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Department of Labor

Recommendations and Actions

DOL02: Develop a Single Comprehensive Worker Adjustment Strategy

Background

In just two years--1990 and 1991--more than one million workers lost their jobs due to business closures and layoffs. The reasons cited for these shifts in employment include international competition, technological change, and shifts in consumer preferences.(1) The Department of Labor (DOL) has reported that the number of plant closures and mass layoffs affecting 50 or more workers totaled about 3,100 in 1990 and nearly 3,900 in 1991. Although some of these dislocated workers adjust quickly and find new jobs, others need help. Whether the assistance offered by state and local agencies is effective often depends on how quickly it comes. According to the General Accounting Office (GAO), relatively few workers get sufficient notice of a business closure or major layoff to seek assistance before losing their jobs.(2)

The federal government sponsors several programs to help dislocated workers make the transition to new employment. Because of a perceived lack of program coordination at the local level, these programs have been criticized by GAO, state employment security agencies, and Congress. The programs are also criticized for frequent delays in providing assistance to dislocated workers and because the workers who need help find it difficult to determine the services and benefits for which they are eligible.(3)

Two major programs help dislocated workers make the transition to new employment:

--- the Economic Dislocation and Worker Adjustment Assistance (EDWAA) Program provides approximately $1.1 billion annually for retraining, placement, and support services; and

--- The Trade Adjustment Assistance (TAA) program provides approximately $190 million each year in retraining and income support funds for trade-affected workers only.

EDWAA services are delivered through Job Training Partnership Act (JTPA) delivery centers, and TAA services are delivered through state employment security agencies. TAA and EDWAA provide similar services, including occupational training, placement assistance, job search, and relocation allowances. In addition, EDWAA provides job counseling, remedial education, and support services such as transportation and child care. Most dislocated workers may receive 26 weeks of income support through the Unemployment Insurance program. TAA also provides up to 52 weeks of additional income support.(4) EDWAA services are supplemented by three one-time appropriations:

--- $150 million from the Department of Defense (DOD) to implement the Defense Conversion Adjustment (DCA) Program;

--- $75 million for defense diversification; and

--- $50 million authorized annually under JTPA to assist workers who lose their jobs due to clean air standards.

In response to a decline in defense spending and its impact on related industries (an estimated 100,000 active military personnel will be separated annually, even after downsizing has achieved its target level), DOL has implemented several programs to serve dislocated, or potentially dislocated, military personnel and civilian workers, including the DCA program mentioned above and the Transition Assistance Program (TAP). The DCA program dispenses grants ($150 million) to states affected by diminished defense contracts, and it provides services to workers permanently laid off and members of the armed forces involuntarily separated as a result of defense downsizing.

TAP is a three-day job search workshop for separating active duty military personnel located at 180 military bases throughout the United States. In addition, DOD also provides operational transition programs for uniformed military personnel preparing for civilian employment. Resources are targeted to special groups including overseas military, DOD civilians, and defense contractor employees.

The variety of programs offered through several agencies tends to confuse the public and add to the administrative costs of the programs. It also makes it difficult for dislocated workers to determine the benefits for which they qualify. Workers employed by the same firm sometimes qualify for benefits from more than one government program administered through separate agencies. Sometimes workers from the same firm qualify for different programs. The results include an excessive focus on determining eligibility rather than providing services. Service delivery agencies find the array of eligibility requirements and benefits confusing and an obstacle to meeting individual needs. From the agencies' standpoint, the reason a person was laid off should not determine the benefits to which the individual is entitled. All individuals should receive the necessary assistance to make the transition to a new job as soon as possible.

In its report on an evaluation of the programs that assist dislocated workers, the GAO estimated that fewer than 10 percent of qualified workers received assistance from TAA within 15 weeks of layoff. Workers qualifying for EDWAA fared better, but still only 60 percent received benefits within 15 weeks of their layoff. The report also underscored:

--- the need to streamline the process for determining eligibility for TAA benefits;

--- the importance of ensuring that projects provide a comprehensive mix of services to meet the varied needs of individual dislocated workers;

--- the need to improve coordination between the programs;

--- the lack of adequate data-gathering systems to track participant progress,

--- the need to monitor program performance.(5)

The Secretary of Labor has indicated that the administration will seek legislation for a comprehensive worker adjustment program that improves services to dislocated workers. Some of the enhancements called for by the Secretary include earlier intervention, customer- driven services to greater numbers of workers who need adjustment assistance, and linkage to unemployment insurance to ensure early identification and referral.(6) This program will contribute to a national employment training strategy, encourage state and local innovation in program delivery, include a comprehensive system of information on employment opportunities and training programs, and provide technical assistance to states and communities.

A single comprehensive strategy will also help military personnel by ensuring that participants have access to the most current job information, thereby helping them make a rapid transition to civilian employment.

Action

DOL should develop a single, integrated, worker adjustment assistance program for those workers who are jobless or are expected to permanently lose their jobs.

The program should disregard the specific reason for dislocation and provide an opportunity to offer skills improvement training and retraining to currently employed workers who are vulnerable to dislocation. To reduce the potential for dislocation, DOL should work with business and labor to explore ways to increase training (and retraining while on the job) to enhance worker skills, thereby reducing the potential for workers to become dislocated or, if dislocated, improve their chances for reemployment.

Congressional adoption of a worker adjustment program as part of a national employment training strategy will encourage state and local innovation and a sharing of information on program improvements and innovations. It will be DOL's responsibility to ensure that the strategy:

--- includes early intervention;

--- incorporates the best aspects of existing programs; and

--- has the flexibility to meet the needs of the various groups it is intended to serve.

Implications

A comprehensive worker adjustment strategy will improve services to workers who are jobless--and those at substantial risk of dislocation--while making better use of resources available for adjustment assistance. This approach is based on the concept that DOL should take the lead role in providing training services, coordinating the efforts of the Departments of Defense, Commerce, and Veterans Affairs, local and state program administrators, and state employment security agencies. A single worker adjustment program will reduce administrative costs, provide early intervention, and strengthen services provided to the public.

Fiscal Impact

Program contributions are expected to total $887 million in fiscal year 1993, with the following breakdown: Economic Dislocation and Worker Adjustment Assistance Act--$517 million; Trade Adjustment Assistance program--$190 million; Defense Conversion Adjustment program--$60 million; and the enforcement of new clean air standards- -$50 million.

Due to streamlined management, paperwork reduction, and improved communications, a 5 percent savings in administrative costs will accrue. These costs typically represent 15 percent of the total program budget. This savings will yield an additional $6 million, increasing the amount that can be spent on training and other services designed to help dislocated workers find new employment.

Endnotes

1. U.S. General Accounting Office (GAO), Dislocated Workers: Comparison of Assistance Programs, (Washington, D.C.: U.S. General Accounting Office [GAO], September 1992), p. 10.

2. U.S. General Accounting Office, Dislocated Workers: Worker Adjustment and Retraining Notification Act Not Meeting Its Goals (Washington, D.C.: GAO, February 1993), p. 36.

3. GAO, Dislocated Workers: Comparison of Assistance Programs, pp. 2- 5.

4. Ibid.

5. U.S. General Accounting Office, Labor Issues, United States General Accounting Office Transition Series (Washington, D.C.: GAO, December 1992), pp. 18-23.

6. U.S. Department of Labor, FY 1994 Budget Justifications of Appropriation Estimates for Committee on Appropriations, Dislocated Worker Assistance Program (Washington, D.C., April 1993), p. TES-44.

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