Financialization and the Individualization of Personal Welfare

Recent studies indicate that financial markets have taken on a more prominent role in the economic activities of U.S. organizations outside of the finance industry. While prior research has documented some of the associated macro-level implications, little work to date has directly examined what financialization has meant for individual workers. This paper proposes that one important yet understudied consequence of financialization is that it facilitates a shift of responsibility for personal welfare in society onto individuals’ shoulders by creating a power imbalance in the employment relationship. Random-effects models using individual-level data from the NLSY matched with industry data consistently reveal that people working in more financialized industries are more likely to have responsibility for their personal welfare shifted onto their shoulders, as indicated by a lower probability of receiving medical coverage, retirement savings, and paid sick leave. Financialization is more likely to individualize personal welfare among individuals who lack power to protect their share of organizational resources – the working poor, newcomers, and non-union members – and under a limited industry union presence and negative returns on stock holdings. In sum, the findings show that financialization is a driving force behind altering whom is tasked with promoting personal welfare in U.S. society.