Welfare program for laid-off workers doesn’t work; renewed anyway

By Yaël Ossowski | Watchdog.org

A
billion-dollar welfare program to help laid-off workers displaced by
foreign competition has been saved from extinction, even though it’s
been judged ineffective and wasteful according to the federal
government’s own commissioned studies.

Flexing his bipartisan
muscle, President Obama signed the bill Monday renewing the Trade
Adjustment Assistance program until 2021, which gives welfare payments
and training to workers who have lost their jobs as a result of
globalization.

The law, first proposed in the days of President
Kennedy, was set to expire in September but was extended another six
years, supported by both Republicans and Democrats in Congress.

It’s
estimated to cost more than $1 billion a year and gives unemployed
workers access to benefits up to two years after they’re laid off.

What’s
more, the new law waters down the metrics of the old program, changing
the purpose of the program from helping laid-off workers find new jobs
to them completing a training program and demonstrating “measurable
gains in skills toward such a credential or employment,” according to the law.

Critics from both think tanks and government entities see an issue with continuing the program.

“Congress
should not spend $1 billion a year on a program that does not help —
and may well hurt — unemployed workers,” argued researchers from the Heritage Foundation in a paper released earlier this year.

“These
benefits are far more generous than anything most unemployed workers
receive. They go beyond supporting workers temporarily,” said David
Muhlhausen, the Heritage research fellow who led the study.
“Scientifically rigorous evaluations of federal job-training programs
consistently find these programs to be highly ineffective.“

Muhlhausen points to several government-sanctioned evaluations that don’t give the program passing grades.

The most damning, a 2012 study commissioned by the Department of Labor and conducted by Mathematica, compared participants in the program with other laid-workers workers who did not take the training or receive benefits.

It
concluded program participants were “significantly less likely to be
employed than comparisons and they earned substantially less.”

A fully featured cost-benefit analysis discovered the overall benefit of the program to be a negative $53,802 per participant.

A Government Accountability Office report from January 2014
supports that claim, finding workers who participated in the program
ended up with lower wages after joining it when compared to their peers,
showing a bad investment on the government’s part.

But that hasn’t stopped the administration’s support.

“Since
1974, 2.2 million American workers have benefited from this program,
which provides workers with opportunities to obtain the skills,
credentials, resources, and support they need to obtain good jobs in an
in-demand occupation — and keep them,” wrote Jeffrey Zients, director of
the National Economic Council on the White House Blog last month.

Beyond
the original law, the updated version broadens the scope of which kind
of businesses that can also apply for temporary assistance if they’ve
lost income due to foreign competition, without a strict process to
demonstrate proof.

Overall, it’s an odd conundrum for the Obama administration.

To
begin, Obama has used much of his political capital of late pushing for
a free trade deal with 12 Pacific countries. But on the other hand, his
administration signs off on more than $1 billion a year to give to
domestic workers who may lose their jobs as a result of increased
foreign competition.

Yaël Ossowski is an international consumer activist and writer. His writings and interviews have appeared in newspapers, magazines, and online outlets across the world in multiple languages. He is founder and editor of Devolution Review, deputy director at the Consumer Choice Center, and senior development officer for Students For Liberty. He was previously a national investigative reporter at Watchdog.org. He has a Master’s Degree in Philosophy, Politics, Economics (PPE) from the CEVRO Institute in Prague and a Bachelor's in Political Science from Concordia University, Montreal. He currently splits his time between Vienna, Austria and Charlotte, North Carolina.
Website https://yael.ca
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