Your and My Happy Days.
Do we still live in a world of Happy Days?

Public and corporate policy regarding retirement income and health insurance is based on the assumption that people would live in a nuclear family with one breadwinner and one bread baker. The single provider of income would, in turn, work at the same company throughout his working life.

As you know, that’s not exactly what the American society and economy look like today. Last week, the Bureau of Labor Statistics released the latest findings (PDF) of an ongoing project called the National Longitudinal Survey of Youth 1979. (Click here for one newspaper's summary of the findings.)

The study is a survey which tracks the same 10,000 or so Americans over time. The survey found that the average person in this group held 10.5 jobs between the ages of 18 and 40.While people tend to change jobs less frequently as they age, this group had on average two jobs during the age range of 36 to 40—one job every two years! (For what it’s worth, the survey focuses on employers, which means that an initial job, a lateral reassignment and a promotion all count as one job. This means that the survey may actually underestimate job hopping.)

Defined contribution plans, such as 401k(s), are more in tune with this new reality. The old version of Social Security, which worked best when Detroit’s Big 3 defined the world automotive industry, is obsolescent, and should be supplemented (for those who wish) with a 401(k) style plan that involves privately owned accounts.

In our health care approach, many people who lose their job lose their health insurance coverage. Whatever its merits in years past, it’s simply a stupid approach today. There are two alternative ways forward: government-run health care (socialized medicine) and individually-owned insurance.

Corporate policies can and do change, though the old approaches are still propped up by federal laws such as the tax code. Public policies, since they are driven by interest group politics, are slower to change. But as time marches on, we will find that they were designed for a world that, bit by bit, doesn’t exist anymore.

Labels: Health care

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