What Is This ‘Wage Insurance’ Obama’s Talking About?

Wage insurance like this is actually just one of a range of policies that could all be fairly described by the phrase “wage insurance”—efforts to protect families from shocks to their income, or from barebones wages more generally. Americans already benefit from some of these policies—they aren’t something that only exist among the usual suspects, Scandinavia or Canada. One of the earliest forms of wage insurance is unemployment insurance, made national in 1935.

Some companies—typically ones that are unionized or those prone to cyclical and seasonal furloughs and layoffs—provide their own version of wage insurance. Employers can set up a trust fund that holds any combination of employee and employer contributions. Such Supplemental Unemployment Benefit Plans have been around since the 1950s. Unemployment insurance plus SUB plans helps employers who lay off workers, but want these experienced unemployed workers to not take first job available, and wait in case the employers call them back to work.