Trade Adjustment Assistance for Workers (TAA) provides federal assistance to workers who involuntarily lose their jobs due to foreign competition.1 The primary benefits for TAA-eligible workers are funding for reemployment services (including training) and income support while a worker is enrolled in training. Workers may also be eligible for other benefits, including a tax credit equal to a portion of qualified health insurance premiums. Workers age 50 and over may be eligible for Reemployment Trade Adjustment Assistance, a wage supplement program.
After a brief discussion of the program's purpose and recent reauthorization, this report describes TAA as reauthorized by the Trade Adjustment Assistance Reauthorization Act of 2015 (TAARA, Title IV of P.L. 114-27).
Reduced barriers to international trade are widely acknowledged to offer benefits to consumers in the form of increased choices and lower prices. Expanded trade may also offer expansionary opportunities to firms that produce goods or services that see increased exports. Reduced barriers to trade may, however, have concentrated negative effects on domestic industries and workers that face increased competition. TAA is designed to provide readjustment assistance to workers who suffer dislocation (job loss) due to foreign competition or offshoring.
TAA was created in 1962 and, historically, has been reauthorized alongside expansionary trade policies. A detailed legislative history of the program is in the Appendix.
In June 2015, TAA was reauthorized by TAARA.2 The eligibility and benefit provisions of TAARA are authorized to continue through June 30, 2021.3
TAARA was part of a bill that extended other trade-related policies as well. TAARA was also passed in conjunction with a separate bill that reauthorized the Trade Promotion Authority (TPA, Title I of P.L. 114-26). TPA (also known as "fast track") grants the President authority to negotiate trade agreements, which are then subject to an "up or down" vote in Congress.4
This report focuses on the eligibility and benefit provisions of TAA as enacted by TAARA. These provisions apply to all workers certified for TAA after the law's enactment. The law also had retroactivity provisions and, in some cases, workers that were parts of groups certified prior to the 2015 reauthorization may also be covered under the TAARA provisions.
In some cases, however, a worker who was certified under pre-2015 provisions may continue to receive benefits under the prior provisions. As such, while the version of the program described in this report will apply to all new program participants certified through June 30, 2021, it may not apply to some participants who were already enrolled in TAA prior to the enactment of TAARA. In these cases, states may operate multiple TAA programs to concurrently serve workers certified under the TAARA provisions and workers certified under other provisions.5
TAA is jointly administered by the federal government and the states. It is funded by the federal government. The respective roles of federal and state governments in administering and financing the TAA program were in place prior to TAARA and were not changed by it.
TAA is jointly administered by the U.S. Department of Labor (DOL) and cooperating state agencies. DOL makes group eligibility determinations, allots appropriated funds to cooperating state agencies, and oversees grantees. Individual benefits are provided through state workforce systems and state unemployment insurance systems.6 Workers may physically receive benefits and services through local American Job Centers (also known as One-Stop Career Centers). States are responsible for collecting participation and outcome data and reporting these data to DOL.
The Health Coverage Tax Credit, which is available to qualified TAA-certified workers who purchase qualified health insurance, is administered by the Internal Revenue Service (IRS).7 It is administered separately from the TAA program's other benefits and services.
TAA is funded by mandatory appropriations. Typically, Congress appropriates a single sum that supports all TAA activities.8 DOL then allocates these funds to various program activities.
Under TAARA, funding for reemployment services is capped at $450 million per year. Funds are allotted to the states via a grant allocation formula that considers past and anticipated program usage.9 States may expend reemployment service funds in the year of allotment or in either of the next two fiscal years.
Training subsidies are states' primary expenditures out of their reemployment services funding. TAARA specifies that states must allocate at least 5% of their reemployment services funding to case management and no more than 10% to administrative costs.10
Funds for the Trade Readjustment Allowance income support and Reemployment Trade Adjustment Assistance wage insurance program are not capped. Appropriations for these benefits are based on congressional estimates. Funding for these benefits that is not spent in the year of allotment is returned to the Treasury.
