Heres the Most Unorthodox Idea From the State of the Union
In listing the ways that government can help unemployed Americans get back on their feet, President Obama mentioned a handful of familiar policies  unemployment insurance, job-training programs  and then threw a curveball Why not have wage insurance too?, "Say a hardworking American loses his job  we shouldn't just make sure he can get unemployment insurance we should make sure that program encourages him to retrain for a business that's ready to hire him," Obama said during his State of the Union address Tuesday night. "If that new job doesn't pay as much, there should be a system of wage insurance in place so that he can still pay his bills. And even if he's going from job to job, he should still be able to save for retirement and take his savings with him.", The line got applause and sent the wonks on Twitter aflutter, but it left most people drawing a blank What's wage insurance?, In a nutshell, it's a government entitlement that keeps low- and middle-income workers' wages from dropping below a certain benchmark. Unlike unemployment insurance, which attempts to provide a buffer for workers that have temporarily and involuntarily lost their jobs, wage insurance protects workers against future losses in earnings too, in case they have no choice but to accept a lower-paying job in order to get re-employed. Read More President Obama Puts Joe Biden in Charge of Curing Cancer, Unlike universal income, which is a mostly liberal-backed idea that would provide a standard wage to every American regardless of employment status, wage insurance would only be accessible to working people who involuntarily lost a job and then got another, less-well-paying one. In the past, support for wage insurance has actually been pretty bipartisan. Democrats liked it because it's a government entitlement aimed squarely at working and middle-class Americans, and Republicans liked it because it requires that people keep working  even if it means taking the first job they can get. Most existing wage-insurance proposals  which, for the most part, languish in think-tank archives  have built-in ways to keep people from gaming the system. For example, some proposals suggest calibrating payouts so that no American would voluntarily be on wage insurance if it was possible for you to get a better-paying job, it would be in your economic interest to snag it. Other proposals suggest that it would apply only to salaries below a certain salary level. So if you're making 200,000 and you lose your job and get a new one that pays you only 150,000, then this program isn't for you. Wage insurance became popular among the economic intelligentsia about 25 years ago, right about when it became apparent that powerful forces in the modern economy  free trade, globalization, technologization  were both juicing the national GDP and permanently eliminating good, American jobs and replacing them with less good, lower-paying ones. Read More Obama Puts Terrorism in Perspective in State of the Union, For example, bank tellers, which used to be paid relatively well, have seen their ranks decimated by the ATM. While that might be good for the economy writ large  think of all those ATM repairmen!  it's not good for that individual bank teller, who now works as, say, a dishwasher, making significantly less. Wage-insurance aficionados argue that the answer to that conundrum is not to try to stop those larger market forces  we can't stick a wrench in the rapid advance of technology  but to take the gains that those forces deliver to the larger economy and reinvest them into working Americans' salaries. If that former bank teller used to make 700 a week and now makes 450 as a dishwasher, then wage insurance would compensate some portion of those lost wages  keeping the worker above the poverty line.