Trade Adjustment Assistance: Improvements Necessary, but Programs
Cannot Solve Communities' Long-Term Problems (20-JUL-01,	 
GAO-01-988T).							 
								 
The Trade Adjustment Assistance (TAA) Program and the North	 
American Free Trade Agreement Transitional Adjustment Assistance 
(NAFTA-TAA) Program are designed to help dislocated workers,	 
communities, and firms adjust to the rapid economic changes that 
characterize the globalization of national economies. While	 
globalization has increased the importance of technology and	 
service sector jobs, it has also resulted in the loss of many	 
manufacturing jobs as companies that cannot compete with	 
lower-priced imports go out of business or relocate abroad. The  
federal government recognizes that, while the benefits of	 
increased trade are widely dispersed across the economy, the	 
costs of worker dislocation effects are more localized. This has 
heightened concerns about the efficacy of federal trade 	 
adjustment assistance efforts. This testimony discusses (1) the  
nature of trade impacts on communities and the use of benefits	 
and services under TAA and the NAFTA-TAA programs, (2) the	 
structural problems that impede effective delivery of those	 
services and benefits, and (3) the longer-term challenges facing 
trade-impacted communities.					 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-01-988T					        
    ACCNO:   A01424						        
  TITLE:     Trade Adjustment Assistance: Improvements Necessary, but 
             Programs Cannot Solve Communities' Long-Term Problems            
     DATE:   07/20/2001 
  SUBJECT:   Community development				 
	     Economic development				 
	     Economically depressed areas			 
	     Foreign trade agreements				 
	     Globalization					 
	     International trade				 
	     Unemployment compensation programs 		 
	     DOL NAFTA Transitional Adjustment			 
	     Assistance Program 				 
								 
	     Trade Adjustment Assistance Program		 
	     Treasury Community Adjustment and			 
	     Investment Program 				 
								 

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GAO-01-988T
     
TRADE ADJUSTMENT ASSISTANCE

Improvements Necessary, but Programs Cannot Solve Communities? LongTerm
Problems Statement of Loren Yager, Director, International Affairs and Trade

United States General Accounting Office

GAO Testimony Before the Committee on Finance, Subcommittee on

International Trade, U. S. Senate

For Release on Delivery Expected at 9: 30 a. m., EDT Friday, July 20, 2001

GAO- 01- 988T

GAO- 01- 988T Trade Adjustment Assistance 1 Mr. Chairman and Members of the
Subcommittee:

I am pleased to have the opportunity today to discuss our recent work on
federal trade adjustment assistance that we have been undertaking at the
Committee?s request. These programs are designed to help dislocated workers,
communities, and firms adjust to the rapid economic changes that
characterize the globalization of national economies. While globalization
has increased the importance of technology and service sector jobs, it has
also resulted in the loss of many manufacturing jobs as companies that
cannot compete with lower- priced imports go out of business or relocate
abroad. The federal government recognizes that, while the benefits of
increased trade are widely dispersed across the economy, the costs of worker
dislocation effects are more localized. This has heightened concerns about
the efficacy of federal trade adjustment assistance efforts.

Today I will draw on information from our earlier report on the Trade
Adjustment Assistance (TAA) program, which covers workers who lost their
jobs because of imports from any country, and the North American Free Trade
Agreement Transitional Adjustment Assistance (NAFTA- TAA) program, which
covers only those workers who have lost their jobs due to increased imports
from or a shift of production to Mexico or Canada. 1 I will also draw on
material from our ongoing work for this Committee, which has focused on case
studies in six communities to learn about their experiences with trade
adjustment assistance. Specifically, I will discuss (1) the nature of trade
impacts on communities and the use of benefits and services under the TAA
and NAFTA- TAA programs, (2) the structural problems that impede effective
delivery of those services and benefits, and (3) the longer- term challenges
facing trade- impacted communities.

1 See Trade Adjustment Assistance: Trends, Outcomes, and Management Issues
in Dislocated Worker Programs (GAO- 01- 59, Oct. 13, 2000). We also
completed reports on trade adjustment assistance to communities and firms.
See Trade Adjustment Assistance: Opportunities to Improve the Community
Adjustment and Investment Program (GAO/ NSIAD- 00- 229, Sept. 29, 2000) and
Trade Adjustment Assistance: Impact of Federal Assistance to Firms Is
Unclear (GAO- 01- 12, Dec.

