Trade Adjustment Assistance Works!
After nine months of being used as a pawn in a partisan battle, Trade Adjustment Assistance (TAA)—a small program that provides job search assistance and training to workers, firms, farmers, and fishermen hurt by globalization—is scheduled for a vote this week in the Senate. Hundreds of thousands of workers have been denied assistance since the program expired at the end of 2010, while critics continued to make unsubstantiated and out-of-date claims. It is time to set the record straight about a program that has provided a critical lifeline to millions of workers and their families.
International trade reduces costs at home and provides new opportunities to sell US goods and services abroad, thereby creating high-skill, high-wage jobs for Americans. But increased import competition and outsourcing can also cause dislocations. Although the benefits of trade might outweigh the costs for the economy as a whole, the costs can be substantial for certain groups of workers and regions.
Appreciating this calculus, President Kennedy asked Congress to create TAA in 1962. TAA has been a centerpiece of US trade policy since then, receiving broad support from Democrats and Republicans, as well as from the both the business and labor communities.
TAA provides extended unemployment insurance (UI), intensive job search assistance, and serious vocational training to workers who lose their jobs because of increased imports or outsourcing. Approximately 235,000 workers received assistance last year at a total cost of less than $1 billion. Despite terrible labor market conditions, 59 percent of those participants found a new job within six months after "graduating" from TAA and 80 percent of them remained employed at those jobs one year later.
In arguing that it is "unfair" to provide more assistance to some workers and not to others, some critics conceal their opposition to all government assistance to the unemployed. Others argue that there are already too many worker assistance programs, even though these programs serve different populations. And then there's the old canard that TAA is nothing more than a "payoff" to unions. In fact, union members constitute a minority of TAA recipients and there is a small likelihood that these workers will find new jobs covered by unions.
Much of the criticism of TAA is based on provisions that no longer exist. The program has undergone tremendous reform over the last decade. Workers must be enrolled in certified training for occupations and skills currently under demand in order to receive extended UI. A recent study finds that enrolling in and completing TAA training reduces the costs incurred and raises the chances of a worker finding a new job.
Critics continue to blame earnings losses among TAA participants on the program, ignoring the fact that earnings for all workers have fallen over the last 30 years. Others argue against expanding TAA to cover service workers, even though, as my colleague Brad Jensen finds, more service workers than manufacturing workers currently face international competition.
TAA has enjoyed bipartisan support throughout its existence. Just two years ago Senator Charles Grassley (R-Iowa) noted that a bipartisan agreement on TAA reforms was in keeping with "a social compact we've had on trade for more than 45 years." Senator Max Baucus (D-Montana) characterized the reforms as "an important step to retain jobs and help those who are out of work retool for new jobs." And Congressman Dave Camp (R-Michigan), referred specifically to the inclusion of service workers as "absolutely essential to helping those hurt by trade."
It is ironic that some in Congress would cut assistance to the unemployed when workers are facing enormous difficulties in finding new jobs, causing some of them to drop out of the labor market altogether. The irony is further compounded by the fact that total federal spending on worker assistance continues to fall, despite calls by business leaders and policymakers for more, not less worker training, given the intensification of technological change and international competition.
It is time for Congress to move beyond petty political fighting and finally renew TAA before more American workers and their families are hurt.