standards and renewed protection of workers’ rights; social insurance better matched to diverse employment relationships and career trajectories; work-life balance policies (especially paid leave) more suited to families and prevailing patterns of labor force participation; a stronger commitment to equal protection and antidiscrimination (especially in housing and employment); investments in infrastructure and education; and a safety net that brings us closer to the goal of “a socially acceptable standard of living independently of market participation,” as Esping-Andersen emphasized.

Then came the pandemic.

All of the dimensions and challenges of the last risk shift are still with us; the policies needed to address those risks just as pressing. In this respect, COVID-19 has exposed underlying conditions and demonstrated how thoroughly we have failed to sustain any semblance of social citizenship. But the current crisis also marks another risk shift, pushing new challenges and policy priorities to the fore.

Three overarching observations lay out the conditions of the new risk shift. The first is that all the elements of the last shift—precarious employment, fragmented access to safety-net policies, the privatization of health and retirement risk, income volatility—have profound public health implications as well. The risks faced at work cannot be confined to the workplace nor fully mitigated there, and these risks accompany specific occupations but also broad occupational settings—such as frontline service work or labor-intensive, line-based manufacturing. The meager reach and generosity of the safety net (made worse as the CARES Act provisions begin to sunset) compelled people back to work before it was safe. The tiered and categorical coverage of those policies—across and within states—undermines the universalism essential to public health.

Second, while our reliance on labor force participation to distribute, finance, and sanctify social provision is inequitable and inefficient at the best of times, it has proven even worse in the context of the COVID-19 crisis. The employed face unprecedented risk, the uninsured and underinsured face punishing costs, and those losing jobs for the sake of public health often lose health coverage at the same time. The work-based safety net has offered little individual or collective cushion against the economic downturn. The American insistence on attaching work requirements to almost any form of social assistance has been rendered ludicrous.

Third, neither New Deal policies nor our meager efforts to build on them ever came close to providing any semblance of work-life balance. When family members fell sick and schools and child-care centers shuttered, households were thrown into crisis. Beyond innovations in a few states, the United States is alone among its peers in its failure to offer a public program of paid family or sick leave. Our social policies need to be based on the presumption that all workers have the responsibility to care for dependents. Instead, we have valorized work as the golden ticket to citizenship and relentlessly devalued—at least for the poorest among us—caring for one’s children or elderly parents as a social contribution.

Rather than addressing any of these problems, the policy response to the COVID-19 crisis has been overwhelmingly focused on mitigating or minimizing the economic damage by propping up private employment and private consumption. This was evident in the pointed emphasis on backfilling payrolls and paychecks, largely to the exclusion of support for public institutions. (The CARES Act devoted $800 billion to business assistance, $250 billion to unemployment insurance [UI], $300 billion to individual stimulus checks, and only $150 billion to state and local governments.) And it was evident when local and state jurisdictions chafed to “reopen”—to stop, as Iowa Governor Kim Reynolds put it bluntly, choosing “lives” over “livelihoods.”

Such decisions reflect not just the narrow vision of U.S. social policy, but an utter failure to appreciate the new world of risk. The carelessness and cruelty of Donald Trump’s administration and like-minded state governments have been well-documented. But our notoriously weak sense of collective responsibility (on full display in the controversy over mask mandates), our misplaced faith in market solutions, and a carefully cultivated suspicion of alternatives runs much deeper than that. As much as our political leadership has failed us, our core social policies have failed us as well. The challenges posed by the experiences of the last year—the uneven reach of UI, the prevalence of food and housing insecurity, dismal and unsafe working conditions, inadequate paid leave, fragile health coverage, and the rest—were not caused by the pandemic. They were exposed by it.

What is to be done? There is, of course, a pressing need to protect the public welfare in what are hopefully the waning months of the pandemic, and to mitigate its impact on the economy. Toward these ends, the Biden administration’s relief package hits most of the right notes—including renewed and more generous investments in UI and paid leave, much more robust federal support for vaccinations, and (at long last) support for state and local governments. But these are just relief and recovery measures, promising to get us past the pandemic. Federal support for UI and paid leave, under Biden’s plan, will sunset in September. Fiscal support of schools, cities, counties, and states will phase out as the economy recovers. Public health policy, if and when the virus is controlled, will revert to an underfunded patchwork.

What we need is not just a response to the COVID crisis, but a response to the economic insecurities and policy failures that it laid bare. In the 1930s, the New Deal devoted its attention to immediate relief from the ravages of the Great Depression, to recovery from the economic crisis, and, imperfectly, to the challenge of securing shared prosperity in the long run. Not much was to be gained by weathering the crisis and returning to the political economy of 1928. By the same token, rolling back the clock to the pre-COVID economy would be a hollow accomplishment. It is that final piece—the public policies that outlast the immediate crisis and respond to the inequality and insecurity that predated it—that deserve more serious attention.

Perhaps most urgently, we need to eliminate the privatization and fragmentation of risk in healthcare. The COVID-19 crisis underscores some of the most compelling arguments for universal healthcare: uneven coverage poses a risk to both individuals and to the public; reliance on job-based coverage allows one risk (losing a job) to overwhelm another; and jurisdictional inequalities (especially the uneven expansion of Medicaid under the Affordable Care Act) cut against both equity and efficiency. The public-private fragmentation of healthcare makes it virtually impossible to meet a public health threat with any coherent response. The Trump administration’s missteps were but a small part of the problem; even in the best of circumstances, our healthcare nonsystem makes it impossible not only to plan and coordinate public health measures but even to assemble or disseminate the most basic information.

