By Shawn Fremstad and heather Boushey

Morning in America and the Decline of the Social Wage
The three decades of post-World War II, broadly shared prosperity in the United States were largely the product of intentional public policy decisions, not the private ones of a theoretically autonomous market or “natural” economy left to its own devices. These decisions—including the GI Bill, which made it
possible for millions of World War II veterans to attend college or vocational school; the creation and strengthening of labor market institutions, through measures such as the minimum wage and collective bargaining; and sensible financial regulation that limited asset bubbles and other abuses—helped make a vibrant middle-class a reality. The rise of conservatism in the mid-1970s, and the subsequent election of Ronald Reagan in 1980, brought a decisive halt to this long wave of investment in the social infrastructure that was necessary to build and sustain a broad middle-class. Conservatives claimed their radical ideas would result in greater economic growth and productivity, to the benefit of all Americans. President Reagan, for example, opened his first Economic Report, in 1982, with the assertion that the conservative “reorientation of the role of the federal government in our economy” would mean “more jobs, more opportunity, and more freedom for all Americans.” This reorientation did not deliver on its promises. Over the last three decades, the economy and productivity have grown, on average, at slower rates than during the post-World War II era of shared prosperity. And the share of American jobs that can be categorized as “good”—ones that pay wages that will produce at least a moderate income for a full-time worker, and provide health and retirement benefits—has barely budged, despite substantial increases in workers’ education levels and the technology they use on the job.1 On top of this, the benefits of the gains in growth and productivity that did occur were disproportionately captured by the few at the very top. Between 1979 and 2007, the share of total market income (before individual income

the (mis)measUre Of prOsperity

New Labor Forum 19(1): 45-56, Winter 2010 Copyright © Joseph S. Murphy Institute, CUNY ISSN: 1095-7960/10 print, DOI: 10.4179/NLF.191.0000008

does not account for population growth. taken together. We must also assess trends in the “social wage. and tax credits. 5) veterans benefits and services. we 46 • New Labor Forum S.taxes and social transfers) going to the top 10 percent of taxpayers increased from a little over a third to almost half. this is entirely due to increasing o sOcial wage trends dUring the cOnservative era ne basic way to assess the social wage involves examining trends in the level of public expenditures on the benefits. 3) “other income security”—including unemployment insurance.4 Table 2 shows the change.” As we define it. broadly defined. training. however. and 6) education. in real terms. Supplemental Security Income (SSI). These dismal trends in market wages and compensation levels during the conservative era have been well documented. but they do not tell the full story of what living standards have been like for middle. services. While the size of the public sphere overall has remained relatively flat over the same period—federal spending generally hovered around 20 percent of GDP—and national defense spending was modestly lower (going from 4. homeownership and housing. Boushey . training. roughly comprise the social wage: 1) health care—including Medicaid. in direct social wage expenditures on benefits and services in six broad functional categories that. and public housing. and investments that constitute it.2 By 2007. than they were in 1979.6 percent of GDP in 1979 to 4. child nutrition programs. 2) retirement and disability income security—including Social Security and other forms of retirement and disability insurance. is spread across a larger population base. A conventional way to do this is by looking at expenditure trends in inflation-adjusted dollars. employment services. These benefits and services may be subsidized by the public sector through direct federal expenditures. and social services. food and nutrition. or some people are excluded or provided with less. A full treatment of tax expenditures is beyond the scope of this article so. including the exclusion of benefits from taxable income. between 1979 and 2007. and other health-services expenditures. spending on the social wage.3 So much for the conservative promise of “more freedom and more opportunity” for all Americans. income security. As Table 2 shows. Medicare. we focus on the major expenditures as well as notable new expenditures related to education and children. workers in low-wage jobs were being paid no more per hour. education. However. and the latter “indirect social wage” benefits (see Table 1). with the main difference being the addition of a separate category for children that includes the child credit and various child care-related credits. tax deductions.89 percent of GDP in 2007 compared with 10. the social wage will decline as the same number of dollars. rental housing assistance. and social services. temporary assistance. This. the social wage includes publicly subsidized benefits and services that relate to health.and working-class families. Fremstad and H. Table 3 shows the change. direct expenditures on the social wage were higher in 2007 than in 1979—12.69 percent in 1979.0 percent in 2007). or partially subsidized by the public through individual tax subsidies (tax expenditures). in Table 3. between 1979 and 2007. if expenditures keep pace with inflation but not with population growth. 4) housing and food assistance—including food stamps. in real terms. and child care assistance. increased. in selected indirect social wage expenditures (tax expenditures) in roughly the same set of categories. Therefore. compare expenditures to the size of the overall economy. as measured by the gross domestic product (GDP). we call the former “direct social wage” benefits.

