Thursday, January 14, 2016

Wage insurance

This slight hint of something was the most intriguing moment of the State of The Union speech this week. Barely anyone noticed. It's good to see somebody followed up.
In February 2015, longtime wage insurance advocate Robert Litan, then a senior fellow at the Brookings Institution, suggested that the policy could be more efficient than straightforward job training programs when it comes to helping workers acquire key jobs skills.

“Indeed, economic research has established that, in the absence of a major career change, the best way to get new training is on the job rather than through some government training program, where job prospects are highly uncertain after one finishes,” wrote Litan. “In effect, wage insurance acts as a subsidy for employers to help pay the cost of training new hires, while cushioning the economic pain suffered when unemployed workers take new jobs paying less than what they were earning before layoffs."

But Eisenbrey says he opposed one wage insurance scheme that was proposed during the Bush years because he saw it as a way of shoving needy people into jobs that “would otherwise be inappropriate."

“Basically the idea was to force you to do this, to dangle it out there and say, ‘Make a decision quickly when you are first taking unemployment insurance, or you’ll lose the ability to get wage insurance.’ And obviously the idea was to get people to take lower paying jobs,” said Eisenbrey.
Since Obama isn't putting forth any details, and since he really barely even mentioned this Tuesday night, it's hard to know what, exactly, he had in mind. But if I had to guess, I'd say he's thinking of something much closer to the Bush era proposal than a truly radical innovation like, say, a universal basic income would be.

Later in the speech Obama talked about teachers who have to buy their own supplies and manufacturing workers who have to put in longer hours as signs of "optimism" rather than signs that something is very wrong. In Obama's concept of political economy everything is always working out for the best.

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