TAA is a direct spending (also referred to as "mandatory") program and subject to sequestration under the Budget Control Act of 2011, as amended. For FY2016, the Office of Management and Budget (OMB) has estimated that the reduction for non-exempt, nondefense spending will be 6.8%.11 Sequester levels in subsequent years will be determined by OMB.
Obtaining TAA benefits is a two-stage process. First, a group of workers or their representative (e.g., firm, union, or state) must petition DOL to establish that foreign trade "contributed importantly" to their job losses and become TAA certified. Once a group has been certified by DOL, individual workers covered by the group's petition apply for state-administered benefits at local American Job Centers (AJCs; also known as One-Stop Career Centers). TAA is available to workers in the 50 states, the District of Columbia, and Puerto Rico.
To be eligible for TAA group certification, a group of workers from a firm (or a subdivision of a firm) must have become totally or partially separated from their employment or have been threatened with becoming totally or partially separated.12 Under TAARA, private sector workers who produce goods ("articles" in the law) or services are eligible for TAA.
The petitioning workers must establish that foreign trade contributed importantly to their separation.13 The role of foreign trade can be established in one of several ways:
To establish TAA eligibility, a group of workers (or their representative, such as a union, firm, or state) must complete a two-page petition and submit it, along with any supporting documentation, to DOL.15 An additional copy of the TAA petition must also be filed with the governor of the state in which the affected firm is located. After receiving the petition, DOL investigates to determine if the petition meets any of the criteria outlined in the previous subsection of this report. Determinations of TAA petitions are published in the Federal Register and on the DOL website.
If a petition is certified, DOL will also determine an impact date on which trade-related layoffs began or threatened to begin. This date can be as early as one year prior to the petition. A certified petition will cover all workers laid off by the firm (or applicable subdivision of the firm) between the impact date and two years after the certification of the petition. For example, if a petition is certified on November 1, 2015, and the impact date is found to be March 1, 2015, all members of the certified group laid off between March 1, 2015, and November 1, 2017, would be eligible for TAA benefits.
If a petition is denied, the group may request administrative reconsideration by DOL.16 Reconsideration requests must be mailed within 30 days of the publication of the initial denial in the Federal Register. Workers who are denied certification may seek judicial review of DOL's initial petition denial or denial following administrative reconsideration. Appeals for judicial review must be filed with the U.S. Court of International Trade within 60 days of Federal Register publication of the initial denial or the administrative reconsideration denial.
TAARA contains several mechanisms to extend TAA benefits to groups of workers who met the eligibility criteria under TAARA but were dislocated when prior provisions with narrower eligibility criteria were in effect. The narrower eligibility criteria (described as the "Reversion 2014 provisions" in the Appendix) took effect January 1, 2014, and were in effect until the enactment of TAARA.
TAARA specifies that petitions that were denied between January 1, 2014, and the enactment of TAARA will automatically be reconsidered under the new criteria. TAARA further specifies that petitions that were filed before the enactment of TAARA but not determined before its enactment will be considered under the new criteria.
TAARA also specifies that for petitions filed within 90 days of TAARA's enactment, DOL could determine an impact date as early as January 1, 2014. (Typically, an impact date can be no earlier than one year prior to a certification.) This broader window allows for the coverage of workers whose job loss occurred after January 1, 2014, and who meet the criteria of TAARA but did not meet the criteria of the pre-TAARA provisions.
After DOL certifies a group of workers as eligible, the individual workers covered by the certification then apply to their local AJCs for individual benefits. To be eligible for Trade Readjustment Allowance payments, a worker must meet all of the following conditions: (1) separation from the firm on or after the impact date specified in the certification but within two years of DOL certification, (2) employment with the affected firm in at least 26 of the 52 weeks preceding layoff, (3) entitlement to state UI benefits, and (4) no disqualification for extended unemployment benefits. Additionally, workers must be enrolled in an approved training program or have received a waiver from training.17
Group-certified workers who are denied individual benefits can appeal the decision. The determination notice that individual workers receive after filing their applications for each benefit explains their appeal rights and time limits for filing appeals.
TAA benefits for individuals include reemployment services and income support for workers who have exhausted their UI benefits and are enrolled in training. Workers age 50 and over may participate in the Reemployment Trade Adjustment Assistance (RTAA) wage insurance program. Certified workers may also be eligible for a tax credit for a portion of the premium costs for qualified health insurance.
