CQ [Congressional Quarterly] Congressional Testimony  [Printer-friendly version]
June 14, 2007

PROMOTING U.S. WORKER COMPETITIVENESS

Statement of Mason M. Bishop, Deputy Assistant Secretary For
Employment and Training, U.S. Department of Labor
Testimony before the Committee on House Ways and Means

Mr. Chairman and Members of the Committee, I am pleased to have the
opportunity to discuss the reauthorization of the Trade Adjustment
Assistance (TAA) program. Since the 2002 reauthorization of TAA, the
Department of Labor has worked with the states and the public
workforce investment system to help trade-impacted workers by
providing job training assistance and income support. Over this time,
we believe we have gained valuable insights into the ways TAA can be
administered to assist trade-impacted workers more effectively.

INTRODUCTION

We are currently in the midst of historic economic transformation
based on advances in communications and information technology.
Innovation and high technology have created well-paying career
opportunities. However, this requires American workers to have greater
education and more advanced skills, which creates a growing policy
imperative with regard to workforce investment in our nation. This
reality is reflected in the economic projections produced by the
Department. Nearly two-thirds (12 million) of the 19 million new jobs
created over the next decade will require some post-secondary
education and training a dramatic increase in the overall education
level required of the U.S. population. Young people must stay in high
school and have avenues to access postsecondary education, and our
current workforce must find ways to improve and update their skill
sets.

As the U.S. continues to face economic transformation due to
technology and globalization, increased flexibility is critical for
our workers and communities to be responsive to these changes. The
reauthorization of TAA offers an opportunity to increase the
flexibility and effectiveness of the program by streamlining it and
providing trade-affected workers with the skills and specialized
knowledge most in-demand by industry. The TAA program has the
potential to bolster our overall competitiveness while serving the
needs of our workers, but it must be reexamined in light of the new
realities of our regional labor markets and the new challenges of the
21st century global economy.

An improved TAA program can be an important tool for keeping our
nation's workforce competitive. Business leaders have told us that
their most critical challenge in growing their companies is finding
and hiring workers with needed skills and retaining those skilled
workers. Considering that the Department certified close to 120,000
workers last year for TAA benefits, and that, on average, those
workers had 10 years of work experience, we know that TAA can be part
of the solution to helping workers obtain additional skills and meet
the workforce needs of businesses. TAA can provide the training and
support needed to help trade- affected workers become an asset in
their community's response to an economic shock. The federal
government invests nearly $1 billion every year in TAA funds that
provide training, income support, job search and relocation
assistance, wage subsidies for older workers, and the Health Coverage
Tax Credit (HCTC) to certain workers whose job loss relates to foreign
trade. These funds provide workers with the help they need to improve
their opportunities to return to work in high skill jobs that pay good
wages.

However, the TAA program is just one tool in a larger workforce
development toolkit. Every year, about $15 billion in federal funds
are invested in talent development through the public workforce
investment system. Trade affected workers have access to an array of
reemployment services through the One-Stop Career Center system
authorized under the Workforce Investment Act of 1998 (WIA). The
assessment, career counseling, resume writing and interview skills
workshops, and placement services available through the One-Stop
Career Center system complement the services funded under the Trade
Act. To provide workers access to the full array of services they need
to be competitive in our global economy, the Department envisions
better TAA service integration with the services provided through the
One-Stop Career Center system. A reauthorized TAA program must utilize
the larger One- Stop delivery system and be connected to the many
other Federal job training programs that exist to train and prepare
workers.

