In the 1960s, the United States Supreme Court underwent a significant shift in its approach to constitutional protections for property rights, particularly concerning government employees and recipients of government benefits. Historically, the Court had distinguished between "rights" and "privileges", with rights warranting constitutional protection and privileges, such as government jobs or benefits, being revocable without due process. This dichotomy often left government employees vulnerable to arbitrary dismissal without legal recourse.
The pivotal change began with Yale Law Professor Charles A. Reich’s influential 1964 article, The New Property. Reich argued that in an era where individuals increasingly depended on government benefits and employment for their livelihood, these interests should be recognized as property deserving of constitutional safeguards. He contended that the traditional rights-privileges distinction was outdated and failed to protect individuals from modern forms of government control.
Unlike in the past, when economic independence was tied to private ownership, mid-20th-century Americans increasingly relied on public employment, welfare, licenses, social security, Medicare, and other government programs for stability. Therefore, much as the Court had long recognized a true property right of peasants to graze their livestock in the town “commons,” due in part to their dependence on that right, modern society rested its stability on certain government pillars providing economic support. These entitlements were no longer discretionary favors but essential foundations of economic security.
Reich’s perspective gained traction over the next several years, shepherding a new era of decisions that redefined constitutionally protected property rights. In Goldberg v. Kelly (1970), the first of these cases, the Court held that welfare benefits are a form of property, requiring due process before termination. Justice Brennan, writing for the majority, noted that "it may be realistic today to regard welfare entitlements as more like 'property' than a 'gratuity.'"
This shift culminated in the Court’s abandonment of the “wooden” rights-privileges distinction, acknowledging that government-conferred benefits and positions constitute property interests. As a result, government employees gained greater job security, as their employment could no longer be terminated without procedural due process protections. This evolution in legal thought not only provided individual security but also promoted fairness and transparency within public institutions.
By dismantling the outdated rights-privileges divide, the Court ensured that modern economic realities were reflected in constitutional protections. It also recognized a reality of the modern American economy, rooted in entrepreneurship and risk. Modern America championed the “rags to riches” story and the “self-made” millionaire. But such stories required a social safety net capable of providing a soft landing if a big risk ended in a big fall. These safety nets remain well established in our system of bankruptcy, patent, trademark, SBA, and any variety of programs designed to encourage small business while using government to mitigate risk. And providing mitigation for the humans in that risk is just as important as providing it for the businesses that they puppeteer.
This recognition in the 1960’s that our society required this stability to thrive was not some bleeding heart appeal to the better nature of the Court, but a recognition of the best interests of the American economy. Look to any success story and you will find failures. Bankruptcies, failed loans, government backed programs that allowed a business to succeed despite bumps in the road. This line of cases merely recognized that reality for human beings as well.
Humans with stable jobs boost the housing market, have children, and put money into the economy because they don’t fear tomorrow. The Court simply recognized that this, just like access to a grazing field for 16th century farmers, became a property right because became fundamental to those people and the entire community in which they lived. And today, as we see swaths of government employees being fired without justification, that stability is at risk across the country.
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