CREATING A CAPITAL INVESTMENT WELFARE STATE: THE NEW AMERICAN EXCEPTIONALISM* 1998 Presidential Address

Jill Quadagno FloridaState University

In the past few decadesforces such as globalization and internationalcompe- tition, rising public budgets, and aging populations have caused many na- tions to reexaminethe social programs they established at least a half century ago. Some nations have cut spending; others have reorganizedpriorities to provide supportfor dual-earnerfamilies, single mothers, or elderly people who need long-term care. The United States appears instead to be in transi- tion from a social insurance welfare state to a "capital investment welfare state " in which the objective is to increase savings and investment.This shift in U.S. public policy is most explicit in the ascendance of a neoconservative ideology, which depicts the welfare state as an impedimentto a free market. This ideology has lent credence to proposals for privatizing Social Security and is implicit in seemingly minor technocratic changes in Medicare, which nonetheless have inserted marketprinciples into a social insuranceprogram. Whethercurrent trends representthe most recent manifestation of American exceptionalism or a concurrent restructuring across nations can be deter- mined only by comparative research examining (1) how differentnations are responding to contemporaryfiscal pressures, and (2) if nations are redistrib- uting the social welfare burdenfrom the public to the private sector.

A ccording to one side of a long-con- ist democracies. Grounded in a firm opposi- tested theoretical debate, the United tion to all forms of government intervention, States has a distinctive political culture that this classical liberal tradition honors private differentiates it from other Western, capital- property, distrusts state authority, and holds * individual rights sacred (Lipset 1996). This Direct correspondenceto Jill Quadagno, Pep- notion of American exceptionalism was first per Institute on Aging and Public Policy, , Tallahassee, FL 32306 (jquadagn applied by socialist theorists at the turn of @coss.fsu.edu). I thank Robert Alford, Jill the century, initially to explain the weakness Bernstein,Pamela Larson, and John Myles for help- of working-class radicalism, then later to ex- ful comments on an early draftof this manuscript. plain why the United States was the only in-

