Trade Adjustment Assistance
Program Provides an Array of Benefits and Services to Trade-Affected Workers
Gao ID: GAO-07-994T June 14, 2007
Manufacturing workers face an uncertain future as manufacturing employment declines--more than 3 million manufacturing jobs have been lost in this country since 2000, many due to international trade. Furthermore, finding a new job may be harder for these workers because they tend to be older with have fewer transferable skills than other laid-off workers. The Trade Adjustment Assistance (TAA) program was established in 1962 to assist manufacturing workers who lose their jobs because of international trade. In 2002, the Congress made a number of key changes designed to expand benefits and decrease the time it takes to get workers into services. This testimony draws upon several GAO reports, including our most recently issued TAA report and our case study of five layoffs, and provides an overview of (1) how the TAA program operates, (2) recent trends in the Department of Labor's (Labor) certification of petitions, (3) the extent to which workers participate in training, (4) the extent to which workers take advantage of other TAA benefits, and (5) what is known about TAA program outcomes. We are not making new recommendations at this time. Labor generally agreed with the findings and recommendations in our referenced reports.
The process for enrolling trade-affected workers in the TAA program begins when a petition for TAA assistance is filed with Labor on behalf of a group of workers. Labor has generally processed these petitions in a timely manner, taking on average 32 days during the past 3 fiscal years. Once enrolled, trade-affected workers can access a variety of TAA benefits and services, including income support, job training, and health coverage. Workers typically access these services through one-stop centers where they also receive case management services, such as counseling and vocational assessments. During the past 3 fiscal years, the number of petitions certified and the number of petitions filed have declined. The proportion of petitions certified has remained relatively stable, as Labor certified about two-thirds of petitions investigated in each of these years. These petitions covered an estimated 400,000 workers. Petitions were most commonly denied because workers were not involved in the production of articles, a basic requirement of the TAA program. Nationally, the decline in the number of workers entering training from fiscal years 2004 to 2006 parallels a decline in the estimated number of trade-affected workers. However, there are wide state-to-state variations in this trend. Sixteen states reported a decrease in training enrollment during the past 3 fiscal years, while 20 states reported an increase. We also found that few TAA participants take advantage of the wage insurance and health coverage benefits. Although the number of new workers receiving the wage insurance benefit has increased from 1,400 in 2004, to about 3,200 in 2006, the number remains small--two-thirds of the states estimate that 5 percent or less of their TAA participants received wage insurance in fiscal year 2006. Participation in the health coverage benefit is also low. Approximately 6,900 workers enrolled for the first time in the advance health coverage benefit in fiscal year 2006. Finally, we found that the nationwide TAA performance data that are currently available do not provide a complete and credible picture of the program's performance. However, at our five case study sites, we found that most of the workers who lost their jobs because of foreign trade had either found a job or retired at the time of our survey. The majority of reemployed workers earned less in their new jobs than they had previously earned, but generally replaced about 80 percent or more of their pre-layoff wages.
GAO-07-994T, Trade Adjustment Assistance: Program Provides an Array of Benefits and Services to Trade-Affected Workers
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Testimony before the Committee on Ways and Means, House of
Representatives:
United States Government Accountability Office:
GAO:
For Release on Delivery Expected at 10:00 a.m. EDT:
Thursday, June 14, 2007:
Trade Adjustment Assistance:
Program Provides an Array of Benefits and Services to Trade-Affected
Workers:
Statement for the Record by Sigurd R. Nilsen, Director:
Education, Workforce, and Income Security Issues:
GAO-07-994T:
GAO Highlights:
Highlights of GAO-07-994T, a testimony before the Committee on Ways and
Means, House of Representatives
Why GAO Did This Study:
Manufacturing workers face an uncertain future as manufacturing
employment declines”more than 3 million manufacturing jobs have been
lost in this country since 2000, many due to international trade.
Furthermore, finding a new job may be harder for these workers because
they tend to be older with have fewer transferable skills than other
laid-off workers. The Trade Adjustment Assistance (TAA) program was
established in 1962 to assist manufacturing workers who lose their jobs
because of international trade. In 2002, the Congress made a number of
key changes designed to expand benefits and decrease the time it takes
to get workers into services. This testimony draws upon several GAO
reports, including our most recently issued TAA report and our case
study of five layoffs, and provides an overview of (1) how the TAA
program operates, (2) recent trends in the Department of Labor‘s
(Labor) certification of petitions, (3) the extent to which workers
participate in training, (4) the extent to which workers take advantage
of other TAA benefits, and (5) what is known about TAA program
outcomes.
GAO is not making new recommendations at this time. Labor generally
agreed with the findings and recommendations in our referenced reports.
What GAO Found:
The process for enrolling trade-affected workers in the TAA program
begins when a petition for TAA assistance is filed with Labor on behalf
of a group of workers. Labor has generally processed these petitions in
a timely manner, taking on average 32 days during the past 3 fiscal
years. Once enrolled, trade-affected workers can access a variety of
TAA benefits and services, including income support, job training, and
health coverage. Workers typically access these services through one-
stop centers where they also receive case management services, such as
counseling and vocational assessments.
During the past 3 fiscal years, the number of petitions certified and
the number of petitions filed have declined. The proportion of
petitions certified has remained relatively stable, as Labor certified
about two-thirds of petitions investigated in each of these years.
These petitions covered an estimated 400,000 workers. Petitions were
most commonly denied because workers were not involved in the
production of articles, a basic requirement of the TAA program.
Nationally, the decline in the number of workers entering training from
fiscal years 2004 to 2006 parallels a decline in the estimated number
of trade-affected workers. However, there are wide state-to-state
variations in this trend. Sixteen states reported a decrease in
training enrollment during the past 3 fiscal years, while 20 states
reported an increase.
