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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: 

GAO Highlights: 

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

Why GAO Did This Study: 

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. 

GAO is not making new recommendations at this time. Labor generally 
agreed with the findings and recommendations in our referenced reports. 

What GAO Found: 

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. 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-994T]. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Sigurd Nilsen at (202) 
512-7215 or nilsens@gao.gov. 

[End of section] 

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. [Footnote 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: 

* extended training benefits up to 2½ years to allow for remedial 
training for those who need it; 

* extended income support to match the allowable training period, 
including up to 2 years after workers exhaust their regular 
Unemployment Insurance (UI) benefits; 

* doubled the amount of funds available for training to $220 million 
per year; 

* 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; 

* 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; 

* created a health coverage tax credit to help trade-affected workers 
pay for health insurance; and: 

* 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. 

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).[Footnote 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.[Footnote 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. 

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.[Footnote 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: 

* 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. 

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

- the country is party to a free trade agreement with the United States 
or: 

- 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: 

- 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. 

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

- 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. 

- 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. 

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.[Footnote 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: 

* 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. 

* 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. 

* 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. 

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 year: 2004; 
Number of petitions filed: 2,992; 
Number investigated[A]: 2,559; 
Number certified: 1,689; 
Number denied: 870; 
Percentage certified: 66. 

Fiscal year: 2005; 
Number of petitions filed: 2,638; 
Number investigated[A]: 2,358; 
Number certified: 1,589; 
Number denied: 769; 
Percentage certified: 67. 

Fiscal year: 2006; 
Number of petitions filed: 2,456; 
Number investigated[A]: 2,232; 
Number certified: 1,407; 
Number denied: 825; 
Percentage certified: 63. 

Fiscal year: Total past 3 years; 
Number of petitions filed: 8,086; 
Number investigated[A]: 7,149; 
Number certified: 4,685[B]; 
Number denied: 2,464[C]; 
Percentage certified: 66. 

Source: GAO analysis of Department of Labor petitions data. 

[A] About 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. 

[B] The numbers on petitions certified include 12 petitions that were 
partially certified. 

[C] Labor initially denied 2,599 petitions, but 135 were reversed upon 
appeal. 

[End of table] 

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: 

[See PDF for image] 

Source: GAO analysis of Department of Labor petitions data. 

[End of figure] 

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: 

[See PDF for image] 

Source: GAO analysis of Department of Labor data on petitions filed 
during fiscal years 2004 to 2006. 

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

[End of figure] 

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.[Footnote 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. 

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.[Footnote 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: 

[See PDF for image] 

Source: GAO analysis of Department of Labor data on petitions filed 
during fiscal year 2006. 

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. 

[End of figure] 

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. 

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: 

[See PDF for image] 

Source: GAO analysis of Department of Labor petitions data and 
quarterly activity reports. 

[End of figure] 

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).[Footnote 8] 

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

Type of Training: Occupational; 
2004: Number: 42,793; 
2004: Percent: 84;
2005: Number: 29,909; 
2005: Percent: 79; 
2006: Number: 27,101; 
2006: Percent: 75. 

Type of Training: Remedial; 
2004: Number: 7,768; 
2004: Percent: 15; 
2005: Number: 7,509; 
2005: Percent: 20; 
2006: Number: 8,239; 
2006: Percent: 23. 

Type of Training: On-the-job; 
2004: Number: 368; 
2004: Percent: 1; 
2005: Number: 356; 
2005: Percent: 1; 
2006: Number: 590; 
2006: Percent: 2. 

Type of Training: Total; 
2004: Number: 50,929; 
2004: Percent: 100; 
2005: Number: 37, 774; 
2005: Percent: 100; 
2006: Number: 35,930; 
2006: Percent: 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. 

[End of table] 

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: 

[See PDF for image] 

Source: GAO analysis of survey responses. 

[End of figure] 

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: 

[See PDF for image] 

Source: State administrative records. 

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. 

[End of figure] 

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): 

[See PDF for image] 

Source: GAO survey of dislocated workers. 

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. 

[End of figure] 

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: 

[See PDF for image] 

Source: Department of Labor data. 

[End of figure] 

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: 

[See PDF for image] 

Source: GAO analysis of IRS data. 

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

[End of figure] 

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: 

[See PDF for image] 

Source: GAO survey of dislocated workers. 

