The central tenet of the American dream is the idea that if you work hard, you can succeed. Success is usually measured by financial stability, the ability to support a family, own some property perhaps, save for retirement, invest in the future opportunities of your children and maybe afford to take a vacation once in a while.
Middle-class America thrived for many years because hard work created a degree of wealth that allowed people to achieve these relatively modest goals. But in our new, global economy the link between work and wealth is being severed. Without substantial changes to our social safety net, the continuing rift between work and wealth will create serious risk to our economic and social wellbeing.
More and more firms are cutting ties to employees — in the form of moving jobs overseas, subcontracting, reducing or eliminating benefits, and the “sharing economy.”
Wages and benefits — the foundation of wealth for working people — are being replaced with lower and less stable earnings, unpredictable self-employment income, anemic benefits (if any), and a frayed social safety net. How will people insure themselves against risks of injury and sickness without employer-provided health insurance, paid sick leave or workers’ compensation insurance? How will working people save for retirement without employer-sponsored retirement savings or employer contributions to Social Security?
As firms separate themselves from employed workers, more and more wealth is concentrated among the few considered to be part of the firm—particularly high level corporate executives and shareholders.
Despite strong economic growth over the past several decades, worker earnings have not increased and the majority of households are not better off economically. Indeed, many are undeniably worse off.
For too many working people, work is a means to qualify for public benefits, rather than a method of supporting oneself and one’s family. Nearly one in five working people (27.5 million out of 146.3 million) qualify for the Earned Income Tax Credit alone, with others looking to food stamps, housing subsidies, childcare assistance and other public benefits to meet their basic needs.
Our shared economy relies on working people being consumers, but also to be investors, investing in themselves and in their children, who are of course, our future. However, in order to invest, working people need more than subsistence, unstable wages and inadequate benefits. If work continues to divorce itself from wealth, then the structure and intent of the social safety net in United States must adapt.
States and cities are testing ideas to restore the promise of work as a path to a measure of wealth and economic security. California developed Secure Choice to make retirement savings available to more of California’s working people so that they can build assets and economic security for the future. Policies such as paid family leave, now available in Rhode Island, New Jersey and California programs, allow for a health problem or new child without leading to a debilitating loss of income.
Recognizing the changing and increasingly uncertain nature of work in the U.S. economy, a diverse and bipartisan group of stakeholders has called for a broad system of portable benefits that would support retirement savings, supplement income in times of illness or injury and provide options for training and professional development. Others think the time has come to provide universal basic income, regardless of work status, so that people can manage their basic needs and enjoy a measure of security in an increasingly uncertain economy.
If work can no longer lead to wealth, then Americans will lose a fundamental element of our national character. The decisions we make regarding the future of work will have direct implications for the future of wealth — for workers, families, and entire communities today and well into the future. We need to provide workers with a means to create enough wealth to be good consumers and investors. As the paradigms of work shift, so too must state and federal policies which ensure that work and wealth do not become hopelessly divorced from one another.