American Sociological Review, 1999, Vol. 64 (February:1-11 ) 1 2 AMERICAN SOCIOLOGICAL REVIEW dustrialized country that lacked a socialist ating agreements such as seniority provisions movement or a labor party. As the welfare that enhanced job security over the life state became the primary site of the civil course, and in supporting the expansion of functions of government, discussions of public social benefits. The recent decline in American exceptionalism focused on new unionization has reduced the ability of work- questions: Why, compared to other Western ers to negotiate working conditions and ben- capitalist democracies, was the United States efits and has made them more vulnerable to slow to develop national social benefits; why market forces. For example, between 1988 did it fail to offer programs provided else- and 1996 the percentage of large and me- where, such as national health insurance; dium-size firms that provided fully-financed why were U.S. benefits less generous than health insurance to their employees declined those in other Western countries? from 56 to 37 percent (Martin 1998). The In the past few decades, welfare states percentage of male workers covered by a have experienced increasing fiscal con- pension plan also has declined (Bloom and straints associated with globalization and in- Freeman 1994). ternational competition, rising public bud- The family is another social institution that gets, and aging populations. These trends has experienced significant change. In the have caused governments to seek ways to di- 1930s, most households had a male bread- vest themselves of fiscal responsibilities, winner who was the sole wage-earner.At that even as changes in the labor market, in the time, only 22 percent of women were in the family, and in demographic structures have labor force, and rarely did mothers work at created new needs for social protection over all. By 1996 nearly 60 percent of women the life course (Esping-Anderson 1999; were participating in the labor force, includ- Shalev 1996). Political theorists are now de- ing over 70 percent of women in their child- bating how the forces that contributed to the bearing years and 60.5 percent of single exceptionalism of the American welfare state mothers (U.S. Bureau of the Census 1997). are likely to influence public policy direc- This increase in the numbers of dual-earner tions in the twenty-first century. and single-parent households has increased the need for benefits for working families (Esping-Anderson 1999; O'Connor, Orloff, THE CONTEXT OF WELFARE STATE and Shaver 1998). FORMATION Finally, the nation's demographic profile Since the New Deal, when the first perma- has shifted significantly as a result of an ag- nent federal social programs were created, ing population. Between 1930 and 1996, the significant changes have taken place in the percentage of the population age 65 and nation's social, political, and economic ar- older increased from 6.0 to 12.5 percent, and rangements. In the labor force, sectoral is predicted to increase to 20 percent by dominance has shifted from the manufactur- 2030. Life expectancy has increased most ing sector to the service sector. In the 1930s, rapidly among the "old-old," people 85 and 32.5 percent of the labor force worked in over, who have the greatest needs for health manufacturingindustries, and only 59.4 per- and long-term care benefits (Hobbs and cent in service-producing industries. By Damon 1996). 1990 only 17.4 percent of workers were em- Other countries have responded to these ployed in manufacturing, while 77.3 percent same trends by reorganizing their national were in services (Goldin forthcoming). priorities. Some have reduced social expen- One major consequence of this sectoral ditures. Sweden, for example, recently cut shift in employment has been a decline in benefits for unemployment and reduced its trade union membership, down to only 16.2 pension promises to retirees. Other countries percent of the workforce in 1996 (U.S. Bu- have added new programs to meet new reau of the Census 1997). The heavy manu- needs. Germany has added a national long- facturing industries were the site of trade term care program, as has Austria (Smeeding union mobilization in the 1930s. Subse- 1998; Weaver 1998). quently, unions became an importantforce in In the United States, the public policy expanding private sector benefits, in negoti- agenda appears to be moving in confusing CAPITAL INVESTMENT WELFARE STATE 3 directions. The Personal Responsibility and all workers who contributed would be eli- Work Opportunity Act of 1996 eliminated gible for benefits and that lower-income Aid to Families with Dependent Children, a workers would receive a higher level of in- program that consumed less than 1 percent come replacement. Thus, along with the in- of the federal budget, and transferredrespon- surance function, Social Security incorpo- sibility for poor women and their children to rated a redistributory,anti-poverty function. the states. Yet few changes have been made The Social Security Act also included two in the more costly entitlement programs- means-tested programs available only to the Social Security and Medicare. poor-Old Age Assistance and Aid to De- Appearances can be deceiving, however, pendent Children-which left decisions for a transition in the American welfare state about eligibility and benefit levels to the is taking place-a shift toward what I call the states. "capital investment welfare state." This tran- Because the legislation could not win a sition is visible, first, in efforts to restructure majority in Congress without the support of public benefits to coincide with trends in the southern Democrats, a compromise was private sector, second, in efforts to reduce reached: Southerners would support the So- collective responsibility for social welfare cial Security Act as long as labor arrange- needs and increase individual responsibility, ments in the South were left undisturbed. and third, in proposals to transform public The compromise meant that agricultural welfare programs from cash benefits and di- workers and domestic servants (three-fifths rect services into incentives for personal sav- of all black workers in the South held such ing and investing. These changes represent jobs) would be excluded from the social in- the onset of a thirdrealignment of social wel- surance programs. Instead these workers fare policy; the first two were the New Deal would be eligible only for the means-tested and the Great Society. benefits. Thus, a two-tier benefit structure was inserted into the welfare state, which re- inforced the racial divide in American soci- THE FORMATION OF THE ety (Quadagno 1988). AMERICAN WELFARE STATE The New Deal also included incentives in the tax code, termed "tax expenditures," that The New Deal encouraged employers to provide pensions The American welfare state was created in for their employees. Firms could set aside two, widely separated,"big bangs" of reform these "deferredwages" as a nontaxable busi- (Weir, Orloff and Skocpol 1988). The first ness expense and recapture nearly half of permanent federal programs of social provi- their welfare costs in tax savings (Stevens sion were legislated during the New Deal, 1988). By 1944, corporate income taxes rep- following the 1929 stock market crash and resented 7.4 percent of the gross domestic in the midst of a Great Depression. Then, product, making these tax benefits of consid- unlike now, Americans had little trust in erable value to firms (U.S. Department of Wall Street and sought government protec- Commerce 1995). Private sector benefits ex- tion from the forces of the free market. The panded rapidly following a 1948 Supreme New Deal broke with the anti-statist politi- Court decision allowing pensions and health cal culture and brought instead a social insurance to be included in collective bar- democratic tinge to the role of government gaining agreements. As unionized workers for the first time in U.S. history (Hofstadter sought and won guaranteed automatic cost- 1972). of-living increases in pensions, the right to At the heart of the New Deal was the So- retire early, and health insurance for retirees, cial Security Act of 1935, which created two firms agreed to pay these benefits because programs of social insurance-Unemploy- they could recapture a large share of their ment Insurance and Old Age Insurance (So- costs in tax savings. As a result, in the post- cial Security). These programsinsured work- World War II era the United States, more ers against loss of income from fluctuations than any other country, came to depend on in the business cycle or old age. The Social tax expenditures to provide for welfare needs Security program included a guarantee that (Rein 1996; Wennemo 1998). 4 AMERICAN SOCIOLOGICAL REVIEW

