White Paper

The basic tenets of Unemployment Insurance (UI) have changed little since the program was enacted during the Great Depression. It was built as a bridge for workers between jobs in similar industries that required similar skills. You lose your job and a weekly check tides you over until you land a new one, usually doing the same type of work as before. But now, new jobs being created are dramatically different than the ones going away, and workers are struggling to keep up with this change and chart a career. Unemployed workers often need help acquiring new skills and navigating the increasingly complex job market. Some also want to work in a new place but need help with moving costs. Yet the existing safety net offers shockingly little to help them with these modern problems, especially compared to systems in other advanced economies. Reemployment is a 21st century replacement for Unemployment. The program would continue as a universally available earned benefit, offering a temporary income to laid-off workers who paid into the system. But it reinvents Unemployment for a modern economy with the following large, structural changes: Expanded eligibility so all workers have access—including those doing contingent (aka gig) work. Workers would continue to receive income support along with one of three new supports: A universal training voucher—redeemable for certified programs run by community colleges, unions, non-profits, or employers—to replace smaller, existing training programs tied to worker displacement. A job search stipend to help defray the cost of finding new employment for workers who want to pursue work opportunities elsewhere in the country. A bonus if a worker lands a new job before their income support expires. On top of that, all older workers who accept new employment at wages significantly lower than their previous job would be eligible for wage insurance. Together, Reemployment’s suite of benefits would obviate the patchwork of outdated retraining programs scattered across government. Labor productivity and workforce participation would rise. Most critically, it would transform Unemployment from solely a safety net into a springboard to work and higher pay.

The availability of low-wage immobile labor may discourage economic development. In the American South, post-bellum economic stagnation has been partially attributed to white landowners’ access to immobile low-wage black workers; indeed, subsequent Southern economic convergence was associated with substantial black out-migration. This paper estimates that the 1927 Mississippi flood caused immediate and persistent out-migration of black workers from flooded counties. Following this decline in the availability of low-wage black labor, landowners in flooded counties dramatically mechanized and modernized agricultural production relative to landowners in nearby similar non-flooded counties. The temporary displacement of black workers led to a permanent economic transition, though landowners had incentives to discourage black out-migration and maintain a system of labor-intensive agricultural production.

We analyze the likely trends in supply and demand for workers with different levels of education and training over the next decade and beyond. We present data on the current distributions of jobs and wages, and how these distributions have evolved in the recent past; we also review projections from the Bureau of Labor Statistics on future demand by occupation. We compare these demand-side projections with forecasts of the supply of workers with varying levels of education and training. Overall, we conclude that the demand for middle-skill workers will remain quite robust relative to its supply, especially in key sectors of the economy. A range of policies could help low-income workers obtain more education and training for these middle-skill jobs, thereby raising their earnings and their family’s living standards.

This report is issued under the responsibility of the Secretary-General of the OECD. This report was prepared by the Secretariat at the request of the G20 German Presidency for the joint G20 Presidency – OECD conference on Key Issues for Digital Transformation in the G20, in Berlin, Germany, on 12 January 2017. The opinions expressed and arguments employed herein do not necessarily reflect the official views of OECD Member countries or of the G20. This report and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

This report of the Organisation for Economic Co‐operation and Development has been prepared at the request of G20 Leaders (Hangzhou Summit Communique, 4‐5 September 2016). An initial prototype was prepared for the Third G20 Sherpa Meeting in Xiamen, China, 23‐25 June 2016. This report is based on material from the OECD's Science, Technology and Industry Scoreboard 2015 (with data updates where available) and the forthcoming Science, Technology and Innovation Outlook 2016. The latter publication benefits from policy information gathered via the joint European Commission/ OECD International Survey on Science, Technology and Innovation Policy (STIP).

As Inequality has markedly risen over the past few decades, so has economic volatility. Abundant research demonstrates that both individuals and households have faced much greater instability in income since the 1970s 1 – a trend dubbed by Jacob Hacker as the “Great Risk Shift.” 2 Income insecurity can lead to problems and crises like bad credit and losing one’s home, which then further exacerbate a family’s economic vulnerability. As the market restructures, relying on more independent contract work than ever before, we expect these vulnerabilities to be exacerbated even further. The moniker “1099 economy” refers to the trend in the American labor market in which companies are contracting independent workers for short-term arrangements rather than hiring full-time workers. Jobs aren't just being replaced with lower paying jobs, but instead are being replaced with what are essentially non-jobs – contracts that come with no tenure, security or safety net As our economy endures seismic changes, policymakers are beginning to explore compelling ideas to help Americans adjust to the 1099 economy. After President Obama elevated the idea in his last State of the Union address, wage insurance has attracted the attention of policy wonks, who believe it could help displaced workers transition quickly back into the job market. But is wage insurance a useful policy idea for a job market that is increasingly reliant on 1099 employment? This paper argues that while wage insurance may not be suitable as a long-term support system for 1099 workers, it could be extraordinarily helpful as transitional assistance to workers who have lost their full-time jobs and are moving into 1099 work. Ultimately, a full safety net for 1099 workers will require the development of a number of new protections and programs, such as universal portable benefits. We recommend further research and exploration of wage insurance as part of a potential suite of policy options for helping the 1099 worker develop and maintain economic security in the new economy.

For American workers, having a high school or general equivalency diploma (GED)—which once represented a means of entrance to the middle class—is no longer adequate for finding steady employment. In fact, three quarters of low wage workers have these qualifications but lack the relevant occupational skills and connections to employers needed to launch a career. At the same time, in some regions of the country there are persistent skills gaps clustered in particular industries, such as manufacturing and healthcare. Many of these jobs are expected to grow3 and require specific technical skills that can be gained only through focused training that is closely linked to the needs of local businesses. Over the past two decades, an innovative approach to workforce development known as sectoral employment has emerged, resulting in the creation of industry-specific training programs that prepare unemployed and under-skilled workers for skilled positions and connect them with employers seeking to fill such vacancies. Based on earlier outcomes studies pointing to the promise of this strategy, Public/Private Ventures (P/PV) set out to conduct a random assignment evaluation to assess whether sector-focused programs could in fact increase the earnings of low-income, disadvantaged workers and job seekers.

The production and shipment of goods in the United States is a large, important, and growing part of the economy. Despite the continued growth and long-term health of manufacturing, significant misconceptions remain about the sector’s demand for labor and how it has changed in recent decades. In this brief, we identify and explain a major source of misunderstanding in manufacturing. In the first section, we focus on what effects productivity change, domestic demand, and foreign trade have on U.S. manufacturing employment. We then discuss policy dimensions of these findings. We begin with a brief overview of manufacturing in the United States.

Taxing Wages provides unique information on the taxes paid on wages in OECD countries. It covers personal income taxes and social security contributions paid by employees; social security contributions and payroll taxes paid by employers and cash benefits paid by in-work families. The purpose is to illustrate how these taxes and benefits are calculated in each member country and to examine how they impact on household incomes. The results also enable quantitative cross-country comparisons of labour cost levels and the overall tax and benefit position of single persons and families on different levels of earnings.