I generally agree with the proposition that job shifting is going to inevitably occur as a result of technological change, productivity increases, and global trade, no matter what we do. I also think that the proper government response is to try to ameliorate the short term negative impact on the population. However the devil is as always in the details. I can think of two bad ways to go about this and one way that would be probably work OK, but would only be a partial solution. There is no good answer to this problem.
The bad answers are extensive job retraining and direct cash compensation for displaced workers. The good but limited answer is expanded unemployment benefits for displaced workers.
IMO, programs aimed at direct job retraining work very very poorly. I’ve worked as a workers’ comp attorney for 10 years, doing both worker side and employer side. I work in California which used to have the most extensive work comp vocational retraining program in the country. I’ve seen a lot of vocational retraining and its a miserable failure IMO. For the most part, adult workers who are willing to be retrained will do so on their own irregardless of any compensation, government program or other incentive. And workers who don’t want to retrain (which is in my experience around 80% to 90% of adult workers) will not succeed in retraining no matter how much money, vocational counseling, schooling etc you are throw at them. Its not an issue of resources or opportunity. Its an issue of personality, willingness to change, networks of friends and relationships, lifestyle issues, and so on. The most common outcome of vocational retraining in workers comp in that the worker becomes disabled from the old job, is given retraining for a new job, either fails to complete retraining, or completes retraining but doesn’t find a new job. Then, after their case settles, they typically go back to work in their old job or a related job (which theoretically they are too disabled to do, but they go back anyway). This pattern occurs in something like 70% or 80% of work comp vocational retraining cases. The fraction who actually get retrained and find a permanent position in a new field is around 10% to 20%, and even then its fairly common for people to end up disliking the new field and changing either back to their old vocation or to an entirely new 3rd profession a few years down the road. Bottom line, these programs are very expensive and work like crap. They work so badly that even before the recent political changes in CA, the liberal CA legislature had already voted to change the law and get rid of vocational rehabilitation in its entirety.
Also, in my opinion large payments of direct compensation (specifically cash grants or other lump sum compensation) are not very effective. The specific reason is that there is no control on the worker to make them use that money to retrain themselves or set themselves up in a new business. In CA the new system replacing vocational rehabilitation is lump sum payments and I’ve already seen that it works quite poorly - it essentially just gets used as a bargaining tool for case settlement and I haven’t seen any evidence that the workers are actually using the money to retrain themselves. Once again, the fraction who want to retrain will do so, and the free money can help them, but the ones who don’t will just get a windfall.
The one partial solution that would work IMO is a shared risk unempoyment insurance type system. We all pay taxes into a common pool and if your job is displaced to another country you receive payments for a period of time until you can find a new job, up to a certain number of months. The difference between this and current unemployment would be higher benefit rates and longer periods of eligibility, and that instead of having to look for work to remain eligible, displaced workers could be eligible if they look for work or if they engage in schooling / retraing. Unemployment rates are kept as low as possible to create a strong incentive for the unemployed to find a new job - for worker’s whose jobs have displaced out of the country I think you need to be a bit more lenient and given them a higher rate of benefit . Also periods of eligibility are kept short for the same reason. In other words, this would just be an expanded unemployment insurance system for people whose jobs have left the country. I think those workers should be treated differently from the current system b/c of the greater impact of jobs leaving the country (ie when your industry is GONE its a lot harder to bounce back in a new job).
So basically this would be money that would allow worker’s to voluntarily retrain themselves or would allow them to look for work for a longer period. Obviously this would only ameliorate the impact of jobs leaving the country not solve the issue entirely. In the long run, the globalization of the economy is likely to raise global standards of living and have a net positive effect worldwide. But in the short term we are going to have to come up with ways to cushion the immediate impacts.
Another possible solution is government loans to assist in retraining costs, sort of like federal student loans for adults.
I’m willing to listen to alternative methods but my extensive experience in retraining in the work comp system has convinced me that most of the well meaning programs for adult retraining and/or direct cash compensation are a tremendous waste of resources and don’t actually achieve their goal of permanently retraining people. Truly permanent retraining pretty much only happens voluntarily of the worker’s own initiative.
Dan