What Is Economic Security?
Broadly construed, economic security is the ability of people to meet their needs consistently. It is connected to the concept of economic well-being and also to the notion of the modern welfare state, a governmental entity that commits itself to providing baseline guarantees for its citizens’ security.
Attempts to ensure economic security are meant to serve as a check against instability in the market, which scholars say has become more important in the years since the fall of the Soviet Union and the predominance of market capitalism. It may be even more relevant in light of declining labor bargaining power since the 1970s in post-industrial economies, such as the United States, and economic insecurity caused by COVID-19.
- Economic security refers to the ability of people to meet their needs consistently.
- The concept is important for individuals and nations, where it is a factor in assessing national security, and it’s connected to the concept of economic well-being.
- Cultural standards are involved in determining economic security.
- Climate change, growing fears and anxieties around the globe, COVID-19, and big technological changes have increased economic insecurity significantly in recent years.
Understanding Economic Security
“Economic security” can be understood as a term for how well people are able to regularly meet their needs. “Economic insecurity,” its opposite, happens when there aren’t enough resources to pay for food, housing, medical care, and other essentials.
Cultural standards play a role in determining what’s included in the list of essentials for economic security, meaning that both what counts as economic security and how it is worked out have changed over time. The International Committee of the Red Cross, an organization that tries to improve economic security globally, has identified five key livelihood outcomes to track economic security: food consumption, food production, living conditions, income, and the capacity of civil society organizations and the government to meet people’s needs.
Indeed, economic security relies on the perception of security in addition to quantifiable material or financial conditions. Economic security can be captured in numerous ways depending on the level of analysis under consideration, ranging from the effects of foreign investments on national economics to the ability of laborers to access health insurance. Notably, researchers for the United Nations have said that the measurements for economic security do not adequately capture volatility.
In Article 25, the United Nation’s Universal Declaration of Human Rights delineates the right to a reasonable standard of living and to "security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond [their] control."
Climate change, growing fears and anxieties around the globe, big technological changes, and COVID-19 have increased economic insecurity significantly in recent years, which has caused institutions such as the United Nations to comment that the risks to economic security are growing faster than policies to redress the problem.
National Security and Economic Security
Nationally, economic security refers to a country’s ability to pursue its own developmental goals for its economy, and it is often explicitly linked to national security. This encompasses broad concerns about balance of trade, the impacts of foreign investments on national markets, and private-public partnerships.
While traditionally calculated in gross domestic product (GDP) terms, national economic well-being, a concept intimately connected to economic security, has increasingly broadened to include factors such as national happiness.
Economic security is also related to the concept of a welfare state, which is a governmental entity committed to guaranteeing baseline protections for its citizens’ well-being as a way of protecting against the market risks that arise from old age, misfortune, or unemployment.
Economic Security in the US
Traditionally, economic security was ensured by assets, labor, family, and charity. However, this would break down irrevocably during the Industrial Revolution period in the United States, according to historical accounts.
With the Industrial Revolution, wage labor became a mainstay of modern economies at the same time that the population underwent urbanization and moved away from the extended family unit, which had previously provided some economic stability. Life expectancy increased at an unprecedented rate. As a result, laborers found themselves increasingly at the mercy of market forces outside of their control. This would open up the space for new programs.
The Great Depression laid waste to a significant portion of American wealth, which increased the need for new programs that would reestablish economic security in the country. Eventually, federal social insurance became the national solution to economic insecurity, and the Social Security program, a key part of President Franklin Delano Roosevelt’s New Deal, was passed in 1935. The act offered greater social benefits than state programs, including old-age benefits.
The role of race in this and related legislation remains an issue that merits further discussion—to clarify the historical record and because of its impact to the present day. Domestic and farm workers weren’t covered, which had racial impact, and means tests kept Black citizens from accessing benefits, which has had long-term effects on inequality. However, this is often cited as the moment that the modern welfare state began to grow in the U.S.
Since the fall of the Soviet Union and the rise of market capitalism, scholars say, economic security has become especially important as a check against possible market insecurity.
Progressive think tanks such as the Center on Budget and Policy Priorities have extolled the success of modern welfare efforts at reducing poverty in America. However, inequality in economic security has not just continued, but grown. United States Representative Don Beyer (D-Va.), vice chair of the congressional Joint Economic Committee, for example, has worried that the visible signs of improvement for Black Americans “mask deep inequities” that have persisted.
Other communities continue to face higher levels of economic insecurity as well. LGTBQ+ people, for example, are more likely to experience it. In 2021 the U.S. Census Bureau’s Household Pulse Survey reported that 36.6% of LGBT adults suffered from food and economic insecurity, compared with about 26.1% of non-LGBT adults. They also reported having lost more household unemployment income and uncertainty over whether they’d be able to make their next housing payment.
Notable events such as the Great Recession and rising inequality have made concerns over economic insecurity more acute. COVID-19 and related issues have impacted both economic security and inequality through a range of factors, including reductions in retirement planning and income, that have continued to have disparate impacts, especially on older people, as structural disadvantages have a cumulative effect.
Many proposals exist for improving the social safety net. In recent decades, for instance, scholars have recommended increasing the existing benefits, because low-wage workers can still find themselves impoverished on the existing social benefits. And calls to support the Women’s Economic Agenda by the nonprofit Economic Policy Institute insist that its passage would improve economic insecurity for women by eliminating the gender wage gap.
How Is Economic Security Defined?
Economic security is the ability of people to consistently meet their needs. The International Red Cross defines it as the ability of people or communities “to cover their essential needs sustainably and with dignity.”
Why Is Economic Security Important?
Without basic economic security, people cannot plan for their future or the future of their children. The lack of security will harm people’s quality of life and lessen innovation and trust in institutions. Financial anxieties and feelings of economic insecurity have many other negative outcomes, such as prolonging how long victims of domestic abuse will stay with an abuser.
How Do You Ensure Economic Security?
Most governments try to preserve economic security through social safety nets that guarantee minimal protections for citizens. However, there are often disparities in how economic instability is experienced within a population.