Trade Adjustment Assistance (TAA) is a federal program of the United States government to act as a way to reduce the damaging impact of imports felt by certain sectors of the U.S. economy.
President Kennedy said: "When considerations of national policy make it desirable to avoid higher tariffs, those injured by that competition should not be required to bear the full brunt of the impact.
"[3] Supporters argue that free trade offers widespread benefits among consumers, workers and firms in the U.S. in terms of lower prices, higher efficiency and quality, and more jobs.
According to the Department of Labor (DOL), displaced workers are defined as "persons 20 years of age and older who lost or left jobs because their plant or company closed or moved, there was insufficient work for them to do, or their position or shift was abolished".
These trade costs, albeit relatively smaller than the benefits, are highly concentrated by region, industry and worker demographics.
Furthermore, while gains from trade require a long time to take full effect, costs are felt rapidly, particularly in less competitive sectors.
[9] According to a report by the Progressive Policy Institute, between 2007 and 2011, 1.3 million direct and indirect jobs were lost to increasing imports of goods and services.
[10] Similarly, Kletzer (2005) estimations suggest that industries facing high import competition account for 40% of manufacturing job losses.
These characteristics are associated with limited labor mobility and reemployment difficulties, especially for workers with obsolete skills who do not receive additional training, no matter the reason of displacement.
If the worker is able to be relocated in other job in other region the whole family is displaced and children are uprooted from their schools, increasing domestic tensions.
The phenomenon of displaced workers has a broader impact because it also affects aggregate demand for goods and services and tax collections.
Furthermore, labor reallocation from inefficient to competitive sectors aimed at realizing the benefits of trade can be impeded by several obstacles described above, prolonging the transition period and increasing the adjustment costs.
"[22] The Department of Labor Employment and Training Administration program, Trade Adjustment Assistance for Workers, provides a variety of reemployment services including training and job-searching assistance and benefits to displaced workers who have lost their jobs or suffered a reduction of hours and wages as a result of increased imports or shifts in production outside the United States.
The Secretary of Labor was authorized to implement Trade Readjustment Assistance (TRA) and relocation allowances through cooperating state agencies.
In October 2011, the Trade Adjustment Assistance Extension Act (TAAEA) of 2011 was signed into law, reinstating most of the benefits included in the TGAAA of 2009.
Sponsored by the Department of Commerce's Economic Development Administration (EDA), this cost-sharing federal assistance program helps pay for projects that improve firms' competitiveness.
Trade Adjustment Assistance for Firms provides import impacted companies with professional guidance, business recovery plan development, and cost-sharing for outside consulting services.
Eligibility is established along similar lines, with companies showing that there has been a recent decrease in sales and employment, in part due to customers shifting purchases away from the applicant and to imported goods.
The American Recovery and Reinvestment Act (ARRA) of 2009 expanded eligibility to service firms as well as the traditional manufacturing companies that had been the sole focus of the program.
This expansion for service firms and workers was scheduled to expire on December 31, 2010, and the program would revert to the pre-ARRA structure without a vote to extend the authorization.
Under the program, certain agricultural producers can each receive payments of up to $10,000 per year if price declines for their commodity were at least partly caused by imports.
In order to receive the benefits displaced workers must fill a petition as a group to initiate the investigation to address the reasons of their layoff.
Once the DOL finds that trade has contributed notably to the layoff, the group is certified but the individual worker must still apply for benefits at a local One-Stop Career Center.
[23] Under the current law, as modified in 2009, workers in most service jobs (call center operators, for example) are eligible for trade adjustment assistance.
Data on post-TAA outcomes for program exciters based on DOL estimations shows that the entered employment rate was 66% in 2011.
The program is ineffective closing the earning gap because in order to be eligible for wage insurance workers must find a job within 26 weeks after being laid off, which proved to be a very short period.
Finally, the implementation of this program overlaps extensively with others such as Workforce Investment Act generating extra costs and duplicating administrative efforts.
[31] Over last years, the TAA program has been subject to diverse critics due to its flawed performance and extremely high cost.
[33] In addition, the program would also offer a health insurance subsidy for all full-time displaced workers, for up to 6 months, or until they found a new job (whichever is earlier).
[33] In 2001, Robert Litan and Lori Kletzer estimated that about 20% of displaced workers reemployed full-time would have had at least 2 years' tenure on their previous job and suffered a wage loss in the new one.