The Great Risk Shift by Jacob S. Hacker

Last updated: Oct 4, 2023

Summary of The Great Risk Shift by Jacob S. Hacker

The Great Risk Shift by Jacob S. Hacker is a comprehensive analysis of the changing nature of economic risk in America and its impact on individuals and society as a whole. The book argues that over the past few decades, there has been a significant shift in the way risk is distributed and managed, resulting in increased insecurity for many Americans.

Hacker begins by examining the historical context of risk in America, highlighting the development of the welfare state and the social safety net in the mid-20th century. He argues that these institutions were designed to protect individuals from the inherent risks of life, such as unemployment, illness, and old age.

However, Hacker contends that in recent years, there has been a fundamental transformation in the way risk is allocated. He identifies three key factors driving this shift: the decline of traditional employer-provided benefits, the rise of contingent work arrangements, and the erosion of government support programs.

One of the main arguments of the book is that the burden of risk has increasingly shifted from institutions to individuals. Hacker provides extensive evidence to support this claim, citing statistics on the decline of employer-provided pensions, the rise of part-time and temporary employment, and the weakening of social safety net programs.

Hacker also explores the consequences of this risk shift for individuals and society. He argues that the new risk landscape has resulted in increased economic insecurity, reduced social mobility, and heightened inequality. He highlights the struggles faced by individuals who lack access to stable employment, affordable healthcare, and retirement savings.

The book also examines the political and policy implications of the risk shift. Hacker argues that the current system is unsustainable and calls for a reimagining of the social contract to better address the challenges of the modern economy. He proposes a range of policy solutions, including expanding access to affordable healthcare, strengthening retirement savings programs, and promoting worker protections.

In conclusion, The Great Risk Shift provides a comprehensive analysis of the changing nature of economic risk in America. It highlights the increasing burden placed on individuals and the negative consequences for society as a whole. The book calls for a reevaluation of the social contract and offers policy recommendations to address the challenges of the modern economy.

1. The Rise of Economic Insecurity

In "The Great Risk Shift," Jacob S. Hacker explores the growing economic insecurity faced by American workers. He argues that over the past few decades, there has been a significant shift in the risks associated with employment and economic well-being. Traditionally, workers relied on stable jobs with benefits and pensions to provide financial security. However, with the rise of globalization, technological advancements, and changes in labor markets, these traditional forms of security have eroded.

Hacker highlights how the burden of economic risk has shifted from corporations and the government to individual workers. This shift has resulted in increased income volatility, reduced job security, and limited access to benefits such as healthcare and retirement plans. Understanding this shift is crucial for individuals and policymakers alike, as it highlights the need for policies that address economic insecurity and provide support for workers in an increasingly uncertain labor market.

2. The Decline of Employer-Sponsored Benefits

One of the key takeaways from "The Great Risk Shift" is the decline of employer-sponsored benefits and the implications this has for workers. Hacker argues that the traditional model of employer-provided benefits, such as healthcare and retirement plans, has become increasingly rare. This decline is driven by factors such as rising healthcare costs, the shift towards part-time and gig work, and the erosion of unions.

As a result, workers are left to navigate the complex and expensive world of individual insurance plans and retirement savings. This shift places a significant burden on individuals to manage their own risks and financial security. It also exacerbates existing inequalities, as those with higher incomes and more stable employment are better able to access and afford these benefits. Recognizing the decline of employer-sponsored benefits is crucial for individuals to plan for their own financial security and for policymakers to consider alternative models that provide universal access to essential benefits.

3. The Role of Government in Mitigating Risk

Hacker emphasizes the importance of government intervention in mitigating economic risks and providing a safety net for individuals. He argues that the government has a crucial role to play in ensuring economic security and reducing inequality. This includes policies such as unemployment insurance, healthcare coverage, and retirement benefits.

By understanding the role of government in mitigating risk, individuals can advocate for policies that promote economic security and hold policymakers accountable. It also highlights the need for a comprehensive social safety net that provides support for those facing economic hardships.

4. The Impact of Rising Healthcare Costs

Rising healthcare costs are a significant driver of economic insecurity, as highlighted in "The Great Risk Shift." Hacker explains how the increasing cost of healthcare has shifted the burden onto individuals, making it harder for them to access affordable and comprehensive coverage.

This has implications for both individuals and policymakers. Individuals need to be aware of the rising healthcare costs and take steps to protect themselves financially, such as saving for medical expenses and exploring insurance options. Policymakers need to address the root causes of rising healthcare costs and work towards a more affordable and accessible healthcare system.

5. The Erosion of Retirement Security

Hacker also explores the erosion of retirement security in "The Great Risk Shift." He highlights how the shift from traditional pensions to individual retirement accounts, such as 401(k)s, has placed the burden of retirement savings on individuals.

This shift has significant implications for individuals, as they are now responsible for managing their own retirement savings and navigating the complexities of investment options. It also exacerbates existing inequalities, as those with higher incomes and more stable employment are better positioned to save for retirement.

6. The Importance of Education and Skills

In an increasingly uncertain labor market, education and skills play a crucial role in mitigating economic risks. Hacker argues that individuals with higher levels of education and marketable skills are better equipped to adapt to changing economic conditions and secure stable employment.

This highlights the importance of investing in education and skills development, both for individuals and policymakers. Individuals should prioritize acquiring relevant skills and continuing their education to enhance their employability and adaptability. Policymakers should focus on creating accessible and affordable education and training programs that equip individuals with the skills needed for the evolving job market.

7. The Need for Collective Action

Hacker emphasizes the need for collective action to address the growing economic insecurity faced by workers. He argues that individual actions alone are insufficient to address systemic issues and that collective efforts, such as unionization and advocacy, are necessary to bring about meaningful change.

This highlights the importance of individuals coming together to advocate for policies that promote economic security and hold corporations and policymakers accountable. It also underscores the power of collective bargaining and organizing in improving working conditions and wages.

8. The Intersection of Economic and Social Insecurity

"The Great Risk Shift" also explores the intersection of economic and social insecurity. Hacker argues that economic insecurity can have profound social consequences, such as increased stress, strained relationships, and limited opportunities for social mobility.

This understanding highlights the need for comprehensive policies that address both economic and social insecurity. It also underscores the importance of a holistic approach to well-being, recognizing that economic security is intertwined with other aspects of individuals' lives.