The American debt safety-net

This article evaluates the often under analyzed relationship between transformations in US liberal welfare capitalism and the growth in household indebtedness. Using young adults (under-35s) and senior citizens (over-65s) as examples it consider how, alongside profound transformation in financial markets, important changes in the US liberal welfare capitalism contributed to households demand for ever-larger amounts of debt. Here, we focus on three key developments: (1) transformations in the labour market regime; (2) the promotion of asset-based welfare, and; (3) the use of debt as a safety-net. Young adults and senior citizens were affected by these trends in a multiplicity of ways but a common thread runs through the highly variegated experiences: rapidly rising indebtedness. Essentially debt became a panacea during this period; it was used to fund investment, consumption and as a safety-net. This suggests that transformations in the form and content of welfare capitalism are relevant factors when assessing the causes of rising household indebtedness. The credit-asset bubble may have occurred ‘outside’ the logic and processes of welfare reform but, nonetheless, were linked through the everyday practices of households which used debt to cope with changing welfare provision and instability in labour markets.