The Great Society matically alter policy outcomes by activat- ing new groups to take an interest in the The Great Society of the 1960s produced the policy, by fragmenting the existing configu- second "big bang" of welfare state reform. It ration of support, or by limiting the param- began with President Lyndon Johnson's War eters of potential options for change. Fram- on Poverty, which created new programs for ing the debate over Social Security in terms community action, job training, and urban of saving our children's future is a less divi- renewal. The Great Society presented an op- sive message than cutting benefits to greedy portunity for the United States to complete senior citizens (Quadagno 1998). Struggles the initiative launched during the New Deal. over social policy thus become struggles The programbegan just as other nations were over information (Weir 1998). Another adding the second tier of social benefits re- strategy politicians use is to obscure benefit quired for economies centered around the cuts in technocratic details, or what has service sector and the rising labor force par- been called "policy by stealth" (Pierson ticipation of women. Instead of expanding 1994). Beneficiaries are more likely to ob- the welfare state, however, the Great Society ject if politicians threaten to cut Medicare became absorbed in the struggle for civil than if they suggest adding another bend rights and equal opportunity;its task became point to the calculation of Social Security that of undoing the racial legacy of the New benefits. This increasingly technical nature Deal. The resulting white backlash frag- of social programs means that major deci- mented public support for the new programs sions may be virtually concealed from pub- and for the Family Assistance Plan, a pro- lic view. posal that would have provided welfare re- This third transition in the U.S. welfare cipients with federal support for child care state represents a shift from a welfare state and would have guaranteed a basic income based on the principles of social insurance to to the working poor (Quadagno 1994). one with a different set of features (see Fig- The Great Society's only lasting legacy ure 1). The objective of social insurance is came in the expansion of entitlement pro- to insure those who contributed to the sys- grams. In 1965 Congress created Medicare tem against selected life course risks. The and Medicaid, programs that provided health main beneficiaries are workers, benefits are insurance for the elderly and the poor. Then based on work history, and the programs in- between 1968 and 1972, a series of amend- clude an element of income redistribution. ments to the Social Security Act raised ben- These features stand in sharp contrast to the efits and indexed them to the cost-of living, emerging "capital investment welfare state," so that inflation would not erode their value in which the objectives are to increase sav- (Myles 1988). ings and investment, the primary beneficia- ries are investors, levels of benefits are de- termined by an individual's investment port- The Investment State Capital Welfare folio, and benefits are skewed to favor those The United States is presently in the midst who are already prosperous. of a third transition, but it is unlikely to ar- rive as a "big bang." The reason has to do THE WELFARE with the welfare state itself. Adding new pro- REINVENTING grams is a fundamentally different task than STATE is taking benefits away, and large social pro- The transition in American public policy is grams mobilize public support and create most explicit in the ascendance of a neo- strong interest group constituencies. conservative ideology, which depicts the Because any politician who openly pro- welfare state as an impediment to a free mar- poses cuts in benefits risks alienating the ket. This ideology has lent credence to pro- public, more subtle tactics must be devised posals for privatizing Social Security and is (Pierson 1994). One strategy adopted by implicit in seemingly minor technocratic politicians seeking to cut benefits is to alter changes in Medicare, which nonetheless public discourse by redefining the issues. A have inserted market principles into a social change in how issues are defined can dra- insurance program. CAPITAL INVESTMENT WELFARE STATE 5

Features Social Insurance Welfare State Capital Insurance Welfare State

Exemplars Social Security, Tax expenditures, Medicare Medicalsavings accounts, Personal security accounts

Objectives Insuringworkers and dependents Promotingsavings and investment against life course risks

Beneficiaries Workers Investors

Benefit criteria Workhistory Investmentperformance

Pattern of Benefitsskewed towardless affluent; Benefits skewed toward more stratification redistributory affluent;non-redistributory

