Schumer & McDermott Introduce Nation's First Comprehensive Wage Insurance Bill
With Workers Facing Job Uncertainty, Bill Offers Safety Net to Workers Forced to Take Lower-Paying Jobs by Creating National Wage Insurance Program With Workers Facing Job Uncertainty, Bill Offers Safety Net to Workers Forced to Take Lower-Paying Jobs by Creating National Wage Insurance Program
WASHINGTON Senator Charles E. Schumer (DNY) and Rep. Jim McDermott (DWA) today introduced the Worker Empowerment Act of 2007, the nation's first comprehensive wage insurance bill offering a safety net to workers who lose their jobs to globalization or economic downturn. Under the legislation, when workers are forced to take lowerpaying jobs, wage insurance will help cover some of the difference between their new wages and their old wages. As Chairman of the Joint Economic Committee, Schumer convened a hearing on wage volatility in March, which helped to shape the final bill he introduced today.
"Too often, the people who pay the consequences of economic change in the era of globalization are our workers," said Senator Schumer. "This legislation eases the immediate economic hardship workers face when they are forced to take lowerpaying jobs and struggle to make ends meet."
The bill offers assistance to workers who have lost their jobs and are reemployed in jobs that pay lower wages by creating a national wage insurance program and is expected to benefit an estimated 350,000 to 500,000 workers annually, depending on economic circumstances. While unemployment insurance has been a hallmark federal assistance program, currently there is no program in place to help the hundreds of thousands of Americans who find work after losing their jobs, but suffer a decline in wages when they are reemployed in lowerpaying jobs.
More than 20 million Americans involuntarily lose their jobs each year, and more than 40% of those dislocated workers experience a decline in wages. In areas of concentrated economic downturn, many families struggle to keep their homes or pay the bills when breadwinners are suddenly bringing home much less in wages than they used to.
The Worker Empowerment Act would provide relief by replacing 50% of a worker's lost wages for up to two years, for up to $10,000 per year, provided that the worker meet certain qualifications, such as that they were employed by their former employer for at least two years. The benefit amount will be recalibrated as workers' wages rise in their new job. Workers who earn less than half of the median income in their area would receive a slightly higher benefit, with wage insurance replacing more than 50% of their old wages.
"For workers who have lost their jobs, one of the most devastating hardships they face is the lack of new jobs that will pay what they used to make. Wage insurance will help workers get back on their feet by helping to protect them against significant loss of income. It is not a replacement for the current safety net of unemployment insurance, but it provides a new tool to help workers and their families deal with the realities of today's economy," Schumer said.
The wage insurance program would be financed by the federal government and administered by the states, similar to how unemployment insurance is distributed. Currently, wage insurance is only available to workers over the age of 50 who earn less than $50,000. The Worker Empowerment Act would provide wage insurance to all workers who earned less than Social Security wage base ($97,000 in 2007) in their old jobs and are reemployed in new, lowerpaying jobs. The benefit starts to phase down starting at the annual Social Security wage cap, reaching zero at 120% of the annual cap.
A companion bill, H.R. 2202, has also been introduced by Congressmen Jim McDermott in the House of Representatives.