TAA-certified workers may receive several types of benefits and services to aid them in preparing for and obtaining new employment. The largest reemployment benefit from a budgetary standpoint is training assistance. Workers may also receive case management services and reimbursements for qualified job search and relocation expenses.
TAARA caps annual funding for reemployment services at $450 million per year. Reemployment funds are granted to state workforce agencies via formula.
Eligible workers request training assistance through their local AJCs.18 Once approved, training can be paid on the worker's behalf directly to the service provider or through a voucher system. To receive funding, the worker must be qualified to undertake the requested training, the training must be available at a reasonable cost, and there must be a reasonable expectation of employment following the completion of training.19
The range of approved training includes a variety of governmental and private programs.20 There is no federal limit on the amount of training funding an individual can receive, though some states have a cap.
A concise summation of TAA training programs is difficult due to the range of acceptable activities and the decentralized nature of job training. Data from DOL, however, offer some insight into the nature and duration of TAA-sponsored training programs. In FY2014, approximately 87% of TAA training participants received what DOL describes as occupational skills training: training in a specific occupation, typically provided in a classroom setting. The remainder of training was classified as remedial, prerequisite, on-the-job, or other customized training.21 Among the training participants who completed a program in FY2014, the average duration of enrollment in the program was 585 days.22
TAA does not require training programs to lead to a degree or other credential. In its FY2014 annual report, DOL reported that 83% of workers who completed training earned an industry-recognized credential, or a secondary school diploma or equivalent.23
TAARA specifies a series of case management and employment services to which all TAA-certified workers are entitled. These services include a comprehensive assessment of a worker's skills and needs, assistance in developing an individual employment objective and identifying the training and services necessary to achieve that goal, and guidance on training and other services for which a worker may be eligible.24 Under TAARA, states are required to use at least 5% of their reemployment services allotments for case management and employment services.
States may use their reemployment services funding to provide job search and relocation allowances.25 These allowances target workers who are unable to obtain suitable employment within their commuting areas. Certified workers can receive an allowance equal to 90% of each of their job search and relocation expenses, up to a maximum of $1,250 for each benefit.26
Trade Readjustment Allowance (TRA) is a weekly income support payment to certified workers who have exhausted their UI benefits and are enrolled in training. To be eligible for TRA, a worker must be enrolled in training within 26 weeks of separation from the worker's job or within 26 weeks of TAA certification, whichever is later. In some circumstances, a worker may obtain a training waiver.27
TRA is funded by the federal government and administered by the states through their unemployment insurance systems. TRA is an individual entitlement and not subject to an annual funding cap. Appropriation levels are based on estimated usage and unused funds are returned to the Treasury at the end of the fiscal year.
Individual TRA benefit levels are equal to a worker's final UI benefit. UI benefit levels are based on earnings during a base period of employment (typically, the first four of the last five completed calendar quarters). UI benefits typically replace a portion of a worker's wages up to a statewide maximum. Since states each administer their own UI programs, there is some variation in benefit levels. In July 2014, the highest maximum weekly UI benefit for a worker with no dependents was $679 in Massachusetts and the lowest maximum weekly benefit was $240 in Arizona.28
There are three stages of TRA:
RTAA is an entitlement that provides a wage supplement for workers age 50 and over who are certified for TAA benefits and obtain reemployment at a lower wage. The program provides a cash payment to an eligible worker equal to 50% of the difference between the worker's wage at the trade-affected job and the worker's wage at his or her new job. The maximum benefit is $10,000 over a two-year period. Workers may not receive TRA and RTAA benefits simultaneously.29
To be eligible for RTAA, a worker must either (1) be reemployed on a full-time basis, as defined by the law of the state in which the worker is employed or (2) be reemployed at least 20 hours a week and be enrolled in a TAA-sponsored training program. Workers who receive RTAA payments while enrolled in training and working less than full time may be subject to a reduced benefit.30
Workers who are receiving TRA, UI in lieu of TRA, or RTAA benefits may also be eligible for a tax credit that covers a portion of eligible health insurance premiums.32 The Health Coverage Tax Credit (HCTC) is equal to 72.5% of qualified health insurance premiums.
