How to Refloat These Boats

Moreover, when U.S. workers suffer setbacks -- a health crisis or job loss -- the decline in their economic well-being is far steeper than it used to be. Research by Yale University political scientist Jacob Hacker has shown that families whose incomes drop typically face 40 percent drops, significantly more than during the 1970s and '80s. A higher education degree has become a less reliable insurance policy against such economic setbacks. Princeton University economist Henry Farber has found that college-educated workers who lost jobs between 2001 and 2003 suffered proportionately deeper pay cuts when they went back to work than those with less education.

Should we as a society simply acknowledge that America's economic compact is largely a thing of the past? I don't think so. And, as a Democrat, I want my party to offer an optimistic vision to people who believe that the economic compact is history. Right now, our party is divided on how to do that, but it needn't be. We can come up with ways to not only ease the pain of job dislocations but also help foster middle-class jobs in the future. Here are some things Democrats (and Republicans) should be able to agree on:

Reducing the health care burden on employers.

Encouraging companies to outsource their jobs to rural and urban parts of this country, rather than overseas. (One consultant who advises firms on how to cut legal costs uses the phrase "Banga-tucky" to get them to look at Kentucky as the Bangalore of inexpensive legal work.)

Replacing our fragmented and confusing programs for people who have lost their jobs with a simple, unified system so that a worker can easily find and be eligible for meaningful assistance. Benefits should include health insurance while they're between jobs and wage insurance ensuring that no established worker sees more than a 25 percent drop in income when he or she finds a new job.

Giving workers more help before they lose jobs, by creating "flexible education accounts" with tax credits for education and training.

This may sound like another wonky policy list, but the idea behind the approach is essential. We must recognize both the limits and responsibilities of government. And that means a government that does things it can do -- boosting health and education -- and does not try to do the things it can't do, such as stopping globalization.

One thing no government can do is to accurately pinpoint the middle-class opportunities that will replace the ones flowing to India, China and Mexico. Only 15 years ago, some analysts forecast that work as a travel agent would be one of the fast-growing job categories; it's down 38 percent since then. And no one predicted the number of jobs that would be associated with the Internet.