June 19, 2014    Volume 21, No. 9

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Trade Adjustment Assistance For Workers Program Is Enervated; Its Future In Doubt

By Richard A. McCormack

The federal government's Trade Adjustment Assistance program is no longer providing support to thousands of workers losing their jobs due to offshore outsourcing. It could also soon be gone.

The program, which was expanded in 2011 as a means to provide members of Congress with the political cover they needed to pass the Korea Free Trade Agreement, reverted back to its 2002 operating rules at the end of 2013. The result: workers in the service sector losing their jobs to outsourcing are no longer eligible for trade adjustment assistance. Last year, 66 percent of all TAA certifications involved service industry workers.

The 2011 TAA re-authorization also stipulated that, on December 31, 2014, "the TAA program expires," notes the Department of Labor.

Moreover, the Obama administration has proposed that the Trade Adjustment Assistance program be eliminated next year and folded into a proposed "New Career Pathways" program. The new program would include the Workforce Investment Act and the Dislocated Worker programs, "offering a new path to reemployment for qualified dislocated workers, regardless of the cause of their dislocation," says the Labor Department.

Trade Adjustment Assistance for workers received an appropriation of $609 million in 2014, down from $797 million in 2013 and $1.374 billion in 2010. The Obama administration requested $710.6 million for 2015, stating that it "assumes that the appropriators will continue [funding] TAA through September 30, 2015." But if Congress approves the "New Career Pathways" program, "the administration's funding request for TAA in fiscal year 2015 will be reduced to reflect transition to the new program."

According to those who follow TAA no member of Congress has expressed interest in assuring it continuation next year. Its main proponent -- Senator Max Baucus (D-Mont.) -- retired from the Senate to become ambassador to China.

Moreover, the program is still being touted by members of the Obama administration as a way to justify their aggressive pursuit of free trade. "I don't know if the right hand knows what the left hand is doing," says Howard Rosen, executive director of the Trade Adjustment Assistance Coalition. USTR Michael Froman "talks about [TAA] morning, noon and night, but I don't think he understands or knows the administration has put out a proposal" to eliminate it.

The program is in steep decline. The number of TAA certifications has fallen substantially this year, the result of the change in service worker coverage, extended unemployment insurance, which restricts laid off workers from qualifying for TAA benefits, and the abatement of the manufacturing outsourcing wave of the past 13 years.

"It is amazing, but nobody has noticed that the program [for service workers] expired at the end of December," says Rosen. "You get an award for being the first to call me" about the program's change and potential demise.

Provisions for expanding the TAA program were placed in the Stimulus Bill of 2009 and were extended in 2011 as a sweetener for passage of the Korea trade deal. But that reauthorization included a sunset provision at the end of 2013, which "was not well known," says Rosen. "In 2011, when the president said he would not sign the U.S.-Korea deal unless there were changes to TAA -- do you think he thought he got a two-year deal?" Rosen asks. "Maybe somebody needs to tell the White House that the president didn't get what he thought he got."

From January 1, 2014, through June 15, 2014, there were 273 TAA workplace certifications compared to 542 for the same period in 2013, 571 in 2012 and 1,383 in 2010. The number of denials increased to 198 for the first five-and-a-half months of 2014, compared to 134 in 2013, and 98 in 2012.

On May 21, Michael Jaffe, the certifying officer for the Office of Trade Adjustment Assistance, denied benefits for at least 1,000 workers employed by Sony Corp. in 14 locations throughout the United States. "During the investigation, the Department of Labor obtained information that revealed that the workers' firm did not produce an article; rather the workers' firm supplied services related to sales, marketing, engineering services and support functions services for Sony Electronics," Jaffe wrote in his denial. In the petition, Sony Sr. Human Resources Manager Catherine Wozney stated that "due to increased imports, competition with foreign entities, outsourcing of operations and ongoing difficult economic environment in the electronics industry, Sony has been forced to drastically restructure and redesign its entire consumer, sales, marketing and support organizations."

Support.com, based in Redwood City, Calif., laid off "hundreds" of employees, with its petition stating: "In order for Support.com to stay competitive and to increase the bottom line for shareholders, they have had to outsource and offshore jobs that were previously held by North American employees." Its TAA petition was denied. Denials have been issued to 100 workers at Hewlett Packard in Boise, Idaho.; "a couple of hundred" workers at Dell Inc., in Round Rock, Texas, whose jobs were outsourced to Bratislava; 100 workers at AT&T whose jobs were shifted from Pittsburgh to India, Canada and the Philippines; and 300 workers at Xerox Corp. in Norwalk, Conn., who lost their jobs because "our work will now be performed by staff in a low-cost country, the Philippines."

The decline in certifications is also due the slowdown in offshore outsourcing of manufacturing. The Michigan, Ohio and Indiana region had 205 company certifications of displaced workers due to trade in 2010, but that dropped to only 26 in 2013, a decline of almost 90 percent. "It doesn't indicate that manufacturing is booming, but the bottom is not falling out any more," says Rick McHugh, Staff Attorney and Midwest Coordinator at the National Employment Law Project.

As the TAA program atrophies, so, too, does the justification for keeping it. In the past, conservative backers of free trade understood that in order to pass trade agreements and Trade Promotion Authority, there needed to be a safety net -- and political cover -- for the workers losing their jobs to imports. But that compact has disappeared.

After the Heritage Foundation issued a paper in 2011 titled "Let the Ineffective and Wasteful [TAA] Program Expire," "we saw the Republicans on the House Ways and Means Committee who were pretty faithful supporters of the program take their foot off the accelerator," says McHugh. "They weren't interested in expanding the program with the improvements that were made."

Labor unions have been lukewarm about TAA as well, unwilling to expend political capital on its behalf because they understand that it is used to buy support for the free-trade agenda pushed by multinational companies, retailers and the financial sector, which has led to the loss of hundreds of thousands of manufacturing jobs. "The AFL-CIO has not issued one press release on the program expiring," notes Rosen.

Now the question becomes whether senators such as Orrin Hatch (R-Utah) on the Senate Finance Committee, which is in charge of trade legislation, will use a TAA program extension as a means to entice Democrats to approve Trade Promotion Authority for the president, and the Trans Pacific Partnership agreement later this year or early next. http://www.dol.gov/dol/budget/2015/PDF/CBJ-2015-V1-09.pdf

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