Authenticity   /   Fall 2021   /    Book Reviews

From Hard Hats to Scrubs

The Postwar Political Economy and Its Shifting Patterns of Inequality.

Colin Gordon

Allan Cash Picture Library/Alamy Stock Photo; Ekaterina Belinskaya/; THR illustration.

The last fifty years have not been kind to the American working and middle classes. Variously dubbed “the Great U-Turn,” “the Great Risk Shift,” or “the New Gilded Age,” the modern era has been marked by rising economic inequality and a steady erosion in the quality and security of work. This transformation is captured by the divergent—but intricately linked—trajectories of manufacturing and health care. Consider these statistics: In 1958, manufacturing accounted for just under a third of nonfarm employment in the United States, and health care for less than a tenth of that (not even 3 percent). Two years ago, on the eve of the pandemic, manufacturing’s share had shrunk by more than two-thirds (to just over 8 percent), and health care’s had grown fourfold (to almost 12 percent).

In most accounts, the crossing of these trend lines is described as a long secular shift driven by powerful but discrete forces: globalization drawing labor-intensive industry from high-wage to low-wage settings; technological advances and changing expectations dramatically increasing the consumption of services (health care, education), especially in rich countries. These developments weren’t entirely bad. The tradeoff, at least for those in the global North, would seem to be a good one: greater educational attainment, longer life expectancy, and a reprieve from the satanic mills and mines. In this view, industrial capitalism is but a stepping-stone on the path to a service economy and so-called knowledge work.

Gabriel Winant’s The Next Shift complicates and challenges this story. Winant, professor of history at the University of Chicago, traces the relationship between industry’s fall and health care’s rise through the history of Rust Belt America and through two developments in particular: a demand for palliative care driven by industrialization and, subsequently, deindustrialization; and the emergence of a private welfare state in which government subsidized private job–based benefits rather than expand public provision, cobbled together and largely underwritten by postwar collective bargaining. The aggregate gains from postwar growth masked stark relational and distributional inequalities—especially by race and region—before and after the “Great U-Turn” of the 1970s. In the end, lousy jobs paying decent wages (such as unionized work in the steel mills) for those at the core of the New Deal’s industrial economy were displaced by lousy jobs paying lousy wages at the wide margins of the emerging care economy.

At the root of this story is the failure to pass national health insurance legislation in the late 1940s, and the determination (partly as a result of that failure) of organized labor—at the height of its bargaining power—to win health-care coverage for its members at the bargaining table. World War II–era wage and price controls and postwar collective bargaining tethered health coverage to jobs—a choice that made some sense at a time when public alternatives were withering, and the steepest cost of illness was lost wages. This was a sweet deal for unionized steelworkers who, by the early 1960s, had won no-cost, first-dollar health coverage for themselves and their families. Yet, as Winant is careful to point out, it was not that sweet a deal: The work was still perilous and unpleasant, and much of the logic of “breadwinner” coverage rested on the unpaid domestic labor of women.

More important for the story told here, such “Cadillac” coverage—emblematic of the vitality of the industrial economy and the strength of labor unions in postwar America—came at the expense of the rest of the workforce and their families. Precisely by making health insurance just another employment benefit, labor unions burdened the emerging health-care system with all of the contingencies and liabilities of industrial work, limiting the distribution of basic social support, for example, through occupational segregation, hiring-gate discrimination, and regional disparities in organized labor’s strength. Postwar bargaining erected “silos of solidarity” around vertically integrated industrial unions (such as the steelworkers’), at the expense of meaningful organization (or political clout) in local, state, or national federations. This, in turn, created “islands of social citizenship” which left many workers figuratively treading water offshore, while offering only a fleeting foothold to others.

Pittsburgh illustrates many of these trends, and it is there that Winant traces a trajectory in which real health security—even for those lucky steelworkers—was brief and tenuous. By the time the United Steel Workers, one of the country’s largest unions, won full-blown, employer-paid health coverage in 1959, their island of security was already shrinking. The steel industry lost ground quickly to its global competitors, a disadvantage that—for the industry—underscored the growing cost of providing health care to most of western Pennsylvania. Employers dug in against labor’s demands and expectations. In the 1970s, the industry began shedding jobs—a steep and lasting sectoral recession that underscored the insecurity of private welfare—“an umbrella that melts in the rain,” as one critic called it. In turn, the market fundamentalism of the 1980s transformed the health sector itself: New payment systems, paeans to “competition,” and hospital consolidation meant further marginalization of the uninsured, mounting out-of-pocket costs for the insured, and dismal working conditions for those who toiled in the care economy.

The upshot—and the core of Winant’s argument—is not just that deindustrialization marked the disappearance of one labor market and the emergence of another, but that “the rise of health care” in Pittsburgh (and elsewhere) was a direct consequence of industrial decline. “The collapse of the industrial core of the economy,” Winant argues, “created social problems that became translated, through the mediation of the welfare state, into the form of health problems.” The growth and resilience of this “medical shock absorber” rested on both the demand generated by Pittsburgh’s aging, wrung-out working class and the insulation from austerity provided by job-based coverage and private insurance. While publicly funded social programs withered, health care grew, “shielded from, and indeed feeding off, the larger socioeconomic disruption.”