Even though health care costs have doubled. even after reform). health care system is a public-private hybrid. Even the private part of the system—which covers the majority of people under age sixty-five through employer-based coverage—is partially subsidized. and workers’ earnings. At the most basic level.expenditures on health care. by 2007. however. this subsidy amounted to nearly $134 billion in 2007—or about a third of public expenditures on Medicare that year—making it a not insignificant part of the social wage. In 1979. In 1979. the percentage of working-age adults (ages eighteen to sixty-four) with health insurance fell from 86.2 percent. by 2007. there has not been a commensurate “doubling of care” or improvement in basic health outcomes. direct spending on the rest of the social wage actually declined as a share of GDP by 7 percent. but rather are due to rising costs of services that go primarily to health care professionals and corporations.3 percent in 1979 to 80. Even though health care costs have doubled. that found that Americans paid more per capita.6 Americans appear to also get less for each health care dollar: an analysis comparing the health systems of the thirty OECD (Organization for Economic Cooperation and Development) member countries found that even though the United States spends considerably more on health care than any other OECD country. Increased expenditures on health care did not. health care (both public and private expenditures) accounted for 8. In what follows. rising from 0. but received fewer “real health care resources” per capita. health care accounted for fewer than one in every ten dollars spent on the social wage.7 This confirms earlier research. If we exclude health care. comparing the United States with the United Kingdom and Germany.98 percent in 2007. a system in which roughly half of the spending is private and half is public (and is likely to remain as such. inflation. In recent decades.8 Even though costs have risen faster in the United States. we fall short on core aggregate health measures.9 percent in 1979 to 4. it falls below the OECD median on most measures of health services use. there has not been a commensurate “doubling of care” or improvement in basic health outcomes.4 percent in 2008.S. private markets. life expectancy in the United States was more than a month longer New Labor Forum • 47 Direct federal expenditures on health care as a share of GDP increased by 150 percent from about 1. and also assess the extent to which the increase in health care spending reflects an increase in health care access and quality for most workers. such as life expectancy: in 1980. it was one in every five. While public expenditures finance nearly half of the system.7 percent in 2006. outpacing economic growth.6 percent of GDP. health care costs have increased at an extraordinary rate. As Table 3 shows. Tax expenditures for employer-provided health insurance rose even more. the actual costs of health care services are largely determined in unregulated The (Mis)Measure of Prosperity .5 Health Care The U. we discuss the trends in the various categories of the social wage. it had almost doubled to 16.3 percent of GDP in 1979 to 0. via the exclusion of employer health benefits from the federal income tax. lead to broad-based improvements in access and quality.

