Support For Those Who Want to Work; Not Instead of Work

Cross-posted at Education Week.

In last week’s blog, I called attention to proposals from some Silicon Valley entrepreneurs for government to provide income support to most of the population, in view of the possibility that intelligent machines may end up doing most of the work that needs to be done. Pointing to the need that most of us have for the sense of dignity and worth that comes from the work we do, and the likelihood that educators would be forced to distinguish between those who will have work and those who won’t in the Silicon Valley scenario, I suggested that it is important for our country to think hard about how to cope with advancing automation.

I’ve heard from a number of people who are sympathetic to the views I expressed in that blog, but I also heard from some who were concerned that my blog might be interpreted as a rejection of all forms of income support for workers who have suffered from globalization and advancing automation.  In this blog, I will try to clarify my views on this point.

As I see it, we need to make a fundamental distinction between lifetime cash payments to able adults without any conditions, which is what the Silicon Valley entrepreneurs are talking about, and assistance offered to workers who want work but cannot find it because of public policies pursued in the name of free trade as well as the advance of automation.

Though few Americans know this, the Scandinavian welfare state is built on this distinction.  Those nations offer generous income support benefits to able-bodied people who are out of work, but only if they are willing to take a decent job if one is offered or if they enroll in a genuine education or job training program.  Most of those countries have established much more robust job search and counseling programs as well as job training programs than are available in the United States. They also offer more financial assistance than is available in the United States for job seekers to go to interviews at some distance from their home.  The aim of all this support is not simply to get the individual any job, but to do as much as possible to help that individual get at least as good a job as the one they had, if not a better one.  This is not a matter of kindness.  The Scandinavians know that if a lot of their people are moving from good jobs to jobs that are not as good, their whole society will be worse off.  It is in everyone’s interest for as many workers as possible to be employed in jobs that pay well and have good prospects.

In the model I have just described, income support is just one part of an overall policy designed to help workers whose jobs are disappearing to get jobs as good or better as fast as possible and take advantage of whatever education and training is required to make that adjustment in the process.  Income support is not seen as welfare, if by welfare one means providing income support to able-bodied people who are not seeking employment or getting the education and training they need to get one.

But what, you might ask, do the Scandinavians have to do with it?  I brought it up not because I am in favor of raising American taxes to the levels that would be necessary to provide the same level of state benefits that we see in Scandinavia—I am not—but because I think the Scandinavian approach to worker adjustment policy makes a lot of sense in a world in which millions of American workers are suffering from the results of trade policies that are benefitting many other American workers. The right response to that problem is not to abandon the trade policies, but to do much more than we have done to help the people harmed by them. I am attracted to the Scandinavian approach to this specific problem because they do not see this aid as welfare for people to be pitied but as help to worthy people who need it to again become independent contributors as soon as possible.

So what policies should we be pursuing?  I argued in my last blog that one reason low-wage work pays so poorly is that we have too many people with low skills chasing a declining number of jobs requiring only low skills. What we need is fewer people with low skills and more people with higher skills (which will reduce the gap in income between the high skilled and the low skilled). That does not, of course, mean that the low-skill jobs are going to disappear any time soon. These two facts combine to compel us to make sure that on the one hand, people with low skills who are willing to work hard can support themselves and their families and hold their heads up high. At the same time, it means that we have to start radically reducing the number of people who have only low skills by greatly increasing the skills of working-age people who have only low skills to offer, people of all ages.  These are, as I see it, the twin imperatives of labor market policy for the low skilled.  Note that neither of these policies offers anything to people who are not willing to take decent jobs or get the education and training needed to qualify for decent jobs.

Here is what I would do:

1. Greatly expand the Earned Income Tax Credit program, a policy embraced by both Republicans and Democrats that rewards work by providing support to full-time workers whose income fails to lift them out of the poverty level.  One of the great benefits of the design of this program is that it does not penalize poor people when they get work.
2. Abolish minimum-wage exemptions for employers of people who get tips. This exemption originated as a way to enable employers of former slaves to avoid paying them for their services and should have been abolished long ago.
3. Raise the federal minimum wage to its former high water mark, adjusted for inflation.
4. Provide the level of wage support provided to workers adversely affected by specified trade agreements to all workers who lose their jobs, provided that they are willing to take the first decent job offered them or are engaged in full-time education or job training.
5. Greatly strengthen the resources available to the states and localities for the operation of neighborhood career centers that provide job counseling, access to employment information and skill training.
6. Greatly increase access to high-quality adult education, job training and apprenticeship systems through the community college system, with employers taking the lead in defining the specifications for the programs and in providing the on-the-job training component.
7. Create for every individual, as soon as they demonstrate that they have successfully completed a high school program set to a true college-and-work-ready standard, a tax-protected account into which the federal government makes an initial contribution and into which the individual, her parents, her employer and her state can contribute, the value of which can be drawn down only for the purpose of paying for further education and training over the individual’s lifetime.

This is not welfare.  It is not a bone thrown to surplus workers whose work is no longer needed.  It is an investment in the most important resource the nation has: its citizens. It is affordable. And it will pay off.