Season of Discontent
It's the great paradox of this political season: The U.S. economy has expanded for nearly five years, but Americans remain pessimistic. Why? High gas prices and rising income inequality were the top culprits in a recent poll. The first worry made sense-until the past month, at least-but the second? Do husbands and wives, during bedtime chitchat, really bemoan the rich getting richer? Or do they fret about themselves suddenly getting poorer if one of them were to lose a good job?
In The Great Risk Shift, Yale University political science Prof. Jacob Hacker says it's the latter. Hacker fingers growing income volatility as the cause of economic insecurity. The killer stat from his research: At its peak in the mid-'90s, income instability was almost five times as great as in the early '70s, and it's still much higher.
Even college-educated workers "are riding the economic roller coaster once reserved for the working poor," Hacker writes. Meanwhile, the social insurance net is fraying as pension plans disappear and healthcare costs rise. Hacker's biggest idea to combat volatility: Smooth out the financial ups and downs through "universal insurance" that would temporarily make up income shortfalls from job losses. Don't be surprised to see a variation on this and other Hacker ideas batted around during the 2008 presidential race.
This story appears in the October 16, 2006 print edition of U.S. News & World Report.