Fremstad and H.Table 1. and Social Services 48 • New Labor Forum S. and rehabilitation Hospital and medical care for veterans Child Care Assistance Child Tax Credit Tax Exclusion of Premiums on Group Term Life Insurance Tax Exclusion for Reimbursed Employee Parking Dependent Care Credit HOME Program Mortgage Interest Deduction State and Local Property Tax Deduction Capital Gains Exclusion on Home Sales Hope and Lifetime Learning Tax Credits Financial Assistance for Higher Education Rehabilitation Services Head Start Hope and Lifetime Learning Tax Credits Child Tax Credit Veterans housing Other veterans benefits and services Veterans Benefits and Services Housing. training. Social Wage by Functional Categories and Major Programs/Subfunctions. Homeownership. School Lunch) Low-Income Home Energy Assistance Public Housing and Rental Assistance FHA Mutual Mortgage Insurance Elementary and Secondary Education Vocational and Adult Education Workforce Investment Act Social Services Block Grant Foster Care and Adoption Assistance Income security for veterans Veterans education. Training. Disease Control Income Security—Retirement Social Security-OASI and DI Railroad Retirement Black Lung and Longshore Act Benefits Tax Exclusion for Employer-Provided Retirement Benefits Tax Exclusion for IRAs Tax Exclusion for Social Security Benefits Occupational Health and Safety Consumer Health and Safety Tax Exclusion for Employer-Provided Health Insurance Benefits Health Care Tax Credit Tax Deduction for Medical Expenses Other Income Security Unemployment Insurance Trade Adjustment Assistance Temporary Assistance Supplemental Security Income Earned Income Tax Credit Food Stamps Child Nutrition (WIC. and Nutrition Education. Food. Boushey . Employment Services. Health Medicare Medicaid and Children’s Health Insurance Program Substance Abuse and Mental Health Services Community Health Centers Indian Health System NIH and other health research.

651 1.80% 0.76% 5.22% 0.2% 0.0% 5.073 4.174 35. and 6.493 1.607 899 46.19% 15% -10% -50% -88% -39% -53% -44% 21% -7% The (Mis)Measure of Prosperity New Labor Forum • 49 .2% 1.9% 0.2% 36.9% 6.3% vocational education Higher education Research and general education aids Training and employment Other labor services Social services Total Total Social Wage— Including Health Care Total Social Wage— Excluding Health Care 5.4% 0.61% 0.1% 0.3% 0.40% 0.7% 4.7% 0.724 91.157 10.4% 0.29% 0.122 586. Training.53% 0.05% 0.02% 0.847 4.988 3.26% 1.430 2.684 2.01% 0.107 124.12% 0.713 32.916 697.715 54.24% 4.833 488 6.0% 2.69% 8.69% 67% -7% 14% 10.43% 0.587 24.Table 2.43% 0.0% 0.97% 0. Expenditures (Nominal Dollars— Millions) 1979 Health Medicare Health care services Health research and training.611 176 609 19.0% 5. training.842 9.75% 1.170 7.1% 5. and rehabilitation Hospital and medical care for veterans Veterans housing Other veterans benefits and services Total 10.02% 0.16% 0.914 35.898 38.635 16.1% 0.676 1.28% 0.6% 4.05% 0.154 39.024 72.01% 0.43% 0.576 220.02% 0. 1979 and 2007.06% 0.17% 0.0% 5.950 160.01% 0.725 5.989 375.26% 0.8% -0.30% 0.495 15.26% 0.1% 0.0% 0.02% 0.793 2.225 641.407 233.24% 0.06% 0.67% 12.080 1.758.116.279 3.373 22.2% 2.223 267.02% 0.21% 10.91% 5.5% 11.1% 0.637 3.5% 49.3% 17.43% 0.9% 39.82% 0.1% 1.0% 7.0% 2.4% 0.2% 100% 0. Federal Expenditures on the Social Wage.4% 5.3% 13.2% 1.458 94.71% 0.20% 0.14% 0.593 30.0% 1.6% 8.030 1.64% 0.0% 0.3% 1.7% 2.153 7.88% 2. Employment Services.173 1.3% 3.361 24.17% -40% 72% 21% 104.12% 3% -67% -16% -2% Education.92% 1.0% 33.4% 4.787 15.676 131.3% 100% 2.6% 21.11% 0.0% 9. including Medicaid Consumer and occupational health and safety Total 26.294 -868 3.2% 4.70% 160% 168% 49% -34% 151% 2007 Expenditures as a Share of Total Social Wage 1979 2007 Expenditures as a Share of Gross Domestic Product 1979 2007 Change Retirement and Disability Income Security Social Security Other retirement and disability insurance Federal employee retirement and disability insurance Total Other (Non-Retirement) Income Security Unemployment insurance Other income security Total Housing and Food Assistance Housing assistance Food and nutrition assistance Total Veterans Benefits and Services Income security for veterans Veterans education.829 103.24% -0. and Social Services Elementary.21% 0.367 10.4% 2.5% 1.89% 8.0% 1.1% 9.02% 4.17% 0.9% 1.2% 7.123 38.04% 1. secondary.18% 0.813 13.057 4.53% -39% -82% 6% -190% -9% -33% 4.931 29.3% 0.

