A New Deal for the Twenty-First Century

Overview

The challenge of how to help those left behind by rapid economic change—whether caused by technology or global competition—has moved to the center of the U.S. national debate in a way it has not been since the 1930s. Trade competition, especially from China, has been a significant factor in declining U.S. manufacturing employment over the past decade. Trade also became a major issue in the 2016 presidential campaign, despite the larger role played by automation and technological change in displacing manufacturing workers for decades. This process will only continue in coming years, with advances in robotics, artificial intelligence, and software that will eliminate many jobs while creating others, regardless of what policies the federal government may adopt toward trade and outsourcing.

Edward Alden

Senior Fellow

Robert E. Litan

Adjunct Senior Fellow

The central economic policy challenge faced by the United States—and by other advanced economies—is how to prepare its workforce to manage this rapid pace of change. It is far from obvious that there will be a shortage of work—indeed as the population ages, some countries in Europe are already struggling to fill available jobs. The problem will instead be to ensure that the workforce is trained to fill the new sorts of jobs that will become available, and that the labor market and public policy are working together to create rising living standards for most.

This Twenty-First Century New Deal would be premised on a simple principle: the government’s job is not to give you a job or even to retrain you for one, but to help finance your retraining and the job counseling that often goes along with it, to remove impediments in the economy that discourage companies from creating better-paying jobs, and to assist those who are forced to take significant wage reductions in moving from one job to another.

The recommendations include:

• Accelerating the creation of new and better paying jobs by reducing and reforming the corporate tax system to encourage investment, facilitating voluntary job mobility, and reforming occupational licensing.
• Helping workers qualify for better jobs by increasing access to education and training. The authors propose the creation of “lifetime career loan accounts,” which would be income-contingent repayable loans accessible to any employee at any point in their careers. This should be supplemented by expanded wage insurance to top up the earnings of those who lose their jobs and are forced to take new ones at significantly lower wages.
• Expanded national service programs, both military and civilian, for young people. These would help to bring together more young Americans from different backgrounds, as well as carrying out useful public service projects such as tutoring disadvantaged students, helping the elderly, and improving public spaces such as parks and playgrounds.