Wage insurance is an experimental
policy that could lead to some serious stability in the economy if applied.
George W. Bush has supported it in his presidency, as has current President
Barack Obama but most surprisingly, it does have bipartisan support. It helps
those who have lost jobs and are currently underemployed or unemployed. While
it is only currently available for those over fifty who make no more than
$50,000 per year, presumably because they are rapidly approaching retirement,
it also targets to protect those who have lost their jobs to workers overseas. This
is a policy that had been adopted by Canada in the mid nineties and recommended
by them to us. If it becomes effective through 2021 as Obama implied, it could
be critical for domestic economic growth.
http://www.nytimes.com/2016/03/13/upshot/how-wage-insurance-could-ease-economic-inequality.html?ref=economy&_r=0
As mentioned in the article, "insurance is a type of risk management." Besides this, in my opinion, insurance can also be regarded as a reallocation of social wealth. By setting up two different insurance system-government and private-people's well-being can be guaranteed in both short run and long run, which will encourage people to choose more risky jobs and eventually create more production for the whole society.
ReplyDeleteIncreased domestic economic growth needs to be sustained. With respect to Canada, wage insurance could be a very promising policy for the US as well. If this policy is effective through 2021 like Obama advised, what will hinder this policy from being effective? From this standpoint, I agree with Lizheyin on the possibility that people will mistreat this policy and make more risky decisions due to the fact that they will feel there is a soft spot to land on if their jobs are lost. I also think wage insurance should only stay available to people 50 years old and above with an income of no more than $50,000. This is because the young and able people need to fill the labor force and avoid living off wage insurance too early.
ReplyDeleteI like the idea of a wage insurance program like this, except that programs like this get taken advantage of a lot of the time. I think 50 might even be too young and that 60 might be a better age for the program to start. Also, I wonder how sustainable this program will be since it has been proven that social security is not sustainable.
ReplyDelete“That assistance can reduce economic inequality while providing incentives for unemployed people to go back to work quickly.” This program will not work like unemployment insurance just to be clear. If people were to scam the system it would be through means of underemployment rather than through not having a job (take less skilled jobs so they still have the benefits). Second I agree with Jake, on the concept of how effective will this be if it only lasts until 2021? My hunch is that it will be too short a period to tell.
ReplyDeleteAs charlie mentioned it will be interesting to see how this policy works with comparison to social security. Because social security will need to increase the retirement age to keep it going otherwise it will go bust.
ReplyDeleteAs charlie mentioned it will be interesting to see how this policy works with comparison to social security. Because social security will need to increase the retirement age to keep it going otherwise it will go bust.
ReplyDeleteI am curious to how this would work. Would everyone employed be required to pay for wage insurance, or just people that want it? I feel like there would be many people that feel secure enough in their job that they wouldn't want to purchase an insurance plan of this nature. However, the people without job security would definitely want to seize this opportunity to be paid for not having a job. If I remember correctly, I think that insurances that give benefits to those who are unemployed actually raises the unemployment rate because it causes the unemployed to feel that it is less vital to find a job quickly
ReplyDelete