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U.S. urged to retrain workers who lose jobs to free trade

Jay Shambaugh, a member of the White House

Jay Shambaugh, a member of the White House Council of Economic Advisers, speaks Saturday, May 21, 2016, to the Society of American Business Editors and Writers convention in Crystal City, Va. Credit: Newsday / James T. Madore

CRYSTAL CITY, Va. --The United States should provide better skills training, health insurance and wage compensation to Americans who lose their jobs because of free trade, economists said here Saturday.

Without more aid for displaced workers, the experts said, broad public support for proposed trade pacts with the Pacific Rim and Europe will be almost impossible to obtain. Fear of job loss has made trade a key issue in the 2016 presidential campaign.

The economists, who generally back the United States opening its markets to foreign businesses, called for health insurance not to be tied to where a person works and for robust retraining programs. They also said Uncle Sam should make up the salary difference, in the short term, when a laid-off worker gets a new job that pays less than the former position.

“You should find the support you need to get back into the economy, and back on your feet in a better way,” Jay Shambaugh, a member of the White House Council of Economic Advisers, told a convention of business journalists meeting in suburban Washington.

Such policies “would make people less uncertain in a world where they see slower growth and make them less hostile to changes in the global economy,” he said.

Congress has begun reviewing the recently completed Trans-Pacific Partnership agreement, which reduces tariffs between the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Signed in February, the treaty also includes labor and environment protections.

The presumptive presidential nominees -- Donald Trump, the Republican, and Hillary Clinton, the Democratic -- both have said they would renegotiate the trade deal, also known as TPP.

Separately, talks are continuing between the United States and the European Union for a free-trade agreement: Transatlantic Trade and Investment Partnership. Negotiators hope to have a deal by year’s end.

Shambaugh told the Society of American Business Editors and Writer convention on Saturday that the trade pacts would inject sorely need growth into the U.S. economy, though the impact would likely be less than with China’s rapid industrialization in recent years. “We need to make sure those gains wind up being shared by employees and employers,” said Shambaugh, who grew up in Huntington.

World Bank chief economist Kaushik Basu agreed, saying when workers are replaced by robots the savings should go to retraining programs, not corporate treasuries. The current system of helping those laid off because of free trade, Trade Adjustment Assistance, was established in 1974.

It has been used heavily since the North American Free Trade Agreement between the United States, Canada and Mexico was enacted 20 years ago.

The program “has not been very effective [and that] leads to not very strong trust among workers in these free trade agreements,” said Margaret Simms, director of the Low-Income Working Families Initiative at the Urban Institute, a Washington-based think tank. “Increasingly, we are seeing a fraying of social services, the safety net that people rely on when they lose their jobs.”

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