Trade Adjustment Assistance Returns, Part I
November 12, 2019
Those of you who know me are aware I have spent years defending the Trade Adjustment Assistance program, first on the Hill and later in the private sector. It was originally based on a simple premise—trade creates winners and losers, and when there are losers due to government policy, then the government has some obligation to help them out. It turned out that in the early version of the program, the bar for determining whether one qualified for assistance was quite high (you had to have lost your job as the consequence of a trade agreement), and there were few certifications. Over the years, the bar has been lowered and the program expanded, although it remains relatively small—less than $1 billion annually. There now appears to be renewed interest in it, partly in response to the acknowledged weaknesses of the program and partly due to the politicization of trade policy in recent years and the realization by free trade advocates that they cannot successfully sell their position without addressing the need for adjustment for workers who have been displaced by trade.Despite its clearly good intentions, the program has not always been well-received, attracting criticism from a variety of perspectives:
- It is too small, doesn’t help enough people, and the benefits are not large enough to make much of a difference.
- The training it provides is not adequately calibrated to jobs that are actually available.
- It does not adequately deal with critical ancillary issues that make adjustment difficult, such as the need to maintain health insurance while undergoing training.
- From organized labor: it is essentially “burial insurance.” Instead of helping workers find a different job, the government should be taking steps to make sure they don’t lose the ones they’ve got.
- From some conservatives: an unemployed worker is an unemployed worker. There is no justification for treating some workers differently because of the particular reason they are unemployed. The program should be folded into the regular unemployment compensation system.
Now, however, to my total surprise, the Trump administration last week produced a set of proposals in this area that are quite constructive and forward-looking. Who would have thought? Published in the form of a Notice of Proposed Rule Making by the Department of Labor (NPRM), it includes the following ideas:
- Expands the number of workers eligible to apply for job search and relocation allowances;
- Increases those allowances from $800 to $1,250 in line with current law and expands training to include more flexibility for apprenticeships—both registered apprenticeships under the National Apprenticeship Act and other training programs that include paid-work based learning and an education/instructional component that results in an industry-recognized credential are approvable training activities;
- Increases staffing flexibilities for states to more efficiently provide integrated services at the state and local level;
- Makes clear that service workers are eligible for benefits along with those that work at a satellite office or shared space;
- Makes it easier for groups of workers to apply for benefits; and
- Offers assistance to additional categories of workers, including by helping workers in jobs threatened by foreign trade to receive training and support to transition to new employment even before their current job has disappeared.
The NPRM makes clear both the limited nature of the current program as well as its relative success: “In Fiscal Year (FY) 2017, an estimated 94,017 workers became eligible for TAA Program benefits and services. Nearly 75 percent of trade-affected workers obtained employment within 6 months of completing the TAA Program, and over 90 percent of those who found work retained their jobs 6 months later.”
There may be landmines hidden in these proposals that will be revealed through the public comment process, but an initial look suggests they are quite promising, and it is good to see the administration at least implicitly acknowledging that tariffs are not enough. Trade accelerates the pace of change and forces more rapid adjustment. Government policies that help workers through that process not only do the right thing for them but also help reinforce the argument that trade overall is a good thing.
Finally, the country that has long been regarded as having one of the best adjustment programs is Denmark. We will be meeting shortly with the Danish minister of employment, Peter Hummelgaard, to learn more about what his country does, and I hope to share that with you in next week’s column—unless, of course, a China breakthrough, or disaster, occurs, which would take precedence.
William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C.
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