Provide Comprehensive Worker Adjustment Assistance
Empower Citizens to Find Dignified, Sustainable Work in the 21st Century Economy
Americans are committed to preventing devastation from natural disasters and sharing the costs of rebuilding when one strikes. Yet when global competition and accelerating economic change threaten the livelihoods of auto workers or computer programmers, we do almost nothing before devastation sets in and provide little help for those facing major falls in their standards of living. Our current “adjustment assistance” system is overly complex, disjointed, and incomprehensive. It is also far too reactive—providing help only after workers are laid off. We need a more just, effective, and preemptive system for moderating the ups and downs in the global economy. Assistance under the new system should not be tied to why or when a worker loses his or her job. Comprehensive adjustment assistance would distribute part of the broad benefits of our dynamic economy to those who shoulder a disproportionate share of the costs—often with their jobs.
The Plan:
1. True One-Stop Shopping for Adjustment Assistance. Out of work Americans should be able to apply for unemployment insurance, retraining programs, or health insurance assistance all in one place, no matter what state they live in.
2. Flexible Education Accounts. To empower workers to invest in themselves, we should replace the Lifetime Learning Tax Credit with Flexible Education Accounts providing a 50 percent refundable credit on up to $15,000 in education or training expenses per decade. These accounts would give Americans the option to make a large one-time investment in their skills or spread smaller credits over a longer period—whether they’ve lost a job, or just want to change fields.
3. Real Wage Insurance. To cushion potential declines in standards of living and make it easier for workers to return to the workforce, we should provide 50 percent wage insurance to all established dislocated workers, regardless of how or when they lost their job. When taking a new job, workers would receive half the difference between their new wages and those at the old job for a certain time. If they lost a job paying $20 an hour and took one paying $10/hr, an additional $5/hr support would bring their total pay to $15/hr. We could also experiment with “pay-in” pilot programs where employees pay small premiums to receive more extensive coverage, defraying some of the costs. Wage insurance could be extended to younger workers as well—possibly allowing those in their 30s or 40s to receive one to two years of protection, and those in their 50s to receive more help, possibly until they are eligible for early Social Security benefits.
4. Preemptive retraining. Rather than providing “burial insurance,” as many workers see current retraining, we should empower workers when they are still employed. The federal government could offer compacts to at-risk communities willing to fight to stay ahead of the curve. Rapid Pre-Response Units could help local leaders navigate federal offerings and offer qualified communities support for on the job training to update or expand existing skills and entrepreneurial training to teach people to start their own small businesses.
5. More Help Between Jobs. Workers should have more options for retaining affordable health coverage when out of work. Expanding the health care tax credit currently offered to all displaced workers under the Trade Adjustment Act would be a good first step, but we should also look to other options both for laid off workers and those taking jobs not offering insurance. We could also look for ways to provide mortgage/foreclosure insurance to help workers make payments on their homes when out of work.
For more information: Gene Sperling, The Pro-Growth Progressive; “The Early Warning Economy,” Washington Monthly; “How to Refloat These Boats,” Washington Post.
The Expert: Gene Sperling
To contact one of our experts please call/e-mail Sean Gibbons, director of media strategy, at 202-481-8228
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