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.