On June 17, The TAA Modernization Act of 2021 was introduced into the U.S. House of Representatives, as a reauthorization of the Trade Adjustment Assistance (TAA) program. The bill represents a bold approach to fulfilling the promise of economic security for workers displaced from their jobs by trade. This bill’s reforms would go a long way toward improving the quality of benefits for unemployed workers and their ability to access training and other job assistance. Furthermore, since the TAA program passed its expiration date of June 30 this year, it reverted to a less substantial form (known as a snapback) and it will fully expire on December 31, 2021. There’s an urgent need to reauthorize and continue this program before the end of the year.
Workers simply cannot do without this essential part of their employment safety net. And furthermore, in its current form, TAA needs to be updated in order to respond to the substantial barriers trade-impacted workers face when they suffer the shock of permanent job loss.
Workers simply cannot do without this essential part of their employment safety net. And furthermore, in its current form, TAA needs to be updated in order to respond to the substantial barriers trade-impacted workers face when they suffer the shock of permanent job loss. As TCF outlined in testimony before the House Ways and Means Committee, “Improving Trade Adjustment Assistance to Respond to the Pandemic Economy and Beyond,” key improvements to TAA eligibility, outreach, and training would allow it to adequately assist the diverse population it serves. These reforms have been years in the making, building on changes first enacted by the 2009 American Recovery and Reinvestment Act (but later repealed) and underscored by research from the Government Accountability Office, alongside previous research responding to the technology, trade, and policy choices resulting in permanent job losses.
The TAA modernization could not have come at a more important time. 3.8 million people are currently experiencing long-term unemployment (jobless for more than twenty-six weeks), a number heavily determined by the COVID-19 pandemic, which disrupted international trade in goods and services. More than 2.7 million people were displaced from jobs they had held from at least January 2017 to December 2019. Of these workers, 41 percent lost or had to leave their job due to plant or company closings or relocation, and 36 percent of displaced workers had their position eliminated. Even at a time of record job growth, 50 percent of these workers were either still out of work by January 2020 or were underemployed. A reformed TAA program is urgently needed to help trade-impacted, dislocated workers navigate the tumultuous economic recovery and the changed labor market landscape of 2021.
The Trade Adjustment Assistance program has existed since the 1960s to support American workers affected by trade and global economic competition. The program provides benefits to workers who have lost their jobs through funding for retraining programs, wage supplements, and reemployment services. While it is not a substitute for providing stable, well-paying jobs and protecting the livelihood of American workers, this program plays a vital role in the safety net provided to the unemployed, allowing them to withstand some of the blow of inevitable job loss due to trade policies. The program serves a diverse worker base, especially assisting workers from marginalized communities or in otherwise vulnerable positions. In 2019, an estimated 88,001 workers became eligible for TAA with 28,348 participants receiving benefits. 50.7 percent of these workers have only a high school diploma, GED, or less, and 17.6 percent of these workers are Black or African-American.
These more generous benefits allow dislocated workers to consider a wide variety of training opportunities, including community college degrees, occupational training, and apprenticeships.
TAA is also known to be more generous than other programs for unemployed workers, providing more benefits and dollars per service in training ($13,000 per participant compared to around $3,000 in standard dislocated worker training provided by the Workforce Investment and Opportunity Act (WIOA)). These more generous benefits allow dislocated workers to consider a wide variety of training opportunities, including community college degrees, occupational training, and apprenticeships. These training benefits make a difference that shows up in the employment prospects and earning potential of TAA graduates. At 76 percent, TAA’s employment rate is higher than WIOA’s, and a careful econometric study found that TAA graduates earned $50,000 more than those denied access to the program.
In addition to the retraining support, the TAA program includes the following benefits, which would be enhanced by the 2021 modernization act.
- Trade Readjustment Allowance (TRA) benefits. The 2021 act would provide workers with trade readjustment allowance benefits taking the form of up to 104 weeks of income support if enrolled in a training program (thirteen weeks more than the current law), meaning laid-off workers could complete a two-year degree while on TAA. It would also add an additional twenty-six weeks for workers in remedial or prerequisite education.
- Wage insurance. TAA provides wage insurance, known as Reemployment Trade Adjustment Assistance (RTAA), for workers over the age of 50 who obtain a new job at a lower wage than their pre-layoff employment. The new law would make workers earning up to $70,000 eligible for wage insurance and increase the maximum benefit to $20,000 (from $10,000 currently).
- Continued health care benefits. The health care tax credit covers the cost of maintaining employer-based insurance through continued Consolidated Omnibus Budget Reconciliation Act (COBRA) rights of the Pension Benefit Guaranty Corporation. The new reform bill would make the health care tax credit permanent and not based on annual extensions, and would increase the credit coverage of qualified health insurance premiums from 72.5 percent to 80 percent.