15, 2000).

GAO- 01- 988T Trade Adjustment Assistance 2 Before I get into the specifics
of these topics, let me provide a brief summary of

our findings.

Summary

In our ongoing review of communities? experiences with trade adjustment
assistance, we found about 300 communities that had more than 500 workers
certified for TAA benefits from fiscal years 1994 to 1999. Some communities
lost a large percentage of their jobs in sudden plant closures, while others
experienced rolling layoffs, where a series of smaller plant closures
dislocated as many or more workers but did so more gradually. The number of
workers covered by certifications under both trade adjustment programs
averaged about 163,000 annually from fiscal years 1995 through 2000 (see the
app. for 1995- 2000 data about payments and service and benefit recipients).

Apparel and textiles represented about 35 percent of all certified workers,
followed by the oil and gas, electronics, and metal and machinery
industries.

In fiscal year 2000, TAA and NAFTA- TAA benefits to displaced workers
included -- $255 million in income support for basic and extended trade
readjustment allowances and -- about $104 million in training support.

TAA and NAFTA- TAA provide substantial assistance to dislocated workers.
However, program administrators and training officials said that the
programs have structural problems that impede effective service delivery.
Specifically, they said that

the period of time dislocated workers receive income support versus training
benefits is inconsistent (18 and 24 months, respectively), which local
officials and workers said limited training options;

GAO- 01- 988T Trade Adjustment Assistance 3

the instability of funding for training benefits results in delayed approval
of training requests; and

the maintenance of separate TAA and NAFTA- TAA programs is administratively
inefficient and confusing.

We found in our reviews that providing trade adjustment assistance cannot
resolve all the workers? or communities? long- term challenges- particularly
those faced by lower- skilled workers and less economically diverse
communities. For example, based on the most recent national data,
approximately 80 percent of the TAA and NAFTA- TAA workers using benefits in
fiscal years 1999 and 2000 had a high school education or less, compared to
42 percent in the overall labor force. In addition, many of these workers
have been out of the educational system for 20 years, and in some
communities, many have limited English skills. Because of these and other
challenges, TAA- sponsored training is unlikely to complete the match
between these workers and the kinds of jobs available in the current
economy.

The communities face other longer- term challenges such as improving their
human capital. Community leaders found that there is limited federal and
state assistance to help with economic adjustment. However, even when these
communities received funds, the funds were targeted and not necessarily
designed to address long- term human capital and infrastructure challenges.
Many of these communities had relied on low- skilled manufacturing jobs,
which are disappearing, and now face the difficult task of diversifying
their economies. As a result, many of these communities are attempting to
replace the jobs that were lost to layoffs. At the same time, they are
trying to attract higher paying and more stable service industry jobs.
However, while helping dislocated workers is the immediate challenge, it
does not lead to- and may even detract from- the efforts to achieve a more
flexible and highly educated workforce and a more diversified economy.

GAO- 01- 988T Trade Adjustment Assistance 4 At the end of my statement, I
highlight several matters the Congress may wish to

consider during its reauthorization deliberations.

Background

The TAA and NAFTA- TAA programs assist U. S. workers displaced by foreign
trade and increased imports. 2 The TAA program covers workers who lose their
jobs because of imports from any country, while the NAFTA- TAA program
covers only workers who have lost their jobs because of increased imports
from or a shift of production to Mexico or Canada. In addition to the NAFTA-
TAA program provided for in the North American Free Trade Implementation
Act, a Statement of Administrative Action was issued that made a commitment
to provide services and benefits for ?secondary workers.? Such workers are
employed at firms that supply or assemble products produced by directly
affected firms certified under NAFTA- TAA. However, such secondary workers
are not eligible for the NAFTATAA program but receive benefits under another
dislocated worker program. Both TAA and NAFTA- TAA programs provide similar
benefits such as trade readjustment allowances (extended income support
beyond normal unemployment insurance benefits), services such as job
training, and job search and relocation allowances. However, the two
programs? rules covering benefits and services differ.

The Department of Labor oversees both programs and makes final
determinations regarding worker eligibility. Groups of workers or their
representatives can petition the Department of Labor for certification of
eligibility to apply for services or benefits under the program (under
NAFTA- TAA, this process begins in the states). The Department then conducts
an investigation to determine if increased imports have contributed to their
loss of employment. Once a TAA or NAFTA- TAA petition is approved, covered
workers must meet several tests

2 The current Trade Adjustment Assistance program was created by the Trade
Expansion Act of 1962 (P. L. 87- 794). It was substantially modified by the
Trade Act of 1974 (P. L. 93- 618) and the North American Free Trade
Agreement Implementation Act of 1993 (P. L. 103- 182).

