Rethinking the American Social Contract

Jul 15, 2011

By Hilary Hall

America has long touted itself as a land of shared prosperity and equal opportunity, but the current reality is hardly representative of such ideals.

Economic inequality has appallingly increased over the past three decades.  In the 1970's, the top one percent of Americans owned only 9 percent of the nation's wealth. Today, the top 1 percent owns 21 percent of the nation's wealth, and the top 10 percent owns almost half of it. On a global level, these statistics mean that the United States has the highest levels of inequality among 17 wealthiest OECD nations.

The United States has the fourth-highest percentage of persons living in poverty among all of the OECD countries, even though its GDP is the largest in the world. Wealth distribution is more concentrated at the top, even as the collective wealth has grown. Such facts are compounded by the fact that the United States is the only industrialized nation in the world that does not ensure universal health care and provides, on average, 20 percent less of pre-retirement income in Social Security than other OECD countries. Many Americans face a precarious future in the wake of rising long term unemployment and cannot depend on a social safety net for security.

In a new report, Rethinking the American Social Contract: The International Labor Organization's Decent Work Agenda in the United States, the New America Foundation discusses why using the International Labor Organization's "Decent Work Agenda" can help the country establish a social contract that will allow broaden economic opportunity and security. Over the past 30 years, American jobs have become polarized into high wage/high skill jobs and low wage/low skill jobs, creating the current wealth disparities.  In fact, workers with a high school degree but no college degree earn $50 less today than they did in 1970 (in inflation adjusted dollars).

New America suggests that if the nation integrates the ILO's Decent Work Agenda into the American Social Contract, we can strengthen our economy in both the long- and short-term and alleviate gaping inequalities. They conclude that we should introduce more, better jobs that the government supports with policies promoting education and training, that workers' rights must be guaranteed, that the government should extend social protections to citizens whether they are unemployed or not and regardless of their incomes, and that there should be a strong social dialogue that allows for collective bargaining between employees, employers, and the government. The Great Recession revealed the inadequacies of our system, but we have the chance to remake it, learn from the past, and build a foundation that is secure enough to better withstand another economic downturn.

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