In his weekly address, Pres. Obama unveiled details of his plan to create a new entitlement: “wage insurance.”
After making a glancing reference in his State of the Union to his intention to institute “wage insurance,” Obama followed up by providing details in his weekly speech:
“If a hardworking American loses her job, regardless of what state she lives in, we should make sure she can get unemployment insurance and some help to retrain for her next job. If she’s been unemployed for a while, we should reach out to her and connect her with career counseling.
“And if she finds a new job that doesn’t pay as much as her old one, we should offer some wage insurance that helps her pay her bills. Under my plan, experienced workers who now make less than $50,000 could replace half of their lost wages – up to $10,000 over two years. It’s a way to give families some stability and encourage folks to rejoin the workforce – because we shouldn’t just be talking about unemployment; we should be talking about re-employment.”
Obama also wants to expand unemployment insurance to cover part-time workers. In a fact sheet posted on the White House website, Pres. Obama explains that wage insurance is just one of three ways he plans to make the taxpayer-funded entitlement more generous:
The President’s proposal contains three core elements:
- Protecting Workers with Wage Insurance: The President’s plan would ensure workers have access to wage insurance that would replace half of lost wages, up to $10,000 over two years. Displaced workers making less than $50,000 who were with their prior employer for at least three years would be able to leverage these resources to help them get back on their feet and on the way to a new career.
- Strengthening Unemployment Insurance (UI): The President’s plan would address holes in our UI system – including by expanding coverage to part-time, many low-income, and intermittent workers, and workers who leave work for compelling family reasons. It would also ensure that states provide at minimum 26 weeks of coverage.
- Making it Easier for Workers to Retool and Retrain: The President’s plan would make it easier for companies to avoid lay-offs through work-sharing, while incentivizing states to offer and allow retraining for workers on UI or to provide relocation vouchers or subsidized employment. In addition, it would expand intensive career counseling to the long-term unemployed, discouraged, and part-time workers.
If enacted, the new entitlement would suppress both wages and employment, Demian Brady, Director of Research at the National Taxpayers Foundation tells MRCTV.org:
"We've already seen how the so-called Affordable Care Act's burdensome mandates and taxes have reduced full-time employment. Now President Obama is offering a wage insurance proposal as an attempt to alleviate the impact of his previous policies on jobs.
"While the details are unclear and Administration won't say how much it costs, a new tax on employers to pay for this could further stagnate wages and employment rates. The enforcement costs to counter potential fraud in this program could also be significant on an IRS that is already struggling to administer our complex Tax Code."