We recently came across an interesting article discussing the changes within the employment‐based security system in America. The technological advancements that have swept this nation since the industrial revolution have had a multi‐faceted impact on several job markets, particularly in the Rust Belt.
One could say that Midwestern workers really own the history of the employment‐ based safety net they worked hard to enforce during the booming years of labor‐ intensive manufacturing in their part of the country. The employer‐based systems served them well. With the passing of time and the evolution of employment, systems in place such as health insurance, pensions, and unemployment insurance have become less and less beneficial for this Rust Belt community.
We can thank these unions and hardworking manufacturing industries for setting the standards of the country’s economic security many moons ago. Pensions and health insurance systems used today were first introduced in the area during the second World War to entice employees, due to limited wage compensation imposed during that time. Wisconsin paved the way in the public sector with Social Security participation. However, the policies that made sense in that era now crave flexibility for survival in today’s changing world of employment.
Novel concepts of private pension plans implemented in the Midwest spread nation‐ wide over the next couple of decades. By 1964 an impressive 80 percent of all American workers were a part of employer‐provided health insurance.
Times have changed. The need for human hands in production began its decline with the introduction of robots in production. The most extreme case of this change was noted in Detroit and its 5 surrounding states. A staggering 35 percent drop in manufacturing employment (1.6 million jobs) has been observed within the first decade of the year 2000.
As a result of these changes, the extreme plunge of companies offering pension plans have affected a devastating number of American workers. About half of fortune 500 companies in the states offering pension plan benefits dropped down to a mere 5 percent by the year 2015. By 2010, 37 million Americans were without health insurance. The disappearing act of employer‐provided safety nets quickly became more visible.
The year 2016 brought on more challenges for those finding themselves pushed out of their jobs, with less access to unemployment insurance. The lack of local and state funding had reached $1.4 trillion. Unemployed workers receiving benefits during this time were far and few between. Qualified unemployed workers receiving UI benefits dropped to a record low of 27 percent.
The shift dislocating this large group of manufacturing workers is a struggle as many originally entered the booming workforce without any need for further education. A modern need to search out new careers without higher degrees is a challenging position to be in.
The increasing rates of automation and digitalization across the country, specifically in this area we speak of has resulted in an increase from long‐term single employer jobs to more contingent situations. Earning money as a part‐time worker, freelancer, temp firm employee, and the self‐employed is becoming a new norm and therefore calls for some adjustments. Not only an issue in the Midwest, this rising crop of employees now accounts for 40 percent of the national workforce. Problematically, lack of special diplomas or back‐ups skills make the “gig economy” a less secure one for the Rust Belt contingent.
So, considerable arguments could be made about necessary reform to the current economic security system as it has adapted over the recent years away from a purely long‐term single‐employer workforce. Solutions could be created that can simultaneously support innovational advancements while protecting the economic security of American workers this affects negatively. Extending benefits for those employed in multiple job situations as well as providing support during a time of adapting and advancing in this new economy, during temporary dislocations, helping workers gain more access to better paying jobs with newly acquired skills.
Policymakers are hard at work to solve this for those affected. Portability, Pro‐ rationing of benefits, unemployment insurance, and more aggressive adjustment assistance reform are all on the table as vehicles of progress for a renewed safety net for this portion of American workers.
Finding positive ways to create more flexibility in accommodating the changing base of American workers, particularly in the hardest hit Rust Belt communities, is one that we hope will inspire optimism in these United States. Everyone should have resources they need to achieve the American dream, especially those in the Midwestern states that originally provided the groundwork for security systems that lasted and benefited so many for so long. How the economy will evolve as a result of the newer generations’ ever‐changing working scenarios will be interesting to observe.