America's sinking

AMERICA’S SINKING WELFARE STATE
BY ROBERT J. SAMUELSON

Raised in an individualistic culture, Americans dislike the concept or the “welfare state” and do not use the term. But make no mistake, theUnited States has a welfare state, and its future is precarious. The true significance of the General Motors bankruptcy lies more with this welfare state than with the battered condition of Americancapitalism.
Broadly speaking, the U.S. welfare system divides into two parts-private, administered by firms; and the public, provided by government. Both are besieged: private companies by intensecompetitive pressures; government by rising debt and intense taxes. GM exemplified the large corporation as private welfare state. In contracts with the United Auto Workers, GM promised high wages,lifetime employment, generous pensions and comprehensive health insurance. All this is now ancient history: new workers get skimpier benefits.
As metaphor, GM’s bankruptcy marks the passage of thismodel. Companies still provide welfare benefits to attract and retain skilled workers. But these shelters against insecurity are growing flimsier. Career jobs remain, but lifetime job guarantees –formal orinformal- are gone. Last year, about 50 percent of male workers ages 50 to 54 had been with same employer at least 10 years; in 1983, that was 62 percent.
Health insurance and pensions tell similarstories. In 2007, employer-provided insurance covered 177 million Americans, 59.3 percent of the population; in 1999, coverage was 63.9 percent. Since 1980, companies have gradually moved from“defined benefit” to “defined contribution” pensions, notably 401(k)s. Defined benefit plans provided guaranteed monthly payments; defined contribution plans -just putting money into a pot- make workersresponsible for managing retirement savings.
What most Americans identify as government “welfare” are payments to single mothers, food stamps and (perhaps) Medicaid, the federal-state health-insurance...