FLAWS IN THE CURRENT PROGRAM

Current authorization for the TAA program expires on September 30,
2007. The U.S. Department of Labor supports reauthorization of TAA and
believes there is a real opportunity to improve the program's
effectiveness and the return on our current investment. Although much
of the TAA debate is about who is eligible for TAA, we believe that
the reauthorization must take into account what happens to workers who
are eligible. As currently designed, TAA is an "all or nothing"
program. By requiring a worker to give up benefits if he/she returns
to work, even at a lower paying job or a job that does not provide
health coverage, the program creates a disincentive for a worker to
accept such employment. Additionally, financial support is only
available to trade- impacted workers who are in full-time training -
another disincentive to work. Access to training is also problematic.
As the program is currently designed, training options may not be
flexible enough to meet worker needs. Workers attempting to access
these training options often face barriers, such as strict enrollment
deadlines. In addition, many areas confront the challenge of a limited
number of training slots for high-demand occupations, and there is a
need for resources to increase the training capacity of local
providers; therefore, workers either train for occupations where there
is less demand, or languish on waiting lists for extended periods of
time waiting for admission to high-growth employment training
programs. In a 2006 study of the TAA program looking at five layoffs,
the Government Accountability Office (GAO) found that the timing and
availability of training programs unnecessarily limited worker
training options, thereby reducing their ability to transition into
high-growth, high-demand occupations.

Another flaw in the current program is that the Department cannot
begin providing services to workers until they are actually laid off.
This is true even in cases where the Department is notified of layoffs
well in advance, such as in the case of the recent automotive layoffs.
Moreover, once the Department actually begins providing services,
workers must navigate the complex and confusing system that currently
characterizes the TAA program. "Wrap around" services, such as
counseling, testing, and job placement, provided under WIA, are an
important complement to the services provided under TAA, but there is
no requirement that programs providing such services to other
dislocated workers co- enroll trade-affected workers. The Department
believes that reauthorization provides Congress an opportunity to
improve the current TAA program to help workers gain the skills needed
to successfully compete in the global economy.

PRIORITIES FOR IMPROVING THE TAA PROGRAM

The Department has identified four overarching priorities to achieve
through reauthorization. Increased Choice to "Earn and Learn" The
first priority is that trade-affected workers must have increased
individual choice to "earn and learn" through the TAA program by
having access to transitional benefits, such as education and training
post-employment and transitional income support (in certain cases).
Benefits under the program should include a menu of "New Economy
Worker Services" that allows the worker to choose the option that best
fits his or her individual needs. For example, training-related
options should allow a worker to combine either full or part-time work
with education and training. Similarly, workers should continue to
have access to job search and relocation allowances if they are
willing to relocate to obtain better employment.

Improved Access to Education and Training

The second priority for reauthorization is for trade-affected workers
to have improved access to education and training. The reauthorization
should ensure greater access to post-secondary education and training
by providing "New Economy Scholarships". The New Economy Scholarship
should be portable, enabling certified workers to have access to
tuition assistance whether they are unemployed or return to
employment. Workers should be able to choose to attend training full
or part-time and use the funds for tuition, books, fees and required
tools. On-the-job training (OJT) should remain an option for workers,
but the current design needs reform and unnecessary restrictions
removed. Currently, when a worker participates in OJT, the employer
may be reimbursed for up to 50% of the wage rate of the participant to
cover the cost of providing the training and additional supervision.
OJT is not widely utilized under the current rules, as only 590
workers participated in TAA-funded OJT in 2006. Training funds should
be available to pay either the direct costs of required classroom
training or the additional employer costs associated with an OJT
opportunity. Changes to the TAA program should be made to allow TAA
participants access to apprenticeship programs. For trade-affected
workers to have improved access to education and training, regional
economic institutions, such as community colleges, must have the
capacity to provide appropriate training. Therefore, a portion of the
funds provided under the Community-Based Job Training Grant program
should be devoted to enhancing the capacity of training providers,
primarily community colleges, to create immediate and needed training
programs for trade-affected workers. These funds could improve
workers' access to education and training by addressing training
capacity issues that would mitigate unnecessary delays in training
enrollment, such as having to wait for a semester to start.

Early Intervention

The third priority for reauthorization is that trade-affected workers
must have access to education and training prior to layoff. As stated
earlier, although workers threatened with separation may be certified
as eligible for TAA, the current law does not afford services,
allowances, or training to workers until they are totally or partially
separated. Beginning training prior to layoff could shorten the
duration of unemployment or entirely prevent the worker from
experiencing the trauma of unemployment by providing the skills
necessary to secure new employment before the layoff occurs.

