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Rep. McDermott, Ways and Means Leadership, Introduces Trade Adjustment Assistance Legislation
Washington State Could Gain $150 Million Under McDermott Provision
October 23, 2007
For Immediate Release

Key leaders on the House Ways and Means Committee including Chairman Charles Rangel, and Subcommittee Chairmen Sander Levin and Jim McDermott introduced comprehensive legislation today to confront head-on the global trade challenges that have hurt American workers.  Ways and Means is the committee of jurisdiction on international trade issues.

“In the rush to embrace global trade, American workers have been left by the side of the road and it is time to put American workers and their families first - this new legislation puts us on that path,” said McDermott (D-WA), Ways and Means Income Security and Family Support Subcommittee Chairman. 

Called the Trade and Globalization Assistance Act of 2007, the proposed legislation incorporates reforms in unemployment insurance authored by Rep. McDermott that would provide the state of Washington with access to a new pool of nearly $50 million additional dollars a year to help provide an economic safety net for workers.  With minor reforms to state law, the figure Washington receives could climb to approximately $150 million.  In addition, the legislation incorporates McDermott’s wage insurance initiative that would provide reemployed displaced workers with up to $12,000 over two years if the new wages in their new career are lower than wages from their old job. 

Washington Governor Christine Gregoire and 14 other governors recently expressed strong support for Rep. McDermott’s proposed reforms in a letter to the House and Senate Committee Chairs and Ranking Republicans.  “Your leadership is critical to the state in providing the federal resources for vitally important services to workers and employers that we administer through the UI system…the opportunity exists to reform the program to meet the challenges of the 21st Century…”

Ways and Means Subcommittees chaired by McDermott and Levin have held hearings on various aspects of global trade in recent months in order to develop this comprehensive new legislation.  McDermott’s subcommittee focused on the impact to workers and their families.

“Globalization is here whether we like it or not, but our policies have not kept pace.  Americans are entitled to security at all levels, including economic security.  This legislation will be good for workers and good for America’s future economic prosperity and security.”

The Trade and Globalization Assistance Act of 2007 innovates and reforms across key areas to provide meaningful and positive changes for American workers.  In brief the new legislation provides:

Expanding Assistance to Service Workers
Today, 80% of all workers in the United States are employed in the service sector and trade in services has increased dramatically.  This bill expands TAA coverage to three categories of service sector workers who lose their jobs because of trade:

Workers who lose their jobs because of increased imports of like or directly competitive services (“increased imports coverage”). 
Workers who lose their jobs because of production relocation (“offshoring coverage”). 
Workers who lose their jobs because of contract production relocation (“offshore outsourcing coverage”). 

II.            Expanding Assistance to More Manufacturing Workers
  The bill eliminates unnecessary and arbitrary eligibility requirements, and extends TAA eligibility in all instances of offshoring, without the need to prove increased imports.  

III.            Expanding Assistance to Entire Industries
The current certification process is on a firm-by-firm basis, which can lead to delayed and inconsistent results.  To address this, the bill requires the Secretary of Labor to conduct industry-wide certification investigations when either: (1) three or more petitions from firms in the same industry are certified within a 6-month period; or (2) if the President, or the U.S. Trade Representative, or the House Ways and Means Committee, or the Senate Finance Committee requests the Secretary to conduct such an investigation. 

IV.            Expanding Assistance to Entire Communities
The bill includes a package of tax incentives designed to encourage the redevelopment of areas that have suffered substantial reductions in manufacturing employment.   The proposal authorizes the Secretary of Treasury to designate a group of manufacturing redevelopment zones.  Under the bill, the areas designated as manufacturing redevelopment zones would be eligible for the special Work Opportunity Tax Credit classification that now applies to empowerment zones. 

V.            Enhancing Training
The bill encourages longer-term training geared towards job growth sectors by providing up to 130 weeks of training to TAA certified workers.  The bill also ensures adequate funding for training, broadens the types of training that TAA eligible participants can pursue, and addresses key problems with the existing operation of the training program.   

VI.            Extending and Making the Wage Insurance Demonstration More Accessible 
The bill extends the wage insurance demonstration program, and includes a number of other important changes to make the program more accessible.  The bill strikes the requirement that a worker find employment within 26 weeks of being laid-off to participate in the program.  Factoring in the inflation rate, the bill increases the limit on wages in eligible reemployment to $60,000 a year and the wage insurance benefit to up to $12,000 over a two-year period.  The bill also allows wage insurance participants to receive TAA-funded training.  And the bill increases flexibility for workers by permitting them to choose the training, work and wage insurance combinations that work best for them. 

VII.            An Improved Health Care Benefit
The Health Coverage Tax Credit (HCTC), first established in 2002, assists TAA eligible workers or retirees who have lost their employer-sponsored health coverage.  While many trade-displaced workers are eligible for the HCTC, few have been able to take advantage of this program because 1) coverage is unaffordable; 2) insurance rules limit access to coverage; and 3) the program is overly complex.  In order to address these problems, the bill increases the premium subsidy to 85 percent and imposes rating requirements on health plans; allows eligible individuals to access their benefits sooner and links HCTC eligibility to eligibility for TAA services and benefits to minimize coverage disruptions; and removes barriers to obtaining insurance coverage.  

VIII.            Improving Outreach to Impacted Workers
Many TAA eligible workers are not aware of the program and the assistance and training that it can offer.  The bill remedies this problem in a number of ways to ensure that effective outreach is conducted and reaches workers. 

IX.            Simplifying TAA’s Rules
Confusing dates and deadlines that can unfairly exclude otherwise eligible workers from TAA can be found throughout the program.  The legislation simplifies confusing rules and requirements so that TAA will operate more effectively and it will help ensure that otherwise eligible workers are not unfairly excluded from the program.

X.            Greater Funding, Greater Expectations and Greater Accountability
To ensure that existing and new training funding has its intended effect – retraining workers so they can obtain good paying jobs – the bill sets forth detailed requirements concerning the type of employment services and case management that the Department of Labor and the States must provide to TAA enrollees to ensure that they are getting the assistance they need and deserve.    It also requires the Department of Labor to address the GAO-documented information deficit so that Congress can perform its oversight responsibilities and, if necessary, to refine and improve the program further.

XI.            Strengthening the Adjustment Assistance for Firms Program 
The most significant problem facing the TAA for Firms program is inadequate funding.  Authorized at $16 million a year, the program has never received this much funding.  The bill increases annual funding to $50 million, which will help eliminate the $18 million backlog in projects already certified to participate in the program.  It will also help cover the cost of providing benefits to service firms, which the bill now makes eligible for the program.  The bill also improves the program eligibility rules to ensure they reflect the reality of doing business. 

XII.            Modernizing the Federal-State Unemployment Insurance System
The bill includes significant reforms to the Federal-State Unemployment Insurance (UI) system to address unfair and inequitable aspects of the program. More specifically, the bill provides up to $7 billion from the Federal Unemployment Account for UI Modernization Incentives to encourage, assist, and reward States for modernizing and improving their UI programs.  The bill encourages States to institute an alternative base period that includes more recent wages when calculating UI eligibility (18 States and DC already do so), stop discriminating against otherwise eligible part-time workers who seek part-time employment, enact reforms to make the UI system more family friendly, and provide extended benefits for those in approved training.  Finally, the bill automatically provides a total of an additional $100 million per year for the next five years to the States to improve the administration of their UI and employment services systems.

XIII.            Re-Authorizing the TAA Programs – Workers, Firms, and Farmers
The bill extends the authorization for these programs through September 30, 2012.