Trade Adjustment Assistance as a Model for Unemployment Insurance Reform

1
Trade Adjustment Assistance as a Model for
Unemployment Insurance Reform

• Howard Rosen
• National Academy of Social Insurance
• January 19, 2006

2
Trade Adjustment Assistance

• Assists workers who lose their jobs due to
  increased imports or shifts in production
• Provides more assistance than under traditional
  UI and WIA
• Federal entitlement program

3
TAA Eligibility Criteria

• Decrease in production/employment
• Increase in imports or shift in production
• Increase in imports or shift in production
  contributed importantly to decline in
  employment
• Secondary workers

4
Assistance

• Additional 78 weeks of income support
  (conditioned on enrollment in training)
• Training
• Health Care Tax Credit
• Wage Insurance (ATAA)
• Job Search Assistance
• Relocation Assistance

5
Wage Insurance

• Workers over 50 years old
• Take a new jobs within 26 weeks of separation
• New job pays less than 50,000 and less than old
  job
• Wage insurance will provide 50 of the
  difference for up to 2 years
• Maximum assistance of 10,000 over 2 years

6
Health Care Tax Credit

• Worker has access to health insurance coverage
• COBRA
• State high risk insurance pools
• Worker pays IRS 35 percent of premium
• IRS pays 65 percent of premium

7
Changes in US Labor Market

• Higher labor force participation
• Structural factors more important cyclical
  factors less important
• Unemployment rate down
• Unemployment duration up
• Increased turnover

8
Job Gains and Losses by Industry
9
UI Reform Proposals

• Shift to federal program
• Allow voluntary contributions
• Expand eligibility criteria for assistance
• Wage Insurance
• Health Care Tax Credit
• Established tax-deferred saving for unemployment
  and retraining

10

• Trade Adjustment Assistance Coalition
• 1615 Q Street, NW
• Suite 305
• Washington, DC 200009
• 202-265-8555
• Web site www.TAACoalition.com
• E-mail Rosen_at_TAACoalition.com