Additional Reforms That Would Expand the Trade Adjustment Assistance Program
The 2021 Modernization Act demonstrates a commitment to expanding the scope of eligible workers and addressing obstacles to reaching all workers who may benefit. This reauthorization makes a significant investment, increasing the funding of TAA for Workers from its current $450 million per year to $1 billion dollars per year for seven years covering training, outreach, and the increased eligibility. The entire bill allots $22 billion to all TAA programs, with full support for the following:
- Expands eligibility for workers. The reauthorization includes new definitions of “staffed worker” and “teleworker,” and adds back in public sector workers. To ensure more workers affected by trade are included, the bill expands eligibility to workers who lose their job due to their employer’s decreased exports and removes the requirement to prove that imports “importantly” contributed to their job loss, which can be a significant burden.
- Child care allowances. Alongside increasing relocation and job search allowances, the 2021 reauthorization introduces a new $2,000 child care allowance per minor dependent per year.
- Support for apprenticeship and on-the-job training. The program will now allow individuals participating in on-the-job training (including apprenticeships) to receive TRA benefits. Workers earning less than $70,000 in on-the-job training can receive TRA benefits on top of their wages.
- Automatic extension of trade readjustment allowances. Income support will be automatically extended to workers who complete training for an additional twenty-six weeks but cannot find work due to poor economic conditions. Such conditions are defined as a “period of heightened unemployment” when the state or federal total seasonally adjusted unemployment equals or exceeds 5.5 percent for the most recent ninety days of published data.
- Increases eligibility for training waiver requirements. The 2021 act would allow workers who are recalled to their previous employment, possess marketable skills that enable them to be reemployed quickly, or are within two years of retirement to still receive TRA cash benefits without the training requirement.
- Improves training quality. The new bill requires states to work with training providers with a proven track record of workers “achieving a satisfactory rate of completion and placement in jobs that provides a living wage, basic benefits that increase economic security, and develop the skills, networks, and experiences necessary to advance along a career path”; facilitating the creation of workplaces that balance the “priorities and well-being of workers with the needs of businesses”; and serving individuals who “face the greatest barriers to employment, including people with low incomes, people of color, immigrants, and formerly incarcerated individuals.”
- Improves outreach to workers and the community with a focus on underserved communities. The 2021 act would improve TAA outreach to workers through improved communication methods and partnerships with unions and peer support workers. The bill also requires states to adopt an “aggressive outreach model” which uses proactive searches to find workers who may be eligible for TAA, in particular, those from underserved communities who face barriers to accessing services. The Department of Labor would be required to collect data on the demographics of TAA participants and create a user-friendly dashboard for the public. The Department of Commerce would also be required to develop a plan for outreach to potentially eligible firms like minority- or women-owned businesses and firms in the service sector.
- Establishes a new, bolstered TAA for Communities Program. This addition would establish a separate funding pool for trade impacted communities in the Department of Commerce’s Economic Development Administration. After developing and submitting a strategic plan, eligible communities would be provided grants of up to $25 million to adjust to the impact of trade by promoting economic opportunities, assessing the impact on underserved communities, or funding training programs.
- Reauthorizes the successful TAA Community College Training Program. To build on the 2010 funding for the development of community college training courses in high-growth industries, which has not been replenished since, the 2021 act would provide vital funding ($1.3 billion over seven years, for $9.1 billion in total) to community colleges.
Why the TAA Modernization Act Is Vital Right Now
Since the expansion of the TAA with improved eligibility and increased benefits, established in 2015, was not renewed by its expiry date of June 30, 2021, it has reverted to its less inclusive and comprehensive 2014 state with the program fully expiring in December 2021. (There were attempts to extend it before the deadline, but they did not prevail.)
Workers under TAA will now lose their eligibility for income support benefits if they return to work of any kind (even low-paid, low-skilled jobs) as aid for training can only be approved on a full time basis in the 2014 program. The TAA also mandates that workers cannot receive services until they are fully laid off, hindering access to training and other benefits as well as requiring provisionally unemployed workers to choose between potential recall or being eligible for TAA benefits.
Many workers lost a vital part of their safety net with the TAA snapback, a situation that will only worsen if the program is not reauthorized at all and is left to expire completely.
Service workers will also no longer be eligible, even though they comprise 80 percent of all private-sector employment and made up 50 percent of last year’s trade certifications. In short, many workers lost a vital part of their safety net with the TAA snapback, a situation that will only worsen if the program is not reauthorized at all and is left to expire completely.
What Happens Next?
The TAA Modernization Act of 2021 shows a renewed commitment to the needs of trade impacted workers as many continue to reel from displacement due to the impacts of policy decisions and harmful trade agreements. President Biden called for a $100 billion investment in retraining as part of his American Jobs Plan, including a general call for new training dollars for dislocated workers. The TAA Modernization Act of 2021 provides a vehicle for Congress to fulfill Biden’s commitment to American workers. Dislocated workers urgently hope that an improved TAA program will be part of one of the major pieces of legislation moving through Congress this summer.