Is Life Today Really So Risky?

In many ways, the good old days weren't so secure either. And today, Americans can at least expect to live longer. That's pretty good

By Michael Mandel

I've been thinking about risk and economic insecurity since 1996. Back then, I wrote a book entitled The High Risk Society: Peril and Promise in the New Economy, in which I argued that technology and globalization were increasing insecurity. "In the 1990s economic growth is disruptive and unpredictable," I wrote. "As a result, economic uncertainty has become a constant of our lives."

But truth be told, my intellectual uncertainty has increased over the past 10 years as well. I'm no longer quite so convinced that insecurity and risk, in the broadest sense, are any higher now than they used to be. Yes, employment is probably less secure, especially comparing today with the 1950s or 1960s. But in critical noneconomic areas such as the possibility of dying early, there's far less risk now than 20, or 30, or even 40 years ago. So looking at all factors, I wonder whether Americans live less risky lives than they used to.


  Let's start with employment and retirement insecurity. I'm prepared to believe that job security has been eroded. However, when I go looking for the "Golden Age of Security" that American workers supposedly enjoyed in the past, it isn't easy to find. Certainly the pre-New Deal era -- before Social Security and unemployment insurance -- was not a time of great security for most Americans. Neither was the Great Depression of the 1930s, with its 25% unemployment rates. The rate plunged in the first half of the 1940s, as the U.S. ramped up for war, but it's tough to say that wartime brings greater economic security.

Jumping ahead, no one would argue that the 1970s or the 1980s were great for economic security either. The 1970s had the two oil-price shocks, a sharp recession that sent unemployment up to 8.5%, and inflation rates that went well into double digits. The poverty rate, which had fallen as low as 8.8% in 1973, started rising and hit 12.3% by 1983. And the recession of 1981-82 was so deep that a staggering 22% of the working population experienced unemployment some time during 1982.

That leaves the 1950s and the 1960s as the period when employment security was probably better than today. Unionization was higher back then, offering some protection against arbitrary employer actions, while a large share of the population had good, defined-benefit pension plans. And while, surprisingly, more Americans were affected by unemployment in the 1960s than today, the length of jobless spells was much shorter back then. Let's compare, for example, data from 1966 with those from 2003, the latest available.

1966 2003
Percent of workforce 
experiencing joblessness 13.0% 10.7%
during the year 
Percent of unemployed
out of work for 15 weeks 23.8% 53.4%
or more
Average unemployment 3.8% 6.0%
Data: Bureau of Labor Statistics

However, the threat of unemployment isn't the only or even the most important risk individuals have to face. The biggest and most devastating events that can befall you are still serious illness or death. To put it bluntly, when you lose your job, you can always find another one. But when you're dead, you're dead -- and that's not going to change.

Viewed from that perspective, the 1960s don't look quite so secure. For a middle-aged male, the odds of dying in the near future were about twice as large then as they are today. To be more precise, in 1966 a 55-year-old male had about a 21% chance of dying by the age of 65. Today, if you're a 55-year-old male, that chance is 11.6%, based on the latest numbers.

Percent chance of dying over next 10 years
1966 2002
Age 45
Male 9.4% 5.4%
Female 5.1% 3.2%
Age 55
Male 21.2% 11.6%
Female 10.8% 7.4%
Data: National Center for Health Statistics

This dramatic drop represents a real decline in insecurity. If you're a middle-aged male, you can plan for the future with much more certainty that you'll be alive 10 years from now. The change for females isn't as great but is still significant.

Like job loss, the death of a family member -- especially someone with children at home -- can have major financial consequences for the rest of the family. A death's financial impact can be partially cushioned by life insurance, but most Americans tend to be underinsured.

Is the decrease in the risk of dying since the 1960s sufficient to compensate for increase in the risk of long-term job loss? As far as I know, no one has done the calculations. It's interesting, though, to ask yourself whether you would change places with someone who lived in the 1960s, knowing that your job would be safer but your odds of dying would double. I know I wouldn't.

Mandel is chief economist for BusinessWeek

Edited by Patricia O'Connell

Before it's here, it's on the Bloomberg Terminal.