In her new book, Sharing Risk: The Path to Economic Well-Being for All, Boston College Law School Professor Patricia McCoy, a leading voice in financial regulation and consumer financial protection, argues that the financial burdens on American families have become untenable. As government and business have steadily shifted risk onto individuals, she makes the case for rebuilding systems that share those risks more broadly across society.
In this conversation, McCoy discusses how risk sharing can restore households’ economic stability, why traditional safety nets are “showing their age,” and where she finds hope for reform.
Q: Your new book, Sharing Risk: The Path to Economic Well-Being for All, argues that the financial burdens on US families have steadily increased as government and business have shifted risks onto individuals. What led you to focus on “risk sharing” as the organizing idea for rebuilding economic well-being?
McCoy: The starting point for the book is that today, ordinary working families and retirees face far too many financial risks given their limited capacity to absorb them—and the problem has gotten worse over time.
So, the natural question is: How do we reallocate some of those risks? How do we get them off of families’ shoulders and find ways to finance those risks more equitably? That’s where the idea of risk sharing comes in.
Risk sharing means that all of us contribute some money into a pool, and if any one of us gets hit by a particular risk (e.g., job loss, illness, disaster) that pool covers the loss. It is a conventional mechanism we already use in many settings, but I maintain we need to expand it in the future.
Q: You argue that over the past 50 years, businesses and governments have steadily transferred financial risks onto individual families. How did that process unfold, and what does it mean for ordinary households today?
McCoy: That process unfolded gradually, often through legislation that allowed or even encouraged employers to shift risk to individual workers.
A major example is federal legislation that induced employers to replace traditional pensions, where retirees received a guaranteed monthly check for life similar to Social Security, with defined contribution plans such as 401(k)s. Those plans require every worker to save and invest for retirement on their own, and to become “mini investment experts.” But many people simply do not have enough income to save at that level.
At the same time, taxpayer pressure pushed governments at every level to reduce taxes. That led to cuts to the social safety net. Unemployment insurance is a major example, as it now reaches a shrinking share of jobless workers.
Another example is higher education. Forty years ago, an in-state student could attend a state university for around $500 a year because state subsidies covered much of the cost. Fast-forward to today, and tuition can reach $60,000 in some state professional degree programs annually. States have steadily withdrawn those subsidies, placing that burden directly on families and students.
Q: You write that half of American families lack a living income. What does that look like in practical terms, and how did we reach a point where working full time no longer guarantees stability?
McCoy: Lacking a living income means not being able to afford basic living expenses. We’re not talking about luxuries, but about essentials like food, rent, and heat. About half of American families now struggle to cover those expenses every month.
How did we get here? Over the past 50 years, labor markets have lost many of the protections that once supported the economic well-being of families. Unionization has declined drastically, and with it, the willingness of employers to offer full-time jobs with benefits and living wages.
As manufacturing jobs disappeared, many of those workers moved into the service sector in hotels, restaurants, and retail, where wages are lower, hours unpredictable, and benefits scarce. These workers often are not even guaranteed a regular schedule. They are on call, piecing together part-time hours, and living on incomes that do not stretch to meet their basic needs.
Q: In your book, you identify five milestones that underpin a financially secure life: meeting basic expenses, owning a home, affording health care, paying for college, and retiring with dignity. How would renewed risk-sharing systems help families reach those milestones?
McCoy: Let us start with the first milestone, making ends meet. That means simply getting through the month and covering ordinary bills. One essential step, while not technically risk sharing, is raising the federal minimum wage, which has not increased in years.
Beyond that, we need to expand traditional risk-sharing programs. Take unemployment insurance: only about 28 percent of jobless workers even qualify for benefits. That means three-quarters are left out entirely. We need to broaden eligibility so that it reaches the people it was designed to help.
Similarly, Social Security benefits for the poorest retirees should be increased. Strengthening these foundational programs would help families meet basic expenses and reduce the constant financial strain that prevents them from achieving the other milestones.
Q: Your work has long emphasized consumer financial protection, but here you argue that protection alone isn’t enough. How do you distinguish between shielding consumers from harm and building structures that enable them to flourish?
McCoy: Consumer financial protection is essential. It governs how people interact with credit: car loans, credit cards, student loans, and so on. Those protections matter because Americans are heavily dependent on debt.
But if people are forced to borrow simply because their incomes are too low, then protection alone will not solve the deeper problem. We can and must maintain robust consumer protections, because that is the reality of today’s economy. But we also need to confront the structural issue that millions of people, no matter how hard they work, do not earn enough to live on.
Shielding consumers from exploitation is necessary. Enabling them to flourish requires raising incomes and rebuilding the systems that spread risk more fairly.
Q: In the book you describe existing safety nets as “showing their age.” Where are today’s programs falling short, and what would modernized risk sharing look like in practice?
McCoy: Unemployment insurance is one major example; it does not reach enough people. Another is higher education aid. While the federal Pell Grant program is an excellent idea, it does not reach enough students from struggling households. As a result, too many low-income students are forced to borrow heavily for college. Then, after graduation, they often have difficulty repaying those loans.
This is not a good outcome for them or for society. Expanding Pell Grants and similar programs would reduce overreliance on debt and make education a true engine of mobility again.