Integration with the Workforce Investment System

The fourth priority for reauthorization is that trade-affected workers
must be able to access services through a streamlined and efficient
workforce investment system one that is customer focused and does not
arbitrarily limit services. Currently, in many states, state
employment service staff and managers, funded partly by Wagner-Peyser
and partly with TAA administrative funds, administer much, or all, of
the TAA program at the local level. In other states, local WIA staff
provide TAA services. As encouraged by the Department through
administrative guidance and technical assistance, TAA services should
be delivered through an integrated One-Stop Career Center delivery
system. These changes could streamline access to career counseling,
assessment, and career and employment information, thereby helping the
worker make informed choices about the options available to him or
her. Moreover, this reform could improve access to other supportive
services such as transportation assistance or subsidized child care
through programs available at One-Stop Career Centers.

ADMINISTRATIVE IMPROVEMENTS TO THE TAA PROGRAM

The Department has made several important administrative improvements
to the TAA program over the past several years. These improvements are
especially evident in the areas of fiscal management, performance, and
petition processing.

Fiscal Management

Prior to 2004, TAA funds were distributed to states on a request
basis, leading to a race among the states to request funds. This
approach did not result in an equitable distribution that targeted
funds to where they were most needed, and states were not held
accountable for their expenditures. Therefore, in fiscal year 2004,
the Department adopted a new TAA allocation formula to fund state TAA
needs more equitably and ensure that current year funds are allocated
efficiently to meet current year TAA training needs. In addition, the
Department holds 25 percent of available TAA funds in reserve, which
allows us to meet state needs for additional training funds throughout
the fiscal year. Although we do not actively try to end the fiscal
year with funds still available in the reserve account, the ability of
states to begin a new fiscal year with a distribution at the end of
the current fiscal year allows us to mitigate the disruptions states
experience under Continuing Resolutions, when funds are not made fully
available until well into the fiscal year.

Overall, we believe the adoption of a formula-based methodology for
distributing TAA training funds has been a success. Since adopting
this formula approach, no state has ended the year without access to
additional TAA training funds when they have been able to show that
they have expended at least 50 percent of their current year
allocation or have otherwise demonstrated need. The Department has,
however, become concerned that some states carry a significant level
of funds into the new fiscal year, while other states have expended
nearly all funds allocated. The "hold harmless" formula provision,
which guarantees a state 85 percent of the prior year's funds, may be
causing this imbalance. In implementing the formula, the Department
believed that the hold harmless provision was important to ensure
funding stability while states were becoming accustomed to the new
methodology. Now that states have experience with the formula and the
reserve process, the Department is reviewing the current funding
formula and believes it is appropriate to consider changes for the
next fiscal year.

Performance

Program performance has long been an issue in the TAA program. The
Trade Act contains no provisions that require states to report on
program outcomes, nor are there any statutory sanctions or incentives
for performance. In fiscal year 2001, the Department implemented a new
Trade Act Participant Report (TAPR) to track participant outcomes.
Over the past few years, the Department has worked extensively with
states to focus attention on the importance of achieving national
performance goals for TAA participants. States have shown steady
improvements over the past couple of years, and in fiscal year 2006,
states surpassed two of the three outcome-based national performance
goals, with the third missed only by a narrow margin. To obtain better
information on the performance outcomes of TAA and guide future
improvements, DOL has initiated a five-year impact evaluation of TAA,
the results of which will be available in 2011.

Petition Processing

The Department has taken significant steps to improve the speed of
petition processing, and we have placed a priority on improving the
consistency of case determinations. We have implemented procedures
requiring that investigators contact the petitioners in addition to
employers, and, in the event of discrepancies in evidence, the
investigator is required to reconcile the discrepancy. The Department
requires that investigators ensure that all findings have supporting
documentation available in the official record. The Department also
has an ongoing process of reexamining and revising its policies as
necessary, in response to case adjudications. The result of these
actions has been that the average processing time for a TAA petition
has been reduced from a high in fiscal year 2002 of 96 days, to the
current average of 31 days, which is well below the statutorily
allowed 40 days.

CONCLUSION

The Department firmly believes that these proposed reforms will help
more workers to return to work as quickly as possible in high skill
jobs that pay good wages.

I would be pleased to respond to any questions that you or the other
members of the Committee may have.

Copyright 2007 Congressional Quarterly, Inc.