Figure 1. Two Models of Welfare State Structure

The Ideology of Public Policy provision were budgetary problems to be solved by budgetarymechanisms, and the rel- The currentpolitical culture surroundingthe evant measures for judging their merit were welfare state centers on the claim that social fiscal responsibility and cost containment benefits are crippling rigidities that increase (Bipartisan Commission on Entitlement and the costs of labor, undermine productivity, Tax Reform 1995). and drain public funds (Antonio and Although members of the Commission Bonnano 1996). This view represents a dis- failed to agree on a grand plan, indeed, even tinct shift from the earlier view that the wel- on a single option, the Entitlement Commis- fare state consists of programs of social in- sion did succeed in another way: It suc- surance organized around the principles of cinctly capturedvarious views on the welfare sharing the collective risks of market failure state and wove them into a coherent mes- and promoting social solidarity. Over the sage. As a result, the charts depicting the en- past decade, social insurance programs in- titlement crisis, which were featured in ev- creasingly have been portrayed as static and ery newspaper in the country that summer, outmoded, and markets as modern and dy- have become the standard for framing the namic (Kuttner 1998). "problem." Social insurance beneficiaries I became aware of this shift in public dis- have become unfunded liabilities; the grand course in 1994 when I served on the staff of distributional issues of the day have become the President's Bi-Partisan Commission on budget dilemmas; the objective of social Entitlement and Tax Reform. The Commis- welfare expenditures has become to increase sion's objective was to recommend a plan for savings and investments (Quadagno 1998). reducing entitlement spending. The problem The changing political culture thus has trans- that generated the interest in entitlement re- formed the public debate about Social Secu- form was variously defined as one of the bud- rity reform and what "social security"means. get deficit (which then stood at $350 billion), as the national savings rate (which had de- Proposals for Social Security Reform clined significantly since the early 1980s and was lower than that of Germany, Japan, and According to the most recent projections, Sweden), and as the aging of 75 million baby Social Security faces a crisis in 2032. In that boomers (who would supposedly gobble up year the trust fund will be depleted, and in- all federal revenues when they began retiring coming taxes will be sufficient to finance around 2010). Whether the problem was only 75 percent of the payments promised to framed as the budget deficit, the savings rate, beneficiaries. Although no changes have yet or the retirementof the baby boomers, the un- been made in the program, proposals to derlying theme was that programs of social privatize Social Security have become a 6 AMERICAN SOCIOLOGICAL REVIEW common feature in the political landscape. uct by 1982) (Quadagno and Hardy 1996; Those recommended by the 1994 Advisory U.S. Department of Commerce 1995). Council on Social Security provide three Since the 1980s, a different type of pension "ideal-typical" options for reconstructingthe option, called a "defined contribution"plan, welfare state, which ranged from restoring has become predominant (Salisbury 1997). long-range solvency to totally reconstructing Defined contributionplans are not really pen- the program toward private pension models sions in the traditional sense; they are sav- (Koitz 1998b). ings plans with certain tax advantages. No The Advisory Council, which usually retirementbenefit is guaranteed;rather retire- meets in total obscurity, delayed making its ment income depends entirely on how well report public for more than a year because, the account has performed in the market over for the first time in its history, its members time. Between 1980 and 1993, the number of could not reach a consensus. Instead mem- defined benefits plans offered by employers bers split into three factions-each faction declined from 148 to 83 while the number of proposed its own options for bringing the defined contribution plans increased from trust fund into long-term actuarial balance. 340 to 618 (U.S. Bureau of the Census 1997). One faction proposed minor benefit cuts, an Social Security operates like a defined eventual increase in the payroll tax, and the benefit pension because benefit levels are de- investment of a portion of the Social Secu- termined by prior work history and prior rity trust fund in the stock market. A second wages. If workers were allowed to divert part faction proposed benefit cuts and a manda- of their payroll taxes to individual accounts, tory system of personal savings accounts that Social Security would operate more like a would be invested in financial markets. The defined contributionplan. The recent shift in third proposed eliminating the current sys- private sector benefits has made such an idea tem entirely and replacing it with a two-tier appear less extreme than it did in the past. system. The first tier would consist of a low, Shifting responsibility for income security flat benefit set below the current poverty in old age from Pennsylvania Avenue to Wall level; the second tier would involve indi- Street would have important political and vidual accounts financed by 5 percent of economic ramifications. Politically, it would payroll taxes (Advisory Council on Social give future retirees a greater stake in mutual Security 1997). Thus, all three proposals funds than in the welfare state. Economi- would channel some money into financial cally, it would mean that future retirees markets. In the 105th Congress, 28 bills were would have a large share of their retirement introduced that followed one or another of income invested in the stock market. The these models (Koitz 1998b). most important effect, however, would be a The idea of privatizing Social Security has change in the risk structure. become more credible in part because of What would the new risks be? First, the ideological shifts in public discourse about most obvious risk is that of a prolonged social insurance but also because it coincides downturnin the value of stocks, which could with trends in private pension plans. The first lower retirement benefits for an entire gen- pensions negotiated by trade unions in the eration. Investment counselors are already post-war era were mainly of a type called a debating whether the stock marketwill plum- "defined benefit" plan. Employers estab- met when baby boomers begin selling their lished tax-free pension funds and then paid investments to pay for their retirementneeds. benefits to retired workers according to their Second, the market could rise or fall rapidly length of service and previous earnings. Be- in a period of just a few years. Equal savers ginning in the early 1970s, a series of could end up with very different benefits de- changes in federal law reduced the incentives pending on when they retired or on how well for employers offering defined benefit plans. their investments performed. Third, people The changes included increased government might be unpreparedto meet various life cri- regulation of pension funds, new regulations ses. Workers who had saved for retirement concerning age discrimination in employ- might be forced to spend all their savings if ment, and a decrease in corporate tax rates faced with an event such as being "down- (to only 1.6 percent of gross domestic prod- sized" out of a job at age 50 (Ball 1998). CAPITAL INVESTMENT WELFARE STATE 7

