Disappearing benefit packages leave workers with chronic economic insecurity - Generocity Philly

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May 5, 2021 2:58 pm

Disappearing benefit packages leave workers with chronic economic insecurity

Many low-wage workers turn to the governmental safety net for their benefits package to supplement their paychecks. But our country’s governmental safety net is best described as a collection of inadequate assistance programs that vary state to state. 

7 out of 10 workers who receive Medicaid and SNAP (food stamps) work fulltime, mostly for private sector employers in retail, food stores and hospitality.

(Photo by Jack Sparrow from Pexels)

Two things keep most of us from falling through the country’s gaping economic cracks — our paycheck and our benefits package.

While wages have often been the attention-grabbing twin, the benefits — health insurance, retirement plans, disability insurance, vacation time, sick leave — are equally important in insulating one from the vagaries of the economy.  Yet, the number of people with job-sponsored benefits is shrinking, increasing workers’ economic insecurity.

The benefits system had its origin in the Great Depression of the 1930s. From the end of WWII to the mid-1970s the wages and benefits connection was inseparable as employers delivered the country’s social net benefits.

But it was never ideal, and the pandemic has made things worse.

For decades there has been a trend of workers, especially low-wage or hourly workers, receiving fewer benefits and having less security from job losses. Almost 22.2 million people lost their jobs during the pandemic which meant a loss of employer-sponsored healthcare. About three million women — especially Latinx and Black women — have left the workforce because of a lack of adequate child care.

Or as sociologist Jessica Calarco explained, “Other countries have safety nets. The U.S. has women.”

The United States is the only wealthy country that doesn’t have a national paid family and medical leave program. As Dissent Magazine reported, “As a system of general social provision, the uniquely American reliance on job-based benefits has always fallen short of providing real security. Such benefits have historically flowed to two groups of workers: those already well placed in the labor market (management, high earners), and those with the organizational clout to win health and retirement plans at the bargaining table.”

One reason benefits are less available is because the number of alternative work situations have exploded — contract, temporary, on-call or gig employment. Unlike fulltime, permanent jobs, alternative work comes with few to no benefits.

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According to Pew Research, fewer workers received health or pension benefits in 2015 than they did in 1980. The increase in the employment numbers between 2005 and 2015 is almost all due to the increase in workers doing alternative work. According to a 2015 US Government Accountability Office (GAO) study, it is these workers who have less access to employer-sponsored benefits.

For example, 9 out of 10 workers in the highest paid jobs have paid sick leave compared with about half the lowest paid workers. In addition, pension and health care coverage fell for almost all workers. In the mid-1960s, 80% of American men had employer sponsored healthcare and in 1975, 55% had employer-sponsored pensions.

This reality was revealed first with the Great Recession.

“Employers used the Great Recession as an opportunity to slash payrolls, substitute technology for people and outsource workers,” said Robert Reich, a former secretary of Labor in the Clinton administration, adding that when people returned to the workforce they returned to poorer quality jobs.

“They have fewer if any benefits, work longer hours, have less job security, more variable earnings and fewer legal protections,” Reich said.

The result is many low-wage workers turn to the governmental safety net for their benefits package to supplement their paychecks. But our country’s governmental safety net is best described as a collection of inadequate assistance programs that vary state to state.

Trooper Sanders. (Courtesy)

“Last spring, due to COVID we saw a 150% increase in calls across all our contact centers; more people calling were eligible for public benefits and many people were applying for benefits for the first time,” explained Trooper Sanders, CEO of Benefits Data Trust. 

According to the GAO, 7 out of 10 workers who receive Medicaid and Supplemental Nutritional Assistance Program (better known as food stamps) work fulltime, mostly for private sector employers in retail, food stores and hospitality. Walmart, McDonald’s, Dollar Tree and Dollar General were among the top employers with the most employees in Medicaid and food-stamps.

“The lack of social support in the United States has been an emergency for a long time. This isn’t a new problem, only one that is newly visible in this simultaneous healthcare crisis for everyone,” added a post from the California Law Review.

Building Back Better will require the safety net to be secured. There’s movement.

Federal policymakers, who responded by creating a temporary paid leave program in the spring of 2020,  are looking to make this permanent. And on March 29, Philadelphia’s Public Health Emergency Leave law providing paid sick leave went into effect and will stay in effect “for the duration of the COVID-19 pandemic.”

Another push is for portable benefits that are linked to workers and not to jobs. Portable benefits would follow the worker allowing them to accrue benefits such as unemployment insurance, workers’ compensation protection and paid time off despite working with different employers.

“Our task now is to take these hard lessons to heart and work to create the kind of modern benefits system that works for people and families that we wish we would have had at the start of the pandemic,” said Sanders.


Generocity is one of 22 news organizations producing Broke in Philly, a collaborative reporting project on solutions to poverty and the city’s push toward economic justice.

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