The Perils of Private Welfare: Job-Based Benefits and American Inequality

By Colin Gordon - March 27, 2014

American inequality is driven not just by the uneven distribution of wages, but also by the uneven distribution of job-based benefits. More than any other country, the United States relies on private employment and private bargaining to deliver basic social benefits—including health coverage, retirement security, and paid leave. The results—on any basic measure of economic security—have been dismal.

Reliance on private benefits made some sense in a mid-century economy organized around lifetime “family wage” employment in large and stable firms. But even under these circumstances, benefits bypassed many workers. Their coverage was always uncertain (loss of a job meant loss of benefits) and often capricious (consider the health and pension plans that routinely evaporate in corporate restructuring). Good benefits followed good jobs, widening the gap between low-wage workers and everyone else. The expectation of private coverage undercut public programs—which were often structured as ways of supplementing job-based plans or mopping up around their edges. And, across the last generation, the logic of delivering social policy via private employment unraveled with the economy on which it was based.