FUTURE of Workers Act
- Sponsor
- Sen. Schatz, Brian [D-HI]
- Committees
- Finance Committee (primary)
- Last action
- Sep 30, 2026
Bottom line
The FUTURE of Workers Act creates a new federal program to retrain and support workers displaced by AI and automation, funded by new taxes and contributions from the AI industry and employers, while mandating federal responses to rising unemployment.
What it actually does
This bill establishes a comprehensive federal framework to address worker displacement due to automation and artificial intelligence (AI), alongside a tiered response to elevated national unemployment. It creates a Worker Adaptation and Training Program (WATP) offering retraining, financial assistance, and optional Medicaid coverage for displaced workers. To fund these initiatives, it imposes a new excise tax on AI services and an employer contribution system based on displacement ratios, coupled with penalties for excess displacement and disincentives for automation during high unemployment. It also expands WARN Act notice requirements and provides tax credits for employer-provided upskilling.
Proponents argue
Supporters argue that this bill proactively addresses the inevitable economic disruption caused by rapidly advancing automation and AI, ensuring that American workers are not left behind. They contend it provides a vital safety net and pathways to new careers, while incentivizing companies to invest in their workforce and holding those responsible for displacement accountable. The tiered unemployment response is seen as a necessary mechanism to ensure federal agencies prioritize job creation during economic downturns.
Opponents contend
Critics might argue that the new excise taxes on AI services and employer contributions could stifle innovation, increase costs for businesses, and potentially slow the adoption of beneficial technologies. They may contend that the government's role in dictating employment impacts and mandating retraining programs is overly interventionist and could lead to inefficient allocation of resources, creating a bureaucratic burden that hinders economic growth rather than promoting it.
The bill is moderately long and contains complex tax and program details, requiring a dedicated reading time. The estimated 40 minutes is reasonable for an informed reader to grasp its core provisions.
Sec. 3, Amending the Employment Act of 1946
Government Action During Periods of Unemployment
This section amends the Employment Act of 1946 to mandate specific federal government actions when the national unemployment rate exceeds certain thresholds for two consecutive quarters. At 6% unemployment, agencies administering discretionary grants/loans must consider employment impacts. At 7.5%, an emergency interagency taskforce is convened, the Comptroller General reviews agency activities for employment incentives, and the CBO must score bills for anticipated employment impacts. At 9%, the Federal Reserve Board must prioritize its maximum employment mandate.
Supporters argue
Supporters contend this provision ensures a proactive and coordinated federal response to economic downturns, preventing prolonged periods of high unemployment by directing government resources and policy tools towards job creation and stability.
Critics contend
Critics might argue that mandating specific actions for federal agencies and the Federal Reserve based on unemployment thresholds could politicize economic policy, potentially leading to inefficient interventions or undermining the independence of institutions like the Federal Reserve.
Tradeoffs
This provision balances the desire for a robust federal response to unemployment with concerns about government overreach into agency operations and monetary policy. It aims to ensure accountability for employment outcomes while potentially limiting agency discretion.
Sec. 4
Worker Adaptation and Training Program (WATP)
This section establishes the Worker Adaptation and Training Program (WATP) within the U.S. Employment Service. It provides retraining, career counseling, relocation assistance (up to $10,000), and 'New Foundations Support Payments' (monthly financial assistance) to workers displaced by covered technology (automation or AI) or those in at-risk occupations. It also offers optional Medicaid coverage for participants and their dependents, and wage replacement assistance for up to five years for those placed in lower-paying qualified employment. The program is authorized $60 billion annually.
Sec. 5
Federal Workforce Integration for WATP Participants
This section requires the Director of the Office of Personnel Management (OPM), in conjunction with the Secretary of Labor, to annually identify high-demand federal position classifications and occupational skill gaps. The goal is to facilitate the placement of Worker Adaptation and Training Program (WATP) participants into civil service positions, with OPM assisting participants in applying for these roles.
Sec. 6
Prioritization and Set-Aside for WATP Participants in Small Business Programs
This section directs the Administrator of the Small Business Administration (SBA) to prioritize participants in the Worker Adaptation and Training Program (WATP) when reviewing applications for SBA loans and grants, including the business loan and microloan programs. Additionally, it mandates that 1.5% of amounts appropriated for the SBA's business loan program (Section 7(a) of the Small Business Act) be set aside specifically to assist WATP participants.
Sec. 7
Covered Technology Impact Reports
This section requires the Commissioner of Labor Statistics, in consultation with other federal agencies, to publish and submit an annual report to Congress on the adoption of covered technology (automation and AI). The report must include occupational employment trends, a list of 'at-risk occupations' categorized by risk level, demographics most likely to be impacted, consequences of job displacement, anticipated technological advancements, a list of fastest-growing resilient occupations, and recommendations for workforce development policies.
Sec. 8
Expansion of WARN Act Notices
This section amends the Worker Adjustment and Retraining Notification (WARN) Act to increase the required notification period for plant closings and mass layoffs from 60 days to 120 days. It also mandates that the notice disclose whether the closing or layoff is 'substantially due to the adoption of covered technology' (automation or AI) and include information on employee retraining, unemployment resources, and transition services, specifically mentioning the Worker Adaptation and Training Program (WATP). These changes apply to events occurring 180 days after enactment.