We also found that few TAA participants take advantage of the wage
insurance and health coverage benefits. Although the number of new
workers receiving the wage insurance benefit has increased from 1,400
in 2004, to about 3,200 in 2006, the number remains small”two-thirds of
the states estimate that 5 percent or less of their TAA participants
received wage insurance in fiscal year 2006. Participation in the
health coverage benefit is also low. Approximately 6,900 workers
enrolled for the first time in the advance health coverage benefit in
fiscal year 2006.
Finally, we found that the nationwide TAA performance data that are
currently available do not provide a complete and credible picture of
the program‘s performance. However, at our five case study sites, we
found that most of the workers who lost their jobs because of foreign
trade had either found a job or retired at the time of our survey. The
majority of reemployed workers earned less in their new jobs than they
had previously earned, but generally replaced about 80 percent or more
of their pre-layoff wages.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-994T].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Sigurd Nilsen at (202)
512-7215 or nilsens@gao.gov.
[End of section]
Mr. Chairman and Members of the Committee:
We are pleased to have the opportunity to discuss the assistance
available through the Trade Adjustment Assistance (TAA) program to
workers who are dislocated because of international trade. We have
conducted a number of studies on the TAA program since the program was
last reauthorized in 2002, and this testimony will focus primarily on
the results of that work. [Footnote 1]
Manufacturing workers face an uncertain future as manufacturing
employment declines--more than 3 million manufacturing jobs have been
lost in this country since 2000, many due to international trade.
Furthermore, finding a new job may be harder for these workers because
they tend to be older, with fewer transferable skills than other laid-
off workers. To assist these workers, the Congress established the TAA
program in 1962 to provide income support, job training, and other
benefits for manufacturing workers who lose their jobs as a result of
international trade. TAA, administered by the Department of Labor
(Labor), was funded at about $900 million in fiscal year 2006,
including $220 million for training. In 2002, the Congress made a
number of key changes designed to expand benefits and decrease the time
it takes to get workers into services. Among the changes, the act:
* extended training benefits up to 2½ years to allow for remedial
training for those who need it;
* extended income support to match the allowable training period,
including up to 2 years after workers exhaust their regular
Unemployment Insurance (UI) benefits;
* doubled the amount of funds available for training to $220 million
per year;
* established a deadline for workers to enroll in training, after they
have been laid off or their petition has been approved, in order to
maintain eligibility for extended income support payments;
* created a wage insurance benefit for workers age 50 and older,
subsidizing the difference between the prior and new wages of some
trade-affected workers who find reemployment quickly;
* created a health coverage tax credit to help trade-affected workers
pay for health insurance; and:
* shortened from 60 days to 40 days the time the Labor is given to
process petitions filed on behalf of groups of workers to determine
their potential eligibility for services.
You asked us to provide an overview of the TAA program as it currently
operates. This testimony provides information on (1) how the program
operates, (2) recent trends in Labor's certification of petitions, (3)
the extent to which workers' participate in training, (4) the extent to
which workers take advantage of other TAA benefits, and (5) what is
known about TAA program outcomes. To address these issues, we drew upon
our recently issued report prepared for you, as well as on our prior
study of five trade-related layoffs and our review of TAA performance
data. Our most recent study was based, in part, on a survey of the 46
states that received an initial allocation of TAA training funds in
federal fiscal year 2006 (October 1, 2005, to September 30,
2006).[Footnote 2] We received responses from all 46 states. In
addition, we interviewed Labor officials and visited state and local
officials in four states--California, Massachusetts, Michigan, and
North Carolina. The case study review examined in detail five plant
closures located in Massachusetts, Mississippi, Missouri, Pennsylvania,
and Washington that were certified under TAA.[Footnote 3] We visited
each layoff site and interviewed state and local officials, company and
union officials, training providers, and affected workers. In addition,
we conducted a telephone survey of all affected workers, including
those who did not receive services. Survey response rates for each
layoff ranged from 66 percent to 86 percent. In conducting the TAA
performance data review, we conducted a survey of the 46 states that
received an initial allocation of TAA training funds in federal fiscal
year 2005, and obtained a 100 percent response rate. In addition, we
visited five states--California, Iowa, Ohio, Texas, and Virginia--and
interviewed state and local officials. We performed our work in
accordance with generally accepted government auditing standards.
In summary, TAA provides a variety of benefits and services to workers
who lose their jobs because of international trade, including income
support, job training, and health coverage. Workers typically access
these services through one-stop centers where they also receive case
management services, such as counseling and vocational assessments. Our
work shows that during the past 3 fiscal years, there has been a
decline in the number of petitions filed and certified. However, the
proportion of petitions Labor has certified over the 3 years remained
relatively stable at about two-thirds and covered an estimated 400,000
workers. Nationally, the decline in the number of workers entering
training from fiscal years 2004 to 2006 parallels a decline in the
estimated number of trade-affected workers--declining sharply between
fiscal years 2004 to 2005 but leveling off in fiscal year 2006.
However, trends in the number of workers entering training vary from
state to state. Not all workers choose to enroll in training. In our
study of five layoffs, no more than 40 percent of affected workers at
any site enrolled in training, and at one site, only 9 percent
enrolled. Occupational training remains the most popular type of
training, currently constituting about three-quarters of all training
enrollments. We also found that few TAA participants take advantage of
the wage insurance and health coverage benefits. Although the number of
new workers receiving the wage insurance benefit has increased from
1,400 in 2004 to about 3,200 in 2006, the number remains small--two-
thirds of the states estimate that 5 percent or less of their TAA
participants received wage insurance in fiscal year 2006. Participation
in the health coverage benefit is also low. Approximately 6,900 workers
enrolled for the first time in the advanced health coverage benefit in
fiscal year 2006. Finally, we found that the nationwide TAA performance
data that are currently available do not provide a complete and
credible picture of the program's performance. However, at our five
case study sites, we found that most of the workers who lost their jobs
because of foreign trade had either found a job or retired at the time
of our survey. The majority of reemployed workers earned less in their
new jobs than they had previously earned, but according to our survey
estimates generally replaced about 80 percent or more of their
prelayoff wages.