Q: Many policymakers still tell struggling families to “just save more.” You call that advice not only unrealistic but deeply misleading. Why is that narrative so persistent, and what harm does it cause?
McCoy: If you look at families in the lower 50 percent of the income distribution, they are typically able to save only 2 to 5 percent of their income at best. That is not much.
With intelligent programs, these families can gradually build emergency or rainy-day funds, and that is an attainable goal. But expecting them to save tens of thousands of dollars for college or the million dollars financial planners now recommend for retirement is utterly unrealistic.
For those big-ticket needs, we need different solutions, collective ones. Relying on individual savings when wages are stagnant just deepens inequality and fuels frustration.
Q: You warn that lawmakers who ignore widespread financial distress do so at their own peril. What political shifts do you see emerging from the economic insecurity you describe?
McCoy: We are seeing some fascinating cracks in the political edifice right now. On both the left and right, some lawmakers are recognizing that their constituents are under serious financial stress. On the Democratic side, figures like Elizabeth Warren, Ed Markey, and Alexandria Ocasio-Cortez have long championed this issue. But increasingly, so have conservatives such as Josh Hawley, Marjorie Taylor Greene, and at times JD Vance. They may disagree on ideology, but they are all responding to the same reality: the economic pressure on ordinary Americans has become impossible to ignore.
Q: The book makes a case for risk sharing as both an ethical and an efficient response to inequality. How does pooling risk across society lead to better outcomes than relying on individual savings or private markets alone?
McCoy: Right now, individuals are told to save enough money to cover emergencies, sometimes very large ones. That is not efficient, and it is not realistic. Many workers do not have that kind of money to begin with. Those who do end up tying up large sums against a disaster that may never happen, while others are wiped out when it does.
Risk sharing allows us to pool resources more efficiently. By contributing collectively, we can protect everyone with a smaller total outlay. It is more cost-effective, more humane, and it prevents individual families from facing ruin when bad luck strikes. It is a win-win.
Q: Some readers may see your proposals as politically ambitious. Yet you point to the recent expansion of the Child Tax Credit as proof that progress is possible. What lessons do you draw from that experience?
McCoy: Social safety nets in this country have always evolved gradually. We rarely adopt sweeping reforms all at once. Instead, we make progress in moments of crisis such as the Great Depression, the 2008 financial crisis, or the pandemic, when the need becomes undeniable.
We also have examples of bipartisan cooperation. The Child Tax Credit and the Earned Income Tax Credit have both been expanded repeatedly with support from both parties. In fact, just this summer, a Republican-controlled Congress expanded the Child Tax Credit again.
So, while I do not expect all my proposals to pass at once, I do believe we will continue to see moments when the political stars align and the safety net expands once more.
Q: Throughout your career you’ve been at the intersection of consumer protection and financial regulation from your work at the Treasury to help you to launch the new Consumer Financial Protection Bureau to your time on the Federal Reserve’s Insurance Policy Advisory Council. How did those experiences shape the ideas in this book?
McCoy: Working at the Consumer Financial Protection Bureau (CFPB) drove home the depth of financial precarity in this country. It underscored both the importance of the Bureau’s mission and its limits. The CFPB could protect consumers in financial transactions, but it could not fix the larger structural problems undermining families’ economic security.
Those experiences made me determined, as an academic, to tackle the broader question of how we can rebuild systems that protect people not just from overpriced loans, but from economic fragility itself.
Q: After a lifetime of studying these issues, what gives you hope that the United States can rebuild a fairer, more resilient system of shared risk?
McCoy: At times, our country has been able to come together and decide that things have to change. Most recently, we saw that during the pandemic.
In the pandemic, Congress expanded unemployment insurance temporarily to millions of additional jobless workers who otherwise would not have qualified. It expanded the Earned Income Tax Credit and the Child Tax Credit. It expanded the Affordable Care Act’s coverage. It expanded Medicaid. Together, those things lifted millions of children out of poverty. We could see what the future would look like if we made those changes permanent. Unfortunately, most of those changes expired.
During the recent government shutdown, Democrats fought to extend one pandemic-era change: the expanded premium subsidies for Affordable Care Act health coverage. Those subsidies showed us how society could improve if we made those changes permanent.
Q: Reviewers have called Sharing Risk “pathbreaking” and “a blueprint for the country we want to live in.” What kind of response do you hope the book sparks among policymakers and the public?
McCoy: I hope it inspires both policymakers and the public to believe that meaningful change is possible. The ideas in the book are not speculative. They are tried, true, and fiscally responsible ways to shore up the financial stability of working families.
I want readers to come away convinced that we can show people we care and that we can do it in a way that strengthens, rather than strains, the economy and our country.
Q: You have described BC Law as a place that values both rigor and public purpose. How has being part of this community influenced your scholarship, particularly your work at the intersection of financial regulation, consumer protection, and economic justice?
McCoy: Boston College is an extraordinarily special place. Its mission explicitly includes social justice, but it is also a sophisticated institution deeply engaged in business and business law. That combination makes it the perfect environment for my work.
BC Law has been deeply supportive of my research and of social policies that can make a tangible difference in people’s lives. It is a community that believes law should serve humanity. That conviction runs through everything I do here.