Trade Adjustment Assistance: Program Provides an Array of	 
Benefits and Services to Trade-Affected Workers (14-JUN-07,	 
GAO-07-994T).							 
                                                                 
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. 	 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-994T					        
    ACCNO:   A70870						        
  TITLE:     Trade Adjustment Assistance: Program Provides an Array of
Benefits and Services to Trade-Affected Workers 		 
     DATE:   06/14/2007 
  SUBJECT:   Allocation (Government accounting) 		 
	     Employee training					 
	     Employees						 
	     Employment assistance programs			 
	     Federal aid programs				 
	     Federal funds					 
	     Funds management					 
	     International trade				 
	     Manufacturing industry				 
	     Program evaluation 				 
	     Reductions in force				 
	     Surveys						 
	     Training utilization				 
	     Wage surveys					 
	     Trade Adjustment Assistance Program		 

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GAO-07-994T

   

     * [1]An Overview of the TAA Process from Filing Petitions to Rece

          * [2]TAA Petition Process
          * [3]TAA Benefits and Services

     * [4]Certifications Have Declined over Past 3 Fiscal Years as Pet

          * [5]Labor Certified Two-Thirds of Petitions Investigated, althou
          * [6]Petitions Were Most Often Denied because Workers Were Not In

     * [7]Number of Workers Enrolling in Training Has Declined since 2
     * [8]Few TAA Participants Take Advantage of Wage Insurance and He
     * [9]Little Is Known Nationwide about What the Program Achieves
     * [10]Concluding Observations
     * [11]GAO Contacts and Staff Acknowledgements
     * [12]GAO's Mission
     * [13]Obtaining Copies of GAO Reports and Testimony

          * [14]Order by Mail or Phone

     * [15]To Report Fraud, Waste, and Abuse in Federal Programs
     * [16]Congressional Relations
     * [17]Public Affairs

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

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.
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

           o extended training benefits up to 2 1/2 years to allow for
           remedial training for those who need it;
           o extended income support to match the allowable training period,
           including up to 2 years after workers exhaust their regular
           Unemployment Insurance (UI) benefits;
           o doubled the amount of funds available for training to $220
           million per year;
           o 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;
           o 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;
           o created a health coverage tax credit to help trade-affected
           workers pay for health insurance; and
           o 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.

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. [18]GAO-07-70 1, 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. [19]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. [20]GAO-06-43 . (Washington, D.C.: Jan. 31, 2006); and Trade
Adjustment Assistance: Reforms Have Accelerated Training Enrollment, but
Implementation Challenges Remain. [21]GAO-04-1012 . (Washington, D.C.:
Sept. 22, 2004).

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).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.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.

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).

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.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:

           o 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.

           o Shift of production--the firm has shifted production of articles
           to another country and either

                        o the country is party to a free trade agreement with
                        the United States or
                        o 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
                        o 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.

           o Affected secondarily by trade--workers must meet one of two
           criteria:

                        o 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.
                        o 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.

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. S
2272(a)(1).

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.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:

           o 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.

           o 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.

           o 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.

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).

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                                  Number    Number Number Percentage 
year   Number of petitions filed investigateda certified denied  certified 
2004                       2,992         2,559     1,689    870         66 
2005                       2,638         2,358     1,589    769         67 
2006                       2,456         2,232     1,407    825         63 
Total                      8,086         7,149    4,685b 2,464c         66 
past 3                                                                     
years                                                                      

Source: GAO analysis of Department of Labor petitions data.

aAbout 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.

bThe numbers on petitions certified include 12 petitions that were
partially certified.

cLabor initially denied 2,599 petitions, but 135 were reversed upon
appeal.

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

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

Note: This figure does not include 12 petitions that were partially
certified.

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 2006.6 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.

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.

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.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

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.

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.

7 Fiscal year 2006 was the first year that complete data were available on
the reasons petitions were denied.

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

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).8

8 The percentages are based on enrollments in each training category and
not individuals. Some individuals could have enrolled in more than one
activity.

Table 2: Training Enrollments by Type of Training by Fiscal Year

                              2004              2005             2006     
Type of Training Number Percent    Number Percent    Number    Percent
Occupational             42,793     84     29,909     79    27,101  75 
Remedial                  7,768     15      7,509     20     8,239  23 
On-the-job                  368      1        356      1       590   2 
Total                    50,929    100    37, 774    100    35,930 100 

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.

