Wage Dependency and Vulnerability
Through the first half of the nineteenth century America was a nation of farmers, shopkeepers, and small businessmen living in small towns. Capitalism was local and commercial, rather than national
and industrial, and the family was a self-sustaining economic unit. Family members worked largely within the confines of the household, on the family's land, or in the family's shop or other small business. Gradually, however, technological development and increases in economic centralization and differentiation combined to erode households' self-sufficiency. More people began to work outside the family for wages or salary. And as needs came to be more commonly supported by participation in the labor market, fewer families held their own land or other businesses. Today, only a small fraction of Americans owns household-sustaining property. The vast majority of us, including many professional and managerial people, are dependent for our livelihoods on selling our labor in the market.
Wage dependency creates the preconditions for wage vulnerability. Any disruption in wages threatens a worker's ability to meet basic needs. And many disruptions to participation in the labor market—disabling injury, aging, recession, plant closings due to loss of international competitiveness—lie beyond the control of an individual worker. Even households in the top quintile of income distribution are not immune to such hazards. Only the very wealthiest households can sustain themselves over lengthy periods without labor market participation and without recourse to outside assistance, such as public social programs.
Other trends characteristic of advanced industrial societies reinforce the problems of wage dependency and vulnerability. As people go to work for others, they tend to move from rural to urban environments, and urban settings afford fewer opportunities for household production of food and shelter. Additionally, the nuclear family, itself an adaptation to urban industrial society, has been splintered by desertion and divorce, events that often leave women and their children without a source of adequate income. New households based on remarriage, sibling ties, and friendships have reduced some, but by no means all, of these difficulties. Finally, as life expectancies increase well beyond society's conception of the duration of people's economic usefulness, a growing proportion of elderly people find themselves excluded from regular participation in the labor market.
In addition to these trends associated with wage dependency and vulnerability, the prices of customary and essential services
have far outpaced normal income levels. The rural household of the early nineteenth century was largely self-sufficient not only with respect to basic goods but also with respect to services. For example, home remedies were the rule for illness or injury, in part because of the expense of hiring a physician, particularly the cost of transportation, but in part because a professional healer could not always be expected to achieve results more encouraging than those of a layperson.
Today, in contrast, the efficacy of sophisticated medical services is far superior to lay remedies, and people who cannot acquire access to the most crucial of these services cannot successfully claim full membership in contemporary society. Indeed, in a wage-dependent economy, individuals rely heavily on medical care to cure the illnesses or injuries that disrupt their ability to earn a living. Yet while medical care is increasingly important, it is also extremely expensive, beyond the reach of most people's incomes. The fortunate have their medical bills paid for by private insurance or public social programs; the unfortunate often go without even the most basic care.
In sum, an intrinsic characteristic of advanced industrial societies is that families are no longer independent economic units. In light of the family's loss of self-sufficiency, modern societies have created social programs to provide a measure of protection for their citizens. In the United States, as in other advanced industrial societies, these social programs are intended to cushion people against episodic disruptions of income as well as to sustain people whose economic resources are persistently insufficient.