Ross Eisenbrey and Maurice Emsellem
March 08, 2007
Ross Eisenbrey is the vice president and policy director of the Economic Policy Institute (EPI). Maurice Emsellem is the director of public policy for the National Employment Law Project (NELP).
Congress will soon debate whether to renew President Bush’s fast track authority to negotiate trade deals, and lawmakers—and even corporate America—will talk about the fate of U.S. workers hurt by increased imports or offshoring exacerbated by past deals.
Several Democrats are proposing the idea of “wage insurance,” giving laid-off workers up to $10,000 a year for two years—but only if they lost their job due to offshoring and only if they take a job with a big pay cut, unlike traditional unemployment benefits that are given to all workers that lose their jobs. What’s wrong with helping out workers who are having a hard time finding a good job? Even with the new Congress, this push for wage insurance could do more harm than good to laid off workers and the programs that they and their families rely on to get back on their feet.
Wage insurance does nothing to improve the economy, give the workforce new skills, or create jobs. Essentially, it is a game of musical chairs that rewards higher-paid people whose jobs disappear with a subsidy for taking lower paying jobs, at the expense of other unemployed people who otherwise would have had those jobs. One study even declared “virtually all the employment gains experienced by dislocated workers as a result of the wage subsidy come at the expense of other workers.”
And despite its $3.5 billion price tag, wage insurance doesn’t address the most pressing concern of workers who lose their jobs—other than finding a new job, especially those with families: the loss of health insurance.
Before debating whether to spend another penny on wage insurance, Congress should ensure that every trade-impacted worker, including those in the service sector, is fully protected from the loss of health insurance. Right now, only 28,000 workers who lost their jobs because of trade (or about 11 percent of the total officially certified as “trade impacted”—a significant undercount by many estimates) get help with their health insurance under the Trade Adjustment Assistance (TAA) program, which provides jobless benefits and training for some people who lose jobs because of increasing imports. They are crushed by the burden of paying for 35 percent of their health insurance premiums on an average of $280 a week in unemployment benefits.
Given that only 36 percent of jobless workers receive any unemployment benefits, the next place to look if new funds become available is reform of the unemployment insurance system to ensure that more of the unemployed get help, for longer durations and in larger amounts. The extra time workers have to look for work with their unemployment benefits has been shown to help them find a new job that pays better and provides health benefits.
Not surprisingly, the Bush administration wants to allow states to substitute wage insurance for unemployment benefits. Its priority is to move people into jobs quickly, not to help them find quality jobs with health insurance.
By contrast, a high quality job training program with adequate income support can raise the skills of workers and improve productivity. It makes more sense to invest in the opportunity to learn and earn more, rather than to subsidize employees’ downward mobility. Right now, the program that funds training for trade-impacted workers is capped at $220 million a year, which means that 19 hard-hit states have had to suspend training, including several Midwest states.
The priority of our leaders in Congress should be to help families and communities hardest hit by major layoffs to access good-paying jobs with health insurance, to provide them with marketable skills and to take care of their families until they can do so on their own. With record manufacturing losses and mounting losses in trade-impacted service industries—and more trade deals yet to come—now is the time to consider proposals that really ensure the nation’s economic security.
March 08, 2007
Ross Eisenbrey is the vice president and policy director of the Economic Policy Institute (EPI). Maurice Emsellem is the director of public policy for the National Employment Law Project (NELP).
Congress will soon debate whether to renew President Bush’s fast track authority to negotiate trade deals, and lawmakers—and even corporate America—will talk about the fate of U.S. workers hurt by increased imports or offshoring exacerbated by past deals.
Several Democrats are proposing the idea of “wage insurance,” giving laid-off workers up to $10,000 a year for two years—but only if they lost their job due to offshoring and only if they take a job with a big pay cut, unlike traditional unemployment benefits that are given to all workers that lose their jobs. What’s wrong with helping out workers who are having a hard time finding a good job? Even with the new Congress, this push for wage insurance could do more harm than good to laid off workers and the programs that they and their families rely on to get back on their feet.
Wage insurance does nothing to improve the economy, give the workforce new skills, or create jobs. Essentially, it is a game of musical chairs that rewards higher-paid people whose jobs disappear with a subsidy for taking lower paying jobs, at the expense of other unemployed people who otherwise would have had those jobs. One study even declared “virtually all the employment gains experienced by dislocated workers as a result of the wage subsidy come at the expense of other workers.”
And despite its $3.5 billion price tag, wage insurance doesn’t address the most pressing concern of workers who lose their jobs—other than finding a new job, especially those with families: the loss of health insurance.
Before debating whether to spend another penny on wage insurance, Congress should ensure that every trade-impacted worker, including those in the service sector, is fully protected from the loss of health insurance. Right now, only 28,000 workers who lost their jobs because of trade (or about 11 percent of the total officially certified as “trade impacted”—a significant undercount by many estimates) get help with their health insurance under the Trade Adjustment Assistance (TAA) program, which provides jobless benefits and training for some people who lose jobs because of increasing imports. They are crushed by the burden of paying for 35 percent of their health insurance premiums on an average of $280 a week in unemployment benefits.
Given that only 36 percent of jobless workers receive any unemployment benefits, the next place to look if new funds become available is reform of the unemployment insurance system to ensure that more of the unemployed get help, for longer durations and in larger amounts. The extra time workers have to look for work with their unemployment benefits has been shown to help them find a new job that pays better and provides health benefits.
Not surprisingly, the Bush administration wants to allow states to substitute wage insurance for unemployment benefits. Its priority is to move people into jobs quickly, not to help them find quality jobs with health insurance.
By contrast, a high quality job training program with adequate income support can raise the skills of workers and improve productivity. It makes more sense to invest in the opportunity to learn and earn more, rather than to subsidize employees’ downward mobility. Right now, the program that funds training for trade-impacted workers is capped at $220 million a year, which means that 19 hard-hit states have had to suspend training, including several Midwest states.
The priority of our leaders in Congress should be to help families and communities hardest hit by major layoffs to access good-paying jobs with health insurance, to provide them with marketable skills and to take care of their families until they can do so on their own. With record manufacturing losses and mounting losses in trade-impacted service industries—and more trade deals yet to come—now is the time to consider proposals that really ensure the nation’s economic security.
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