Suppose you lost your job. Would you take one at lower pay? Maybe not. What if the government gave you part of the wage difference? Would you take the job then?Such make-up payments are called "wage insurance." Senator Schumer wants to help you get some. When Congress reconvenes after its 2-week recess he will introduce a wage-insurance bill in tandem with Rep. Jim McDermott of Washington....
...Wage insurance goes beyond unemployment insurance. It pays a worker who has a job. The most often-cited version of the proposal was developed by Brookings Institution scholars Lael Brainard, Robert Litan, and Nicholas Warren. Full-time workers would receive half the difference between the wages of a lost higher-paying job and a new lower-paying job, with benefits capped at $10,000 a year for two years.
Testifying before the House Committee on Education and Labor on March 26, Ms. Brainard stated, "Under such a program, an average trade-displaced worker, who earned $37,382 in 2004 and was reemployed with a 26% loss rate at $27,662 would instead receive $33,522 for the first two years after reemployment, thus enabling them [sic] to smooth their income while becoming more valuable in the new job."...
Conservatives, of course, are against such a weird scheme. Employers don't like it. And even the labor unions are quite skeptical. But Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor and once the chief of staff for the President’s Council of Economic Advisers, thinks the idea has bright possibilities.
For more, here's Ms. Furchtgott-Roth's New York Sun article on the matter.