GAO- 01- 988T Trade Adjustment Assistance 5 regarding the timing of their
layoff and their length of employment with the tradeimpacted

firm. Workers can be certified as eligible for both programs but can claim
benefits from only one. The states play a major role by providing program
services and benefits, such as job training and reemployment services. 3 The
TAA and NAFTA- TAA programs together received about $407 million in fiscal
year 2001 funding. Workers who lose their jobs for nontrade reasons
generally receive benefits under the Workforce Investment Act program, which
will serve an estimated 927,000 workers in fiscal year 2001 and received
about $1.6 billion in funding.

Generally, TAA and NAFTA- TAA income assistance for a dislocated worker is
equal to the weekly benefits of the state?s unemployment insurance program 4
and may be paid for up to 52 weeks after the initial 26 weeks (30 weeks in
Massachusetts and Washington state) of unemployment insurance benefits have
been exhausted. Thus, eligible dislocated workers may receive up to 78 weeks
(18 months) of cash payments if enrolled in approved training or if eligible
for a training waiver. Dislocated workers also are eligible for up to 104
weeks (2 years) of training. Therefore, workers do not necessarily receive
income assistance during their entire period of training.

The federal government has also established programs to assist trade-
impacted firms and communities suffering job losses due to changing trade
patterns. For example, the Trade Adjustment Assistance program for firms,
established in 1962 and administered by the Department of Commerce?s
Economic Development Administration, provides assistance to firms that can
demonstrate that increases in imports have contributed importantly to
layoffs and declines in sales or production. The TAA for firms program was
funded for $10.5 million in fiscal year 2000. In addition, the Community
Adjustment and Investment Program was 3 See Trade Adjustment Assistance:
Trends, Outcomes, and Management Issues in Dislocated Worker Programs for a
more detailed discussion of TAA and NAFTA- TAA certification procedures and
eligibility requirements.

GAO- 01- 988T Trade Adjustment Assistance 6 established as a result of the
1993 North American Free Trade Agreement

Implementation Act. Under the program, loan guarantees, loans, and grants
are provided to businesses and grantees in eligible counties to help
stimulate private sector employment and growth. Loan guarantees to local
businesses have accounted for the preponderance of financing commitments to
date. The program was established with an initial capitalization of $22.5
million and has received $20 million in additional appropriations to support
and expand program activities. The Congress did not appropriate any funds
for the program in fiscal year 2001.

Trade Affects Wide Range of Workers and Communities

Worker Certification Trends- Fiscal Years 1995 Through 2000 The estimated
number of workers covered by certifications under both trade adjustment
programs averaged about 163,000 annually from fiscal year 1995 to 2000,
reaching a high of about 228,000 in fiscal year 1999 (see table in app.). 5
Petitions under the TAA and NAFTA- TAA programs covered an estimated 977,611
workers during fiscal years 1995- 2000. 6 Many worker groups file for
certification under both programs, and Department of Labor officials
estimate that 75 percent of NAFTA- TAA certified workers are also covered by
TAA petitions. Such workers could be counted twice in the overall program
totals if they had been part of the groups that filed for certification
under both programs. From fiscal years 1995 through 1999, these
certifications covered workers in apparel and textiles (35 percent), oil and
gas (15 percent), electronics (9 percent), and metal and

4 Unemployment benefits vary widely among the states. In 1999, the average
benefit was an estimated $202 per week. 5 By way of comparison, between
January 1997 through December 1999, 1 million factory workers lost jobs in
the United States, according to the Bureau of Labor Statistics. These job
losses accounted for about one in every three job displacements in the
country during that period.

6 These certifications represent potentially affected workers not actual
jobs lost. In some cases, workers certified were facing the potential loss
of their job and were not laid off. Thus, program certifications are not an
accurate count of job losses due to trade.