[End of figure] 

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.[Footnote 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: 

Company: General Mills; 
Went to one-stop and enrolled in training; Average pre-layoff hourly 
wage(in dollars): $15.67; 
Went to one-stop and enrolled in training: Average wage replacement 
rate when reemployed (percent): 82; 
Went to one stop but did not enroll in training: Average pre-layoff 
hourly wage (in dollars): $16.49; 
Went to one-stop but did not enroll in training: Average wage 
replacement rate when reemployed (percent): 88; 
Did not go to one-stop: Average pre-layoff hourly wage (in dollars): 
$17.97; 
Did not go to one-stop: Average wage replacement rate when reemployed 
(percent): 95. 

Company: Lear; 
Went to one-stop and enrolled in training; Average pre-layoff hourly 
wage(in dollars): 16.22; 
Went to one-stop and enrolled in training: Average wage replacement 
rate when reemployed (percent): 92[A]; 
Went to one stop but did not enroll in training: Average pre-layoff 
hourly wage (in dollars): 16.13; 
Went to one-stop but did not enroll in training: Average wage 
replacement rate when reemployed (percent): 74; 
Did not go to one-stop: Average pre-layoff hourly wage (in dollars): 
17.26; 
Did not go to one-stop: Average wage replacement rate when reemployed 
(percent): 94. 

Company: Weyerhaeuser; 
Went to one-stop and enrolled in training; Average pre-layoff hourly 
wage(in dollars): 25.35; 
Went to one-stop and enrolled in training: Average wage replacement 
rate when reemployed (percent): 71[A]; 
Went to one stop but did not enroll in training: Average pre-layoff 
hourly wage (in dollars): 27.10; 
Went to one-stop but did not enroll in training: Average wage 
replacement rate when reemployed (percent): 87; 
Did not go to one-stop: Average pre-layoff hourly wage (in dollars): 
30.34; 
Did not go to one-stop: Average wage replacement rate when reemployed 
(percent): 93[C]. 

Company: Toro; 
Went to one-stop and enrolled in training; Average pre-layoff hourly 
wage(in dollars): 13.83; 
Went to one-stop and enrolled in training: Average wage replacement 
rate when reemployed (percent): [B]; 
Went to one stop but did not enroll in training: Average pre-layoff 
hourly wage (in dollars): 15.21; 
Went to one-stop but did not enroll in training: Average wage 
replacement rate when reemployed (percent): 81; 
Did not go to one-stop: Average pre-layoff hourly wage (in dollars): 
[B]; 
Did not go to one- stop: Average wage replacement rate when reemployed 
(percent): [B]. 

Company: Sanmina-SCI; 
Went to one-stop and enrolled in training; Average pre-layoff hourly 
wage(in dollars): 16.79; 
Went to one-stop and enrolled in training: Average wage replacement 
rate when reemployed (percent): 89; 
Went to one stop but did not enroll in training: Average pre-layoff 
hourly wage (in dollars): 18.46; 
Went to one-stop but did not enroll in training: Average wage 
replacement rate when reemployed (percent): 94; 
Did not go to one-stop: Average pre-layoff hourly wage (in dollars): 
22.96; 
Did not go to one-stop: Average wage replacement rate when reemployed 
(percent): 96[C]. 

Source: GAO survey of dislocated workers. 

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. 

[A] These estimates have margins of error of plus or minus 15 percent 
or less of the value of the estimates. 

[B] All 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. 

[End of table] 

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: 

[End of section] 

Related GAO Products: 

Trade Adjustment Assistance: Changes to Funding Allocation and 
Eligibility Requirements Could Enhance States' Ability to Provide 
Benefits and Services. 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. 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. 
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. 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. 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. GAO-05-650. 
Washington, D.C.: June 29, 2005. 

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

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

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

FOOTNOTES 

[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. GAO-07-701, 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. 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. GAO-06-43. (Washington, D.C.: Jan. 31, 2006); 
and Trade Adjustment Assistance: Reforms Have Accelerated Training 
Enrollment, but Implementation Challenges Remain. GAO-04-1012. 
(Washington, D.C.: Sept. 22, 2004). 

[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). 

[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. § 
2272(a)(1). 

[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). 

[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. 

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

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

[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.

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