BEYOND THE NUMBERS
Helping Workers Adjust to Permanent Job Losses
Globalization and technological change remain important contributors to long-run increases in U.S. living standards. But what’s good for the average American is not necessarily good for every American. In fact, the gains from trade and technology tend to be quite diffuse. The losses, in contrast — while usually smaller than the gains in aggregate — tend to concentrate among particular workers, firms, and communities.I cite a new study on the economic impact of rising imports from China on local U.S. labor markets, which finds that real world adjustments to economic change can be much slower and more painful than textbook economic models assume. The study also finds that while most of the government transfer payments triggered by these developments cushion the blow of job loss, they are not designed to help the affected workers find new jobs. The case for better programs to help workers who lose jobs that will never return does not reflect a criticism of unemployment insurance (UI), and policies to help those workers transition to new jobs should not come at UI’s expense. Adjustment assistance and training are, however, valuable complements to UI — and we are not doing enough in that area.