Organized labor and civil society organizations have been critics of U.S. trade policy for years. Yet, it wasn’t until the 2016 election of President Donald Trump—who as a Republican candidate made anti-trade rhetoric a centerpiece of his campaign—that a rethinking of U.S. trade policy is finally in the spotlight. Since his inauguration, President Trump has moved quickly to reshape America’s approach to international economic affairs, including pledging to give “American workers a fair deal” by renegotiating or withdrawing from U.S. trade agreements.
Rejecting trade agreements outright will not end global competition for U.S. workers who will continue to confront corporate relocation and dislocation; the global economy is here to stay. What the United States is failing to do is to help American workers whose jobs have been displaced by the complex forces unleashed by globalization and automation.
Today’s highly competitive global economy regularly produces winners and losers, as competitive pressures lead to thousands of jobs being created and destroyed every day. And while trade has a role to play in this dynamic, it is not the only explanation for this volatility and instability. It is just one among many factors, which include technological change, industrial shifts, tax incentives, global workforce expansion, the pursuit of low-cost labor, and customer tastes and desires, among others.
Still, when it comes to the debate over the costs and benefits of trade, proponents of open trade focus disproportionately on its benefits without paying equal attention to the plight of those on the losing end of the stick. This is not a fair approach. Moreover, ignoring those who have been negatively affected by the impact of trade and other factors has led to the intractable debate we find ourselves in today.
No magic bullet will solve the challenges associated with worker dislocation. But any attempt must first start with a broad acknowledgment that our current system—a collection of vastly outdated, underfunded, and underperforming programs—is not working. Instead, what is needed are comprehensive and integrated strategies that provide a range of supports and opportunities to workers—and employers—in transition. Existing U.S. support programs as they are currently designed, such as Unemployment Insurance (UI) and Trade Adjustment Assistance (TAA) to mention a few, must be overhauled and adapted for the needs of a 21st century, globalized economy. What takes their place must better help people cope with the downsides of job loss, while at the same time enabling them to take advantage of new and emerging opportunities to enhance the overall competitiveness of our dynamic, international economy.
Fortunately, there is no shortage of good ideas.
To begin, we should expand income and so-called “wage-loss” earning supplements and health insurance supports for displaced workers. Under the current system, TAA benefits are short term and are only available to certain age workers who can specifically prove that they have lost their jobs due to trade—a burdensome distinction that is both anachronistic and overly restrictive. A better approach would enable wage insurance and targeted skill training support for all workers who have lost their job through no fault of their own—regardless of the reason for their job loss or their age.
America needs to act quickly yet deliberately with a vision that speaks clearly and honestly to those who are skeptical, if not hostile, to international trade.
Finally, we should look abroad to other countries —such as Denmark, Germany, and Singapore —that offer ideas on which to model new initiatives here in the United States. From their own experiences with long-term unemployment, each have developed far more proactive approaches to equipping the unemployed with new skills that match demand for emerging job opportunities. For example, Germany’s Kurzarbeit and Denmark’s flexicurity programs have pioneered innovative ways to incentivize employers to reduce full-time workers to part-time, rather than lay them off entirely, thereby reducing mass lay-offs while preserving an experienced workforce. Germany’s renowned apprenticeship or “dual-education” programs, often developed in cooperation between private sector companies and educational institutions, are increasingly being piloted in the U.S. as a cost-effective means for building the talent pools of local communities—but they require greater support and socialization at every level.
These kinds of approaches would bring more honesty to the debate about the true benefits and costs of international trade and of the resources necessary to make trade policy work better for all workers. This is not today’s model. And with growing public sentiment against trade, and political leaders on both the left and right opposing international trade agreements, America needs to act quickly yet deliberately with a vision that speaks clearly and honestly to those who are skeptical, if not hostile, to international trade.
For too long, U.S. policies have asked workers to adapt to new and emerging economic realities on their own, in essence saying, if you lost your job, you are somehow to blame. This has to change. We need a social contract, one that recognizes the challenges of a disruptive economy and the role that government must fill in helping people manage job loss while planning for a dynamic economic future. This new social contract should result in dislocated workers once again becoming successful, competitive, and profitable in an ever-evolving technological age and shifting domestic market.
In his recent address to Congress, President Trump said “We must create a level playing field for American companies and workers.” If the president truly wants to assist workers, he—together with Congress—must pursue a trade agenda that makes solving the problem of worker dislocation a priority. Without a solution, working Americans will neither understand nor experience the benefits of trade to the U.S. economy. The outcome could be a shortsighted economic nationalism that will prove even more destructive to the U.S. economy.
