Precarious Work and Precarious Welfare: How the Pandemic Reveals Fundamental Flaws of the U.S. Social Safety Net

Almost all forms of social insurance in the United States are tied to employment. The employment link to social insurance has proven to be a catastrophe during the COVID-19 pandemic and the resulting economic downturn, in which almost twenty percent of the American workforce lost their jobs. The linking of social insurance to employment is an institutional design choice as the system evolved during and since the New Deal. It was to ensure that social insurance would not provide a disincentive to take low-wage jobs, and would therefore not destabilize racialized labor regimes (especially in agriculture), traditional family structures, or labor relations in industry. As a result, however, only about half of all unemployed workers receive unemployment insurance benefits (UI) when they lose their jobs, and just twelve percent of part-time workers receive UI. In July 2020, the percentage of uninsured adults nearly doubled, to sixteen percent, on account of job losses and states’ failures to expand eligibility for Medicaid. These systemic weaknesses exist because the interests and voices of workers were largely absent from the program design and legislative debates. In this Article, we explain how the pandemic brought into sharp focus the institutional design flaws in tying the American social welfare system to employment. We show that, in contrast to experiences in other industrialized countries, these design flaws have magnified hardship for the least privileged members of American society and amplified inequalities of race, class, immigration status, and gender. After describing the major achievements of the March 2020 federal legislation, we propose solutions to help complete the unfinished work of the New Deal, and to remedy the failings built into the system. We explore the necessity of broadening eligibility and the tax base to fund social insurance by eliminating the distinction between employees and independent contractors. More specifically, we consider the comparative approaches of (1) building on the model of Old Age and Disability Insurance (known popularly as Social Security), (2) Universal Basic Income; and (3) Flexsecurity, a European social insurance program intended to preserve employment during recessions and life events.