TAARA includes provisions specifying that a worker must elect between the HCTC and premium credits under the Patient Protection and Affordable Care Act (P.L. 111-148, amended). Unlike other provisions of TAARA, which are in effect through June 30, 2021, the HCTC is authorized through December 31, 2019.
Early History
The first TAA programs were enacted in 1962 but little used until the Trade Act of 1974 eased eligibility requirements. Program use expanded through the 1970s and the number of certified workers increased from about 59,000 in FY1975 to nearly 600,000 in FY1980. In light of rapidly increasing program costs, the Omnibus Budget Reconciliation Act of 1981 (P.L. 97-35) cut spending by reducing benefits and emphasizing training and other reemployment services. TAA participation levels fluctuated throughout the 1980s, but were mostly well below the levels of the 1970s.
In 1988, the program was reauthorized through FY1993 by the Omnibus Trade and Competitiveness Act of 1988 (P.L. 100-418). Among other changes, the 1988 reauthorization expanded eligibility for TRA but also placed a new emphasis on training by making it a program requirement.
1990s and NAFTA
The Omnibus Reconciliation Act of 1993 (P.L. 103-66) reauthorized TAA through 1998 with reductions in training funding. The North American Free Trade Agreement (NAFTA) Implementation Act of 1993 (P.L. 103-182) established a new component of TAA that offered dedicated benefits to workers whose job loss was attributable to trade with Mexico and Canada.
Trade Act of 2002
The next major reauthorization of TAA was part of the Trade Act of 2002 (P.L. 107-210). This law combined TAA, TPA, and other trade-related issues into a single piece of legislation. Among other changes, the 2002 TAA reauthorization merged the NAFTA-TAA program into the general TAA program and created the Health Coverage Tax Credit for TAA workers.
The Trade Act of 2002 reauthorized TAA through FY2007. Several short-term extensions continued the program until it was reauthorized in February 2009.
American Recovery and Reinvestment Act
In February 2009, TAA was reauthorized and expanded by the American Recovery and Reinvestment Act (ARRA; P.L. 111-5). Unlike other reauthorizations, which tended to be aligned with expansionary trade policy or budget reconciliations, this reauthorization was aligned with other domestic initiatives to spur economic activity during a time of above-average unemployment.
The ARRA reauthorization of TAA expanded the program in several ways. Among other provisions, it increased funding for training, increased the maximum number of weeks that a worker could receive TRA, and extended eligibility to service sector and public sector workers who had been displaced by trade.
The ARRA provisions of TAA were scheduled to expire after December 31, 2010. A short-term extension continued the program through February 12, 2011. After that date, TAA reverted to the more limited eligibility and benefit provisions that were in place prior to ARRA.
2011 Reauthorization: Trade Adjustment Assistance Extension Act
In October 2011, the Trade Adjustment Assistance Extension Act (TAAEA; Title II of P.L. 112-40) was enacted. This reauthorization was aligned with the separate passage of three implementing bills of free trade agreements with Colombia, Panama, and South Korea.
TAAEA reinstated some, but not all, of the expansions that had been enacted under ARRA. Most notably, it re-expanded eligibility to service sector (but not public sector) workers and increased training funding to near-ARRA levels. TAAEA also curtailed benefits by reducing the eligible reasons for training waivers from six to three.
Sunset and Termination Provisions of 2011 Reauthorization
The eligibility and benefit provisions initially enacted by TAAEA were scheduled to remain in place until December 31, 2013. Beginning January 1, 2014, the TAA program reverted to a more limited set of eligibility and benefit provisions ("Reversion 2014 provisions").34 Among other changes, the Reversion 2014 provisions ended eligibility for service workers and reduced the cap on training funding to the 2002 levels.
The Reversion 2014 provisions were scheduled to remain in place for one year before authorization expired after December 31, 2014, and the program was scheduled to begin to be phased out. The program did not, however, expire as scheduled at the end of 2014. Instead, the Consolidated and Further Continuing Appropriations Act, 2015 (P.L. 113-235) provided funding for full operation of the program under the Reversion 2014 provisions through FY2015.