An Overview of the TAA Process from Filing Petitions to Receiving
Benefits:
The process for enrolling trade-affected workers in the TAA program
begins when a petition for TAA assistance is filed with Labor on behalf
of a group of workers. Once certified, workers may receive a variety of
benefits, including income support, job training, and health coverage.
Workers typically access these services through the one-stop system--
the consolidated service delivery system required under the Workforce
Investment Act (WIA) to provide services for most federally funded
employment and training programs. Case managers at the one-stop centers
also provide vocational assessments and counseling to help workers
enroll in the program and decide which services or benefits are most
appropriate.
TAA Petition Process:
Petitions may be filed by the employer experiencing the layoff, a group
of at least three affected workers, a union, or the state or local
workforce agency. Labor is required to either certify or deny the
petition within 40 days after receiving it. Labor investigates whether
a petition meets the requirements for TAA certification by taking steps
such as contacting company officials, surveying a company's customers,
and examining aggregate industry data. When Labor has certified a
petition, it notifies the relevant state, which has responsibility for
contacting the workers covered by the petition, informing them of the
benefits available to them, and telling them when and where to apply
for benefits. The TAA statute lays out certain basic requirements that
all certified petitions must meet, including that a significant
proportion of workers employed by a company be laid off or threatened
with layoff and that affected workers must have been employed by a
company that produces articles.[Footnote 4] In addition to meeting
these basic requirements, a petition must demonstrate that the layoff
is related to international trade in one of several ways, including the
following:
* Increased imports--imports of articles that are similar to or
directly compete with articles produced by the firm have increased, the
sales or production of the firm has decreased, and the increase in
imports has contributed importantly to the decline in sales or
production and the layoff or threatened layoff of workers.
* Shift of production--the firm has shifted production of articles to
another country and either:
- the country is party to a free trade agreement with the United States
or:
- the country is a beneficiary under the Andean Trade Preference Act,
the African Growth and Opportunity Act, or the Caribbean Basin Economic
Recovery Act or:
- there has been or is likely to be an increase in imports of articles
that are similar to or directly compete with articles produced by the
firm.
* Affected secondarily by trade--workers must meet one of two criteria:
- Upstream secondary workers--affected firm produces and supplies
component parts to another firm that has experienced TAA-certified
layoffs, parts supplied to the certified firm constituted at least 20
percent of the affected firm's production, or a loss of business with
the certified firm contributed importantly to the layoffs at the
affected firm.
- Downstream secondary workers--affected firm performs final assembly
or finishing work for another firm that has experienced TAA-certified
layoffs as a result of an increase in imports from or a shift in
production to Canada or Mexico, and a loss of business with the
certified firm contributed importantly to the layoffs at the affected
firm.
If Labor denies a petition for TAA assistance, the workers who would
have been certified under the petition have two options for challenging
this denial. They may request an administrative reconsideration of the
decision by Labor. To take this step, workers must provide reasons why
the denial is erroneous based on either a mistake or misinterpretation
of the facts or the law itself, and must mail their request to Labor
within 30 days of the announcement of the denial. Workers may also
appeal to the United States Court of International Trade for judicial
review of Labor's denial within 60 days of either the initial denial or
a denial following administrative reconsideration by Labor.
State and local workforce agencies also play key roles in the petition
certification process and help workers take advantage of the services
and benefits available in TAA. The agencies assist workers and
employers in filing petitions and will also file petitions on behalf of
workers. After a petition is certified, the agencies contact employers
to obtain a list of workers affected by the layoff and send each worker
a letter notifying him or her of potential eligibility. The agencies
may also hold orientation sessions to provide workers with detailed
information on the TAA program and services and benefits that workers
typically access through the one-stop system. Case managers at the one-
stop centers provide vocational assessments and counseling to help
workers enroll in the program and decide which services or benefits are
most appropriate. Local case managers also refer workers to other
programs, such as the Workforce Investment Act, for additional
services.
TAA Benefits and Services:
Under TAA, workers enrolled in the program have access to a variety of
benefits and services including the following:
Training. Participants may receive up to 130 weeks of training,
including 104 weeks of vocational training and 26 weeks of remedial
training, such as English as a second language.
Extended income support. Participants may receive a total of 104 weeks
of extended income support beyond the 26 weeks of unemployment
insurance (UI) benefits available in most states. In fiscal year 2006,
Congress appropriated about $655 million for income support.
Job search and relocation benefits. Payments are available to help
participants search for a job in a different geographical area and to
relocate to a different area to take a job. Labor distributed a total
of about $288, 000 in fiscal year 2006 for these benefits.
Wage insurance benefit. The wage insurance benefit, known as the
Alternative Trade Adjustment Assistance (ATAA) program, was created by
the TAA Reform Act of 2002 as a demonstration project for workers age
50 years old or older and who find reemployment within 26 weeks of
being laid off that pays less than $50,000 and less than what they
previously earned. Workers who meet these criteria are eligible to
receive 50 percent of the difference between their new and old wages up
to a maximum of $10,000 over 2 years. For the fiscal year 2008 budget
request, Labor estimated wage insurance benefits at $23 million.
