Retraining program helps, but new jobs fall short

Tuesday, March 22nd, 2011 

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Claudette Bernier works in a strip mall in Livonia, Mich., near a storefront offering cash advances. In her job at the Michigan Works! service center, she helps other people find jobs. It’s not easy.

Bernier’s specialty is working with people who lost their jobs to offshoring or imports. There’s no shortage of clients in Michigan. She helps workers find retraining programs through the Trade Adjustment Act or TAA.

Most white-collar employees won’t have heard of the TAA, but for many blue-collar workers, it’s a familiar abbreviation. The program provides expanded benefits to workers who lose their jobs because of imports or offshoring — jobs lost because a company moves its factory overseas or starts importing a product that used to be made in Michigan.

“The majority of my customers are older workers,” Bernier said. “When they got hired in the last millennium, there was no Internet,” she continued.

“The future is here,” she said, “and it came before they were ready.”

Who is and isn’t using the TAA

Nationally, the average person using the Trade Adjustment Act last year was a 46-year-old white man with a high school diploma, who had held the job he lost to trade for an average of 12 years, according to the Labor Department. Fully 25 percent of program participants have less than a high school education, and only 10 percent are college graduates. Regionally, Michigan, Ohio, California, Pennsylvania, and North Carolina had the most workers certified last fiscal year.

Number of workers certified under TAA, by state

Source: Department of Labor.

The Trade Adjustment Act was passed in 1974, and for most of the act’s 36-year life, the parameters have been fairly narrow. Only workers who were in “article-producing” industries could qualify: people who made objects, essentially. As offshoring has moved from shoes and cars to software and back-office services, the act did not keep pace. A 2007 report (pdf) by the Government Accountability Office found that some 40 percent of TAA petition denials were because the workers were not producing “articles,” as the law required then.

An expansion of the TAA in May 2009 brought the program into the 21st century. Workers in service industries could get assistance for the first time. That meant the call-center employees, computer technicians and software programmers whose jobs have been bleeding out of America could finally get the retraining help long afforded to auto workers and machinists.

More than 155,000 service workers qualified for help under the expanded program rules. Less than six months after the program was expanded, service sector workers accounted for almost 20 percent of new petitions certified, according to a Department of Labor report. But that expanded version of TAA expired in February, and service workers whose jobs leave America are once again out of luck.

The expanded program ended “way too soon,” said Melissa Tolle, the director of the displaced worker project at Sinclair Community College, in Dayton, Ohio.

The short-lived change in the program reflected a change in the nature of offshoring. It is no longer just manufacturing work that can be moved across the globe. White-collar jobs — jobs a worker leaving manufacturing might once have been retrained to do, in fact — are now vulnerable to offshoring.

Rick McHugh, a lawyer with the National Employment Law Project, has been tracking worker dislocation since the 1970s.

When he started looking at these issues, McHugh said, an expert on the TAA, dislocation “was basically a problem of blue-collar workers. People that worked for banks, utilities, the postal service, state and local governments, those people weren’t laid off. They had pensions. As long as they came to work, they could expect to retire from there.”

No more. He cited utility companies that have been privatized, bank operations that have been transformed by technology and state and local governments that are underfunded.  “Every one of those sectors that I just named is no longer providing stable employment for people,” he said.

 The spread of offshoring to service workers “was the rationale for the 2009 changes,” McHugh said. “Obviously, retreating from that is retreating from the underlying reality.”

Does TAA Work?

There’s no question that for a worker who gets laid off, the additional cash payments are welcome. But retraining is a mixed bag. The harsh reality is that many jobs lost to trade require little formal education even though they offer relatively good wages. Such jobs are hard to replace.

For many, preparing for this new reality is daunting. Many people who can attend classes through the TAA “believe that because they’re older, they may not fit in,” said Chad Bridgman, a dislocated worker specialist at Sinclair. After years of work, he said, “they have to establish a new normal.”

In Livonia, health care and information technology are popular fields of study, Bernier said.  Learning how to install and repair heating and air conditioning programs is also popular, she added, perhaps because that hands-on work is less vulnerable to offshoring. At Sinclair, many TAA students are studying engineering, school officials said.

Students have to demonstrate a reasonable expectation of employment before entering a training program. But finding a job is by no means guaranteed. Nationally, fewer than 60 percent of workers in the TAA program were employed a year after their training ended. Among those who found work, wages were low. The Department of Labor tracks retrained workers’ wages for six months. During that period, the average worker retrained through TAA earned just under $14,500, which, of course, translates to $29,000 a year. The federal poverty line for a family of four is $22,350.  

Average 6-month earnings of TAA workers, 2010, by state

Source: Department of Labor

Details on post-training jobs are scarce, but many people wind up in service or retail fields. Some 15 percent work in the broad category of “administrative and support and waste management and remediation services,” a sort of service industry catch-all. Another 13 percent work in health care and social assistance, 10 percent in retail and 5 percent in educational services. While most people entering TAA retraining come from “article-producing” industries, just 30 percent find new work in manufacturing. (The Department of Labor cautions that because only a fraction of programs report on where people find work, those numbers may not be representative.)

So we know little about what work people find. And what happens to the workers who don’t get jobs is an open question. No federal data on the question is available, although some states track those figures.

Another statistic the federal government doesn’t track: the number of jobs lost to offshoring overall. Or rather, several agencies each track job losses a little bit. The Bureau of Economic Analysis tracks imports and exports, but that doesn’t include counting lost jobs. The Bureau of Labor Statistics tracks something called “movement of work,” which counts layoffs involving more than 50 workers, but not smaller layoffs. And offshoring of service work may be uniquely undercounted because what the Bureau of Labor Statistics calls "a dearth of relevant data." 

The Trade Adjustment Act is “not really measuring the full impact of global trade” for both service and manufacturing workers, McHugh said. Workers who lose jobs to trade may not know about the program or their workplace has closed, and the Department of Labor’s investigators can’t reach the company to confirm a shift of work overseas.

“For some people you can’t establish that there’s a connection to global trade,” he said. “But that doesn’t mean it’s not there.”

The Investigative Reporting Workshop’s Michael Lawson contributed to this report.

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