Transferring the responsibility for social beneficiaries. These "experiments," which welfare needs from the government to the in- were justified by their proponents as a way dividual has significant distributional impli- to increase freedom of choice for future cations. In an era when the stock market is Medicare beneficiaries, reflect the changing soaring, some investors can, over time, ac- political culture of the welfare state. Their cumulate a very large sum of money. In ex- general effect is to make Medicare more change for the opportunityto develop a small similar to the private insurance market and investment portfolio, however, low-income to insert incentives into the program for the workers would lose all insurance against dis- individual to invest in and/or to purchase pri- ability or death for themselves and their de- vate health insurance. pendents as well as sacrificing the redis- The new options now offered are called tributory component of the current Social Medicare Plus Choice. Under previous law, Security program. Further, unless the pro- physicians could be prosecuted if they gram was mandatory, low-income workers charged Medicare beneficiaries more than might choose not to invest. An analysis by the amount allowed by the government, the nonpartisanCongressional Research Ser- even if patients were willing to pay the ex- vice (Koitz 1998a) indicates that the costs of tra fees. Physicians also could not sign pri- implementing the more radical privatization vate contracts with Medicare patients for proposal would fall most heavily on low-in- any services covered by the program. Under come earners. the new law, however, beneficiaries may drop out of the Medicare program and sign private health insurance contracts with doc- Changing Incentives in Medicare tors. Physicians who make private arrange- Medicare, the federal health insurance pro- ments with patients can now charge more gram for every Social Security recipient age than the amount allowed under Medicare's 65 or older, is the most rapidly expanding fee schedule. Those physicians who choose entitlement. In nearly every budget over the to do this, however, will be totally excluded past decade, Congress has attempted to cut from the Medicare program for two years Medicare spending, mainly by reducing re- (Binstock 1998). imbursements to providers. The effect has Most likely, the drop-out provision in been an implicit privatization, as benefits are Medicare Plus Choice will not prove to be playing a diminishing role in an expanding viable because it will prove unprofitable. economy and social provision is shifting to- Most physicians, except perhaps for a few ward the private sector. specialists, cannot afford to forego their When Medicare was created, fee-for-ser- Medicare income. Further,few private insur- vice arrangementspredominated in the pri- ance carriers are likely to risk insuring large vate sector. People were free to choose their numbers of Medicare beneficiaries without doctors, and doctors were free to set their the guarantee of a government payment. In- fees-Medicare thus largely replicated the deed, Medicare was enacted because private pattern of reimbursement that was common insurers found the elderly to be an unprofit- among private insurers. Over the past quar- able group. Yet some Medicare beneficiaries ter century, however, the organization of will choose private contracts with their phy- health care in the private sector has experi- sicians, and policy analysts believe it will be enced revolutionarychanges. Fee-for-service those retirees who are healthier, more afflu- arrangementshave been supplanted by man- ent, and younger. As this group of desirable aged care, which is now the form of health beneficiaries opts out of Medicare, sicker insurance provided to more than 70 percent (i.e., more expensive), poorer, and older pa- of people in the United States (Tallon 1998). tients could be left in the standardMedicare Medicare, for the most part, has not kept program. Per patient costs for Medicare pace with these changes: Only 14 percent of would then have to rise (Moon 1998). Medicare beneficiaries are currentlyenrolled Medicare Plus Choice also includes a dem- in managed care (Binstock 1998). onstrationproject that allows beneficiaries to In the Balanced Budget Act of 1997, Con- establish "medical savings accounts." Medi- gress added some new options for Medicare care will provide beneficiaries a set amount 8 AMERICAN SOCIOLOGICAL REVIEW for purchasing a health insurance policy, In the rush to returnthe welfare state to the which ideally might offer a wider range of market, it is important for policymakers to services than is presently available. Benefi- remember what markets cannot do. Markets ciaries may then keep any unused funds as a are not designed to insure workers and fami- tax-sheltered investment, or even to pass lies against unexpected hazards; nor are they funds on to their heirs. Most policy analysts designed to redistribute resources to those caution, however, that only healthy and af- whose lives have been constricted by unequal fluent people will choose this option, and opportunities to attend school, to earn good that the program will segment off an attrac- wages, and to accumulate wealth. Should the tive pool of claimants for private insurers, current trend in political discourse provide a further widening the disparity in income and framework for organizing social provision, wealth in the United States. the result would be a new type of two-tier welfare state-flat, low benefits for the poor, and tax subsidies for personal savings for life WELFARE RETURNING STATES TO course risks for everyone else. As a system of MARKETS social stratification, the welfare state would These new Medicare options and the propos- consist of an investment class and a class of als for Social Security reform revive the core those too poor to invest. principle of American exceptionalism-that of individualism-by inserting into the wel- fare state the same principles that govern tax CONCLUSION expenditures. As a general rule, when ben- Sometimes it is difficult for sociologists to efits are distributed as "rebates" against the identify the principles shaping currenttrends individual tax burden, redistribution occurs in public policy. One reason is that the divi- from the less affluent to the more affluent. sion of intellectual labor in our discipline Sometimes tax expenditures favor the poor. tends to replicate program divisions. Experts The Earned Income Tax Credit, for example, on aging study Social Security; experts on provides tax rebates to the working poor. health care study Medicare; experts on pov- Most other tax expenditures, however, favor erty study Aid to Families with Dependent people who earn more than the median in- Children. As a result, trends that are occur- come, and often significantly more (Howard ring concurrently across programs are ob- 1997). Such biases occur because these ben- scured by these artificial boundaries.Another efits tend to be offered through the work- problem is that we lack a historical perspec- place, more often by large companies in tive because the outcome of the current re- unionized industries, and to the better-paid structuring is still undetermined. Further, workers. many of the ongoing changes are highly Patterns of coverage in private pensions technocratic and thus are invisible except to and health insurance exhibit disparities by the most informed policy experts. social class and by race. In defined contribu- All of these factors make theories of wel- tion plans, like the 401K for example, rates fare state formation appear irrelevant to con- of participation rise with income (Korczyk temporary policy debates. Nevertheless, a 1993). Racial disparities also are present, historical analysis reveals that the new direc- with 51 percent of whites being covered by tions in U.S. social policy signify a resur- such pension plans, but only 44 percent of gence of the classical liberal tradition, de- African Americans and 29 percent of Hispan- signed to restore market forces to areas of ics (Even and MacPherson 1998). Higher- social life that have been displaced by the paid workers are also more likely to have growth of the state. At the core of this tradi- health insurance provided by their employ- tion is the premise that human society con- ers. Although rates of health insurance cov- sists of a series of market-like relations, that erage have been declining for everyone, they individuals have natural rights to freedom have dropped more rapidly for low-income and property, and that the primaryrole of the workers-from 49 percent covered in 1982 state should be to enforce only those rules to only 22 percent in 1996 (Bureau of Labor necessary for reconciling conflicts over indi- Statistics 1998). vidual rights (Gray 1995). CAPITAL INVESTMENT WELFARE STATE 9

