"Risk shift" is the trend towards economic and other risks - and the responsibility for risk management - being shifted from institutions to individuals.
Examples include corporations shifting more responsibility for retirement, career planning and healthcare to their employees and governments reducing social safety net programs.
Political scientist Jacob Hacker explored this trend in-depth in his 2006 book The Great Risk Shift.
We consider this one of the 3 books that best explain how the economy and jobs have changed over the past couple of decades.
Hacker recently released an updated 2nd edition of The Great Risk Shift with new data and insights.
It's on our "must read" list.
He also recently wrote the NY Times Op Ed The Economy Is Strong. So Why Do So Many Americans Still Feel at Risk?
His answer to this question is economic insecurity. Key quote from the article:
"... many Americans feel insecure. They may be doing well at the moment, but they fear that, however high they are on the economic ladder, a single bad step or bad event could cause them to slip. A booming economy hasn’t quieted these concerns, because insecurity remains a huge and growing problem in ways that voters and candidates instinctively get but the sunny job numbers largely hide."
Reinforcing this, the Federal Reserve just released their 2019 Survey of Household Economics and Decsionmaking study.
It shows that 39 percent of Americans said they wouldn’t be able to scrape together the cash to meet a $400 emergency expense, 6 in 10 said losing their job would mean they couldn’t cover three months of expenses, and only a bit over 1 in 3 (36%) said their retirement savings were on track.
So despite strong overall economic numbers, a large share of Americans are dealing with economic insecurity and uncertainty.
We see the impacts of the risk shift all the time in our research. It's a key reason for the growth of the gig economy because increased financial insecurity has resulted in more people needing to supplement their income.
We consider the risk shift one of the most important trends we follow.
See our economic uncertainty section for more on this topic. And read Hacker's book.
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