EDF and Resources for the Future reviewed existing public benefits programs that can help safeguard communities affected by the transition to a clean economy. This report is the third in a joint series on ensuring fairness for fossil fuel workers and communities in transition.
Without a comprehensive policy plan in place, the spillover effects from the decline in coal and other fossil fuels could leave millions of Americans in fossil fuel regions — beyond just the energy workers themselves — in need of immediate assistance to soften the economic downturn.
The role of public benefits programs
Policies that distribute resources to support general wellness, buffer communities from economic shock and ensure individuals’ ability to meet their basic needs are sometimes referred to as "public benefits." They provide retirees with pensions, displaced and disabled workers with financial relief, and low-income families with health care and nutritional assistance.
These programs are often referred to as the social safety net because they serve as the first line of defense in times of crisis. The current COVID-19 pandemic has highlighted the importance of expanded social safety net programs, like unemployment insurance, in insulating families and communities from the most severe economic shocks. However, compared to peer nations, the U.S. spends a relatively small percentage of its GDP on social safety net programs for workers and has virtually no safety net for local governments, which often experience fiscal crises during economic downturns, rendering them unable to provide essential services — often at a time when more people need them.
As we explore in other reports in this series, fossil fuel communities are likely to need targeted federal investment in economic development, workforce development, infrastructure, environmental remediation, and more as the U.S. transitions to a clean economy. Although it is clear that broad public benefits cannot ensure fairness for workers and communities alone, they can play a complementary role to these more targeted approaches.
For example, public benefits can provide an immediate stop gap in scenarios where workers and communities unexpectedly lose employment — and more targeted approaches have not been deployed. Our latest report explores the role of existing public benefits in protecting workers in transition, and which reforms or models could strengthen the delivery of federal benefits to fossil fuel producing communities.
Our analysis on the role of public benefits policies for communities in transition found:
- Public benefits, including programs that we think of as the social safety net, are critical for communities in transition. Social safety net programs already contribute to fairness for fossil fuel workers in transition, 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.
- Among social safety net programs, those that automatically expand in times of economic hardship are most likely to play an important role for communities in transition. These benefits programs, known as automatic stabilizers, can contribute to fairness for fossil fuel–dependent communities by improving economic stability in the face of energy-related economic shocks. There may also be opportunities to strengthen these policies to be more responsive to regionally concentrated economic shocks or to waive stringent eligibility criteria that may limit accessibility for fossil fuel communities.
- Social safety net programs with strict requirements are less likely to support workers in transition. Reforms to expand access and utilization can maximize benefits for fossil fuel communities. Since many federal social safety net programs are means-tested or require individuals or states to opt in, access is limited by stringent eligibility requirements, state political choices, lack of public awareness, or other barriers. Policy that expands federal benefits eligibility, access, and utilization could contribute to fairness for workers in the transition to a clean economy.
- Despite the advantages of broad-based social safety net programs in the U.S., our review suggests that these existing policies cannot address all the needs of fossil fuel communities. Additional targeted policies will likely play a significant role in ensuring fairness for these communities because they can be deployed in direct response to the specific needs of fossil fuel–producing regions facing economic contraction. Still, existing social safety net programs can offer immediate and temporary relief, while policymakers implement more targeted approaches, 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 pension 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 revenue from fossil fuel production will become unsustainable as the industry declines. Policymakers who hope to preserve these benefits need to consider decoupling their funding from rates of fossil fuel production and reforming company bankruptcy processes. Other industry-specific programs may provide a helpful model to support workers and communities in transition.