The distinguishing features of American 60 in Pension Coverage Issues for the '90s, ed- exceptionalism provide the frameworkfor the ited by R. P. Hinz, J. A. Turner, and P. sociological analysis of the welfare state and Fernandez. Washington, DC: U.S. Department set the agenda for future research. That of Labor. Statistics. 1998. Trends in Em- agenda should include inquiry into the social Bureau of Labor ployer-Provided Health Insurance. Washing- construction of policy issues, the framing of ton, DC: Government Printing Office. political initiatives, the social movements and Esping-Anderson, Gosta. 1999. Social Founda- elite networks that influence policy decisions, tions of Postindustrial Economies. London, En- and the distributionalconsequences of policy gland: Oxford University Press. outcomes. At the core of any distributional Even, William and David MacPherson. 1998. analysis should be the issue of whether new "Racial and Ethnic Differences in Pension forms of racial inequality are being institu- Coverage and Benefit Levels." Working Paper tionalized within the welfare state. Series, Pepper Institute on Aging and Public FL. The question of whether current trends Policy, Tallahassee, Goldin, Claudia. Forthcoming. "LaborMarkets in represent the most recent manifestation of the Twentieth Century" In Cambridge Eco- American exceptionalism rather than a con- nomic History of the United States, vol. 3, ed- current restructuringacross nations can only ited by S. Engerman and R. Gallman. Cam- be determined within a comparative research bridge, England: Cambridge University Press. framework. Studies of single countries can Gray, John. 1995. Liberalism. Buckingham, En- provide the building blocks for cross-na- gland: Open University Press. tional research. Comparativeresearchers can Hobbs, Frank and Bonnie Damon. 1996. 65+ in then use these single-country studies to ex- the United States. Washington, DC: U.S. Bu- amine how nations are responding to the fis- reau of the Census. Hofstadter, Richard. 1972. The Age of Reform. cal pressures imposed by rising public bud- New York: Alfred Knopf. gets and aging populations, and whether they Howard, Christopher. 1997. The Hidden Welfare are redistributing the social welfare burden State. Princeton, NJ: Princeton University from the public to the private sector. Press. Koitz, David Stuart. 1998a. "Social Security Re- Jill Quadagno is Professor of at form: How Much of a Role Could Private Ac- Florida State University, where she holds the counts Play?" CRS Report for Congress, 98- Mildred and Claude Pepper Eminent Scholar 195, March 4, 1998. Washington, DC: Library Chair in Social Gerontology. She is currently of Congress. conducting a historical analysis of the racial in- . 1998b. "Social Security Reform: Bills in tegration of the U.S. health care system, and is the 105th Congress and Other Proposals." CRS studying the effect of a merger between two banks Report for Congress, 98-195, Sept. 8, 1998. on the life course trajectories of older workers. Washington, DC: Library of Congress. Korczyk, Sophie. 1993. "Gender Issues in Em- ployer Pensions Policy." Pp. 59-66 in Pensions REFERENCES in a Changing Economy, edited by R. Burk- Advisory Council on Social Security. 1997. Re- hauser and D. Salisbury. Washington, DC: Em- port of the 1994-1996 Advisory Council on So- ployee Benefit Research Institute. cial Security. Washington, DC: Advisory Kuttner, Robert. 1998. "The Rampant Bull: So- Council on Social Security cial Security and the Market." The American Antonio, Robert and Alessandro Bonnano. 1996. Prospect, July-August, pp. 30-36. "Post-Fordism in the United States: The Pov- Lipset, Seymour Martin. 1996. American Excep- erty of Market-CenteredDemocracy." Current tionalism. New York: W. W. Norton. Perspectives in Social Theory 16:3-32. Martin, Cathie Jo. 1998. "Inviting Business to the Ball, Robert. 1998. Straight Talk about Social Party: The Corporate Response to Social Security. New York: Century Foundation. Policy." Pp. 230-67 in The Social Divide, ed- Binstock, Robert. 1998. "Personal Responsibility ited by M. Weir. Washington, DC: Brookings and Privatization in Public Policies in Aging." Institution. The Public Policy and Aging Report 9:6-9. Moon, Marilyn. 1998. "Privatization, Individual- Bipartisan Commission on Entitlement and Tax ization, and Social Insurance." Pp. 45-52 in Reform. 1995. Final Report to the President. Resecuring Social Security and Medicare. Un- Washington, DC: Government Printing Office. derstanding Privatization and Risk, edited by Bloom, David and Richard Freeman. 1994. "The J. Gonyea. Washington, DC: Gerontological Fall in Pension Coverage in the U.S." Pp. 53- Society of America. 10 AMERICAN SOCIOLOGICAL REVIEW