GAO- 01- 988T Trade Adjustment Assistance 7 machinery (8 percent); the
remaining petitions were from a range of

manufacturing industries. Trends in Benefit Utilization The largest benefit
delivered to trade- impacted displaced workers in 1995 to 2000 was in the
form of income support, primarily to allow workers partial wage replacement
while taking training. The TAA and NAFTA- TAA programs paid a total of
$843.7 million during this period for basic income allowances. The two
programs also paid $314.5 million in additional income allowances. Training
courses cost $494.2 million, and job search and relocation allowances
totaled $10.3 million over the 6- year period. Most state officials we
surveyed said job search and relocation benefits have not been heavily
utilized, because workers are reluctant to move to new areas, primarily
because of family commitments or ties to the community. Figure 1 depicts the
breakout of major TAA and NAFTA- TAA services and benefits for fiscal year
2000.

GAO- 01- 988T Trade Adjustment Assistance 8

Figure 1: Trade Adjustment Assistance Benefit Utilization, Fiscal Year 2000

Totals may not add up to 100 percent due to rounding. Source: GAO analysis
of Department of Labor data. The Department of Labor still considers data
for fiscal year 2000 preliminary.

Trade- related Layoffs Hurt Case Study Communities As part of our work on
trade adjustment assistance, we identified about 300 communities that had
500 or more workers certified for TAA benefits between fiscal years 1994 and
1999. Based on our case study examination of six of these communities, we
found that trade- related layoffs occurred in a variety of ways. In some
communities, a single large plant closing led to the layoff of more than 500
workers. For example, Tultex, an apparel manufacturer and one of the largest
employers in Martinsville, Virginia, declared bankruptcy in December 1999
without prior notice and immediately closed all operations. This left more
than 2,000 workers without jobs and caused the city?s unemployment rate to
rise from about 9 percent to almost 20 percent that year. In other cities
such as El Paso,

Basic Income Allowance 51%

Additional Income Allowance 19%

Training 30%

Job Search / Relocation 0.62%

GAO- 01- 988T Trade Adjustment Assistance 9 for example a series of layoffs
occurred that have contributed to their relatively

high unemployment rates. We also observed that many of the communities that
we visited were concerned about additional trade- related layoffs and plant
closures. In Washington, North Carolina, and Martinsville, Virginia,
community leaders said that they expect their textile and apparel industries
to continue to decline because of increased foreign competition.
Martinsville leaders also fear that the furniture industry, another large
employer in their community, will begin to feel the impact of increased
furniture imports.

Delivery of TAA Services and Benefits Hampered by Program Structure

Length of Time for Income Support Limits Training Options Program
administrators, training providers, and workers in training consistently
said that the TAA and NAFTA- TAA programs needed to close the gap between
extended income support payments, which are provided for up to 18 months,
and training, which is provided for up to 24 months. Although there are
mixed views and little data on the outcomes associated with shorter and
longer training programs, the gap in income support is believed to create
difficulties for workers in 2- year training programs. This situation occurs
because when income support payments stop, dislocated workers generally drop
out of training because they cannot afford to remain in classes without
financial assistance. This choice often precludes them from pursuing a 2-
year Associate of Arts degree program, which could result in higher earnings
or better skills, or any 2- year course of study involving initial remedial
courses. 7

7 Department of Labor program data show that about 12 to 16 percent of those
entering training took remedial courses during fiscal years 1995- 2000.

GAO- 01- 988T Trade Adjustment Assistance 10 Funding Problems Lead to
Training Delays

Another problem with program structure cited by local program administrators
was the lack of a stable funding stream for training benefits. Although
training is a key part of a worker?s benefits, some states had difficulties
providing consistent funding for training due to administrative problems in
the Department of Labor. Generally, federal funding is provided to states
quarterly and is based on prior expenditures. Because TAA and NAFTA- TAA
certifications fluctuate, in some cases states may not have received
sufficient funding to cover workers enrolled during a quarter. In addition,
state and local officials reported that insufficient federal funds are
available for the programs toward the end of the fiscal year (Department of
Labor officials said these problems primarily occur in the first and last
quarters of the fiscal year). High levels of certifications from
unanticipated layoffs and plant closures have resulted in states Texas and
North Carolina, for example with large numbers of workers enrolled in
training at the same time that program officials were informed that no
additional federal funds remained. 8 As we noted in our recent report, 9
although the Department of Labor has issued formal guidance that states
should not stop enrolling workers in program services and benefits when
funding is temporarily unavailable, agency officials report that few states
have done so. In some cases, when federal training funds are depleted,
states use Workforce Investment Act 10 or other state monies.