920 67.260 760 0.981% 0.060 0.329% 0.016% -3% 350 8. Selected Federal Tax Expenditures on the Social Wage. Boushey .790 4. and Table 19-1.990 84.470 4.500 760 11.000% 0.225 5.220% 0.000% 0.140% 0.021% 0.453% 0.Table 3.000 9.330% 0.495 0 0 4.014% 0.260 46.033% 0.003% 162% 89% -36% 11. health Self-employed medical insurance premiums Medical Savings Accounts/Health Savings Accounts Retirement and Disability Income Security Exclusion of pension contributions and earnings: employer defined-benefit plans Exclusion of pension contributions and earnings: defined-contribution.000% 0.345% -24% 8. in Budget of the United States Government.032% 0.037% 0. 1979 and 2007.014% 0. Tax Expenditure Estimates by Function in Budget for Fiscal Year 1980: Special Analysis.006% 0.014% 0.077% 0.890 1.870 3.335 47.020% -16% 355 0 0 1.910 2.255 2.120 2.780 0.025% 0. and others 401(k)s IRAs Low and moderate income savers credit Keogh plans Other Income Security.210 0.024% 0. Fiscal Year 2009: Analytical Perspectives. Transportation Earned income tax credit (effect on tax receipts) Deductibility of mortgage interest on owner-occupied homes Deductibility of property tax on owner-occupied homes Exclusion of reimbursed employee parking expenses Exclusion for employer-provided transit passes Education and Training Exclusion of scholarship and fellowship income HOPE tax credit Lifetime Learning tax credit Children Child credit Credit for child and dependent care expenses 0 610 30. Fremstad and H.115% 0. 50 • New Labor Forum S.000% 0.000% 0.000% 0.000% 0.622% 0.006% 197% -72% -26% 2007 Tax Expenditures as a Share of Gross Domestic Product 1979 2007 Change 1.000 0.493% 0.227% 0. Tax Expenditures (Nominal Dollars— Millions) 1979 Health Exclusion of employer contributions for medical insurance premiums and medical care Deductibility of medical expenses Deductibility of charitable contributions.370 2. Housing.830 420 0.337% 0.310 4.081% 543% Sources: Authors’ Analysis of: Table G-1.043% 0.070% 0.850 19.065 0 0 133. selfemployed.031% 0.

