Trade Adjustment Backers Warn Program Is No Magic Wand

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By Chris Opfer

Feb. 9 — An assorted mix of lawmakers have hitched their wagons to an obscure Labor Department program designed to offset some expected job losses related to the pending Pacific Rim trade deal, but even the most ardent supporters say the benefits system has its limits.

The Trade Adjustment Assistance program provides unemployment compensation, wage insurance, training and other benefits to workers who lose their jobs because of competition from foreign countries.

Although the program was reauthorized as a way to attract support from lawmakers skeptical about the Trans-Pacific Partnership agreement, many say it simply subsidizes bad trade policy that will cost American jobs.

“Trade adjustment—make no mistake about it—is a fancy burial,” AFL-CIO President Richard Trumka told reporters Feb. 3. “It’s not a substitute for keeping jobs in the country.”

The AFL-CIO has been a vocal player in the fight to stop the 12-nation TPP trade deal, which the federation argues will give businesses an incentive to send jobs to partner countries where wages are lower and labor protections are inadequate.

A number of lawmakers who favor the TAA program say it's a reflection of just how bad many trade agreements have been for American workers.

“The TAA is an utter admission that the trade deals are going to cause major job losses,” Sen. Jeff Sessions (R-Ala.) told Bloomberg BNA Feb. 2.

$450 Million Support Net

The TAA program has been reauthorized and tweaked several times since its creation in 1975.

That includes last year, when Congress passed legislation to renew the program for $450 annually. The measure was dangled to coax lawmakers into supporting a separate bill restoring President Barack Obama's power to negotiate and enter into trade deals with only an up-or-down vote on it in the Capitol

The program currently covers manufacturing and service sector workers who lose their jobs because of increased outsourcing or importing to any country, regardless of whether it has a trade deal with the U.S.

Those workers—or their employers or unions—have to file a petition for TAA benefits, which include up to 130 weeks of income assistance for workers who participate in training programs, as well as job search and relocation allowances.

Laid-off workers over the age of 50 also can obtain wage insurance if they're eventually hired at a lower pay rate.

Obama has recently argued that a similar wage insurance program should be extended to jobless workers generally .

The Labor Department paid roughly $507 million in TAA money to states last year. Texas received the most TAA funding ($49 million) in 2015, followed by Pennsylvania ($45 million) and Michigan ($26 million).

Program Impact Questioned

Demand for TAA benefits could rise if Congress approves the Pacific trade deal. Researchers at Tufts University recently estimated that the TPP will cost the U.S. nearly half a million jobs by 2025 .

That doesn't mean the program is likely to grow.

Many Republicans had to hold their noses and vote for the TAA bill in order to get enough votes on the “fast track” legislation. Critics of the program say it's ineffective and gives a preference to a relatively small set of workers laid off for trade-related reasons.

James Sherk, a labor economics researcher at the Heritage Foundation, said TAA participants may be worse off than other workers who get unemployment insurance while they're out of a job.

“The TAA benefits are not equal to what you would get if you have a job, and what happens is that the workers spend up to two years not looking for work while they’re in the training programs,” Sherk told Bloomberg BNA Feb. 9. “When they get out of the training, they never recover from that hit to their earnings because they don't wind up making more money than they would have otherwise.”

In a 2012 study commissioned by the Labor Department, Mathematica Policy Research concluded that the TAA's net benefit for participating workers was negative $27,000 per participant.

Mathematica found that TAA participants in the manufacturing industry had lower earnings after completing the program than those who filed for unemployment insurance during the same time and weren't eligible for trade adjustment benefits.

“Basically, these federal job training programs don’t do all that much to make workers more re-employable,” Sherk said. The Labor Department provided information about how TAA money is spent, but didn't immediately respond to Bloomberg BNA's request for comment on the Mathematica study.

Sen. Brown Wants Program Changes

Meanwhile, some TAA supporters say the program isn't a viable solution to trade policy problems like the lack of adequate wage, labor and currency manipulation protections in the TPP. The group includes Sen. Sherrod Brown (D-Ohio), who fought to get the TAA program reauthorized as part of the trade legislation passed last year.

“Too many trade deals have put Americans out of work, and TAA gives them the support they need to find their next step,” Brown told Bloomberg BNA via e-mail Feb. 2. “But to prevent jobs from being lost in the first place, we need better trade enforcement that holds countries accountable when they cheat trade rules.”

Brown pushed unsuccessfully to increase TAA funding to $575 million. He also has said the program should be expanded to include public sector workers who lose jobs when local layoffs decrease tax receipts and demand for services.

To contact the reporter on this story: Chris Opfer in Washington at

To contact the editor responsible for this story: Susan J. McGolrick at

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