8 When this happens, states may apply for funding, such as National
Emergency Grants from the Secretary of Labor, put workers on waiting lists,
or suspend the training program. 9 Trade Adjustment Assistance: Trends,
Outcomes, and Management Issues in Dislocated Worker Programs.

10 The Workforce Investment Act of 1998, title I, provides assistance to
persons who have been laid off due to plant closures or mass layoffs and/ or
meet the eligibility requirements outlined in the act. There is no special
category of causation, such as that for trade- impacted workers under TAA
and NAFTA- TAA.

GAO- 01- 988T Trade Adjustment Assistance 11 Difficulties Stemming From
Maintaining Separate Trade Adjustment Assistance

Programs Maintaining separate TAA and NAFTA- TAA programs results in a basic
structural problem that confuses participants and causes problems for
program administrators. Dislocated workers we interviewed in Texas and
Michigan stated that the explanations that program officials provided about
the programs before workers choose a program were inadequate and did not
sufficiently clarify workers? questions. For example, while a worker can
obtain a waiver from training under TAA and still receive income support,
waivers are unavailable under NAFTA- TAA. Explaining this difference and
others to dislocated workers unfamiliar with federal programs can confuse
workers particularly because many workers are certified for benefits under
both programs and must select one under which to take benefits.

Officials in the 20 states we surveyed and in the states and localities we
visited believed that differing certification and training enrollment
procedures of the two programs hinders effective program administration.
Under current law, TAA petitions are received and processed by the
Department of Labor, while NAFTATAA petitions are submitted to the state
agency in which the affected plant is located. Officials in every state
administrative office and case study community we visited consistently
supported the consolidation of the TAA and NAFTA- TAA programs. These
officials believed that consolidation would simplify program administration
and be more efficient.

Other Program Requirements Hinder Delivery of Benefits and Services Other
program requirements can impede dislocated workers from successfully
completing training, according to state program administrators and program
participants. State officials were critical of the enrollment deadlines to
qualify for income support in the NAFTA- TAA program. To qualify for
transition

GAO- 01- 988T Trade Adjustment Assistance 12 readjustment benefits under
NAFTA- TAA, a worker must enroll in an approved

training program by (1) the last day of the 16 th week of their most recent
qualifying separation or (2) the last day of the 6 th week after publication
of the certification in the Federal Register, whichever is later. The TAA
program does not have this requirement. According to some state officials,
the stringent NAFTA- TAA requirement limits the training options for workers
who only qualify for this program. In some cases, appropriate training
courses are not scheduled to begin within the enrollment deadline, so
workers choose to take less suitable courses to retain eligibility for
income support. The TAA and NAFTA- TAA programs also prohibit dislocated
workers from receiving income support if there is a break in training
exceeding 14 days. Program administrators we interviewed explained that
community colleges generally have semester breaks lasting longer than 14
days, which means that dislocated workers cannot receive any financial
assistance during that period.

Other factors complicating service and benefit delivery include
certification delays at the Department of Labor and federal paperwork
requirements. As noted in our recent report, Department of Labor delays in
certifying TAA and NAFTATAA petitions or state program administrative office
delays in approving workers? training plans can limit workers? options. 11
Department of Labor officials said that nearly all states have centralized
approval of workers? training plans because local officials have less
experience with TAA and NAFTA- TAA regulations.

11 We found that in fiscal year 1999, 58 percent of NAFTA- TAA
investigations exceeded the 40- day statutory requirements and 34 percent of
the TAA investigations exceeded the 60- day limit. See Trade Adjustment
Assistance: Trends, Outcomes, and Management Issues in Dislocated Worker
Programs.

GAO- 01- 988T Trade Adjustment Assistance 13

Trade Adjustment Assistance Cannot Solve Communities? Longer- Term Problems

Education Seen as Key to Successful Adjustment One challenge consistently
cited by government and civic leaders in the communities we visited was the
issue of human capital. They said that they needed to improve local
educational systems, which often had high school dropout rates much higher
than the national average. In several communities, local leaders said that
school facilities and curricula need to be improved to better prepare
students for high- skilled jobs and to develop a more attractive environment
for companies that they would like to recruit. In some communities, local
officials said that they were caught in a difficult situation in which local
residents who graduate from college leave for better jobs elsewhere. At the
same time, they were hampered in recruiting firms that needed a college-
educated workforce, in part because they had low numbers of such workers in
their area.