2015 Reauthorization: Trade Adjustment Assistance Reauthorization Act
TAA continued to operate under the Reversion 2014 provisions until the enactment of the Trade Adjustment Assistance Reauthorization Act of 2015 (TAARA; Title IV of P.L. 114-27). This reauthorization was aligned with the separate extension of the Trade Promotion Authority (TPA, also known as "fast track"). Any agreements negotiated under TPA are subject to an "up or down" vote in Congress.
TAARA reinstated many of the eligibility and benefit provisions that were enacted by TAAEA in 2011. TAARA reinstated eligibility for service workers and increased training funding to a level between those of TAAEA and the Reversion 2014 provisions.
Sunset and Termination Provisions of 2015 Reauthorization
TAARA contains sunset provisions similar to those in TAAEA that took effect in 2014. Beginning July 1, 2021, the TAA program is scheduled to revert to a more limited set of eligibility and benefit provisions that are similar to the Reversion 2014 provisions. These provisions are scheduled to remain in place for one year until authorization is set to expire after June 30, 2022, and then the program is scheduled to begin to be phased out.
Author Contact Information
| 1. |
In addition to the program for workers, other Trade Adjustment Assistance programs exist for firms and farmers that have been adversely affected by international trade. This report discusses the program for workers. From a budgetary standpoint, the workers program is substantially larger than the programs for firms and farmers and general discussion of "TAA" often only refers to the workers program. For more information on other TAA programs, see CRS Report RS20210, Trade Adjustment Assistance for Firms: Economic, Program, and Policy Issues, by [author name scrubbed] and CRS Report R40206, Trade Adjustment Assistance for Farmers, by [author name scrubbed]. |
| 2. |
TAARA also reauthorized the TAA programs for firms and farmers. For more information on TAARA and those programs, see their corresponding reports cited in footnote 1. |
| 3. |
TAARA includes Sunset Provisions that take effect July 1, 2021. The Sunset Provisions put in effect a more restrictive set of eligibility and benefit provisions. The Sunset Provisions of TAARA are generally not discussed in this report. When this report discusses eligibility and benefits under TAARA, it is referring to the provisions that are set to be in effect through June 30, 2021. |
| 4. |
For more information on TPA, see CRS Report RL33743, Trade Promotion Authority (TPA) and the Role of Congress in Trade Policy, by [author name scrubbed]. |
| 5. |
For a description of pre-TAARA programs, see the FY2014 Trade Adjustment Assistance Annual Report from the U.S. Department of Labor, Attachment A, beginning on p. 28 at http://www.doleta.gov/tradeact/docs/AnnualReport14.pdf. |
| 6. |
For more information on state workforce systems and other programs administered through the systems, see CRS Report R43301, Programs Available to Unemployed Workers through the American Job Center Network, by [author name scrubbed], [author name scrubbed], and [author name scrubbed]. For more information on state unemployment insurance systems, see CRS Report RL33362, Unemployment Insurance: Programs and Benefits, by [author name scrubbed] and [author name scrubbed]. |
| 7. |
For more information on the Health Coverage Tax Credit, see CRS Report RL32620, Health Coverage Tax Credit, by [author name scrubbed]. |
| 8. |
Funds for TAA are typically appropriated under "Federal Unemployment Benefits and Allowances" in the Labor, Health and Human Services, Education, and Related Agencies appropriations bill. |
| 9. |
For more information on the formula and allotment process, see 19 U.S.C. 2296(a)(2)(B) and 20 C.F.R. 618.900-930. |
| 10. |
See 19 U.S.C. 2295a. |
| 11. |
OMB Report to the Congress on the Joint Committee Reductions for Fiscal Year 2015, February 2, 2015, p. 3 and p. 9, https://www.whitehouse.gov/sites/default/files/omb/assets/legislative_reports/sequestration/2016_jc_sequestration_report_speaker.pdf. |
| 12. |
Partial separation is defined as hours of work and wages being reduced to less than 80% of a worker's weekly average. See 20 C.F.R. 617.3(cc). |
| 13. |