To be sure, health care’s rise provided employment opportunities to workers left behind by industry’s collapse in the Rust Belt, but not without significant setbacks. The new health-care labor market, to start with, offered little of the security enjoyed by the previous generation of steelworkers. There are, again, structural explanations for this: The two arms of the emerging health-care system—one public, the other private—made a middle-class income all but an impossibility for a rising generation of workers. Maintaining employment in the health sector, given the low productivity level of caring labor, meant either stretching public budgets or driving down private sector wages (or both). But the private welfare system wasn’t much better; it created unprecedented demand for health services, but its vested interests (especially employers) also demanded cost cutting. (In effect, generous compensation in one sector necessitated low-road labor policies in another.)

In a reflection of long-held assumptions about the nurturing occupations (i.e., that nursing and elder care was largely a domestic responsibility), health-care workers won the right to bargain relatively late (not until 1970 in the public sector in Pennsylvania, and 1974 in the private sector). And Pittsburgh’s health-care workforce was largely populated by those first cast aside by the decline of industry (especially African Americans), and by women drawn into the labor force as male earnings fell. All of this created deep and lasting divisions between elite health-care institutions and well-compensated medical professionals on one hand, and, on the other hand, “a vast, marginalized workforce concentrated at the bottom of the hospital hierarchy and outside hospitals entirely,” as Winant writes.

The Next Shift is an important contribution to our understanding of the postwar political economy and of its shifting patterns of inequality. It deserves a wide audience. But it is not without its problems. The core argument, that the dynamics of collective bargaining and deindustrialization conjured up our health-care system, is overstated. The background counterfactual—that privately bargained welfare undermined a more robust public alternative—suggests that growth would have occurred in any case. The private welfare state shaped the way health coverage was paid for and distributed, but not the size of the sector itself. Winant oversells the importance of well-insured steelworkers, which he never really pins down. Offering only fragments of evidence, he notes that steelworkers made up 17 percent of Blue Cross subscribers in western Pennsylvania in 1977 and that people served by Medicare, Medicaid, and Blue Cross made up 86 percent of patients in a typical area hospital in the mid-1980s. But, of this mix, Medicare (which picked up most of the coverage of retired steelworkers) and Medicaid (which picked up some of those the industry shed in its decline) were more important drivers of health care’s growth after 1965 (the year of their implementation), by which time the labor movement was in retreat and rates of private coverage were tailing off.

In turn, Winant is unsure whether to condemn or celebrate the ability of the steelworkers to win benefits at the bargaining table. He recognizes the punishing inequality created by labor’s silos of solidarity and security, and the political damage they did to the campaign for national health insurance in the 1940s and after. But then, in his account of the market solutions imposed on health-care use in the 1980s, he lauds the “communitarian solidarity” of the private welfare state and avers that “decommodified health care…prevailed in postwar Pittsburgh.”

This formulation, to my mind, misses the meaning and the importance of decommodification—the goal of which, as the Danish sociologist Gøsta Esping-Andersen underscores, is to “uphold a socially acceptable standard of living independently of market participation (emphasis added).” The private welfare state did not, as Winant suggests, yield social citizenship. Instead, it embraced the commodification of health care along two dimensions: It made access to decent coverage a condition of labor market participation, and it made health care itself, whether purchased with private insurance or paid for out of pocket, a precious commodity. In the end, private welfare offered meaningful health security to a subset of workers and their families for a relatively short period—just 15 or 20 years from the landmark contracts of the late 1950s to the steep job losses and “risk shift” of the 1970s.

The rise of health care, as Winant concedes early in his book, is “intrinsic in the transition from an industrial to a service economy” and happened (with some variation) “everywhere across the global north.” In this respect, The Next Shift accounts less for the rise of health care in postindustrial economies than for the dysfunctional peculiarities of the American version of that story—on stark display in Rust Belt settings like Pittsburgh. I wish Winant had more to offer on both scales, the local and the global. The Next Shift has a strong sense of place (especially in its treatment of local hospitals and local patterns of segregation), but it is largely silent on the importance of health care (“eds and meds”) as an urban growth strategy, and on the role of local governments in encouraging, managing, and subsidizing the health-care industry’s growth.

More attention to the global, in turn, would harness Winant’s insights—usefully in my view—to our understanding of how the shambolic marriage of private and public coverage costs so much and delivers so little. Our health-care system swallows 17 percent of gross domestic product (nearly twice the average among the member states of the Organization for Economic Cooperation and Development), leaves millions uninsured and millions more underinsured, and—because both access to care and the social determinants of health are so starkly unequal—delivers health outcomes that leave us trailing the pack of our peers. In this carnival of profit and waste (the latter accounting for one-quarter of all health spending), the dismal wages and working conditions detailed by Winant are especially damning.