it was about twenty months shorter. coverage was gradually extended to all children between the ages of six and eighteen with family incomes below 100 percent of the poverty line. the share of children age fifteen and under eligible for Medicaid increased from about 13 percent in 1983 to 29 percent in 1996. seniors. while making it more difficult for the elderly to access benefits. Social Security retirement and disability benefits amounted to 4. there have been some bright spots in the health care component of the social wage. During the second half of the 1980s. particularly regarding Medicaid coverage. eligibility was largely limited to parents and children receiving AFDC (Aid to Families with Dependent Children). Despite a doubling in expenditures. but by 2005. Unemployment insurance benefits. a percentage that is just slightly higher than it was in 1979. However. the U. which is not covered by Medicare. with too many plans. While an important improvement to the social wage. it was done in a uniquely conservative manner that prohibits the federal government from negotiating discounts with drug companies. forms. paid as a percentage of total wages. and unnecessary variation across the plans in terms of premiums. as the overall decline was offset to some extent by an increase in public coverage due to expansions in eligibility. the overall retirement security of workers has been most detrimentally affected by what has happened with employersponsored benefits. covered drugs.8 percent in 1979 to 64. and establishes a system that is “excessively complicated for [the elderly]. Overall.9 The share of Americans with health insurance provides the most succinct indicator of the decline in the health care component of the social wage. the increase in expenditures has generally not brought about expansions in what is covered by public insurance.11 Health care provides the sole exception to the general rule of conservative opposition to significant expansions of the social wage. However. and to all pregnant women and children under the age of six with family incomes under 133 percent of the poverty line. Aside from prescription drugs for seniors. Retirement Security The largest share of public expenditures on income security in the United States goes to retired workers.10 The overall decline in health insurance coverage is almost entirely due to a decline in employment-based coverage. and is only partially covered for low-income seniors through Medicaid. participation in any kind of plan declined from about 90 New Labor Forum • 51 The (Mis)Measure of Prosperity .”12 As a result. benefits. it will end up costing the public considerably more than it should have.than the average in other wealth nations. the percentage of uninsured Americans between the ages of eighteen and sixty-five with health insurance was lower in 2007 (80. When Medicaid was established in 1965.S. the Bush administration presided over the addition of a prescription drug benefit to Medicare. As a result of these and other changes. Of particular importance is long-term care. which fell from 68. rules. which began in 2006. and people with disabilities. also saw increasing disparities in life expectancies across income groups.3 percent). as with health care.2 percent in 2007. are almost half of what they were in 1979.4 percent) than in 1979 (84. Over the same period. In 2003.3 percent of GDP in 2007. and procedures.

a disparity that is present even when controlling for job tenure.15 This decline is largely attributable to eligibility restrictions that disproportionately impact today’s low-wage workers. some groups of workers have been particularly hard hit by the failure to modernize the unemployment insurance system. Fortunately. In 1980. An additional factor in the decline of UI expenditures is that the amount of UI benefits 52 • New Labor Forum Low-wage workers are about half as likely as higher-wage workers to receive unemployment insurance.58 percent of GDP in 1979. however.14 Similarly. the two broad categories of “other income security”—including unemployment insurance. and more likely to be in a 401(k) program in which the amount the worker receives in retirement is determined by his or her own contributions and the vagaries of the stock market (a “defined-contribution” plan). the American Recovery and Reinvestment Act provided financial incentives for states to adopt reforms that would modernize UI. by 2007. However. six other states S.86 percent of GDP in 2007. according to the National Employment Law Project. Unemployment Insurance. the EITC. low-wage workers are about half as likely as higher-wage workers to receive unemployment insurance. There have.6 percent in 2007 versus 5. food stamps. the share of unemployed workers without a high school diploma that receives UI benefits has declined steadily since 1979. than they were in 1979. school lunch. Moreover. as a share of GDP. Fremstad and H. AFDC/TANF. as are contributions collected. this problem has received increased attention over the last decade. For example. and these plans are less likely to provide a traditional pension. as the Government Accountability Office has found. child care assistance. Most notably. Infants. Expenditures on unemployment insurance (UI) as a share of GDP were 40 percent lower in 2007 than in 1979. WIC (Women.percent in the mid-1980s to 66 percent in 2007. particularly a substantial decline in unemployment insurance which has been offset by increases in other categories. expenditures on UI were still about 25 percent lower. rental housing assistance. Boushey . SSI. a modest increase from their level of 1.13 paid as a percentage of total wages is almost half of what it was in 1979. Workers are now less likely to be covered by a traditional pension that pays out a set amount each year during the worker’s retirement years (a “defined-benefit” plan). And earlier this year. when the unemployment rate grew to 5. the Earned Income Tax Credit (EITC).8 percent in 2008. and Children). and “Other Income Security” Benefits Taken together. Unemployment Insurance. been significant shifts within the categories. A growing number of states has considered policy changes that would expand UI eligibility for low-wage and part-time workers. The National Employment Law Project has documented that nineteen states with reforms already in place immediately qualified for incentive funding.8 percent in 1979. or the disability of a child or another family member as good causes for leaving employment. and other smaller programs—amounted to 1. more than thirty states do not recognize serious illness. 84 percent of employees in medium and large private establishments participated in a defined-benefit plan. Part of this change is attributable to a lower unemployment rate—4. the share had declined to 32 percent.