The term "contributed importantly" means a cause that is important but not necessarily more important than any other cause. See 19 U.S.C. 2272(c)(1). |
| 14. |
19 U.S.C. 2272(c)(3) defines a downstream producer as "a firm that performs additional, value-added production processes or services directly for another firm." |
| 15. |
Petition is available at http://www.doleta.gov/tradeact/docs/RevisedPetition.pdf. |
| 16. |
See 29 C.F.R. 90.18-19 for detailed information on the reconsideration process. |
| 17. |
19 U.S.C. 2291(c) defines three waiver requirements: (1) a worker is unable to participate in training due to health reasons, (2) suitable training is not available, or (3) enrollment in training is not available within 60 days. |
| 18. |
American Job Centers are locally run facilities providing workforce services to individuals and serve as the local arm of the state workforce system. There are approximately 2,500 centers nationwide. For more information on AJCs, see http://jobcenter.usa.gov/. |
| 19. |
The "reasonable cost" determination considers the cost of similar training from a different provider and the cost of training relative to the expected employment outcome. See 19 U.S.C. 2296(a)(1) for legislative language and 20 C.F.R. 617.22 for expanded definitions of terms. |
| 20. |
Eligible programs include (but are not limited to) employer-based training, any training program provided by a state under Title I of the Workforce Innovation and Opportunity Act of 2014, any program of remedial education, any program of prerequisite education or coursework required to enroll in an approved training program, any training program or coursework at an accredited institution of higher education, or any other training program approved by the Secretary of Labor. See 19 U.S.C. 2296(a)(5) for legislative language. |
| 21. |
U.S. Department of Labor, "Trade Adjustment Assistance for Workers Program: Fiscal Year 2014," Table 8, http://www.doleta.gov/tradeact/docs/AnnualReport14.pdf. |
| 22. |
U.S. Department of Labor, "Trade Adjustment Assistance for Workers Program: Fiscal Year 2014," Table 14, http://www.doleta.gov/tradeact/docs/AnnualReport14.pdf. |
| 23. |
U.S. Department of Labor, "Trade Adjustment Assistance for Workers Program: Fiscal Year 2014," Table 13, http://www.doleta.gov/tradeact/docs/AnnualReport14.pdf. |
| 24. |
Full requirements are outlined in 19 U.S.C. 2295. |
| 25. |
Under TAARA, states have discretion whether or not to offer job search and relocation allowances. If states opt to offer these benefits, the allowances are funded out of the state's reemployment services grants. |
| 26. |
Job search and relocation allowance benefits are subject to certain time restrictions relative to the worker's certification and separation. See 20 C.F.R. 617.31(c) and 20 C.F.R. 617.41(c) for details. |
| 27. |
A worker may obtain a training waiver if (1) the worker is unable to participate in training due to a health condition, (2) enrollment in a training program is not available within 60 days, or (3) no suitable training is available. Workers who receive a training waiver may only collect Basic TRA; they are not eligible for the Additional and Completion tiers of TRA. |
| 28. |
For a more detailed discussion of UI calculations and programs, see CRS Report RL33362, Unemployment Insurance: Programs and Benefits, by [author name scrubbed] and [author name scrubbed]. |
| 29. |
A worker who receives RTAA payments after receiving TRA payments will have his or her maximum RTAA benefit reduced on the basis of how long the worker collected TRA. Full calculation is at 19 U.S.C. 2318(a)(4)(B). |
| 30. |
See 19 U.S.C. 2318(a)(6)(B) for full calculation. |
| 31. |
For more information on the Health Coverage Tax Credit, see CRS Report RL32620, Health Coverage Tax Credit, by [author name scrubbed]. |
| 32. |
More information on how workers may claim the credit is available from the IRS at http://www.irs.gov/Individuals/The-Health-Coverage-Tax-Credit-%28HCTC%29-Program. |
| 33. |
For a more detailed history of the TAA program and its relationship with U.S. trade policy through 2013, see archived CRS Report R41922, Trade Adjustment Assistance (TAA) and Its Role in U.S. Trade Policy. |
| 34. |
These provisions were similar, but not identical to, the provisions that were in place under the Trade Act of 2002. |