Thursday, July 7, 2011

WSJ on TAA study

Jobs Study Is Too Late for Debate on Trade


As a divided Congress moves closer to a decision on three big international trade pacts, the Labor Department is four years late in delivering a study that is supposed to measure the efficacy of a program to provide extra benefits to workers who lose their jobs through globalization.

The deals with Colombia, South Korea and Panama, which could add billions in exports, are on a knife-edge over disagreements between Republicans and Democrats over Trade Adjustment Assistance, taxpayer funds paid to workers who lose their jobs as a direct result of trade.

The lack of up-to-date government data on how effective the $1 billion-a-year program is at helping the unemployed find well-paying work has hobbled efforts to identify and make improvements.

With the House and Senate called back into session this week, debate will resume over TAA, which provides training, unemployment payments and health-care subsidies to displaced workers. The program came due for renewal at the end of 2010.

The White House, Democratic leaders and some Republicans say the 50-year-old program helps laid-off workers learn new skills and find jobs in more vibrant industries. Conservatives label it an outmoded giveaway with results that don't justify the annual price tag.

TAA has become a proxy for the wider budget war, in which entitlement programs such as Social Security and Medicare as well as less-prominent matters such as financing the U.S. Patent and Trademark Office have come under scrutiny from budget hawks.

Workers who qualify for TAA get up to 156 weeks of unemployment benefits, compared with a maximum of 99 weeks under standard unemployment benefits for workers in high-unemployment states in a program set to expire at the end of this year. TAA also offers assistance with retraining and health benefits that workers not judged to be idled by trade pacts don't get.

On Tuesday, the House Ways and Means committee said it would hold a hearing Thursday to discuss proposed changes to the trade deals.

But the panel, which has jurisdiction over trade in the House, won't discuss renewing the expired TAA program as part of that process, defying President Barack Obama. Mr. Obama says he won't send the trade agreements to Congress for ratification if lawmakers don't renew TAA.

The president has staked his credibility with U.S. businesses on passing the trade deals, placing them at the heart of his plan to double U.S. exports by the end of 2014.

Hiccups over the pacts' passage damage U.S. credibility with trading partners, at times leading them to seek deals elsewhere. Last week, while U.S. lawmakers bickered, a sweeping trade pact between South Korea and the European Union took effect; one between Colombia and Canada takes force in August.

Labor Department officials say their research on TAA, originally due in 2007, won't be ready until the end of the year. That's likely to be after the fate of the proposed U.S. trade deals has been decided, at least until after the 2012 election. Thus far, the TAA study has cost $8.9 million, the Labor Department estimated.

"The data used for the study is long-term data on individual participants, which was collected over several years; therefore completion of the study is a long process," said Department of Labor spokeswoman Gloria Della.

Howard Rosen, resident visiting fellow at the Peterson Institute for International Economics, helped write 2002 reforms to TAA while he was a congressional aide that also called for a comprehensive evaluation of the program, and he has complained about the Labor Department's failure to deliver it.

"We need to make reforms based on what will work, not what will fly" politically, Mr. Rosen said.
Reports from Labor and the Government Accountability Office have led to changes, for example, in improving worker access to the program. Last year, 235,000 workers—or less than 2% of the nation's 14 million unemployed—were receiving benefits under the TAA program at a cost of $975 million.

In 2009, the program was expanded to include service, not just manufacturing workers, who now make up less than one-fifth of TAA recipients.

More than two-thirds of TAA recipients are over age 40 and three-quarters of them hold at most a high-school diploma. Half of all unemployed workers fall into those two categories. TAA-eligible workers' mean annual wages are $34,000, compared with $28,000 for all unemployed people.

The Labor Department reports that two-thirds of TAA program participants find jobs within three months after leaving the program, and 90% stay in those jobs for at least a year. According to a Labor-sponsored study of TAA applicants in 2008-09, about one-third of eligible workers belong to a trade union; about half of those in the program are union members.

A deal brokered last week by Senate Finance Committee Chairman Sen. Max Baucus (D., Mont.) would make renewal of TAA hinge on cutting the program's cost.

The Congressional Budget Office has yet to fully determine TAA's new cost under the proposal, agreed to by Mr. Baucus, House Ways and Means Committee chairman Rep. Dave Camp (R., Mich.) and White House economic czar Gene Sperling. The biggest proposed changes are cutting TAA recipients' unemployment benefits, and increasing their contribution to health-care coverage.

The deal envisions a cap of 130 weeks of unemployment, down from the current 156. That compares with a maximum of 26 weeks of jobless benefits for non-TAA recipients, unless they live in a high-unemployment state.

Under the 2009 program, TAA enrollees could deduct 80% of their health-care costs; the deal would reduce that deduction to 72.5%. The deduction would end completely at the end of 2013, when TAA enrollees gain access to benefits under Mr. Obama's health-care overhaul.

A Republican House aide says GOP leaders aren't sure whether the agreement approved by Mr. Camp has the votes needed to pass.


This is, almost certainly, the same study referred to in my earlier post, on which I have done a bit of consulting. It really is too bad that the results will not be available to guide debate.

This article was rescued from behind the WSJ's firewall by an anonymous benefactor.

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