the maximum EITC is just $457 a year. expenditures on the EITC were roughly one-fifth of those on unemployment insurance. a full-time. the EITC/minimum wage combination is also lower in 2009 than in 1979. the EITC provided more than $40 billion to working-class families. but these gains have been offset by declines in the inflation-adjusted value of the minimum wage. For minimum wage workers without children.665 a year (in 2009 dollars). By 2007. The combined income from the EITC/minimum wage for a full-time. Who benefits from the EITC. the EITC was a small benefit—providing $4. These features of TANF have rendered it largely unresponsive to the economic declines of the New Labor Forum • 53 The (Mis)Measure of Prosperity . full-year minimum wage worker who is a single parent with one child is less in 2009 than in 1979. EITC expenditures were 14 percent higher than UI expenditures. For workers without children. If there is one conventionally agreed upon “conservative success story. The Personal Responsibility and Work Opportunity Reconciliation Act and Welfare Reform. single parents with two or three children would receive about $1. Established in 1975. The rise of the EITC is conventionally presented as a substantial gain for low-wage workers.16 In basic supply-and-demand terms. with the latter group being harmed the most by the wage decline because they receive no offsetting benefit. finds evidence to suggest that the EITC increases labor supply in a way that depresses wages. In 1979. the financing of tax cuts).” The PRWORA replaced AFDC. currently a senior economist for the Council of Economic Advisers. All of this affects both the low-wage workers who receive a significant EITC benefit (workers with children) and those who do not (workers without children). the EITC increases the number of single parents in the labor market. one of the original programs created by the Social Security Act of 1935. compared to $15. This greater supply means there are more available workers—and less pressure on employers to raise wages to fill jobs. which could then be diverted to unrelated uses (which included. with a block grant named Temporary Assistance for Needy Families (TANF). This conversion froze nominal funding for TANF. and use federal funds to supplant state expenditures. eliminating its counter-cyclical nature at the federal level. [EITC-related] gains have been offset by declines in the inflationadjusted value of the minimum wage.7 billion in benefits in 1979—until a series of expansions was enacted in the second half of the 1980s and the early 1990s. Jessie Rothstein. full-year minimum wage worker earned $17. and legislation has been introduced in most remaining states. providing them with far less than the minimum wage did thirty years ago. as compared to the minimum wage? In a forthcoming article.” it is the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA)—legislation that originated as one of the ten bills included in the House Republicans’ 1994 “Contract with America. The conservative foundation of the PRWORA was the conversion of welfare funds into a block grant program for the states. In 1979.000 more per year. By 2007. The EITC and Other In-Work Benefits.080 in 2009—and the EITC does not fully fill in that gap. and allowed states to both substantially reduce their state expenditures on the program below the nominal levels of the early 1990s.quickly adopted reforms. in some notorious cases.

