KAI RYSSDAL: Notwithstanding the stock market’s bumpy ride the past couple days, there’s plenty of evidence the U.S. economy, overall, is less volatile than it used to be. Recessions aren’t as deep. Peaks aren’t as high.
But the same can’t really be said for individual workers. Wages have become more unstable, rising and dropping from one year to the next. It’s called wage volatility. And Marketplace’s John Dimsdale reports Congress has added it to the list of things to do.
JOHN DIMSDALE: Of the 4 million Americans laid-off between 2003 and 2005, half took a pay cut in their next job.
Senator Charles Schumer, a Democrat from New York, says a lot of workers feel the financial ground shifting beneath their feet.
CHARLES SCHUMER: And if the recession in the manufacturing sector that hit our radar screens this week spreads throughout our economy, the economic rollercoaster for families will only get worse.
Senator Schumer is preparing a bill to expand federal wage insurance for displaced workers who take a pay cut in their next job. To cushion the salary loss, wage insurance would likely pay a worker 50 percent of the difference between the old and new salaries — probably for two years, although the details are still being worked out.
Even if the payment is capped at $10,000 per worker, the annual cost would be more than $4 billion.
That’s steep. Even for unions and some Democrats like Carolyn Maloney, a House member from New York. She worries wage insurance would siphon money away from existing benefits.
CAROLYN MALONEY: Wage insurance may well have a role to play, but implementing it should not come at the expense of shoring up the unemployment insurance system or trade adjustment assistance — both of which are in dire need of reform.
Unions also believe wage insurance would give laid-off workers incentives to take inferior jobs at lower salaries. Instead, they favor improving the federal/state unemployment insurance safety net. And beefing up training programs for workers who’s jobs have been outsourced.
In Washington, I’m John Dimsdale for Marketplace.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.