The early-warning economy: the time to think about helping displaced workers is before they lose their jobs.

• Author: Sperling, Gene

To many Americans, the benefits and burdens of a fast-paced global economy many seem like tropical weather. It is generally enjoyable for those who bask in it, but when the torrid winds of change flatten your community, your dreams, and even your sense of economic dignity, the costs can seem absolutely brutal.

While we as a nation are committed to taking preventative steps to detect and warn communities threatened by natural disaster--and to share in the rebuilding process when havoc is wreaked--when it comes to auto workers, as well as whole swaths of the textile manufacturers or computer programmers, threatened by the high winds of global competition, we do pathetically little to take preemptive steps or to offer serious assistance to those who have seen their economic livelihoods leveled. Even when we can see years in advance that certain workers and communities will be vulnerable, the only options we offer them are either last-minute trade protectionism or economic devastation with a sprinkling of ad-hoc, confusing adjustment assistance. If we want to maintain public support for vigorous competition, innovation, and open markets to raise the economic tide, it is becoming increasingly clear that we need a new cost-sharing compact to help lift up the boats that are sinking.

The need for a new direction has never been greater. The face of economic anxiety about job loss is far more diverse than even a decade ago. Fear of dislocation due to global competition used to be largely the province of factory workers in communities dependent on a single manufacturing industry. Today, large parts of the white-collar community--from travel agents to software engineers--feel that same fear. But in addition, these worries are growing deeper. For many workers, the biggest concern is not simply the temporary depression of losing a job and the weeks of inconvenience and financial stress. Instead, their anxiety is often a fear of falling: the dread that a plant closing, outsourcing, or restructuring will force workers to take jobs with substantially lower pay, resulting in a permanent lowering of their standard of living and a knock to their sense of economic dignity.

These fears are not unfounded. Nearly half of workers displaced between 2001 and 2003 who found new full-time work by February 2004 agreed to take lower pay, according to the Department of Labor's Displaced Worker Survey. A recent study by Princeton professor Henry Farber found that as a group, these workers faced a 17 percent decline in wages due to displacement, more than double the 7.8 percent decline similar workers experienced between 1997 and 1999. Perhaps even more troubling, as family finances have become more volatile, the median decline in income for families that do fall has increased from about 25 percent in the 1970s to more than 40 percent today, according to research by Yale professor Jacob Hacker and Nigar Nargis of the University of Dhaka.

While we can only hope that these trends are temporary, this rational economic anxiety creates both risks and opportunity for policy. With more workers questioning the benefits of...