We need to reconfigure and recalibrate our labor standards. Regulatory health and safety standards and guidelines, as Tanya Goldman and David Weil have argued, should be attached to work rather than employment so that safety on the job (and public health) is ensured, regardless of the employment relationship; employers shouldn’t get away with endangering public health through subcontracting or willful misclassification of workers. And those protections need to account for the public health risk of working in a pandemic, in the form of clear and enforceable standards for personal protective equipment, social distancing, and the like. In turn, we need to allow workers to receive UI when they quit their jobs because of unsafe conditions—and make UI benefits as expansive and generous as possible.

We need to expand and sustain the right not to work. The need to take leave from full-time employment in order to fulfill family obligations became near-universal as the virus spread and public schools closed. And yet, even under the crush of the pandemic, the paid leave provisions of the Families First Coronavirus Response and CARES Acts were anemic: the eligibility criteria were narrow and carve-outs for large employers, small employers, public employers, and healthcare employers left over 60 million full-time workers out in the cold. Universal access to paid leave, a routine protection enjoyed by working families almost everywhere but the United States, would enable workers to meet family obligations without stigma, and without abandoning the labor market.

We need to universalize coverage in our basic social insurance programs. The temporary extension of UI to workers not conventionally eligible is a stark reminder of the uneven and arbitrary reach of such programs. There is a sharp disjuncture between a safety net premised on incentivizing labor force participation and subsidizing low wages on one hand, and a UI system that leaves nearly half the labor force ineligible for coverage on the other. There is a desperate need to modernize both the reach of our UI system and its ability to deliver benefits to those in need. We should make the expansion of Pandemic Unemployment Assistance to the contingent workforce permanent, roping as many people together as we can through a clearer and broader definition of “employee” while providing opportunities for pooling risk through flexible and portable social insurance options for those still outside that definition.

We need to nationalize the eligibility and benefit standards of all our social insurance and safety net policies. Across a range of policies, disparities across the states undermine federal programs and widen regional inequities. This was glaringly evident in the provision of UI. State UI systems were overwhelmed by the demand last March and April, and some erected or sustained quite intentional administrative burdens to discourage or delay applications, especially in the push to “reopen” state economies. There is no credible reason why we do less to compensate a spell of unemployment or housing insecurity in Biloxi than we do in Boston. And there is no logic in deferring to state control of UI if the federal government has to jump in whenever the need is acute.

The inadequacy of our means-tested safety net programs is starker still. The Families First and CARES Acts buttressed Supplemental Nutrition Assistance Program eligibility and benefits, but 15 percent of families with children were food insecure before the pandemic hit, and those rates doubled despite SNAP expansion. The rolling eviction moratorium has stemmed a full-blown housing crisis, but one in five renters have fallen behind on their rent, nearly half of all renters reported spending more than 30 percent of their income on housing before the virus hit, and the only social housing options available to most people are long waitlists for Section 8 vouchers. The remnants of direct cash assistance (TANF) reach so few and offer so little that it is scarcely even part of the conversation. The CARES Act dampened growth in poverty, and any reprise is likely to have the same effect. But that does not shake the fact that we do so little to sustain the security, the opportunity, and the dignity of the poorest among us.

Finally, we need to address the persistence of profound racial disparities in both private markets and public policies. The COVID-19 crisis—even before the social upheaval that followed the murder of George Floyd—made clear the uneven impacts generated by persistent occupational and residential segregation and by stark racial disparities in frontline employment, low-wage manufacturing, and neighborhood conditions. The response here needs to be two-pronged: renewed emphasis on racial equity across all domains of public policy (accomplished, in part, by commitments to universal and national standards), while also focusing on the people and places disadvantaged, disinvested, or discarded by decades of systemic racism.

The prospects for any or all of this are uncertain, and in the short term may seem out of reach. For decades, political institutions have willfully and pointedly exposed a large share of the population to crushing inequality, economic insecurity, and diminished citizenship. Incantations of “market forces” and “personal responsibility” distracted us from a cruel reality: the world was not an inherently riskier place; we had just retreated from social or collective responsibility for mitigating those risks.

The virus reveals all of this, but it also changes the calculus. Now the world is a riskier place. For a moment, we seemed to grasp this. But the very idea of minimizing economic activity and discouraging labor market participation in order to stem the spread of COVID-19 was so at odds with the prevailing political narrative that it proved impossible to sustain. Rather than rethinking our public policies for a new world of risk, the current options span an unsettlingly narrow range. At one end, there is the unveiled and unapologetic logic of the “back to business now” crowd. Knock $600 off the weekly UI benefit so that going back to work is the only option. Send children back to school so that their parents can go to work. Require nothing of employers under these perilous conditions, and offer them immunity from liability for COVID-related claims instead. At the other end, there is a necessary but shortsighted push for economic stimulus and enhanced security—a “back to business later” argument premised on the conviction that the risk we now face will pass with the virus.

This is a dismal trajectory. While Progressives documented the dangers of the first risk shift, it took the Great Depression to galvanize a political response. And, as revolutionary as the New Deal was in the U.S. context, it was—by the standards of our democratic peers overseas—half-hearted and haphazard. The social movements of the 1960s widened the scope and dignity of social protection, but those gains proved fleeting. Over the next generation, business interests and their political allies engineered a second risk shift by burning down what was left of the New Deal and ensuring that nothing was erected in its place. Now, in the face of a profound new risk, the political response is at best temporary relief and at worst indifference and a callous determination to put ordinary Americans in harm’s way.

Colin Gordon is a professor of history at the University of Iowa. He is the author of, most recently, Growing Apart: A Political History of American Inequality and Citizen Brown: Race, Democracy, and Inequality in the St. Louis Suburbs.