Sec. 9
Employer-Provided Upskilling Credit
This section amends the Internal Revenue Code to establish a new 'employee upskilling credit' as part of the general business credit. Employers can claim a credit equal to 25% of qualified training expenditures for employees in 'at-risk occupations' to transition them to other roles. Qualified training must result in a recognized postsecondary credential and be provided through registered apprenticeships, WIOA-approved programs, career and technical education schools, community colleges, labor organizations, or employer/industry-sponsored programs. The credit is also allowed against the alternative minimum tax for eligible small businesses.
Sec. 10
Workplace Development Modernization
This section directs the Secretary of Labor to provide virtual opportunities for individuals to participate online in Department of Labor workforce training programs, aiming to expand their reach. Additionally, in collaboration with the Secretary of Commerce and relevant industry and nonprofit groups, the Secretary of Labor must provide additional online resources for job seekers on the Department of Labor website.
Sec. 11
Excise Tax on Artificial Intelligence Services and Worker Adaptation Trust Fund
This section establishes a new excise tax on 'qualifying artificial intelligence services' provided by 'covered persons' (companies with over $50 million in U.S. AI receipts). The tax is tiered: 4% on receipts between $50M-$500M, 6% on $500M-$5B, and 8% on receipts over $5B, with a phase-in at half these rates for the first year. It defines 'covered artificial intelligence model' based on computing power. The revenue from this tax is deposited into a new 'Worker Adaptation Trust Fund,' which will fund the Worker Adaptation and Training Program and supplemental child/elder care and workforce development programs.
Sec. 12
Worker Adaptation Contributions and Excess Displacement Accountability
This section introduces a quarterly 'Worker Adaptation Contribution' on covered employers (non-small businesses) based on their 'displacement ratio' (costs charged for WATP benefits to their displaced workers relative to total wages). The rate is capped at 2%. It also imposes an 'Excess Displacement Accountability' tax on employers in 'saturation periods' (when their uncapped displacement ratio exceeds 2%), taxing them for eliminated positions at rates equivalent to FICA/FUTA taxes for 5 years. This tax can be reduced by Worker Adaptation Contributions. Additional penalties include a corporate surtax and recapture of accelerated depreciation for automation assets during saturation periods. It also denies bonus depreciation and Section 179 expensing for automation assets during saturation periods.
The definition of 'covered artificial intelligence model' includes models trained using a quantity of computing power greater than or equal to 10^25 integer or floating-point operations, with annual adjustments by the Secretary of the Treasury in coordination with the Secretary of Commerce. It also includes any model the Secretary determines demonstrates 'capabilities substantially equivalent' to such models.
Sec. 11(c)(1), amending Chapter 50B of the Internal Revenue Code of 1986
Why it matters:The technical nature of AI models necessitates a precise definition, but the inclusion of 'substantially equivalent capabilities' grants significant regulatory discretion, which is a common legislative practice to allow for future technological advancements without needing new legislation.
Case for: Supporters argue this flexible definition ensures the tax remains relevant as AI technology evolves, preventing avoidance by companies developing models that achieve similar capabilities without meeting the exact computational threshold.
Case against: Critics might argue that granting the Secretary broad authority to determine 'substantially equivalent capabilities' creates regulatory uncertainty for AI developers, potentially leading to arbitrary enforcement or chilling innovation due to unpredictable tax liabilities.
Estimated impact: This definition is critical as it determines which AI models and, by extension, which AI services, are subject to the new excise tax, impacting potentially billions in revenue and shaping the AI industry's investment decisions.
The definition of 'eliminated position' explicitly includes the termination of employees accompanied by the substitution of independent contractors or workers from staffing/outsourcing agencies performing substantially similar services. Such substitution is not treated as a 'restoration' for abatement purposes.
Sec. 12(b), amending Chapter 50B of the Internal Revenue Code of 1986, adding Sec. 5000F(c)(2)(B)
Why it matters:This is a standard legislative technique to close potential loopholes where employers might try to avoid displacement taxes by reclassifying workers or outsourcing functions rather than truly reducing their workforce, ensuring the intent of the tax is met.
Case for: Proponents argue this prevents employers from circumventing the excess displacement tax by simply replacing employees with contractors or outsourced labor, ensuring the accountability mechanism remains effective against true workforce reduction due to automation.
Case against: Critics might argue that this provision could restrict legitimate business restructuring or the use of flexible labor models, potentially penalizing companies for making strategic operational decisions that are not solely aimed at tax avoidance.
Estimated impact: This provision could significantly expand the scope of the 'Excess Displacement Accountability' tax, potentially impacting employers who utilize independent contractors or outsourcing agencies after employee terminations.
This section denies bonus depreciation (Section 168(k)), requires the alternative depreciation system (Section 168(g)), and denies Section 179 expensing for 'automation assets' placed in service during a 'saturation period' of the taxpayer.
Sec. 12(c), amending Section 168(k)(2), 168(g)(1), and 179(d)(1) of the Internal Revenue Code of 1986
Why it matters:This is a common legislative technique to modify existing tax benefits to achieve policy goals (in this case, disincentivizing automation during periods of high displacement) without creating entirely new, more visible tax provisions.
Case for: Proponents argue this creates a powerful disincentive for companies to rapidly automate and displace workers during periods when they are already causing significant job losses, encouraging more thoughtful and workforce-friendly adoption of technology.
Case against: Critics would contend that removing these accelerated depreciation benefits for automation assets during saturation periods could significantly increase the cost of capital for businesses, hindering investment in productivity-enhancing technologies precisely when they might be needed most for economic recovery.
Estimated impact: This provision could significantly increase the tax burden for companies investing in automation during periods of high displacement, potentially altering investment decisions and the pace of technological adoption.