John Dearie, the Washington-based forum’s SVP for policy and research, told GlobalAtlanta that the paper would be released this month. The report says that job losses due to trade account for 3 percent of U.S. unemployment, but fear of joblessness and lack of government benefits cause many Americans to oppose free trade.
“Our open trade and investment policies have significantly enhanced the economic well-being of American citizens, although not everyone has shared in the benefits of globalization,” said Rob Nichols, the forum’s President and Chief Operating Officer.
The authors propose replacing what they say are outdated government programs to help Americans transition to new jobs, reducing resistance to open market policies despite the inevitable loss of some jobs. The report suggests rolling the benefits of the older plans into a new initiative, the adjustment assistance program, with the estimated $22 billion price tag paid entirely by raising state and federal taxes to fund unemployment programs.
The proposal includes a wage-loss insurance program, by which employers would pay all laid-off workers age 45 and older half of their salary for two years or until they find a new job.
This would cost $7 billion and replace the current system, which pays half wages to workers 50 years old and up, if they can prove they lost their jobs to trade.
A second element of the program recommends continuing employer-provided health insurance for former employees, mitigating the added penalty of losing health coverage when unemployed. Employers would also be allowed to make that coverage tax deductible at a cost of about $10 billion. The report also suggests allowing unemployed people greater penalty-free access to savings and retirement accounts.
The final recommendation is that federal job retraining and relocation programs be made available to all workers, regardless of employment status. This also eliminates the stipulation that only workers who lose jobs to trade are eligible. The price on these expanded programs could be $5 billion.
To pay for the new program, the report suggests imposing a flat 1.32 percent tax on all wages, 1.2 percent to the state and 0.12 percent to the federal government. Employers are responsible for the taxes, but sometimes pass the payment on to their workers.