Health coverage benefit. The health coverage benefit, known as the
Health Coverage Tax Credit (HCTC) and also created by the TAA Reform
Act, helps workers pay for health care insurance through a tax
credit.[Footnote 5] Workers can choose to receive the benefit in one of
two ways--as an advance option that covers 65 percent of their monthly
premiums, allowing them to lower the amount they have to pay out of
pocket for health coverage, or as an end-of-year tax credit that is
claimed on their income taxes. To be eligible for the health coverage
benefit, workers must either be (1) receiving extended income support
payments, or eligible for extended income support but still receiving
UI payments, or (2) receiving the wage insurance benefit. IRS
administers the health coverage tax credit program. There are three
health plan options that are automatically eligible:
* COBRA continuation plans. Under the Consolidated Omnibus Budget
Reconciliation Act (COBRA) of 1985, certain employers with 20 or more
employees are required to make available 18 to 36 months of continued
health care coverage for former employees and their dependents who lose
health coverage due to certain circumstances, such as when a worker is
laid off.
* Spousal coverage. Health care insurance obtained through the employer
of a worker's spouse is also eligible, provided that the employer
contributed less than 50 percent toward the cost of coverage.
* Individual market plans. Workers may use the health coverage benefit
to cover a portion of the monthly cost of individually purchased health
coverage if the worker purchased the coverage at least 30 days prior to
being laid off.
In addition to the three options that are automatically qualified for
the health coverage benefit, the TAA Reform Act allows states to
designate other coverage alternatives--called state-qualified options.
These state-qualified plans must, among other requirements, provide
coverage for preexisting conditions. Currently, 43 have state-qualified
plans.
Certifications Have Declined over Past 3 Fiscal Years as Petition
Filings Declined:
During the past 3 fiscal years, the number of petitions certified and
the number of petitions filed have declined. The proportion of
petitions certified has remained relatively stable, as Labor certified
about two-thirds of petitions investigated in each of these years.
These petitions covered an estimated 400,000 workers. Petitions were
most commonly denied because workers were not involved in the
production of articles, a basic requirement of the TAA program.
Labor Certified Two-Thirds of Petitions Investigated, although the
Number of Certifications Declined as Petitions Filed Declined:
Over the past 3 fiscal years, the number of petitions certified has
declined 17 percent, from nearly 1,700 in fiscal year 2004 to 1,400 in
fiscal year 2006. Labor certified two-thirds of petitions that it
investigated over the past 3 fiscal years, certifying nearly 4,700
petitions (see table 1).
Table 1: TAA Petition Filings and Investigation Decisions, Fiscal Years
2004 to 2006:
Fiscal year: 2004;
Number of petitions filed: 2,992;
Number investigated[A]: 2,559;
Number certified: 1,689;
Number denied: 870;
Percentage certified: 66.
Fiscal year: 2005;
Number of petitions filed: 2,638;
Number investigated[A]: 2,358;
Number certified: 1,589;
Number denied: 769;
Percentage certified: 67.
Fiscal year: 2006;
Number of petitions filed: 2,456;
Number investigated[A]: 2,232;
Number certified: 1,407;
Number denied: 825;
Percentage certified: 63.
Fiscal year: Total past 3 years;
Number of petitions filed: 8,086;
Number investigated[A]: 7,149;
Number certified: 4,685[B];
Number denied: 2,464[C];
Percentage certified: 66.
Source: GAO analysis of Department of Labor petitions data.
[A] About 900 petitions were terminated prior to an investigation by
the Department of Labor during fiscal years 2004 to 2006, accounting
for 12 percent of petitions filed. Petitions may be terminated for
several reasons, including that a petition was recently denied for the
layoff or a company official was not available to provide necessary
information.
[B] The numbers on petitions certified include 12 petitions that were
partially certified.
[C] Labor initially denied 2,599 petitions, but 135 were reversed upon
appeal.
[End of table]
An estimated 400,000 workers were covered by petitions between fiscal
years 2004 and 2006. However, because layoffs tend to be episodic, the
estimated number of trade-affected workers fluctuates dramatically from
year to year and state to state. For example, the estimated number of
trade-affected workers being laid off declined dramatically in Kansas
from fiscal years 2004 to 2005--from 4,117 in 2004 to 75 workers in
2005--and increased somewhat in 2006 to 721. Overall the estimated
number of trade-affected workers in Kansas laid off in fiscal year 2006
represented about an 80 percent decrease from the estimated number in
2004. On the other hand, Missouri experienced an 80 percent increase in
the number of trade-affected workers being laid off between fiscal
years 2004 and 2006--from 1,275 to 2,301 (see fig. 1).
Figure 1: Fluctuation in Estimated Number of Trade-Affected Workers
Laid Off from Fiscal Years 2004 to 2006 in Kansas and Missouri:
[See PDF for image]
Source: GAO analysis of Department of Labor petitions data.
[End of figure]
Of the approximately 4,700 petitions certified over the past 3 fiscal
years, most qualified for the TAA program because increased imports
contributed to the layoff of workers. An additional 38 percent of
certified petitions were because workers lost jobs due to a shift in
production to another country (see fig. 2).
Figure 2: Categories under Which TAA Petitions Were Certified, Fiscal
Years 2004-2006:
[See PDF for image]
Source: GAO analysis of Department of Labor data on petitions filed
during fiscal years 2004 to 2006.
Note: This figure does not include 12 petitions that were partially
certified.
[End of figure]
Although petitions for secondarily affected workers constitute only 7
percent of certified petitions, the number of workers covered under
this eligibility requirement has increased somewhat, from about 7,900
workers in fiscal year 2004 to 8,800 workers in fiscal year
2006.[Footnote 6] Nearly all of the 328 petitions certified for
secondarily affected workers during the past 3 fiscal years were for
workers at firms that supplied component parts to another firm that
experienced a TAA-certified layoff, or upstream firms.
Labor has generally processed petitions in a timely manner over the
past 3 fiscal years. Labor's average processing time has remained
relatively steady, taking on average 32 days to conduct an
investigation and determine whether to certify or deny the petition.
Labor met the requirement to process petitions within 40 days for 77
percent of petitions it investigated during fiscal years 2004 to 2006.
