Assist Displaced Workers

Even before the recent financial crisis, a number of opinion surveys confirmed that Americans regard their immediate economic future with anxiety. While many Americans enjoy the fruits of prosperity, economic statistics confirm that more than a few have suffered declining incomes and job insecurity.

The U.S. Chamber believes America's long-term competitiveness depends on the creation of high-quality, well-paying jobs. For our workers to be competitive, government and business should collaborate to provide training for the higher-end service and manufacturing jobs that increasingly characterize today's U.S. economy. For our companies to remain competitive, they require access to a diverse, educated, skilled, and mobile workforce.

To meet these twin goals, the United States needs a strategy to help dislocated workers adapt to the challenges presented by a global economy. The U.S. business community is committed to doing its part. Business is already making a major contribution: The American Society for Training & Development estimates that U.S. businesses and private organizations spent nearly $130 billion on employee learning and development in 2006, or more than $1,000 per worker. While these programs and their funding levels need to be constantly reassessed, this level of investment underscores the commitment of American business.

With regard to the role of government, the Trade Adjustment Assistance (TAA) program was created by President Kennedy in 1962 to provide income support and training benefits to workers who lost their jobs due to competition from imports. The main objective of the program over the years was to extend unemployment compensation benefits through a trade readjustment allowance and to provide job training for dislocated workers.

However, the program has its problems. First, it rests on the flawed proposition that trade plays a major role in job loss. In fact, less than 3% of layoffs of 50 or more people between 1996 and 2004 were attributable to import competition or overseas relocation, according to survey data from the U.S. Bureau of Labor Statistics.

Research shows this vast and continuous turnover in the U.S. job market is principally driven by technological innovation (especially information technologies), changes in consumer taste, and domestic competition. Together, these factors are vastly more significant than trade as explanations for this "churn" in the job market.

Nonetheless, the U.S. Chamber strongly supported the modernization and expansion of TAA that was included in the American Recovery and Reinvestment Act of 2009. It was the one element in the bill that was the outcome of extensive bipartisan, bicameral negotiation, and it won broad support.

One Chamber-backed proposal that was included in the reform related to workers dislocated due to production shifting overseas. These workers will now be eligible for TAA benefits without regard to the country to which jobs may be relocated.

Looking forward, the Chamber has recommended a number of additional changes to the program. First, efforts to identify layoffs deemed the result of import competition or production shifting overseas—and on that basis determine eligibility for TAA benefits—skew benefits unfairly toward a small minority of displaced workers.

These efforts miss the point of such assistance programs, and the unhelpful and misleading effort to tie job losses to trade should be abandoned. A modernized program to succeed TAA should be renamed to reflect this change.

Second, Congress and the Administration should consider extending eligibility to workers who lose their jobs when a firm consolidates production among domestic plants as part of a national response to global competition.

Third, the Chamber has urged Congress and the Administration to consider integrating TAA's training programs into the Workforce Investment Act-supported one-stop career centers. Also, TAA administrators must do a better job making known its benefits, such as its wage-loss insurance program.

Finally, workers who lose their jobs often face the added challenge of losing their health care. Workers and their families should be given greater flexibility to purchase health care plans that fit their needs rather than those imposed by a one-size-fits-all state mandate. The tax code should not punish Americans buying health insurance on their own by taxing them at a higher rate than those who buy it through their employers.

In the end, the answer to a worker losing his job at a typewriter factory is not to force the factory to keep making typewriters. It's to make sure that workers can move from a 20th century job to a 21st century job without turning their lives upside down, and a modernized TAA program can help reach this goal.

Chamber Recommendations

• Federal training programs offered to displaced workers under Trade Adjustment Assistance should not be conditioned on trade being identified as the cause of job loss.
• Displaced workers and their families should be given greater flexibility to purchase health care plans that fit their needs rather than those imposed by a one-size-fits-all state mandate.
• Federal programs must be coordinated closely with the business community to match assistance and training with the needs of employers and to leverage the extensive investments in training already being made by business.