The Next Welfare Program in the U.S.: Addressing Job Losses, Skill Decline, and Wage Stagnation in the Age of AI

The Next Welfare Program in the U.S.: Addressing Job Losses, Skill Decline, and Wage Stagnation in the Age of AI

The rapid advancement of artificial intelligence (AI) is transforming the American economy in profound ways. While AI promises increased productivity and innovation, it also poses significant challenges: job losses, a decline in traditional skills, and persistent wage stagnation. As automation replaces routine tasks and even some creative roles, policymakers are grappling with how to support a workforce left behind by these shifts. The next welfare program in the U.S. will likely need to address these interconnected issues with a bold, forward-thinking approach that combines income support, reskilling initiatives, and economic incentives.

The AI-Driven Economic Shift

AI is no longer a distant future—it’s here, reshaping industries from manufacturing to customer service. According to a 2023 report by the McKinsey Global Institute, up to 30% of current jobs could be automated by 2030, with low- and middle-skill workers bearing the brunt. Roles like truck drivers, retail clerks, and even some white-collar positions in accounting or legal research are increasingly at risk. Meanwhile, the skills required for emerging jobs—think data science, AI maintenance, or green energy engineering—are out of reach for many, exacerbating a skills gap. Compounding this is wage stagnation: despite productivity gains from technology, real wages for the bottom 50% of earners have barely budged since the 1980s, per the Economic Policy Institute.

This trifecta—job losses, skill decline, and stagnant wages—demands a welfare system that goes beyond traditional unemployment benefits or food assistance. The next program must be proactive, not reactive, preparing workers for an AI-driven economy while ensuring financial stability.

A Universal Basic Income Experiment

One widely discussed proposal is Universal Basic Income (UBI), a system where every citizen receives a regular, unconditional cash payment. Advocates argue UBI could cushion the blow of AI-induced job losses and provide a safety net as workers transition to new roles. Andrew Yang’s 2020 presidential campaign popularized this idea, proposing $1,000 monthly payments to every American adult, funded by a value-added tax on tech giants profiting from automation.

UBI’s appeal lies in its simplicity and universality, addressing wage stagnation by boosting disposable income and giving workers flexibility to retrain or pursue entrepreneurial ventures. Pilot programs, like the one in Stockton, California, showed promising results: recipients reported reduced financial stress and increased employment rates as they used the funds to upskill or relocate. However, critics warn of its high cost—estimated at $3 trillion annually nationwide—and potential to disincentivize work. The next welfare program might refine UBI into a targeted version, focusing on displaced workers or low-income households hardest hit by AI.

Reskilling and Lifelong Learning Subsidies

Another pillar of the next welfare program could be a robust reskilling initiative. As AI renders old skills obsolete, the U.S. needs a system to help workers adapt. Current programs like the Trade Adjustment Assistance are too narrow, focusing only on trade-related job losses. A broader “AI Adjustment Assistance” program could offer subsidized training in high-demand fields, such as renewable energy or healthcare, where human judgment remains critical.

Imagine a government-backed “Lifelong Learning Account” for every worker, funded by taxes on automation technologies. Workers could tap these accounts for online courses, vocational training, or apprenticeships, staying competitive in a shifting job market. Pairing this with tax incentives for companies that hire reskilled workers could accelerate the transition, addressing both skill decline and unemployment.

Wage Subsidies and Public Jobs

To tackle wage stagnation directly, the next welfare program might include wage subsidies or a federal jobs guarantee. Subsidies could boost pay in sectors less affected by AI, like caregiving or education, incentivizing employment while narrowing income gaps. Alternatively, a jobs guarantee could employ workers in public infrastructure projects—think rebuilding bridges or expanding broadband—offering a living wage and benefits.

The Path Forward

The next U.S. welfare program must blend these ideas: a modest UBI for immediate relief, reskilling subsidies for long-term employability, and wage supports to counter stagnation. Funding could come from taxing AI-driven profits, ensuring tech giants contribute to the solution. As AI reshapes the economy, America’s social safety net must evolve to protect its workers, fostering resilience in an uncertain future.