Globalization for All

Ensuring that Globalization Works for All Americans

Trade and globalization have generated, and continue to generate, tremendous aggregate gains for the U.S. economy and American workers. Having said that, the Forum believes it must also be acknowledged that trade and globalization can also entail real and painful local losses. As the global economy evolves and reallocates resources to more productive areas and enterprises, some people lose their jobs, some firms downsize, certain industries shrink, and towns and even entire regions can be disaffected.

On June 26, 2007, the Forum released a study entitled “Succeeding in the Global Economy: A New Policy Agenda for the American Worker.” In addition to documenting the tremendous aggregate gains associated with trade and globalization, the report also acknowledges the reality of dislocation and hardship experienced by some American families, businesses, and towns, and offers an array of innovative policy prescriptions to help those disaffected to re-engage into, and prosper from, the 21st century global economy.

As a follow-up to our original report, the Forum recently released a white paper that offers innovative policy proposals to help American workers prepare for, adjust to, and benefit from the 21st-century global economy. Current worker transition programs, while well-intentioned, are inadequate to meaningfully help workers cope with the challenges faced in today’s economy. Unemployment insurance (UI) was introduced in the early 1930s and has not changed in any fundamental way since then. UI benefits were designed to supplement a worker’s salary until rehired by his or her previous employer. Today, the challenges facing unemployed workers are often much more involved: matching with a new employer, often in a new industry; upgrading or learning new skills; and coping with lost benefits, especially health care.

Trade Adjustment Assistance (TAA) has similar drawbacks. Created in the early 1960s and designed to supplement UI, TAA was specifically intended to assist workers displaced by stronger competition from imports. Today, however, rather than facing a one-time adjustment to new levels of import competition, firms and workers face continual adjustment as new technologies and competitors, both domestic and foreign, make existing capital equipment and skills obsolete. TAA offers adjustment assistance solely to workers who seek retraining, rather than assisting workers with the manifold adjustment challenges they face today. For this reason, as well as administrative challenges, less than a quarter of eligible workers have actually taken TAA benefits in recent years.

21st-century American workers who find themselves in transition need a broader, more flexible, and responsive safety net that assists them in rejoining the workforce, regardless of the reason – trade-related or otherwise – that they find themselves moving from one job to another. The purpose of this white paper is to propose a set of expanded, integrated policies that can fundamentally reshape U.S. labor-market policy.

In January of 2009, the Forum released a second follow-up white paper that details two innovative programs designed to help stabilize and stimulate American communities struggling with steep budget shortfalls and falling tax revenues.

The Communities Prosperity Initiative (CPI) offers a short- and long-term solution to the challenges facing our economy. The first is to create a government-backed insurance program to protect local tax bases and the community-enhancing public services such revenues provide. The other is to bundle targeted immigration, trade, and investment-related program to better link struggling communities to the global economy.

The goal of the CPI is not to insulate communities from dynamic change. That is neither feasible nor desirable. Rather, it is to allow the companies, workers, and families of struggling communities to better adjust to, engage with, and, ultimately, prosper from the dynamism and wealth-creating capacity of an ever-more globalized economy.

All three research papers were authored by Grant D. Aldonas, the founder of Split Rock International and a senior advisor at the Center for Strategic and International Studies; Robert Z. Lawrence, the Albert L. Williams Professor of International Trade and Investment at Harvard’s Kennedy School of Government; and Matthew J. Slaughter, Associate Dean of the MBA Program and Professor of International Economics at the Tuck School of Business at Dartmouth.