Ms Brady’s experience points to a broader problem. Switching careers in America is hard; AI may soon make it more common. Around 10m jobs could be displaced over the next decade, according to Goldman Sachs, a bank. Entry-level white-collar jobs and routine office work are especially exposed, putting both new and current workers at risk. Widespread job losses have yet to materialise, but the fear is already shaping American politics: nearly one in five workers expects AI to eliminate their job within five years. Earlier technologies from electricity to the computer displaced workers but also created new kinds of work. Now some technologists, including Elon Musk, imagine a future in which universal high income cushions people as paid work recedes. Few politicians accept that solution, but devising a different fix is harder. A serious response would help young people enter the workforce, existing workers adapt as jobs change, and displaced workers move into new occupations. Can America build such a system before the disruption arrives? Its recent record is not encouraging. Between 2000 and 2011 America shed nearly 6m factory jobs—some 1m of them owing to Chinese import competition. The main federal response, Trade Adjustment Assistance (TAA), paid for retraining and extended unemployment benefits, but only for workers who could prove that trade had cost them their jobs. Those who received training worked roughly three months more than comparable workers who did not and, over the following decade, earned about $50,000 more. But the programme’s scope was limited. In the early 2000s roughly 160,000 workers a year were covered by TAA certifications, while manufacturing was losing around 500,000 jobs annually. Of those covered, only about 40,000 entered training each year, reflecting cumbersome applications and long wait times. The result was local economic devastation that helped fuel America’s populist turn. The AI shock will be different, affecting white-collar jobs scattered across the country. Losses may come through less hiring and rounds of layoffs rather than factory closures. Still, the burden could fall heavily on particular groups. Young workers may find entry-level opportunities disappearing,
while women without degrees—overrepresented in administrative and back- office roles—face high risks. At present, the country’s system of educating and training workers assumes that they train once, near the start of their careers, and unemployment is a brief interruption before a return to similar work. Around four in ten Americans graduating from high school enroll in a four-year university. Community colleges provide most short-term training, but receive far less funding—they get roughly $25bn in public funding for workforce programmes and serve around 8m people a year. Federal support for displaced workers is smaller still, especially since TAA closed to new workers in 2022. In 2023 the main federal training scheme for those who lose their jobs spent $170m on about 39,000 people. A modest voucher goes toward an approved course. “Our whole system is predicated on funding based on attendance, not outcomes,” says Gina Raimondo, Joe Biden’s commerce secretary and a former governor of Rhode Island. The result is fragmented and underfunded. What would a better model look like? Start with young workers. If AI erodes entry-level white-collar jobs, America will need more routes into work that do not run through a four-year degree. One solution is sectoral programmes, which bring employers and training providers together to design courses around actual vacancies. Four randomised trials in health care, IT support and manufacturing found lasting earnings gains of 11-40%. Apprenticeships offer another route, combining paid work with structured training. These have become more popular, but only around 800,000 Americans are registered apprentices, barely half the number in Germany, with a quarter of America’s population. Unlike in Germany, America’s apprenticeships remain concentrated in construction and skilled trades. Other initiatives are getting started. RAISE US, a non-profit co-founded by Ms Raimondo and Eric Holcomb, a former Republican governor of Indiana, is working with states, training providers and employers—its donors include Anthropic and OpenAI, two giant AI firms, as well as General Motors and Bank of America. So far it has announced pilots in four states. In Maryland it has built on a state scheme that pays young workers to spend a year with
non-profits, adding coaching, training and pathways into long-term jobs in health care and education. Incumbent workers need a different type of assistance, as AI changes the jobs they already hold. It is common for large white-collar employers to help staff learn how to use AI. But some workers will need not a new version of their current role but an entirely new job. Salesforce, a software company, offers a glimpse of what that might involve. It maps employees’ skills to possible internal roles and recommends training; reimbursement can help cover the cost of formal qualifications. It is fitting that Salesforce, itself being reshaped by AI, is testing ways to help its staff evolve. But such internal platforms remain rare. The main problem is that, for many in exposed jobs, no one yet knows what they should be trained for. Ideally roles should build on existing skills and preserve some professional identity. “There is a cost to people’s egos,” says Lee Lilley, North Carolina’s commerce secretary. “It is not realistic to take someone with a 20-year career in a white-collar setting and ask, ‘Would you like to become a welder?’” That uncertainty is one reason training systems need to be nimbler, with employers