Labor most often took only an extra day to process the remaining
petitions. Labor officials said that the reason they are not always
able to meet the 40-day time frame is because they sometimes do not
receive necessary information in a timely manner from company
officials.
Petitions Were Most Often Denied because Workers Were Not Involved in
Producing an Article:
During the past 3 fiscal years, about 2,500 petitions have been denied,
and in fiscal year 2006, the most common reason for petitions being
denied was because workers were not involved in producing an article, a
basic requirement of the TAA program.[Footnote 7] Of the over 800
petitions filed in fiscal year 2006 that were denied, 359 (44 percent)
were denied for this reason (see fig. 3).
Figure 3: Reasons Petitions Filed in Fiscal Year 2006 Were Denied:
[See PDF for image]
Source: GAO analysis of Department of Labor data on petitions filed
during fiscal year 2006.
Note: Other reasons that petitions were denied were that the company
did not experience a decline in sales or production, the predominant
cause of the layoff was unrelated to imports or a shift in production
abroad, or there was no secondary impact. This figure does not include
two petitions that were missing information on reasons they were
denied.
[End of figure]
Of the 359 petitions denied because workers did not produce articles,
about one-third were for business services, such as computer
programming, and about one-third were for airport-related services,
such as aircraft maintenance. During the past 3 fiscal years, workers
appealed decisions in 16 percent of the approximately 2,600 petitions
that Labor initially denied. The vast majority were appealed directly
to Labor. Labor's decisions were reversed in one-third of the appeals.
Labor officials told us that appeals are often reversed because Labor
receives new information, as part of the appeals process, that
justifies certifying the petition. Although few denied petitions are
appealed to the U.S. Court of International Trade (CIT), many of the
recent appeals concern the issue of whether workers were involved in
the production of articles.
Number of Workers Enrolling in Training Has Declined since 2003:
Nationally, the decline in the number of workers entering training from
2004 to 2006 parallels the decline in the estimated number of workers
covered under certifications during this period (see fig. 4). However,
there are wide state-to-state variations in this trend. Sixteen states
responding to our recent survey reported a decrease in training
enrollment during the past 3 fiscal years, while 20 states reported an
increase. States reporting a decline said that the state experienced
fewer layoffs, had fewer eligible participants, and many workers needed
to go back to work, rather than enter training. States reporting
increases had experienced several large plant closures, had larger
percentages of workers needing remedial training, and had more
employers that required their workers to have higher skill levels.
Figure 4: Number of TAA Participants Covered under Certifications and
Enrolled in Training by Fiscal Year:
[See PDF for image]
Source: GAO analysis of Department of Labor petitions data and
quarterly activity reports.
[End of figure]
While many affected workers may seek employment services at one-stop
centers, relatively few enroll in training, according to the results of
our study of five layoffs. Seventy-percent or more of the workers in
our study visited a one-stop center, often receiving one-on-one
assistance. In our most recent study, we found that, nationally,
occupational training remains the largest training category for TAA
participants, with about three-fourths of TAA training participants
opting for occupational training. States ranked nursing--including
registered nurses, licensed practical nurses, and certified vocational
nurses--medical assisting, and truck driving as the occupations in
which TAA participants were most frequently trained. Although
occupational training remains the largest training category, its
relative percentage has decreased, while the percentage of training
enrollments for remedial education has increased (see table
2).[Footnote 8]
Table 2: Training Enrollments by Type of Training by Fiscal Year:
Type of Training: Occupational;
2004: Number: 42,793;
2004: Percent: 84;
2005: Number: 29,909;
2005: Percent: 79;
2006: Number: 27,101;
2006: Percent: 75.
Type of Training: Remedial;
2004: Number: 7,768;
2004: Percent: 15;
2005: Number: 7,509;
2005: Percent: 20;
2006: Number: 8,239;
2006: Percent: 23.
Type of Training: On-the-job;
2004: Number: 368;
2004: Percent: 1;
2005: Number: 356;
2005: Percent: 1;
2006: Number: 590;
2006: Percent: 2.
Type of Training: Total;
2004: Number: 50,929;
2004: Percent: 100;
2005: Number: 37, 774;
2005: Percent: 100;
2006: Number: 35,930;
2006: Percent: 100.
Source: Department of Labor data.
Note: On-the-job training (OJT) is training provided by an employer in
the public or private sector to a TAA participant that has been hired
by the employer. Under the OJT contract, the employer is reimbursed for
no more than 50 percent of the participant's wage for a specified
duration.
[End of table]
For our most recent study, some local officials told us that the need
for remedial training had increased, in part because more non-English-
speaking workers were being laid off. For example, officials from local
areas in two states we visited said that most workers who opted for
training enrolled in English as a second language (ESL) courses. In
response to this need, training providers in one of the local areas
designed a specific training program for dislocated garment workers
that enabled workers to take both ESL and occupational skills training
simultaneously.
Twenty six of the 46 states we surveyed reported having a maximum
amount they will pay for a worker to attend training, typically from
$10,000 to $20,000 (see fig. 5). Many of these states did, however,
note that their training maximums were flexible and could be waived if
justified. In addition, 13 states in our survey reported that their
training cost limits had increased during the past 3 years, mainly due
to rises in tuition and related expenses, as well as requests for more
expensive training.
Figure 5: States' Training Cost Limits:
[See PDF for image]
Source: GAO analysis of survey responses.
[End of figure]
Most workers who entered training at the five case study sites enrolled
in programs that were relatively short-term and that cost less than
$10,000. At four sites, half or more of the workers who enrolled in
training were enrolled in programs expected to last 1 year or less, and
at three of these sites, about 30 percent or more of the workers in
training entered programs expected to last 6 months or less(see fig.
6).
Figure 6: Workers in TAA-or WIA-Funded Training, by Expected Length of
Training Program:
[See PDF for image]
Source: State administrative records.
