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A Prescription to Relieve Worker Anxiety

By Lori G. Kletzer and Robert E. Litan

Abstract

With the sharp slowing of the US economy, worker anxiety is back in the news. But even during healthy economic times such as the late 1990s, workers feared layoffs and general job instability. The failure of Congress to approve fast-track trade negotiating authority in 1997 strongly suggests that no American president will be successful in persuading Congress and the American people to accept further trade liberalization until additional measures, aimed specifically at easing the pain of worker dislocations and encouraging rapid reemployment, are embraced by federal policymakers. In this brief, we outline and present cost estimates for two such proposals: wage insurance for qualifying displaced workers upon reemployment, and subsidies for health insurance for qualifying unemployed displaced workers. Both programs would provide benefits to full-time workers who have been dislocated, for any reason, from jobs they have held for at least two years.

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