there is little evidence that TANF will reverse direction and operate in a counter-cyclical fashion.17 Education. Furthermore. but the Act did not rectify the problems with the Lifetime Learning Tax Credit. But these trends were well established before most states actually implemented the PRWORA. EITC—enacted with no conservative support in Congress—was the more important catalyst of positive income and employment trends for single parents than the PRWORA or related welfare reform provisions.2000s and the increase in economic insecurity. both the income poverty rate for single mothers and the number of families receiving AFDC/ TANF income supplements started on a steady downward path that continued for the rest of the decade. establishing the Hope Tax Credit and the Lifetime Learning Tax Credit which. about 60 percent of children experiencing income poverty received AFDC income supplements. only 24 percent of such children received TANF supplements. Before the passage of the PRWORA in 1996. For example. and Employment Services The education and training components of the social wage have fallen sharply. as a result. These expansions have offset some of the decline in direct expenditures on higher education. and then points to increases in single-parent employment (and income) and declines in teen pregnancy.8 percent of GDP in 1979 and 4. Fremstad and H. as proof that the conservative policy shift was a real-world success.04 percent of GDP. by 2007. Boushey . the bulk of the research suggests that the 1993 expansion of the 54 • New Labor Forum S. which means that lower-income. overall direct expenditures on education. both credits are non-refundable. training. The Clinton administration had some success in increasing tax expenditures for education. after peaking in 1992. and employment services were 8.3 percent in 2007. and the number of parents receiving income supplements through AFDC/TANF.8 billion. However. The national conception of the social wage has not incorporated the need for paid time off for caregiving. Massive cuts in expenditures on training and employment services for adults and youth accounted for nearly the entire decline.18 The American Recovery and Reinvestment Act provides some help here by making the Hope Tax Credit partially refundable. as it is aimed at working adults who seek training. income poverty. but by 2007. At the federal level. Training. or . The conventional narrative of welfare reform starts in 1996 with the passage of the PRWORA. which is especially important in the face of massive job losses. provided tax credits equal to about $5. or the need for workers to have access to workplace flexibility. working-class families do not benefit from them and. with only about 14 percent of the benefits going to families in the bottom 40 percent. Since the start of the recession in December 2007. the majority of expenditures on both credits goes to families in the top 40 percent of the income distribution.

or the need for workers to have access to workplace flexibility. The data presented here are not fine-grained enough to show that trend. roughly $34. Schmitt defines a “good job” as one that pays at least $17 an hour (the inflation-adjusted median male wage in 1979. even in 2006. and the conversion of traditional health and retirement tax benefits (for employer-sponsored health coverage and defined-benefit plans) to more privatized benefit plans—such as 401(k)s and IRAs— that come with greater risks for individuals. First.” 2. heather Boushey and Shawn Fremstad.19 Yet the national conception of the social wage has not incorporated the need for paid time off for caregiving.000 a year in 2006 dollars). 1913-1998. Among the most notable failures to update the social wage. in this article.cepr. New Labor Forum • 55 1. Mothers are now the breadwinners or co-breadwinners in nearly two-thirds of all families. available at http://elsa.6 percent of jobs were “good jobs. “income inequality in the united States. is the failure to establish the kinds of basic national guarantees of paid sick days and family leave that exist in nearly all other wealthy nations. but it is striking in light of the considerable evidence from the health care sector that private delivery of services does little to control costs. See Saez’s website for 2007-updated tables and figures. The Family and Medical Leave Act of 1993 provides unpaid leave to approximately half the labor force. and offers an employer-sponsored pension or retirement savings plan (including 401(k) plans) in which the worker currently participates. payrolls. only 23. no.” Quarterly Journal of Economics 118. pdf. and the Ugly: Job Quality in the United States over the Three Most Recent Business Cycles (Washington.S.” New Labor Forum 17. State spending is not insignificant—as a share of gdP. and mandatory provision of paid sick days and paid family leave. offers employer-provided health insurance for which the employer pays at least part of the premium. John Schmitt.: center for economic and Policy 3. The Good. Two trends that cut across various categories of the social wage should be noted. d. a year shy of the highest point in the business cycle reached over notes The (Mis)Measure of Prosperity . 2 (Summer 2008): 9-19. available at http://www. but it does not address the issue of how workers can afford unpaid time off. the last decade. no. these expansions were effectively countermanded by the failure to strengthen labor market institutions or regulate market failures in ways that would ensure overall progress. the establishment of new education tax credits.cOnclUsiOn Looking forward. documents/publications/goodjobscycles. Second. real improvements in the overall living standards of low-wage workers will require a renewed emphasis on boosting their market wages. This should include further and sustained increases in the minimum wage. increased access to collective bargaining. moreover. it averaged around 5 percent of gdP during the 1990s—but state and local expenditures account for a relatively small portion of the social wage. expansions of both Medicaid and the EITC did not result in overall gains for workers because of declines in real wages and employer-provided health insurance coverage. we limit our focus to federal expenditures. conservative policymakers increasingly look toward the privatization of government services. and they now account for half of all workers on U. and expanding the social insurance available to them when they are temporarily away from work. thomas Piketty and emmanuel Saez. the Bad. policymakers increasingly use tax expenditures to finance the social wage. For example.c. 1 (2003): 1-39. November 2007). to adjust for changing times. But even in areas in which elements of the social wage were expanded. “the Wages of exclusion: Low-Wage Work and inequality. This is evidenced by the increase in the EITC.berkeley.