Notes: Data on training duration were available for 105 General Mills
workers, 91 Lear workers, 25 Weyerhaeuser workers, 7 Toro workers, and
139 Sanmina-SCI workers. Because of rounding, totals do not always
equal 100 percent.
[End of figure]
At our five case study sites we found that while most workers at each
site had received income support benefits, up to one-third received no
income support at all. Only about a third or less of the workers at
each site had received the benefits for over 1 year, and no more than 8
percent for longer than 18 months. Because most workers in the sites we
studied did not enroll in training, and those who did most commonly
entered programs lasting 1 year or less, the vast majority of the
workers in these sites did not utilize the full 2 years of extended
income support benefits available to them (see fig. 7).
Figure 7: Number of Months Workers Received Income Support Benefits (UI
and in Some Cases Extended Income Support):
[See PDF for image]
Source: GAO survey of dislocated workers.
Notes: Data include workers still receiving UI or extended income
support benefits at the time of our survey. For example, the Sanmina-
SCI plant closure occurred about 8 months before our survey, and 49
percent of Sanmina-SCI workers were still receiving income support
benefits at the time of our survey. Because of rounding, totals do not
always equal 100 percent.
[End of figure]
Few TAA Participants Take Advantage of Wage Insurance and Health
Coverage Benefits:
While participation remains low, the number of workers entering the
wage insurance program has increased from 2004 to 2006--from about
1,400 in 2004 to about 3,200 in 2006 (see fig. 8).
Figure 8: Wage Insurance Enrollments, Calendar Years 2004 to 2006:
[See PDF for image]
Source: Department of Labor data.
[End of figure]
The universe of workers eligible for wage insurance cannot be estimated
because data are not available on the number of workers certified for
TAA who are 50 years old or older and meet the other eligibility
requirements. However, two-thirds of the states we surveyed estimated
that 5 percent or less of TAA participants received wage insurance in
fiscal year 2006. In our study of five layoffs, we found that no more
than one in five of the workers potentially eligible for the wage
insurance benefit received it. In 2006, wage insurance benefits
totaling $16.7 million were paid to about 6,300 workers. The total
yearly benefits remain far lower than the 2002 Congressional Budget
Office estimate of $50 million per year.
Participation levels remain low for the health coverage benefit.
Although the number of TAA participants enrolling for the first time in
the advance health coverage benefit--whereby participants receive a
monthly tax credit that covers 65 percent of their premiums--has
increased since 2004, only about 6,900 received the advance health
benefit for the first time in fiscal year 2006. TAA participants may
also elect to receive an end-of-year tax credit, but the number of TAA
participants selecting this option is also low and has been decreasing
over time. We estimate that for tax year 2005, approximately 5,700 TAA
participants received end-of-year tax credits.
New enrollments in the advance credit option have increased over the
past 2 fiscal years, from about 5,600 to about 6,900 enrollments (see
fig. 9). As of September 2006, approximately 7 percent of the workers
that were eligible for the extended income support, a basic requirement
for the health coverage benefit, were receiving the advance credit.
However, some of the workers that were eligible for extended income
support may not meet other eligibility requirements for the health
coverage benefit, such as having a qualified health plan. Since
inception of the advance benefit, about 22,000 TAA participants have
received the credit.
Figure 9: Advance Health Coverage Benefit Enrollments, Fiscal Years
2004 to 2006:
[See PDF for image]
Source: GAO analysis of IRS data.
Notes: IRS data on new advance credit enrollments are unavailable prior
to January 2004.
[End of figure]
Little Is Known Nationwide about What the Program Achieves:
The TAA programwide performance data that are currently available do
not provide a complete and credible picture of the program's
performance. In our 2006 review of TAA performance data, we found that
the data that Labor uses to calculate program outcomes, such as
reemployment and retention rates, did not include all participants who
had completed the program. Only half the states reported that the data
they submit to Labor for determining progress toward national
performance goals include all TAA participants who stop receiving
benefits or services--that is, exit the TAA program, as Labor requires.
We found that Labor did not have a process in place to ensure that
states included all exiting participants in their data. As a result,
the performance data are incomplete and may be skewed. In addition,
some states were not using all available data sources to determine TAA
participants' employment outcomes. This may result in lower reported
outcomes because states may be inaccurately recording some workers as
unemployed who actually have jobs. To compile TAA data, some states
have information technology (IT) systems with limited capabilities that
may hinder their ability to ensure that the TAA data are complete and
accurate. Nine states were using manual rather than automated processes
to compile their TAA performance data, increasing the data's
vulnerability to data entry errors, and only about half of the states'
TAA IT systems could perform edit checks to help minimize errors. State
officials said resource shortages contributed to their data problems,
but many states planned to make improvements to their TAA IT systems'
capabilities. At the end of fiscal year 2006, Labor distributed
$250,000 to each state to help them improve their TAA performance data
systems, but it is too soon to know whether their efforts will improve
the quality of the data.
Because nationwide outcome data are limited, our study of five layoffs
examined the outcomes for workers affected by these layoffs. We found
that most of the workers who lost their jobs because of foreign trade
at four of the five sites we studied had either found a job or retired
at the time of our survey (see fig. 10).
Figure 10: Most Workers at Four of Five Sites Had Found Jobs or Retired
at the Time of the Survey:
[See PDF for image]
Source: GAO survey of dislocated workers.
[End of figure]
The workers who had entered training were the least likely to be
reemployed at each site, but it may be too soon to know the effect of
training on employment outcomes. Some of the workers who had enrolled
in training were expected to still be in training at the time of our
survey. Workers who did not go to a one-stop center were at least as
likely to be reemployed as those who visited a one-stop (but did not
get training). At only two sites--Weyerhaeuser and Sanmina-SCI--were
workers who did not visit a one-stop center more likely to be
reemployed than those who did. For example, at Weyerhaeuser, 50 percent
of those who did not visit a one-stop center were reemployed, compared
with 39 percent of those who did visit a one-stop center but did not
get training.
