How to Reform Worker-Training and Adjustment Policies for an Era of Technological Change

Summary:

  1. There are four key factors that are important to reduce the costs of worker dislocation: 1) supporting full employment, nationally and regionally, not just with macro-economic stabilization policies, but also with robust regional economic development policies; 2) ensuring as many workers as possible have needed education and skills before they are laid off; 3) reducing the risk of income loss and other financial hardships when workers are laid off; and 4) providing better transition assistance to help laid off workers find new employment.
  2. Likewise, Congress should increase the federal unemployment insurance tax rate and dedicate funding to support industry-led skills initiatives, including apprenticeships, and an expansion of the Trade Adjustment Assistance Act to include workers losing their job due to technological change.
  3. This means that nations need to ensure that national monetary policy tilts toward full employment; that nations have in place effective national economic competitiveness strategies; and that policies to support economic development in lagging regions are well funded and effectively implemented.
  4. Policymakers should embrace the concept of “flexicurity,” as Scandinavian nations have, which commits not to ensuring that workers will never get laid off or paying them for long periods to the unemployed, but to minimizing the number of workers at risk; and then, for those who are laid off, providing support so they can make successful and expeditious transitions.
  5. Yet some, such as Bill Gates and economist Robert Schiller, have called for governments to slow the pace of technological innovation, either with outright bans, restrictive regulations, or taxes on “robots.” Policymakers need to firmly reject such proposals as anti-progress and instead support policies that enable the development and adoption of these technologies by all industries and organizations.
  6. Improving policies to help workers navigate what is likely to be a more turbulent labor market is not something that should be done just out of fairness, although it is certainly fair to help workers who are either hurt by change or at risk of being hurt.
  7. Expand funding for the Economic Development Administration (EDA) to support a modest number of targeted regional “growth poles.” Support programs focused on industry and firm competitiveness, including the National Institute of Standards and Technology’s Manufacturing Extension Partnership and the Export-Import Bank.

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