|Wage-Insurance Idea Faces an Uphill Battle|
|Key Words||wage insurance, globalization, unions, government.|
|News Story||A new idea floating through Congress involves the government subsidizing a portion of the lost wages when a worker loses a job as a result of globalization and ends up taking a job that pays lower wages. Some Democrats love the idea, but others - including organized labor unions - are adamantly opposed.
Research indicates that people whose jobs are lost to global trade end up taking jobs that initially pay about 16% less than what they earned before. Manufacturing wages tend to be about 20% less. One specific proposal would require the government to subsidize 50% of the difference in lost wages for up to a period of two years. As the article indicates, a worker earning $30,000 who loses that job and ends up earning $20,000 would receive $5,000 - half the difference in earnings - for two years.
That's hard to argue with on the face of the proposal. Globalization takes jobs away from people; this is a significant cost of free trade. But unions stand opposed to it because they see the move as a way for firms to offer lower wages to displaced workers. According to one union official in the article, "It's basically about getting workers to take bad jobs quickly." Unions fear the loss of bargaining power for higher wages under such a proposal.
A further problem is funding. How will the government pay for this new program? Some fear that funds will be diverted from existing programs, or that funds simply won't be available when the time comes to enact such legislation.
|Source||Andrews, Edmund L. "Why Wage Insurance is Dividing Democrats." The New York Times, March 18, 2007.|
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