Stupid: Why the united States is So different from other countries. “is the eitc as good as an Nit? conditional cash transfers and tax incidence. “it’s the Prices. available at http://www. Means-Tested Transfer Programs in the United States (chicago: National Bureau of economic Research/ university of chicago Press. and” in heather Boushey and ann o’Leary. Fremstad and H.” in adam carasso.cms.” 18. and Varduhi Petrosyan. eds..cbo. “unemployment insurance over the Business cycle. and tend to follow federal-level trends. Strollo.” forthcoming in the American Economic Journal: Economic Policy (see http://www.items/d071147. 2006.pdf. available at http:// www. Philip Levine. no.asp#topofPage. Jonathan gruber. Unemployment Insurance: Low-Wage and Part-Time Workers Continue to Experience Low Rates of Receipt. t.K. “Welfare. december 2009).gao. How Much Does the Federal Government Spend to Promote Economic Mobility and For Whom?. 5.php. 2006). cY 1960-2007. See http://www. and income among Female-headed Families. Working and Poor: How Economic and Policy Changes Are Affecting Low-Wage Workers (New York: Russell Sage Foundation. or http://papers. eitc expansions accounted for as much as 60 percent of the increase in employment rates of lone mothers between 1984 and 1996. d.aeaweb.c. 2006).” in Rebecca Blank.1a. 1979-2008 (Washington. ssrn. Early Experiences of Medicare Beneficiaries in Prescription Drug Plans (Kaiser Family Foundation. pewtrusts. eugene 15. September 2007. gillian Reynolds. summary table (including share of gdP). see also Jeffrey grogger.” Health Affairs 22. ed.. 3 (august 2001): 1063-1114. ibid. and Robert Schoeni. available at http://www. 7. 3 (2003): 89-105.: center for economic and Policy Research. and c. 8. 19. Share of Select Federal tax expenditures by cash income Percentile.” The Review of Economics and Statistics 85. 6. 12. 9.c. Sheldon danziger.such expenditures are generally part of federal-level programs (most notably medicaid). “medicaid” in Robert moffitt. “the New Breadwinners. hye Jin Rho and John Schmitt. 13. 2003). Peter hussey. Neuman. The Shriver Report: A Woman’s Nation Changes Everything (Washington. and the Labor Supply of Single mothers. “the effects of time Limits. citing mcKinsey global wwwpewtrustsorg/Reports/economic_ mobility/emP_mobiilty_Budget. 16. pdf. J. Consistent Estimates of Health Insurance Coverage for Adults and Workers. 14. and other Policy changes on Welfare ftpdocs/91xx/doc9104/04-17-Lifeexpectancy_Brief. heather Boushey. examining changes between 1993 and 1999. Health Care Productivity (Los angeles: mcKinsey and company. National health expenditure accounts. Jessie Rothstein. the earned income tax credit.pdf . 2009). no. employee Benefit Research institute. 1996). eds. uwe Reinhardt. cfm?abstract_id=1405974). d.: center for american Progress. 56 • New Labor Forum S. Boushey . 10. 17. Databook on Employee Benefits (July 2008): table 4. this information is based on an analysis of march 2009 current Population Survey (cPS) numbers by hye Jin Rho and John Schmitt of the center for economic and Policy Research. See Bruce meyer and dan Rosenbaum.. the eitc. See “table 1. united States government accountability office. gerard anderson. 2 (may 2003): 394-408. 11. he concluded that “the eitc may be the most important policy measure for explaining the decrease in welfare and the rise in work and earnings among female-headed families in recent years.” Quarterly Journal of Economics 116. Work.hhs.