Trade Adjustment Assistance: Putting workers first

Trade Adjustment Assistance
(TAA) is a worker retraining program that began in 1974 to help Americans
impacted by the effects of foreign trade. Over the decades, as Congress
increasingly liberalized free trade through agreements — such as the North
American Free Trade Agreement (NAFTA) — and executive powers — such as Trade
Promotion Authority (TPA) — TAA became the primary vehicle to address worker
dislocations and impacts due to these trade policies.

TAA provides eligible workers
certified by the US Department of Labor with an entitlement to benefits not
available to other workers experiencing job loss or reduction of hours. These
benefits include approximately two years of extended unemployment compensation
and job training assistance. TAA participants can also receive relocation
allowances, and older workers can obtain a wage insurance benefit to help
compensate for taking a new job at lower earnings.

Since 2002, TAA has been
reauthorized multiple times, and the law is currently due to expire in the
summer of 2021. While various benefit expansions have occurred through these
renewals of the law, the basic structure of TAA has not changed. This latest
reauthorization is an opportunity to change that and fundamentally alter the
program so it helps more workers in a meaningful way.

U.S. President Barack Obama signs the renewal of the Trade Adjustment Assistance for Workers in the Oval Office of the White House in Washington October 21, 2011. Via REUTERS/Joshua Roberts

On March 4, 2021, I was an expert witness for a hearing titled, “Reauthorizing Trade Adjustment Assistance: Opportunities for Equitable Access and Modernization” before the House Committee on Ways and Means, Subcommittee on Trade. Having led TAA reauthorization efforts as a high-ranking Labor Department official in the George W. Bush administration, this hearing provided an opportunity to reiterate some of the reforms proposed then, as well as offer new solutions for a post-COVID economy.

During the past year, AEI has documented the many shortcomings and opportunities for improvement for the nation’s federal employment and job training programs. TAA is another in the litany of federal programs in need of major overhaul. Recently, Rachel Lipson conducted a review of federal dislocated worker programs for AEI and documented three studies of the TAA program that show questionable results for the overall costs. In light of this evidence and through my own policy experience, I advocated for four major reforms during the hearing.

First is providing federal
flexibility in the states’ delivery of the TAA program. Given the diverse
nature of our workforce and local economic conditions, it is not feasible for a
“top-down” program design to address modern dislocations. Instead, Congress
should remove unnecessary mandates in the law and encourage flexible service
delivery in return for improved outcomes.

Second, a reauthorized TAA
should reduce federal workforce program duplication by creating new
demonstration authority that would allow state innovations, such as braiding
funds, allowing administrative reforms that target more dollars to participant
services, or waiving legal provisions or regulations that hamper service
delivery and improved outcomes.

Third, TAA should be restructured
to provide workers with “Training and Transitional Services” accounts, which
are flexible resources to be used by workers to access the training, case
management, and services needed to gain skills and a return to work. TAA
participants are not accessing different training alternatives, like on-the-job
training, and the current structure of the TAA program incentivizes longer
spells of unemployment in order to access all of the training benefits available.
A reformed program would provide the new TTS accounts so participants could
shop for the case management services and training that provides them with the best
— and most cost-effective — approach to reemployment.

Finally, any training dollars
appropriated for community colleges to build capacity should be prioritized for
small and mid-size community colleges throughout the country. These colleges
are located in many of the same communities decimated by the impacts of foreign
trade or industry loss, yet they often lack the financial resources to scale-up
needed training programs for existing jobs and growing industries.

Congress has the opportunity to drastically improve the TAA program. As the economy recovers from COVID, these reforms will benefit workers and help them transition to stable employment at good wages, while benefitting communities looking to recover.