Yale Professor Writes Book on American "Security" System

If you have ever wondered why the United States lags far behind all other industrialized countries in providing a social safety net for its citizens, you might find the answers in a new book by Yale faculty member Jennifer Klein.

In “For All These Rights: Business, Labor, and the Shaping of America’s Public-Private Welfare State,” Klein, a Robert Wood Johnson Scholar in Health Policy and assistant professor of history at Yale, analyzes the unique symbiosis that developed in this country between private industry and public welfare over the course of the 20th century.

Klein traces the complex nexus of influence between private, commercial insurance and state-based social welfare programs to the turn of the last century as the conflict between industry and labor grew more highly charged and the plight of the poor gained public prominence. It was largely, Klein argues, to head-off the labor-friendly and socially progressive legislation demanded by workers and political reformers that private industry developed a system of employment-based social benefits. Essentially, by working with the burgeoning group insurance business-exemplified by Equitable and Metropolitan Life Insurance Company-employers were able to co-opt the state, according to Klein. She writes:

“While labor unions lobbied for employers’ liability laws, social reformers worked for maximum hours for women workers, minimum wages, factory inspections, child-labor laws, and anti-sweatshop laws. They sought to bring the state into the employment relation. Here insurers’ interests and employers’ interests met. Both sought mechanisms to check the fledgling regulatory welfare state, and each found the other a useful partner. Equitable developed group insurance specifically to deter social insurance legislation.”

If employment-based insurance put welfare benefits at the discretion of employers, it also did a great deal to boost the fortunes of the insurance industry. Equitable, for example, was able to reinvent itself in the wake of an Enron-style scandal by offering businesses group insurance for their employees. Thanks to the insurance industry, employers could meet their goals in industrial relations, without ceding workers power or rights, while insurers could fulfill their goals for achieving a mass marketed form of insurance. The New Deal catapulted security (economic security, that is) to the center of American political life. “For All These Rights” describes the contests to define health care plans at the local level. Yet at the same time, even as the New Deal ushered in a social insurance system in the U.S., commercial insurers were able to sell their product by appropriating the language and rhetoric of social politics. If the demand increased for protection against “the hazards and vicissitudes of life” (in the words of Franklin Roosevelt), private insurance companies positioned themselves to provide that protection. Insurers and employers could capture the language of security.

The most intriguing paradox highlighted by the author is the fact that the private insurance industry actually benefited directly from the New Deal state welfare programs. The newly instituted Social Security program could guarantee workers minimal retirement benefits; private insurers, through employers, offered employees insurance to supplement what insurers purported was the program’s meager coverage. Insurers claimed that public insurance would take care of the not very lucrative market of low wage earners and private providers could take care of the more highly paid workers and the well-to-do. Yet the gaps and insecurities in private coverage persisted through the rest of the century. Left out of the equation altogether was the vast segment of the population that was neither employed full time nor dependent on a full-time employee.

In her epilogue, Klein suggests that the more we rely on privatization and employment-linked social security, the quicker we’re headed back to the insecurity of the pre-New Deal years. As the increasingly demonized government relinquishes its power to private interests, business has not been filling in the gaps. “When the state recedes from involvement, business has the political and ideological space to reduce its commitment as well. Public and private security are unraveling together,” she warns.

“For All These Rights” is published by Princeton University Press.

To reach Klein for an interview, contact the Office of Public Affairs at Yale.