The majority of reemployed workers earned less in their new jobs than
they had previously earned, but according to our survey estimates
generally replaced about 80 percent or more of their prelayoff wages.
Workers and officials told us that several of the plants that we
studied paid higher wages than other companies in the area. Unless
workers moved out of the area, they could not easily earn comparable
wages doing the same type of work.
Workers at four of the five sites who did not go to a one-stop center
had a higher average prelayoff wage than those who did. For example,
Weyerhaeuser workers who did not go to a one-stop center had an average
prelayoff wage of about $30 an hour, while those who visited a one-stop
center (but did not get training) had an average pre-layoff wage of
about $27 an hour. When reemployed, workers who did not visit a one-
stop center generally replaced at least the same proportion of their
prelayoff wages as those who did.[Footnote 9] With the exception of
employees at Lear, those who received training had the lowest average
prelayoff wages. And at two of five sites, these workers had the lowest
average wage replacement rate when reemployed (see table 3).
Table 3: Average Prelayoff Hourly Wage and Wage Replacement Rates:
Company: General Mills;
Went to one-stop and enrolled in training; Average pre-layoff hourly
wage(in dollars): $15.67;
Went to one-stop and enrolled in training: Average wage replacement
rate when reemployed (percent): 82;
Went to one stop but did not enroll in training: Average pre-layoff
hourly wage (in dollars): $16.49;
Went to one-stop but did not enroll in training: Average wage
replacement rate when reemployed (percent): 88;
Did not go to one-stop: Average pre-layoff hourly wage (in dollars):
$17.97;
Did not go to one-stop: Average wage replacement rate when reemployed
(percent): 95.
Company: Lear;
Went to one-stop and enrolled in training; Average pre-layoff hourly
wage(in dollars): 16.22;
Went to one-stop and enrolled in training: Average wage replacement
rate when reemployed (percent): 92[A];
Went to one stop but did not enroll in training: Average pre-layoff
hourly wage (in dollars): 16.13;
Went to one-stop but did not enroll in training: Average wage
replacement rate when reemployed (percent): 74;
Did not go to one-stop: Average pre-layoff hourly wage (in dollars):
17.26;
Did not go to one-stop: Average wage replacement rate when reemployed
(percent): 94.
Company: Weyerhaeuser;
Went to one-stop and enrolled in training; Average pre-layoff hourly
wage(in dollars): 25.35;
Went to one-stop and enrolled in training: Average wage replacement
rate when reemployed (percent): 71[A];
Went to one stop but did not enroll in training: Average pre-layoff
hourly wage (in dollars): 27.10;
Went to one-stop but did not enroll in training: Average wage
replacement rate when reemployed (percent): 87;
Did not go to one-stop: Average pre-layoff hourly wage (in dollars):
30.34;
Did not go to one-stop: Average wage replacement rate when reemployed
(percent): 93[C].
Company: Toro;
Went to one-stop and enrolled in training; Average pre-layoff hourly
wage(in dollars): 13.83;
Went to one-stop and enrolled in training: Average wage replacement
rate when reemployed (percent): [B];
Went to one stop but did not enroll in training: Average pre-layoff
hourly wage (in dollars): 15.21;
Went to one-stop but did not enroll in training: Average wage
replacement rate when reemployed (percent): 81;
Did not go to one-stop: Average pre-layoff hourly wage (in dollars):
[B];
Did not go to one- stop: Average wage replacement rate when reemployed
(percent): [B].
Company: Sanmina-SCI;
Went to one-stop and enrolled in training; Average pre-layoff hourly
wage(in dollars): 16.79;
Went to one-stop and enrolled in training: Average wage replacement
rate when reemployed (percent): 89;
Went to one stop but did not enroll in training: Average pre-layoff
hourly wage (in dollars): 18.46;
Went to one-stop but did not enroll in training: Average wage
replacement rate when reemployed (percent): 94;
Did not go to one-stop: Average pre-layoff hourly wage (in dollars):
22.96;
Did not go to one-stop: Average wage replacement rate when reemployed
(percent): 96[C].
Source: GAO survey of dislocated workers.
Notes: Some of the workers who entered training--ranging from about one-
third to over 60 percent among the 5 sites--were expected to still be
in training at the time of our survey, and it may have been more
difficult for these workers to have started a new job. Differences
between estimates of average wage replacement rates for workers who did
not visit a one-stop center versus those who did were not statistically
significant at the 95 percent confidence interval at Weyerhaeuser and
Sanmina-SCI.
[A] These estimates have margins of error of plus or minus 15 percent
or less of the value of the estimates.
[B] All Toro workers went to a one-stop center. None of the Toro
workers who went to training have become employed, according to
administrative data. However, all but one were expected to still be in
training at the time of our survey.
[End of table]
More than half of reemployed workers returned to the manufacturing
sector, and at most sites workers who returned to manufacturing
replaced about the same proportion of their prelayoff wages as workers
who entered other fields. Workers who entered training replaced
slightly less of their wages than workers who did not at all but one
site, and those who were trained generally left manufacturing for
another industry. When reemployed workers did not return to
manufacturing, we found they entered fields such as professional and
business services; trade, transportation, and utilities; construction;
and education, health care, and social services. To determine whether
participant outcomes are a result of services, rather than other
factors, it is necessary to conduct an impact evaluation that can take
these and other factors into account. Labor has funded a long-term
study to assess the impact of TAA program services. Data collection
began in 2005 and will continue until 2008, and a final report is
scheduled to be issued by the end of 2008.
