Jake Higdon of the Environmental Defense Fund and Molly Robertson of Resources for the Future coauthored the report described in this blog post.
A Federal Reserve report from 2019 shows that nearly 40 percent of Americans cannot afford a $400 emergency—and that was well before the economic crisis resulting from the coronavirus pandemic. This finding, in addition to recent observations during the pandemic, highlights just how quickly economic shocks can rob Americans of the necessary funds they use to meet their most basic needs. The decline in production of coal and other fossil fuels could have spillover effects that leave Americans in fossil fuel regions in need of immediate assistance—beyond just the energy workers themselves.
Our series of reports on this topic has focused on a variety of policy tools that can help workers and communities that are transitioning away from fossil fuels secure a rich, vibrant, and sustainable future. In our most recent report, we examine how existing public benefits programs and social safety nets can interact with other policy tools to bridge the gap for communities in transition.
Policies that distribute resources to support the general well-being of communities, protect communities from economic shocks, and ensure the ability of individuals to meet their basic needs are sometimes referred to as “public benefits.” Public benefits provide retirees with pensions, displaced and disabled workers with financial support, and low-income families with health care and nutritional assistance. Programs that provide public benefits at a national scale are often referred to collectively as the “social safety net,” because they serve as the first line of defense in times of crisis. The current pandemic has highlighted the importance of expanded social safety net programs, such as unemployment insurance that insulates families and communities from the most severe economic shocks. However, compared to peer nations, the United States spends a relatively small percentage of its GDP on social safety net programs.
As we discuss in other reports in this series, fossil fuel communities are likely to need federal investment that targets economic development, workforce development, infrastructure, environmental remediation, and more as the United States transitions to a clean energy economy. Although public benefits programs alone cannot ensure fairness for workers and communities, they can complement more targeted approaches. For example, public benefits can provide an immediate stopgap when workers unexpectedly lose their jobs. Our latest report considers which reforms or models could strengthen the delivery of federal benefits to fossil fuel–producing communities.
Below is a summary of the key findings on the role of public benefits programs for communities in transition.
Public benefits, including programs that we think of as the social safety net, are critical for communities in transition.
Public benefits programs have received limited attention in scholarly work that focuses on fairness for workers and communities, but these programs should be covered more. Because the economic impacts of an energy transition are not distributed evenly, policies that redistribute resources from those who benefit to those who bear costs are especially relevant. Social safety net programs contribute to fairness for fossil fuel workers in transition today, and their role will likely grow in the context of an accelerated energy transition. These programs can improve economic security and health for individuals and families facing job displacement. Policymakers should recognize that regions with weaker social safety nets may require more robust interventions in a transition context, whereas other regions with stronger social safety nets will need less intervention.
The social safety net programs known as “automatic stabilizers” are most likely to play an important role for communities in transition, by bridging the gap between economic shocks and new, more targeted policy interventions.
Public benefits programs that automatically expand in times of economic hardship, known as “automatic stabilizers,” can contribute to fairness for fossil fuel–dependent communities by improving economic stability during energy-related shocks. Opportunities may exist to strengthen these policies by making them more responsive to economic shocks that disproportionately affect specific regions, or by allowing them to waive stringent eligibility criteria that may limit access among fossil fuel communities.
Social safety net programs with strict requirements for eligibility are less likely to support workers in transition than more accessible benefits programs. Reforms to expand access and utilization can maximize benefits for fossil fuel communities.
Many federal social safety net programs require states or individuals to opt in or are “means-tested,” meaning they require proof that families or individuals do not have the means to do without the assistance. Consequently, access to these programs is limited by stringent eligibility requirements, state political choices, lack of public awareness, and other barriers. Policies that expand federal benefit eligibility, access, and utilization could contribute to fairness for workers in the transition to a clean economy. Although social safety net policies that are means-tested may apply to workers and community members who are indirectly affected by fossil fuel divestment, those policies may be less directly applicable to miners and utility workers, who tend to earn above-average incomes.
Despite the advantages of broad-based social safety net programs in the United States, our review suggests that these types of policies cannot address all the needs of fossil fuel communities.
Additional, targeted policies likely will play a significant role in ensuring fairness for communities in transition, because these policies can be deployed in direct response to the specific needs of fossil fuel–producing regions that face economic hardship. In the meantime, existing social safety net programs can offer some temporary reprieve while policymakers develop more targeted policies, which often get held up by the political process.
Industry-specific pension and health benefits can contribute to individual well-being and community economic stability.
With more than $1 billion in authorized transfers to coal pensions and health benefits alone in 2020, federally supported programs for coal workers make up the lion’s share of targeted federal support to fossil fuel communities today. However, programs that depend on revenues from fossil fuel production will become less sustainable as the industry declines. Policymakers who hope to preserve these benefits need to consider decoupling funding from fossil fuel production and reforming company bankruptcy processes. Other industry-specific programs may provide a helpful model to support workers and communities in transition. One promising model is the Veterans Health Administration, which offers health care to a specific group of workers who—like fossil fuel workers—often work jobs with high occupational risk hazards and have high rates of disability.
Public benefits programs cannot, on their own, replace employment, economic activity, or work-based benefits for communities that rely on the fossil fuel economy. However, public benefits can buffer against deep economic shocks, provide a temporary bridge to new job opportunities, and complement more targeted policies. We have explored those more targeted approaches in our recent reports on federal economic development policies and investment in environmental remediation and infrastructure.
Over the coming months, we will publish additional reports, blog posts, and other materials in this series to address more policy mechanisms—including labor policies—and illustrative case studies of communities in transition.
Read the full public benefits report.
Learn more about the full series on ensuring fairness for fossil fuel workers and communities.