Help for Job Losers Takes Big Hit in Trade Deal
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The Fiscal Times
September 7, 2011

In early June, workers at a Sykes Enterprise call center in Morganfield, Ky., sought  federal assistance  after the Florida-based firm announced it was moving 96 telemarketing jobs abroad. In the 34 years since its founding, the publicly-traded company has grown into a billion-dollar enterprise with 83 call centers in 24 countries.

Last month, the Morganfield workers received the government’s response: denied. The workers,  who have no union representation , would not be eligible for extended unemployment benefits while enrolled in job training programs, nor for temporary wage supplementation if they took a lesser-paying job.

The Labor Department based its swift ruling on the fact they were service employees, and ineligible for a Trade Adjustment Assistance program originated in 1972 to help manufacturing workers displaced by trade or outsourcing. The 2009 stimulus act had extended trade adjustment assistance (TAA) to service industries like call centers, but Republicans in Congress – including Rep. Ed Whitfield, who represents Morganfield, and Senate Minority Leader Mitch McConnell, who represents the state – scaled back the program as part of the last deficit reduction package.

More cutbacks to TAA are on the way as part of a compromise reached in June  between Republicans on Capitol Hill and President Obama that should lead to approval of long-pending trade agreements with South Korea, Colombia and Panama. Those deals had been stymied in a dispute over demands by labor groups and Democrats to maintain trade adjustment assistance to displaced workers.

Proponents of the treaties say that a reduction in the federal benefits to cushion the blow of job losses to other countries is a small price to pay for the large overall increase in jobs in this country that the treaties will produce. However,  there’s little evidence that three deals about to move forward in Congress will create anywhere near the 250,000 jobs spanning all sectors of the economy claimed by the treaties’ most fervent backers. The International Trade Commission puts the estimate closer to 70,000 jobs.

While passage has become a rallying cry for Republican presidential candidates on the campaign trail, even the more expansive claim of  nearly a quarter million jobs over the next five years would be a drop in the bucket in the unemployment. The U.S. needs that many jobs created every month for four or five years to return to pre-recession job levels.

The new limits on trade adjustment assistance aren’t a done deal. In early August, Senate leaders agreed to separate the trade deals from the TAA bill, and bring the latter up for a vote first. While that should pave the way for compromise on a slimmed down version of the program, the Tea Party-influenced House is still demanding “significant cuts and concessions” in TAA before reauthorizing the program, according to a statement from Ways and Means Committee chairman Dave Camp, R-Mich.

He’s seeking a reduction in the number of weeks workers are eligible for training assistance from 156 weeks to  117 weeks, with some exceptions, and expiration of the program in 2014. The House is also demanding that all spending on the program’s three-year reauthorization be offset with cuts to Medicare and unemployment insurance. While Congress authorized nearly $1 billion for the TAA program in 2010, displaced workers claimed only $617 million from the program. Under the compromise, the  funding would be reduced to $300 million per year for the next three years, when the program is ended.

The Republican commitment to renew TAA in some form for at least two years opens the door for the president during his prime time jobs speech on Thursday evening to announce his support for the trade deals, even though many of his supporters in organized labor and liberal think tanks say the deals will actually destroy jobs. “Most of the analysts who talk about trade only look at jobs created by exports. They ignore the impact of imports,” said Robert Scott, the chief trade expert for the left-leaning Economic Policy Institute, which estimated the net loss from the three trade deals would be 215,000 jobs by 2017. “It’s like reporting the score of a baseball game and only counting the score of the home team.”

spent 25 years as a foreign correspondent, economics writer and investigative business reporter for the Chicago Tribune and other publications. He is the author of the 2004 book, The $800 Million Pill: The Truth Behind the Cost of New Drugs.