closely involved in adapting courses to changing demand. But that involvement will not come automatically. At Costco, Ms Brady eventually moved into its optical department after being allowed to cross- train. Yet the opportunity arose through an ad-hoc accommodation, not a model for retraining workers at scale. As technological change forces workers to switch jobs more often, many may need to retrain several times. Yet those who lose their jobs receive little help doing so. Donald Trump’s One Big Beautiful Bill Act extended federal Pell grants to approved career programmes lasting between eight and 15 weeks. But the Congressional Budget Office expects the change to reach only 100,000 additional recipients a year by 2034, with grants averaging just $2,200. In the 1940s business leaders fearing mass unemployment after the second world war formed the Committee for Economic Development to plan the
transition to peace. Ms Raimondo wants firms to support a modern equivalent. “If we don’t get this right, we won’t lead the world in AI,” she says. “There will be regulatory backlash, which is bad for the companies.” Connecticut’s governor, Ned Lamont, would welcome more collaboration with tech firms. “Frankly, I need help from Anthropic and the AI companies to stimulate our imagination,” he says. Anthropic and the OpenAI Foundation have committed $200m and $250m, respectively, to research and programmes such as RAISE US to help workers and economies navigate AI disruption. By way of comparison, OpenAI plans to spend 3,000 times that sum on computing power through 2030. ■ Stay on top of American politics with The US in brief, our daily newsletter with fast analysis of the most important political news, and Checks and Balance, a weekly note that examines the state of American democracy and the issues that matter to voters. This article was downloaded by zlibrary from https://www.economist.com/united-states/2026/08/02/can-america-retrain-workers- before-ai-leaves-them-behind
America’s income taxes are diverging As states led by Democrats try to squeeze the rich, Republicans want to phase out income taxes entirely Aug 6th 2026 WHEN HE WAS on the pro-wrestling circuit, Glenn Jacobs—known as “Kane” in the ring—worked in nearly every state. The result was a tax return “a foot tall”. Now the Republican mayor of Knox County, Tennessee, Mr Jacobs is pleased that his state eliminated income tax in 2021 and is serving as a model for other states. On August 4th Missouri voted on a constitutional amendment to phase out income tax. It failed, but its presence on the ballot points to a broader trend. State tax systems are diverging. Much attention has been paid to Democrats’ efforts to raise taxes on the rich. Washington state, for example, introduced an income tax on millionaires this year, and in November Californians will
vote on a wealth tax. But Republican-led states are moving in the other direction. Over the past five years 26 states—most led by Republicans— have reduced their individual income-tax rates. Missouri’s top marginal rate has fallen by more than 20% since 2017. This widening disparity is relatively new. Democrats and Republicans have always differed on taxes, but historically states tried to stay within a range that raised revenue without dampening economic activity. “It used to be possible to speak of a broad middle”, with rates hovering around 6%, says Jared Walczak of the Tax Foundation, a think-tank. “Now you either have low rates, below 4%, or increasingly high-rate states, entering into double digits,” Mr Walczak explains. Income taxes attract particular attention. Democrats prefer graduated income taxes to flat consumption taxes. The latter are regressive, imposing a disproportionate burden on low-income people, who spend a greater share of what they earn.
Republicans take a different view. Bishop Davidson, the Missouri state representative who sponsored the no-income-tax amendment, argues they are “wildly invasive of people’s privacy”. In January Donald Trump’s Council of Economic Advisers published a report encouraging states to scrap income taxes and replace them with a broader, higher sales tax. It argued that taxing consumption rather than production is more economically efficient. But a tax model that works in one state may not in another. Florida has no income tax, but can collect sales tax from tourists. Texas also lacks an income tax, but fills coffers with fees from oil and gas. In Missouri income-tax abolitionists consider Tennessee a more realistic model. Mr Davidson has also studied South Carolina, where lawmakers voted in March to draw down income taxes, and North Carolina, a swing state which will vote in November on a ballot measure to lower and cap its flat rate. Detractors dismiss such comparisons. It is “apples and oranges”, says Ashley Aune, the top Democrat in Missouri’s House, not least because Tennessee had been only minimally reliant on income tax for decades before abolishing it. Missouri, in contrast, depended on income tax for almost two- thirds of its revenue last year. Scott Charton, who advocated against abolishing the income tax, points out that Missourians rejected new taxes on
services in 2016. The problem with eliminating one type of tax is that you probably have to raise another. In Missouri, that argument seemed to win out. ■ Stay on top of American politics with The US in brief, our daily newsletter with fast analysis of the most important political news, and Checks and Balance, a weekly note that examines the state of American democracy and the issues that matter to voters. This article was downloaded by zlibrary from https://www.economist.com/united-states/2026/08/06/americas-income-taxes-are- diverging