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Can Lifetime Career Loans Help Dislocated Workers?

A new report argues for lifetime career loans as part of a modern New Deal for American workers.
A coal miner takes a break after his shift at a small mine on May 19th, 2017, outside the city of Welch, West Virginia.

A coal miner takes a break after his shift at a small mine on May 19th, 2017, outside the city of Welch, West Virginia.

The Trump administration's 2018 budget, released last week, proposes deep cuts to federal spending on nutritional assistance, social safety net programs, education, financial aid, and even job training. It landed with an audible thud among most economists, many of whom have questioned, in addition to its rosy economic assumptions and fuzzy math, its implicit suggestion that people receiving various forms of government assistance aren't working simply because they don't feel like it. Economists also expressed their concerns with the budget's nixing of various programs, such as job re-training and financial aid, meant to improve the productivity and skills of the current and future workforce: Given current economic trends, many feel such programs are more vital than ever.

In the service of illustrating what an ambitious, bipartisan approach to addressing such economic trends might actually entail, Edward Alden and Robert Litan of the Council on Foreign Relations have some ideas for the administration, compiled in a report released earlier this week, titled "A New Deal for the Twenty-First Century."

"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," Alden and Litan write. "The problem will … 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."

Like many of the comprehensive economic policy platforms that have emerged in recent years, Alden and Litan's is full of recommendations designed to appeal to policymakers on both sides of the aisle. Broadly speaking, though, the policy proposals included here fit into two categories: those meant to increase the creation of good jobs (i.e. the demand for workers), and those designed to increase the supply of those workers. The proposals in the first category—corporate tax reform specifically designed to increase investment in U.S. plants and equipment and reduce barriers to hiring—are familiar ones, and are, in fact, already supposedly a focus of the White House and Congressional Republicans.

"Without greater opportunities for more Americans to advance their education and upgrade their skills, many will never qualify for good jobs."

But unlike the Trump administration, Alden and Litan are aware that helping struggling Americans will require more than just increasing gross domestic product growth. "Even if demand can be increased for better-paying jobs, the biggest factor determining earnings remains the education and skill levels of employees themselves," they write. "Without greater opportunities for more Americans to advance their education and upgrade their skills, many will never qualify for good jobs, and will instead remain stuck in dead-end, low-wage jobs."

Again, some of Alden and Litan's proposals in this area are familiar. They suggest, for example, both expanding wage insurance programs for displaced older workers who take lesser-paying jobs and launching an intensive career counseling program (similar to the type proposed by former President Barack Obama in 2016) to "help people figure out which skills they could reasonably gain and how to get there."

Notably, echoing the frequent calls of economists for reforms to the Pell grant, the report also calls for the establishment of "lifetime career-loan accounts" that individuals could use at any time throughout their lifetimes to pay for "courses at qualified providers of certificate programs such as community and for-profit colleges, certificate training institutions, or programming classes at a coding academy." Crucially, the loans could also be used for temporary income support and moving costs, and repayment would be income-based and capped.

This, like pretty much all the proposals in this report, is an eminently sensible idea. Our financial aid system is hopelessly outdated and not designed for the realities of a modern world in which employees will need to frequently adapt and update their skill set. And it would do a lot to help the many Americans who are stuck in place, people may want to retrain in a new field, or move to an area with better economic opportunities, but can't afford to do so without some help. It is also the kind of proposal that should garner bipartisan support. As Alden and Litan point out, Republicans should appreciate its focus on work and personal responsibility (loans, after all, are not government handouts), and Democrats should like the ways in which it provides a true safety net for low-income and displaced workers.

The role of racial and cultural anxiety and bigotry present in this election shouldn't be ignored. But an awful lot of people also voted for President Donald Trump because they wanted good-paying jobs and economic stability for themselves and their children. The proposals outlined in this report would be a good start to making that yearning a reality.