Washington – President Barack Obama will include a new wage scheme in his budget proposal next month to provide supplemental payments to workers who lose their jobs and receive lower salaries as they take a new one.
The White House is expected to release Obama’s budget for fiscal year 2017 on Feb. 9, as tweeted earlier this month by Shaun Donovan, director of the Office of Management and Budget.
Obama’s budget proposal will also benefit others who lose their jobs and want to join training plans to find a new job quickly. The wage insurance payments could help reduce the impact of the financial blow to displaced middle-class workers. The president’s plan is expected to replace 50 percent of a worker’s lost wages, up to $10,000 over two years, for those workers earning up to $50,000 a year.
“Displaced workers making less than $50,000 who were with their prior employer for at least three years would be able to leverage these resources to help them get back on their feet and on the way to” new careers, as the White House said in a statement.
The president mentioned wage insurance in his final State of the Union address. He said the government not only should warrant unemployment insurance to a hard-working American that loses his job, but it should also be committed to designing a program that encourages him to retrain for a company that is likely to hire him. In case the new job does not pay as much as the worker used to earn in his previous one, Obama said there should be a system of wage insurance that enables him to continue paying his bills.
A large number of economists have supported wage insurance because it is a way to confront falling incomes among the middle class. Besides, it is a way to prevent people from leaving the work force. Gary Burtless, an economist at the Brookings Institution, has remarked that a properly-designed wage insurance would serve as a motivation to find jobs quickly because the supplement payments would only start once a new job has been found and it would last for only two years after the previous job loss.
If Obama’s plan is approved, the states would be required to provide at least 26 weeks of unemployment insurance, as well as to expand coverage by including part-time and “intermittent” workers. To date, nine states provide less than 26 weeks coverage and North Carolina provides only 13 weeks.
Furthermore, the plan would automatically extend unemployment benefits during economic downturns. Given that this requires Congress approval, there is the imminent risk that legislative action comes too late for certain workers. For states where job losses are occurring at increasing rates, Obama’s proposal would immediately provide 52 weeks of federally funded benefits.
According to the White House, the proposal would be completely covered in the budget, but it remains unknown the amount of money the plan would cost.
Source: Washington Post