Myles, John. 1988. "Postwar Capitalism and the sibility in Old Age: The United States in Com- Extension of Social Security in a Retirement parative Perspective." Pp. 24-36 in Resecuring Wage." Pp. 265-92 in The Politics of Social Social Security and Medicare. Understanding Policy in the United States, edited by A. Orloff, Privatization and Risk, edited by J. Gonyea. M. Weir, and T. Skocpol. Princeton, NJ: Washington, DC: Gerontological Society of Princeton University Press. America. O'Connor, Julia, Ann Shola Orloff, and Sheila Stevens, Beth. 1988. "Blurring the Boundaries: Shaver. 1998. States, Markets and Families: How the Federal Government Has Influenced Gender, Liberalism and Social Policy in Aus- Welfare Benefits in the Private Sector." Pp. tralia, Canada, Great Britain, and the United 123-48 in The Politics of Social Policy in the States. Cambridge, England: Cambridge Uni- United States, edited by M. Weir, A. Orloff and versity Press. T. Skocpol. Princeton, NJ: Princeton Univer- Pierson, Paul. 1994. Dismantling the Welfare sity Press. State. Cambridge,England: CambridgeUniver- Tallon, James R., Jr. 1998. "New Conundrums: sity Press. Public Policy and the Emerging Health Care Quadagno, Jill. 1988. The Transformationof Old Marketplace." Policy Brief No. 11, Center for Age Security. Chicago, IL: University of Chi- Policy Research, Maxwell School of Citizen- cago Press. ship and Public Affairs, Syracuse University, . 1994. The Color of Welfare: How Rac- Syracuse, NY. ism Undermined the War on Poverty. New U.S. Bureau of the Census. 1997. Statistical Ab- York: Oxford University Press. stract of the United States. Washington, DC: . 1998. "Social Security and the Entitle- Government Printing Office. ment Debate in the Clinton Administration: U.S. Department of Commerce. 1995. Budget of The New American Exceptionalism." Pp. 95- the United States Goverment: Historical 117 in Clinton and the Conservative Political Tables. Washington, DC: Government Printing Agenda, edited by M. Schwartz and C. Lo. Office. London, England: Blackwell. Weaver, Kent. 1998. "The Politics of Pensions: Quadagno, Jill and Melissa Hardy. 1996. "Private Lessons from Abroad." Paper presented to the Pensions, State Regulation, and Income Secu- National Academy of Social Insurance, Janu- rity for Older Workers: The U.S. Auto Indus- ary 29, Washington, DC. try." Pp. 136-57 in The Privatization of Social Weir, Margaret. 1998. "Political Parties and So- Policy, edited by M. Shalev. London, England: cial Policymaking." Pp. 1-47 in The Social Di- Macmillan. vide, edited by M. Weir. Washington, DC: Rein, Martin. 1996. "Is America Exceptional? Brookings Institution. The Role of Occupational Welfare in the Weir, Margaret, Ann Shola Orloff, and Theda United States and the European Community." Skocpol, eds. 1988. The Politics of Social Pp. 27-43 in The Privatization of Social Policy Policy in the United States. Princeton, NJ: edited by M. Shalev. London, England: Princeton University. Macmillan. Wennemo, Irene. 1998. "The Development of Salisbury, Dallas. 1997. "Currentand Emerging Family Policy: A Comparison of Family Ben- Trends in Employee Benefits." Public Policy efits and Tax Reductions for Families in Eigh- and Aging Report 8:1, 3-5. teen OECD Countries." Pp. 70-97 in Power Shalev, Michael. 1996. The Privatization of So- Resource Theory and the Welfare State, edited cial Policy. London, England: Macmillan. by J. O'Connor and G. Olsen. Toronto, Smeeding, Timothy. 1998. "Reshuffling Respon- Canada: University of Toronto Press. CAPITAL INVESTMENT WELFARE STATE 11

