Worker Transition & Global Climate Change

Eileen Claussen, President, Pew Center on Global Climate Change

A Pew Center report series on the economics of climate change has identified ways in which economic modeling can more reliably project the costs of greenhouse gas reduction policies. These studies show that better model design — for instance, more realistically portraying technological progress and flexibility in the economy — can yield substantially lower projections for the costs of addressing climate change. They provide strong evidence that a rational climate policy that sets realistic short-, medium-, and long-term goals can achieve significant environmental gains while minimizing economic costs.

At the same time, it is important to recognize that the costs of addressing climate change are likely to fall disproportionately on certain industries, communities, and workers, and to explore ways to minimize these adverse impacts. This report draws from past worker transition efforts to recommend ways the government can best assist workers who may suffer economic dislocation as a result of climate change policies. A Pew Center report released simultaneously examines potential impacts on U.S. communities, and a future Pew Center report will evaluate competitiveness issues.

In the case of worker transition, the government has considerable experience assisting workers adversely affected by policy choices and market forces. Author Jim Barrett draws lessons from these government programs and outlines the building blocks of a worker transition program that could assist workers adversely affected by climate change policies. The report recommends that such a program include:

• Substantial retraining and/or education for laid-off workers;
• Substantial income support for program participants;
• A bridge to retirement for workers nearing retirement age that maintains their standards of living and retirement benefit levels;
• Maintenance of laid-off workers’ health and pension benefits until they find suitable employment;
• Rapid response programs to ensure prompt service provision, and avoidance of detailed eligibility requirements;
• Advance notice of layoffs when possible;
• Work with unions to inform workers about program availability and to administer services;
• Performance standards that avoid the unintended consequences of the overly simplistic standards used in the past; and
• Requirements and funding for assessments of the program’s effectiveness by comparing outcomes for participants and non-participants, and allowing for mid-course corrections.

Clearly, some steps recommended in these reports will require funding. As policies to address climate change are developed, revenue streams from related fees (e.g., permit fees or auction revenues) could be used to assist with these programs. Addressing climate change through sound policy will make it possible to achieve our environmental objectives while shielding workers and communities from potential economic harm. The Pew Center and the author wish to thank Susan Teegarden, Andrew Hoerner, Robert Ginsburg, Ev Ehrlich, Yolanda Kodryzycki, and Les Leopold, who offered helpful comments on previous drafts of this report. The author also would like to thank Brigit O’Brien and Terrel Hale for their research assistance.