Worker Profile Indicates Potential Training Challenges The profile of
dislocated workers that emerged from our case study discussions with program
administrators, training providers, and small groups of dislocated workers
is consistent with the Labor Department?s available national data on TAA and
NAFTA- TAA dislocated workers. The Department?s data on these programs
illustrates the human capital challenge facing trade- impacted communities
(see table 1). The table compares trade- dislocated workers nationwide to
the total U. S. workforce. While 42 percent of the nation?s total workforce
has a high school education or less, 80 percent of trade- dislocated workers
fall into this category. Among trade- dislocated workers, the average age
was 43, and 59 percent were over the age of 40. In addition, 64 percent of
these workers were women. These data suggest, and community leaders we
interviewed in our case studies confirmed, that trade- impacted workers tend
to be less mobile and face difficulties reentering a workforce that
increasingly requires more skills and

GAO- 01- 988T Trade Adjustment Assistance 14 training. As a result of these
factors, moving these workers further along on the

educational or job skill continuum is a challenge. Our discussions with
training providers and workers indicated that enormous sacrifices are
necessary for dislocated workers many of whom have been out of school for 20
years or more to be successful in an educational system that has become more
challenging while maintaining family and other responsibilities. Given these
factors and the maximum 2 years of training available, earning an Associate
of Arts degree would represent a considerable achievement yet may still
leave these participants short of the skills required for many technology
and service sector jobs.

GAO- 01- 988T Trade Adjustment Assistance 15 Table 1: Profile of TAA and
NAFTA- TAA Participants Compared to Total U. S.

Workforce, Fiscal Years 1999- 2000

Worker characteristics Nationwide TAA and NAFTA- TAA participants

Total U. S. workforce

Gender Male Female

36% 64

53% 47 Average age 43 years NA Limited English proficiency 12% NA Average
old wage $12.13 per hour

(at separation) $13.36 per hour

(current wages for production workers) Average new wage $10.31 Not
applicable

Median tenure 7 years (at separation) 3.5 years Education Less than high
school High school graduate Some post- high school College graduate

25% 55 17

4 10%

32 28 a

30 Notes: TAA and NAFTA- TAA participant data based on data from 36, 000
workers who left the TAA and NAFTA- TAA program in fiscal years 1999- 2000
and filled out a survey. Total U. S. workforce data are from Bureau of Labor
Statistics Employment Situation Report for May 2001, except for average wage
and average tenure data, which are Bureau data for February 2000.

NA= Not available Totals may not add up to 100 percent due to rounding. a
?Some post- high school? for total U. S. workforce includes some college, no
degree, and associate degrees.

Sources: GAO analysis of TAA and NAFTA- TAA participant data from Department
of Labor and data from Bureau of Labor Statistics.

GAO- 01- 988T Trade Adjustment Assistance 16 Differing Economic Adjustment
Strategies May Be Needed to Facilitate

Adjustment to Trade Impacts Communities recovering from adverse trade
impacts are struggling with difficult choices needed to rebuild their
economic base and retool to better compete in the national and global
economies. The assistance available for communities? economic adjustment
efforts is limited, targeted, and generally short- term. Three of the
communities where we conducted our case studies are adopting strategies that
aim for economic diversification by preparing their workforce for the
highskilled, well- paying jobs that they hope to attract. However, these
communities realize that they still need jobs suitable for low- skilled,
displaced workers who will not qualify for jobs in the new economy.

The communities we visited as part of our case studies had received some
assistance from federal and state governments to facilitate their economic
adjustment efforts. The federal government provided a total of $59.5 million
in economic adjustment assistance funding to these six communities from
fiscal year 1995 to the present, mostly in federal loan guarantees. Of this
amount, the largest amount was $42.3 million in loan guarantees to
businesses provided by the Community Adjustment and Investment Program, most
of which were made in El Paso, Texas ($ 38.7 million). The second largest
source of funding was from the Department of Commerce?s Economic Development
Administration, which provided $10.5 million in grant assistance to these
six communities from fiscal year 1995 to early fiscal year 2001. Community
officials believe they are limited in their ability to obtain such federal
assistance, which is spread across many federal agencies, because there is
no central source of information on available programs and because they
often lack the financial resources to meet grant matching requirements.
Local officials also believe that the programs targeted at tradeimpacted
areas are too limited to make a significant difference in their communities?
adjustment efforts.

