Rethinking Economic Adjustment

When compared to other developed economies, in the US we do a very poor job of supporting economic adjustment, helping workers, businesses, and communities recover from economic shocks like plant closings, mass layoffs, and the like.   Our worker retraining and adjustment programs are especially challenged.  The US spends only 0.05% of GDP on vocational training—among the lowest levels among developed economies.  While spending levels don’t guarantee quality, we can definitely do better.  That’s the key take-away from a new Government Accountability Office report (Economic Adjustment Assistance:  Experts’ Proposed Reform Options to Better Serve Workers Facing Economic Disruption), that reviews how we might reform Federal Economic Adjustment Assistance (EAA) programs.  

The report summarizes a series of work sessions (I participated in these sessions) examining key programs such as Trade Adjustment Assistance, the POWER program for coal-impacted communities, and retraining for dislocated workers, among others.  The report includes dozens of ideas, but I’ll just highlight a few recommendations:

• Act Quicker:  Where feasible, layoff aversions should be the first approach.  And, if that’s not doable, more rapid intervention is needed to get laid-off workers into training programs, new jobs, or connected into family and social support programs.
• Embrace Lifelong Learning:  in today’s fast-paced economy, layoffs are likely to become more common.  Instead of being reactive when a layoff happens, we can be more proactive by creating lifelong learning accounts where workers have continuous access to training and education opportunities throughout their careers.
• Build a Stronger EAA Safety Net:  Key partners in providing adjustment assistance, especially community colleges, need additional support to bolster existing programs and to offer specialized services, especially career coaching and counseling, for displaced workers.  In addition, it should be easier for displaced workers to access other support programs that help with other needs, such as child care, housing, and transportation assistance.

Hopefully, some of these good ideas will be taken up by the Biden Administration and Congress in the near future.