The missing piece of NAFTA 2.0

The missing piece of NAFTA 2.0
© Getty Images

Whether referred to as NAFTA 2.0 or the rather uninspiring United States Mexico Canada Agreement, the new North American trade deal has similar attributes as the old one. For consumers and businesses reliant on trade between the three North American nations, that is a good thing. For workers whose jobs are disrupted by trade, it is more bad news.

The benefits and costs of trade have always aligned differently depending on geography and industry. Consumers benefit from lower prices and better choices, but both employment growth and joblessness can become highly concentrated in certain regions. The main government program meant to help workers hurt by trade is old and ineffective. Nothing in the new agreement addresses a single provision in it.

ADVERTISEMENT

Trade adjustment assistance, as it is known, saw just over 94,000 participating workers across the United States in 2017. Compare that to a national unemployed population of over 12 million, and it becomes quite clear that trade adjustment assistance is simply an afterthought in a world economy that is already deeply affected by trade deals.

Trade adjustment assistance was originally created to help workers update their skills to compete for jobs. Instead, the program suffers from low enrollment and a high dropout rate. Even those who see the program through to the end are often not effectively helped. Workers around the nation who completed the training typically ended up with pay cuts of nearly 20 percent in their new jobs as compared to their old ones.

Part of the low enrollment in trade adjustment assistance can be explained by design. Before a worker can qualify for benefits, a petition arguing that increased competition resulting from free trade directly led to job loss must be approved. This process has become so onerous over time that, last year, more than 20 percent of petitions were not deemed eligible, preventing over 32,000 workers from receiving any benefits.

This hints at the main problem of rigid eligibility requirements. When President Kennedy signed trade adjustment assistance into law, the largest disruptive forces in the labor market resulted from trade deals. But from 2000 to 2010, 85 percent of manufacturing jobs were lost as a result of technological changes. These workers are just as unemployed as any others looking for jobs and should be equally eligible for retraining.

As the United States economy continues to feel the building pressures from technological advancement and globalization, now is the time to rethink the way unemployed workers interact with the job market. We recently proposed a modern reemployment system that turns the federal government safety net into a springboard back to work, regardless of whether a shifting supply chain or a robot caused job loss.

First, universal training vouchers would be available for all workers who lose their jobs. This would help workers get high quality certifications and skills for in demand jobs run by community colleges, nonprofits, unions and more. Second, a job search stipend would help workers find new employment and pursue new opportunities. Third, a bonus would be given to those who find work ahead of exhausting their unemployment benefits. This would incentivize those who do not need new training to find work more quickly. Furthermore, older workers would qualify for a short wage insurance stipend to help offset the potential pay cuts.

All workers, from ridesharing drivers to manufacturing technicians, would be eligible for the program. Those looking for jobs would continue to receive income support like that which exists under unemployment insurance. But now, with a modern safety net, losing a job would instead become an exciting opportunity to retool and start anew instead of a stressful and potentially ruinous stint of economic insecurity.

Whether it is a result of trade agreements or technological changes, job displacement is an unavoidable part of the economy. While Donald TrumpDonald John TrumpREAD: Transcript of James Comey's interview with House Republicans Klobuchar on 2020: ‘I do think you want voices from the Midwest’ Israel boycott fight roils Democrats in year-end spending debate MORE celebrates the recent tweaking of NAFTA, working Americans continue to face threats from globalization and automation. Reemployment could very well be the 21st century solution to this 21st century problem.

Ryan Zamarripa is an economic fellow and Gabe Horwitz is vice president of the economic program at Third Way, a think tank based in Washington.