Trade Adjustment Assistance: Lost in the Shuffle
by Greg Mastel, Dutko Worldwide
and Howard F. Rosen, Peterson Institute for International Economics
Op-ed in the Hill
November 5, 2010
© The Hill
A great deal of legislation has passed in the last two years so it is understandable that many may not have noticed that one important piece of legislation that became law in 2009 was a major update of the Trade Adjustment Assistance (TAA) program. Unfortunately, that long-needed revision is due to expire on New Year's Eve unless the Congress acts to extend it.
TAA was a brainchild of President Kennedy and has been in place—with bipartisan support—since 1963. The basic concept of TAA was simple. A policy of expanded trade provided great benefits to the economy as a whole, but had demonstrable costs to some workers and industries. TAA provided for retraining, retooling, and income support to those workers and firms harmed by trade so they could find new places in the economy. Time and time again, polling data suggests that Americans are supportive of new trade agreements and free trade in general only if programs like TAA are in place to deal with the losers from increased trade.
The program was extended and expanded a number of times in the intervening decades. Training periods for workers were extended to allow truly marketable skills to be acquired, new groups of workers were extended TAA coverage, and TAA recipients were allowed to purchase special health coverage for themselves and their families during retraining.
Until 2009, however, there were still important gaps in the program. TAA benefits were extended to workers who produced goods, but not those that produced services. This made sense in the early 1960s, but services are now responsible for the bulk of US employment and US service providers, such as call centers, computer programmers, and even X-ray technicians increasingly face foreign competition. TAA also focused primarily upon situations in which competing imports directly drove US companies out of business, but the increasing reality was that US factories moved overseas to compete rather than being driven out of business.
The 2009 update of TAA addressed both of these major shortcomings of the program and updated it in many small but important ways. Though it did not receive the attention it deserved, the 2009 TAA bill was one of the most important revisions of US worker adjustment legislation in decades.
The best news of all is that it is working and working quite well. The introduction of the new TAA program coincided with the lingering recession and the resulting special extension of unemployment benefits, so some of its benefits are hard to discern early on. But according to just released data from the Department of Labor (DOL), workers affected by more than 3,500 layoffs have been certified to receive TAA benefits since the new law passed—up almost one-third compared to the old pace of certifications.
More tellingly, according to DOL estimates the new provisions (covering service workers, etc.) have resulted in approximately 140,000 additional displaced workers being eligible for TAA benefits. In short, the equivalent of the population of a small city is receiving training and benefits under the TAA program that would not have been receiving assistance otherwise. Some states hit hard by tough economic times, such as North Carolina, Michigan, and Pennsylvania, have particularly benefited from TAA.
Unfortunately, this success story is fragile. Thanks to various legislative and budgetary concerns, the TAA program was extended only until the end of 2010. Unless Congress acts to extend it, the program or at least its new provisions, will cease to exist on January 1, 2011.
Though it seems inconceivable at a time when the country is suffering with near 10 percent unemployment, unless the Congress acts during its upcoming Lame Duck session TAA—one of the most important programs for the unemployed—will expire at the end of 2010.
The Congress still has time to give this story a happy ending. It could simply extend TAA—as it will do with literally hundreds of other programs—before leaving for the year. In the heated debate at the end of the Congress over taxes, new directions for the economy, and many other important topics, it might be easy to lose sight of the fact that 140,000 men and women are being retrained to find a new place in the economy. But shame on Congress if it allows this to happen. TAA is a critical program that has worked for more than four decades with wide bipartisan support. It should not be allowed to just fizzle out.
Mastel and Rosen established the Trade Adjustment Assistance Coalition, a nonprofit organization that advocates on behalf of dislocated workers and their families.