PAST PRESIDENTS OF THE AMERICAN SOCIOLOGICAL ASSOCIATION

Lester F. Ward Edward B. Reuter Donald Young J. Milton Yinger William G. Sumner Ernest W. Burgess Amos H. Hawley Franklin H. Giddings F. Stuart Chapin Robert K. Merton Hubert M. Blalock Jr. Albion W. Small Henry P. Fairchild Robin M. Williams Jr. Peter H. Rossi Edward A. Ross Georae E. Vincent Frank H. Hankins Howard Becker Erving Goffmnan Georae E. Howard Edwin H. Sutherland Robert E. L. Fans Alice S. Rossi Charles H. Cooley Robert M. MacIver Paul F. Lazarsfeld James F. Short Jr. Frank W. Blackmar Stuart A. Queen Everett C. Hughes Kai T. Erikson James Q. Dealey Dwiaht Sanderson George C. Homans Edward C. Hayes George A. Lundberg Melvin L. Kohn James P. Lichtenberg Rupert B. Vance Wiler B. Moore Herbert J. Gans Ulysses G. Weatherly Philip M. Hauser Charles A. Ellwood Carl C. Taylor Arnold M. Rose Robert E. Park Ralph H. Turner John L. Gillin E. Franklin Frazier James S. Coleman William I. Thomas William H. Sewell John M. Gillette Leonard S. Cottrell Jr. William J. Goode William A. Gamson William F. Ogburn Robert C. Angell Howard W. Odum Peter M. Blau Maureen Hallinan Emory S. Bogardus Samuel A. Stouffer Lewis A. Coser Neil J. Smelser Luther L. Bernard Alfred McClung Lee Jill Quadagno