When Jobs Go Away for Good

In 2003, a now-defunct textile company called Pillowtex closed its plant in Kannapolis, North Carolina. Pillowtex was the town’s biggest employer by far, and most of the 4,800 workers who lost their jobs had little education and dim prospects for finding new jobs in manufacturing.

Mike Easley, who was then the governor of North Carolina, responded by invoking a federal program targeted at workers who lose their jobs to foreign competition. Although the Trade Adjustment Assistance program had been around since the 1970s, states weren’t taking advantage of it much at the time.

Easley managed to get millions of dollars in grants to help the Pillowtex workers and more than 12,000 others who also lost manufacturing jobs in the state. The money went for basic education, including high school equivalency degrees, and to re-train workers for jobs in other fields such as health care and construction that were in demand in the local communities and nearby cities. The program also came with generous health insurance subsidies and unemployment checks for more than two years — much longer than unemployment insurance normally lasts — while the workers pursued training and job searches.

Recently, the trade adjustment program has factored into the Obama administration’s response to the nation’s stubbornly high unemployment rate. The federal economic stimulus law has temporarily expanded eligibility for the job re-training assistance beyond the field of manufacturing, and also improved the financial benefits associated with a program that was already considered the Cadillac of unemployment insurance. “The idea is to fundamentally change our approach to unemployment in this country,” President Obama said in May while announcing his employment initiatives. “It’s no longer just a time to look for a new job, but is also a time to prepare yourself for a better job.”

Although some experts doubt whether publicly funded education and training can really make a dent in unemployment, most agree that the trade adjustment program gives jobless workers the best shot available. In North Carolina, the experience with the program is widely considered a success. But the program has failed at one of its original goals — to garner political support from workers for forging free-trade agreements abroad.

Loosening the restrictions

Until North Carolina began tapping the trade-adjustment assistance, states did not make much use of the program. The problem was that not many workers qualified for it — only casualties of manufacturing plant closings were eligible. And because the program was targeted at trade-related job losses, workers had to prove that their jobs had gone to a country with which the United States had a free-trade agreement.

Still, the little-used program surged in popularity between 2008 and 2009, as the economy slumped into recession and governors, unions, companies and small groups of workers rushed to seek federal aid. The number of laid-off workers covered by the program ballooned to nearly 200,000, about twice the number covered in previous years.

Starting May 18, when the American Recovery and Reinvestment Act made the program available to public employees and service workers, the number of applications went up further. Many workers re-applied under the new rules so they could qualify for the higher benefit levels. As a result, the U.S. Department of Labor is swamped with applications and is three months behind in approving them.

In addition to expanding benefits, the stimulus law increased the amount of federal funding available for training. It also expanded coverage to include workers whose firms shifted jobs to any foreign country — not just those included in U.S. free-trade agreements. But like other stimulus programs, the offer is limited. Unless extended by Congress, the program will revert back to the more restrictive rules and less generous benefits on December 31.

The states taking greatest advantage of the increased aid are Midwestern states hit hard by the collapse of the auto industry. Michigan leads the country with more than 39,000 workers certified under the program this year. Ohio is second with 29,000 workers. By comparison, California, with more than three times the population of either state, has certified only 19,000, according to U.S. Department of Labor estimates.

In Ohio, applications increased dramatically in the past year, according to a recent study by the research group Policy Matters Ohio. Automotive companies including GM and Ford led the list of companies with the largest number of eligible employees. They were followed by steel makers and other manufacturers, including a Wal-Mart eyeglasses plant, an Avon cosmetics factory and a Japanese-owned semiconductor factory.

In Michigan, some of the boost comes from the state’s creative marketing of this and other job retraining programs. Under a state program called No Worker Left Behind, Michigan has combined all federal programs and set uniform eligibility and benefit standards. Michigan has more than 60,000 jobless workers enrolled in education and training programs at a cost of $5,000 to $10,000 per person over a two-year period.

Measuring success

Some critics of the trade adjustment program argue that job creation, not retraining, is the answer to the nation’s unemployment problem. In the past ten years, U.S. companies have created fewer jobs than in any other decade since World War II. In the 1990s, for example, 30 million new jobs were created. Since 2000, only 8 million jobs have been added.

Others say the costs of such generous amounts of training and education, plus income supports and benefits, is not worth the results, because not enough people end up getting jobs in the professions they’re trained for. Under Labor Department rules, states must report how many people get jobs after entering the program. The majority of participants do find work, although not everyone lands a job the day they graduate.

Curtis Morrow, administrator of the trade-adjustment program in North Carolina, admits that the program’s ambitious aims raise expectations. “Politicians always want to hear that out of 500 people who get laid off, 499 find jobs as soon as they leave the program,” Morrow says.

“We take a more humanistic approach,” Morrow continues. “If you have folks in a community that’s been devastated by layoffs and you provide those people with some hope in the form of training for opportunities that may come along and you provide them with skills that make them more marketable. Have you done your job? Yes.”