Building a 21st Century Safety Net

The Class of 2010 will enter the job market with "the highest rates of unemployment in at least a generation," according a new Economic Policy Institute report. It's not just the numbers, it's also the nature of the job market that is changing dramatically. The 1950s and 60s were a period of entrenched single-company careers for America's workers. Today, marginally attached and mobile is the new norm. By one measure, the number of independent workers grew by 27 percent between 1995 and 2005, to almost nine million. In New York City, self-employment accounted for two thirds of the job growth between 1975 and 2007, according to the Chicago Fed.

Reihan Salam has a good article about the emergence of an itinerant labor market. This paragraph gets at the psychological crux of the issue:

Suster describes the mentality of Gen Xers, who started their careers in the early 1990s. "We all lost our jobs through downsizing in the early '90s and we felt scarred," he explains. "We realized that there was no such thing as corporate loyalty." ... You mastered a particular corporate bureaucracy, you built up a tremendous amount of capital, and then, poof, it's all gone. Job hopping was and remains a natural defensive reaction. Suster is inclined to blame the job hopper. Yet one could just as easily blame disloyal firms for changing the rules.

You can think about the recession as a sledgehammer to the dreams of Generation Y as it graduated from college after 16 years (or more) of expensive, carefully groomed education expecting to land dream jobs in return. Or you can think about the recession as validating the Gen X/Y instinct to think about their positions as naturally transactional and transitional: likely to change and more like stepping stones than a second home.

The federal government knows how to count payrolls. But it doesn't know how to count freelancers and contractors consistently. That's a big problem. If we acknowledge that the economy is moving toward more marginally attached workers who make a living by stringing together gigs rather than holding down one job, we should find a way to provide support -- jobless benefits, health care protections, wage left laws -- for that growing contingency. But we can't support it until we count it consistently.

National Journal's Ron Brownstein made a similar point in a new piece about the recession's impact on the Millennial generation:

The American social safety net delivers most of its benefits, such as pensions and health care, through the workplace. But that model may be increasingly obsolete for Millennials, given a job environment where so many move back and forth between contract and conventional employment, notes Sara Horowitz, founder of the Freelancers Union, which advocates for freelance workers. Health care reform moved the nation toward accommodating this new reality by creating exchanges and federal subsidies that will make it easier for the self-employed to obtain coverage. But Washington has only just begun rethinking how to provide security to a more fluid workforce.

A 21st century workforce requires a different kind of safety net, with benefits that are more flexible, portable, personal. Salam closes by noting that if we need "universal and portable health insurance," Obama's health care plan is the wrong idea. This is up for debate. One can reasonably argue that as unrevolutionary as Obama's plan was (in the short term, it's more like health care extension than health care reform), the long-term impact might be to tax workers off their employers' health care and move them onto an exchange that would let families buy transparent plans at competitive prices. Whether or not that future materializes, Salam is right that our social safety nets have to morph to the new contours of a shape-shifting labor market.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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