Economy

Rebuilding the Employment Security System for the Rust Belt That Created It

The growth of more flexible work arrangements is a welcome development for many, particularly those working at the higher end of the labor market who have more skills and greater control over their work. But for Midwest workers with relatively low levels of formal postsecondary education and training, part-time work, being subcontracted out and paid as a “1099 worker,” or working in the “gig economy” have increased insecurity and reduced access to benefits and protections.

Toward a Modernized Economic Security System

As our colleagues Mark Muro and Robert Maxim have outlined, America needs a new economic security system that is de-coupled from the once-dominant model of full-time, long-term employment with a single employer. This is particularly the case for Rust Belt workers. Policymakers seeking to rebuild economic security in the Midwest and across the nation should follow these principles:

  • Design for an era of economic instability and disruption—of frequent job and career switches—by increasing benefit portability.
  • Promote innovation, technological change, and risk-taking, but also prioritize effective supports for those who bear the brunt of the resulting changes.
  • Extend benefits to serve part-time workers, contractors, and those employed in multiple jobs.
  • Provide support not only during temporary dislocations but also help individuals adapt and advance in the new economy, with both a safety net and a trampoline that accelerates return to the workforce and expands access to higher-skill, higher-paid jobs.

Policymakers and advocates are advancing a number of proposals that could be scaled to build a modern economic security regime:

Portability: Health care and pension benefits should be portable, universal, tied to individual employees, and delinked from full-time work and single employers. Benefits should be pro-rated for part-time employees based on hours worked. To finance this, some have suggested a Social Security-like mechanism of payroll deductions. Others have proposed more modest multi-employer or sectoral plans like those in the construction industry. Senator Mark Warner (D-VA) has proposed legislation to fund a set of pilots testing different approaches with different mechanisms.

Pro-ration of benefits: Too many benefits are tied to full or almost full-time work with a single employer. Work-related benefits that can reduce family stress and keep people in the workforce—including paid sick leave, family leave, and vacation days—should be extended to part-time employees on a pro-rated basis based on hours worked for a given employer.

Unemployment insurance reform: Eligibility requirements should be made more flexible so that more individuals can access unemployment insurance, including intermittent workers, those with low and variable wages, part-time workers not working enough hours, and entrepreneurs starting their own businesses. Experiments should combine benefit receipt with training, work preparation, and support for pursuing postsecondary credentials.

More aggressive adjustment assistance: Current Trade Adjustment Assistance is too modest, short-term, and tied to specific industries affected by trade. It is not nearly as strategic and proactive as labor market adjustment policies in other advanced industrial countries. More generous relocation assistance can support worker mobility and help people go where the jobs are. Retraining opportunities and support for programs with proven labor market value can help those needing to make significant mid-career changes.

Rust Belt communities, industries, and workers created and benefited greatly from the old system in its prime—and they have arguably suffered the most from its collapse. In turn, they have the most to gain from a needed remaking of employment security and safety net policies that recognize and respond to today’s economic realities. To the degree that these new policies put solid ground beneath more people in Rust Belt communities, they can help shift the political conversation in these places from one based on nostalgia, anxiety, and resentment to one lifted up by greater hope and optimism.

This post was originally published at the Brookings Institution website on August 7, 2018.