Concluding Observations:
The TAA program targets manufacturing workers affected by international
trade, who may have fewer transferable skills and face greater
challenges to reemployment than other dislocated workers. The program
provides a unique blend of services and benefits that have been
designed to meet these workers' needs--some of which are not available
to other dislocated workers. But little has been known about whether
the services provided are the right mix for today's workers who are
dislocated due to trade. Our case study provided a glimpse of the needs
of a small group of workers, the services they received, and their
employment outcomes about 8 to 22 months after their layoffs.
Workers affected by layoffs take a variety of paths. Workers are
increasingly taking advantage of wage insurance and health coverage
benefits, but the numbers remain fairly small. In our case study, we
learned that a large majority sought some assistance from their one-
stop center. Relatively few chose to enroll in training, but those who
did often used this opportunity to chart a new career path. A few did
not seek any federally funded reemployment services, and yet were still
successful in getting a new job. We cannot know all the factors that
motivate workers to seek particular services or that affect their
employability, and we cannot assess the role that TAA services played
in the outcomes workers achieved. It may be that some workers make an
independent assessment of what they need to help them rejoin the
workforce and then try to take the necessary steps, such as seeking
services at a one-stop, to make that happen.
GAO Contacts and Staff Acknowledgements:
For information regarding this testimony, please contact Sigurd R.
Nilsen, Director, Education, Workforce, and Income Security Issues, at
(202) 512-7215. Individuals who made key contributions to this
testimony include Dianne Blank and Wayne Sylvia:
[End of section]
Related GAO Products:
Trade Adjustment Assistance: Changes to Funding Allocation and
Eligibility Requirements Could Enhance States' Ability to Provide
Benefits and Services. GAO-07-701, GAO-07-702. (Washington, D.C.: May
31, 2007).
Trade Adjustment Assistance: New Program for Farmers Provides Some
Assistance, but Has Had Limited Participation and Low Program
Expenditures. GAO-07-201. (Washington, D.C.: December 18, 2006).
National Emergency Grants: Labor Has Improved Its Grant Award
Timeliness and Data Collection, but Further Steps Can Improve Process.
GAO-06-870. (Washington, D.C.: September 5, 2006).
Trade Adjustment Assistance: Labor Should Take Action to Ensure
Performance Data Are Complete, Accurate, and Accessible. GAO-06-496.
(Washington, D.C.: April, 25, 2006).
Trade Adjustment Assistance: Most Workers in Five Layoffs Received
Services, but Better Outreach Needed on New Benefits. GAO-06-43.
Washington, D.C.: January 31, 2006.
Workforce Investment Act: Substantial Funds Are Used for Training, but
Little Is Known Nationally about Training Outcomes. GAO-05-650.
Washington, D.C.: June 29, 2005.
Health Coverage Tax Credit: Simplified and More Timely Enrollment
Process Could Increase Participation. GAO-04-1029. (Washington, D.C.:
September 30, 2004).
Trade Adjustment Assistance: Reforms Have Accelerated Training
Enrollment, but Implementation Challenges Remain. GAO-04-1012.
Washington, D.C.: September 22, 2004.
Workforce Investment Act: Better Guidance and Revised Funding Formula
Would Enhance Dislocated Worker Program. GAO-02-274. Washington, D.C.:
February 11, 2002.
FOOTNOTES
[1] For further information on TAA, please see the following reports:
GAO, Trade Adjustment Assistance: Changes to Funding Allocation and
Eligibility Requirements Could Enhance States' Ability to Provide
Benefits and Services. GAO-07-701, GAO-07-702. (Washington, D.C.: May
XX, 2007; Trade Adjustment Assistance: Labor Should Take Action to
Ensure Performance Data Are Complete, Accurate, and Accessible. GAO-06-
496. (Washington, D.C.: Apr. 25, 2006); Trade Adjustment Assistance:
Most Workers in Five Layoffs Received Services, but Better Outreach
Needed on New Benefits. GAO-06-43. (Washington, D.C.: Jan. 31, 2006);
and Trade Adjustment Assistance: Reforms Have Accelerated Training
Enrollment, but Implementation Challenges Remain. GAO-04-1012.
(Washington, D.C.: Sept. 22, 2004).
[2] The four states that did not receive an initial allocation of TAA
training funds in fiscal year 2006 were Delaware, Hawaii, North Dakota,
and Wyoming.
[3] The selected plant closures were: Massachusetts, Sanmina-SCI
Corporation (printed circuit boards); Mississippi, the Toro Company
(lawnmower and snow-thrower engines); Missouri, General Mills, Inc.
(baked goods); Pennsylvania, Lear Corporation (automotive carpets); and
Washington, Weyerhaeuser Company (fine paper and pulp).
[4] The statute provides that Labor determine that a significant number
or portion of workers have become totally or partially separated, or
are threatened to become totally or partially separated. 19 U.S.C. §
2272(a)(1).
[5] The Trade Adjustment Assistance Reform Act of 2002 created a health
coverage tax credit for certain workers who are eligible to receive
income support benefits under the TAA program because their jobs were
lost due to foreign competition and for certain retirees whose pensions
from a former employer were terminated and are now paid by the Pension
Benefit Guaranty Corporation (PBGC).
[6] The data used to estimate the number of workers certified as
eligible for TAA are based on estimates of the number of affected
workers submitted by companies at the time TAA petitions are filed with
the Department of Labor. At the time petitions are submitted, companies
may not know exactly how many workers will be affected.
[7] Fiscal year 2006 was the first year that complete data were
available on the reasons petitions were denied.
[8] The percentages are based on enrollments in each training category
and not individuals. Some individuals could have enrolled in more than
one activity.
[9] At the fifth site, Toro, in Mississippi, all workers went to a one-
stop center. Therefore, we could not compare the employment outcomes
for those who visited a center to the outcomes for those who did not.
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