|Reviewer(s):||Thomasson, Melissa A.|
Published by EH.NET (August 2004)
Jennifer Klein, For All These Rights: Business, Labor, and the Shaping of America’s Public-Private Welfare State. Princeton: Princeton University Press, 2003. xiii + 354 pp. $35 (cloth), ISBN: 0-691-07056-3.
Reviewed for EH.NET by Melissa A. Thomasson, Department of Economics, Miami University, Oxford, Ohio.
This book offers a detailed historical perspective of the ascendance of welfare capitalism in the U.S. from before the Great Depression through the 1960s. Its themes are perhaps familiar; at its most basic level, the book is about how welfare capitalism exists because it satisfied the mutual interests of American corporations and insurance companies as they attempted to stave off incursions by unions and the state. While Klein’s hypothesis is not new, she examines the complexities of the rise of welfare capitalism within the framework of New Deal politics, and adds rich historical detail to bolster her points. In the end, she provides a sweeping criticism of the way pensions and health insurance are provided for the majority of Americans and argues that “we need to reclaim the language of economic dissent — of just alternatives to ‘the market’ — that makes progressive changes possible” (p. 275).
The strength of the book lies in how well Klein researched her topic. For All These Rights is filled with details that bring the social and political settings of the contest between labor, business, and the state to life. Anyone interested in the growth of fringe benefits can learn from this book. From an economist’s perspective, the fact that Klein relies purely on anecdotal evidence and coincidences in timing to make her points sometimes makes her arguments less than convincing. Perhaps an even more glaring weakness is that Klein implicitly suggests that the counterfactual — a state-provided system of universal health coverage and retirement benefits — would be better than the inefficient, piecemeal private system we have. This may or may not be true; it could be the case that the same forces (such as employers and physicians) that influenced the structure of the current private health insurance system would also influence the structure of a public program, as physicians ultimately did with Medicare.
The book is organized into six main chapters and an epilogue. The first few chapters set the stage for the rest of the book by discussing the pre-New Deal origins of private employee benefit systems and industrial pensions. Group insurance took hold, Klein argues in chapter 1, because Eastern life insurance companies wanted to mass-market insurance and prevent the growth of state-provided social welfare programs. In chapter 2, Klein provides great detail about industrial pensions and the combined politics of welfare capitalism and the Great Depression.
Chapter 3 begins to lay out one of the central ideas in the book: that the New Deal defined the idea of security and allowed insurance companies and corporations to use welfare capitalism to “supplement” the basic package of income security offered within the Social Security provisions of 1935. This undoubtedly allowed insurance companies to “… thrive within the welfare state” (p. 92). By priming America to be ready to accept the notions of basic “security,” the New Deal set the stage for the modern welfare capitalist state.
The themes framed in Chapter 3 are underscored in later chapters. In chapter 4, Klein examines the national discussion of health “security” that occurred in the 1930s on a variety of fronts. Beginning with the Committee on the Costs of Medical Care and its findings that medical costs were rising beyond the reach of some families, and then tracing attempts to provide national health insurance first as an amendment to the Social Security Act of 1935 and later in the Wagner bill in 1939, Klein portrays the intricacies of the genesis of health insurance. A very novel contribution that Klein offers is a detailed discussion of the relationship between labor and health insurance in the 1930s. She argues that the New Deal’s efforts to promote security impelled labor to seek health benefits for its members, and highlights several union attempts to develop health security programs.
The theme of welfare capitalism enabling firms and insurance companies to stave off union and state regulatory intervention is prominent in chapters 5 and 6. Chapter 5 discusses several successful government health programs, such as the Emergency Maternal and Infant Care (EMIC) program that provided health care to millions of wives of lower-pay-grade enlisted men and their newborns. Proponents for universal health coverage also continued their efforts with the introduction of the Wagner-Murray-Dingell bill in 1943. Unions were also actively promoting health programs outside the realm of commercial insurance. Thus, in the face of these challenges, Klein argues that insurance companies and employers came together to survive. As Klein states, “… for employers, the unilateral purchase of commercial group insurance proved the key to containing union power and union political goals” (p. 221).
Absent from Klein’s analysis is a discussion of the role of worker preferences and labor mobility in a tight World War II labor market in helping to shape the health insurance market. In addition, while she mentions the role of the War Labor Board in helping to increase employment-based health insurance in the 1940s, she virtually ignores the tax benefits that enabled workers to receive tax-exempt employer contributions for employer-sponsored (but not union-sponsored) health insurance plans beginning in 1943.
The book finishes with an epilogue entitled “The Limits of Private Security.” Klein’s work here devolves into opinion, with comments such as “the decline of the labor movement, deregulation, and the North American Free Trade Agreement (NAFTA) have provided business firms with the social and political power to withdraw from their commitment to social welfare benefits” (pp. 264-65). She claims that 401K savings accounts allow employers to invisibly reduce their contributions to employee retirement security, and that as for-profit HMOs overtook nonprofit HMOs, they forced the rest of the system to emulate their cost-cutting practices. Perhaps, but these are complicated and involve issues that merit more attention. They are clearly beyond the scope of this book, and tend to detract from Klein’s main point that the piecemeal nature of the current system is a “surrender” that makes it inequitable and inefficient. Overall, the book is a good, thought-provoking read for people interested in the growth of employee fringe benefit programs, and in understanding more of the political relationship between corporations, labor, and the state.
Melissa A. Thomasson is Assistant Professor of Economics at Miami University in Oxford, Ohio. Her articles on the development and growth of U.S. health insurance have appeared in the American Economic Review and Explorations in Economic History.
|Subject(s):||Labor and Employment History|
|Geographic Area(s):||North America|
|Time Period(s):||20th Century: WWII and post-WWII|