GAO- 01- 988T Trade Adjustment Assistance 17 Those involved in worker
adjustment assistance programs in the communities

pointed to the need for training programs linked to the employment needs of
local businesses. One of the fundamental challenges facing trade- impacted
communities is helping dislocated workers- generally older workers with a
high school degree or less- adjust to an increasingly globalized economy
that requires different skills than those needed when these individuals
first entered the workforce. In fiscal year 1999, occupational training was
the most common type of training provided under the TAA and NAFTA- TAA
programs. Computer and information system skills and office and business
administration were the most popular training programs, with 14 states of 20
listing them in their top three occupational course offerings to trade-
impacted workers. Medical skills, including nursing, were listed among the
top three training courses by nine states; and six states listed English as
a second language or remedial education in the top three training courses
offered. However, these relatively short- term training programs may not
bridge the gap between these workers? current skills and the skills they
need to enter a workforce more focused on technology and services.

Matters for Congressional Consideration

As a result of the work that we have performed for the Committee, we have
several matters that the Congress may wish to consider as part of its
current deliberations about consolidating or restructuring the trade
adjustment assistance programs. With regard to the TAA and NAFTA- TAA
programs, the Congress may wish to simplify the administration of the TAA
and NAFTA- TAA programs by standardizing (1) time frames for workers to
enter training, (2) training waiver policies for certified workers, and (3)
time frames for completing certification investigations. Congress may also
wish to consider whether workers who experience an unavoidable break in
training of more than 14 days (such as semester breaks) should continue to
receive income benefits. 12

12 Our prior reports also contained recommendations to improve the
effectiveness of the trade adjustment assistance programs. See Trade
Adjustment Assistance: Trends, Outcomes, and Management Issues in Dislocated
Worker Programs; Trade Adjustment Assistance: Opportunities

GAO- 01- 988T Trade Adjustment Assistance 18

---------- ----------- ------------

Mr. Chairman and Members of the Committee, this concludes my prepared
statement. I will be happy to answer any questions the Committee members may
have.

Contacts and Acknowledgments

For future contacts regarding this testimony, please call Loren Yager or
Phillip Herr at (202) 512- 4128. Individuals making key contributions to
this testimony included Sigurd Nilsen and Leyla Kazaz.

to Improve the Community Adjustment and Investment Program; and Trade
Adjustment Assistance: Impact of Federal Assistance to Firms Is Unclear.

GAO- 01- 988T Trade Adjustment Assistance 19

Appendix Trade Adjustment Assistance and North American Free Trade Agreement
Transitional Adjustment Assistance Payments and Service and Benefit

Recipients, Fiscal Years 1995- 2000

Dollars in millions 1995 1996 1997 1998 1999 2000 Total

Total workers certified a

118,837 166,310 165,898 153,804 227,650 145,112 977,611

Basic allowance

Payments Recipients $109.5

25,641 $127.8 32,856 $148.0

34,158 $119.2 26,241 $159.1

36,910 $180.1 32,368 $843.7

188,174

Additional allowance

Payments Recipients $41.6

5,856 $43.6 7,132 $53.6

15,215 $50.2 7,736 $50.7

8,166 $74.8 10,010 $314.5

54,115

Training Costs Recipients $60.9

28,645 $68.5 32,971 $83.4

26,865 $79.9 25,235 $97.3

32,120 $104.2 24,106 $494.2

169,942

Job search Costs Recipients $0.3

927 $0.3 752 $0.2

520 $0.1 289 $0.1

314 $0.1 359 $1.1

3,161

Job relocation Costs Recipients $2.8

1,678 $1.8 940 $1.7

875 $0.8 473 $1.0

771 $1.1 731 $9.2

5,468 Total service and benefit payments $215.1 $242.0 $286.9 $250.2 $308.2
$360.3 b $1,662.7

Note: Readjustment allowance and training recipients may appear in quarterly
reports spanning more than one fiscal year. Likewise, workers could have
received more than one type of benefit in a fiscal year. ?Recipients? means
the number of people receiving a first trade readjustment allowance payment
and the number of people who entered training.

a These figures include workers certified under both programs. b Data for
2000 are preliminary.

Source: GAO analysis of Department of Labor data collected quarterly from
the states.

(320074)

GAO- 01- 988T Trade Adjustment Assistance 20

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