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

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

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.

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)

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.

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

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

Notes: IRS data on new advance credit enrollments are unavailable prior to
January 2004.

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

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.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

                 Went to one-stop and                  Went to                   
                 enrolled in training                one-stop but                
                                                       did not               Did not go
                                                      enroll in                  to
                                                       training               one-stop
                                                         Average                 Average
                Average         Average      Average        wage     Average        wage
             pre-layoff wagereplacement   pre-layoff replacement  pre-layoff replacement
                 hourly            rate       hourly   rate when      hourly   rate when
               wage (in  whenreemployed     wage (in  reemployed    wage (in  reemployed
Company        dollars)       (percent)     dollars)   (percent)    dollars)   (percent)
General                  $15.67        82        $16.49        88         $17.97     95 
Mills                                                                                   
Lear                      16.22       92a         16.13        74          17.26     94 
Weyerhaeuser              25.35       71a         27.10        87          30.34    93c 
Toro                      13.83         b         15.21        81              b      b 
Sanmina-SCI               16.79        89         18.46        94          22.96    96c 

Source: GAO survey of dislocated workers.

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.

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.

aThese estimates have margins of error of plus or minus 15 percent or less
of the value of the estimates.

bAll 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.

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

Related GAO Products

Trade Adjustment Assistance: Changes to Funding Allocation and Eligibility
Requirements Could Enhance States' Ability to Provide Benefits and
Services. [22]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. [23]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. [24]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. [25]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. [26]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. [27]GAO-05-650 .
Washington, D.C.: June 29, 2005.

Health Coverage Tax Credit: Simplified and More Timely Enrollment Process
Could Increase Participation. [28]GAO-04-1029 . (Washington, D.C.:
September 30, 2004).

Trade Adjustment Assistance: Reforms Have Accelerated Training Enrollment,
but Implementation Challenges Remain. [29]GAO-04-1012 . Washington, D.C.:
September 22, 2004.

Workforce Investment Act: Better Guidance and Revised Funding Formula
Would Enhance Dislocated Worker Program. [30]GAO-02-274 . Washington,
D.C.: February 11, 2002.

(130784)

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[37]www.gao.gov/cgi-bin/getrpt?GAO-07-994T .

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Highlights of [38]GAO-07-994T , a testimony before the Committee on Ways
and Means, House of Representatives

June 14, 2007

TRADE ADJUSTMENT ASSISTANCE

Program Provides an Array of Benefits and Services to Trade-Affected
Workers

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.

References

Visible links
  18. http://www.gao.gov/cgi-bin/getrpt?GAO-07-702
  19. http://www.gao.gov/cgi-bin/getrpt?GAO-06-496
  20. http://www.gao.gov/cgi-bin/getrpt?GAO-06-43
  21. http://www.gao.gov/cgi-bin/getrpt?GAO-04-1012
  22. http://www.gao.gov/cgi-bin/getrpt?GAO-07-201
  23. http://www.gao.gov/cgi-bin/getrpt?GAO-07-201
  24. http://www.gao.gov/cgi-bin/getrpt?GAO-06-870
  25. http://www.gao.gov/cgi-bin/getrpt?GAO-06-496
  26. http://www.gao.gov/cgi-bin/getrpt?GAO-06-43
  27. http://www.gao.gov/cgi-bin/getrpt?GAO-05-650
  28. http://www.gao.gov/cgi-bin/getrpt?GAO-04-1029
  29. http://www.gao.gov/cgi-bin/getrpt?GAO-04-1012
  30. http://www.gao.gov/cgi-bin/getrpt?GAO-02-274
  31. http://www.gao.gov/
  32. http://www.gao.gov/
  33. http://www.gao.gov/fraudnet/fraudnet.htm
  34. mailto:[email protected]
  35. mailto:[email protected]
  36. mailto:[email protected]
  37. http://www.gao.gov/cgi-bin/getrpt?GAO-07-994T
  38. http://www.gao.gov/cgi-bin/getrpt?GAO-07-994T
*** End of document. ***