The $1 billion Trade Adjustment Assistance program (TAA) will
expire at the end of September. The job training program was first
adopted in 1962 to help Americans who were losing manufacturing
jobs in an increasingly globalized economy. Despite its faulty
design and poor track record, some Members of Congress want to
expand the program to cover all sectors--even those that are
creating millions of new jobs. Further complicating the debate is a
proposal to renew the President's fast track trade promotion
authority in TAA legislation.
Rather than making a bad policy worse, Congress should take this
opportunity to eliminate the disincentives at the heart of all
federal employment policies. Congress must reform and consolidate a
host of schemes into one program that provides cost-effective,
timely, and meaningful assistance to workers.
The TAA Program
TAA was originally an expansion of the Unemployment Insurance
(UI) program, which began in 1935 as part of the New Deal. The
total cost of UI ranges from $20 to $40 billion per year.
TAA is currently focused on providing reemployment assistance to
manufacturing workers who have lost their jobs as a consequence of
import competition or a shift in production to foreign sources. TAA
provides up to 130 weeks of training and up to 104 weeks of income
support--on top of the regular 26 weeks of UI benefits available to
workers losing their jobs for less specific reasons.
Additionally, the program provides health insurance assistance and
wage insurance for older workers. The programs are generally
implemented at the state and local levels and are overseen by the
U.S. Department of Labor.
To obtain TAA reemployment services and benefits, a group of
workers must first file a petition with the U.S. Department of
Labor requesting certification as workers adversely affected by
foreign trade. If the worker group meets the necessary group
eligibility criteria, a certification will be issued allowing each
worker in the group to apply for individual services and
While the eligibility criteria are fairly defined, it can be a
difficult and time-consuming process to determine whether a job
loss is due to trade, new technology, recession, or poor business
management. Additionally, the extent to which trade-affected
workers actually use or need the wide array of TAA services is
uncertain. According to the Government Accountability Office (GAO),
laid-off workers can be lost during the certification process, as
they look for new jobs rather than wait for uncertain government
At four of the five manufacturing sites examined by the GAO in a
recent review of the TAA program, most laid-off workers had found a
new job before the GAO study had even commenced. Of those who were
aware of TAA benefits, less than one-third opted to remain
unemployed and receive training and long-term support. In general,
many workers were unaware of health care and wage insurance
benefits, and most simply wanted to find a new job as quickly as
Even with its flaws, TAA remains focused on the one sector that
is truly under duress: manufacturing. Roughly one in five
manufacturing jobs has disappeared in recent years, affecting three
million blue-collar industrial workers. However, not all of these
jobs disappeared as a result of foreign competition, and the sector
overall is producing more goods than ever. Technology and
structural changes play the dominant roles in the changing
composition of the American workforce.
Expanding TAA to cover the service sector would be nonsensical.
The U.S. economy created a surplus of more than 10 million service
jobs over the same time period, and more than 80 percent of
Americans now work in the service sector.
Conclusion: Real Assistance for the
Reauthorizing and expanding TAA's mandate is no long-term
solution to helping distressed workers find new jobs. UI and TAA
are founded on disincentives; by design, they pay people not to
work. The way to fix the economic safety net is to update New Deal
employment programs for the 21st century. A simplified, unified UI
program would provide timely, cost-effective reemployment
assistance to any worker who has been laid off for any reason.
The original, stated goals of federal unemployment policy were
to: (1) provide income support; and (2) increase the job search
opportunities of workers who had become unemployed through no fault
of their own. After seven decades and billions of tax dollars
spent, it is clear that job assistance programs have hindered, not
helped, workers' search for new jobs. Congress must eliminate the
disincentives at the heart of federal employment programs--and do
so in a way that saves taxpayer dollars and provides real
assistance to workers.
Ph.D., is Director of, and Daniella
Markheim is Jay Van Andel Senior Analyst in Trade
Policy in, the Center for International Trade and Economics at The
Government Accountability Office, "Trade Adjustment Assistance:
Most Workers in Five Layoffs Received Services, but Better Outreach
Needed on New Benefits," GAO-06-43, January 2006.