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American workers who lose jobs in a trade war won't get much help

Earlier this month, news came out...

Posted: Apr 30, 2018 6:32 AM
Updated: Apr 30, 2018 6:32 AM

Earlier this month, news came out that 50 Tampa Bay Times employees would face a fate typically reserved for factory workers and steel mill operators: Losing their jobs in a trade dispute.

Tariffs the United States imposed on softwood lumber from Canada had raised the paper's newsprint costs by some $3 million a year, the publisher said, and the business' already thin margins couldn't absorb that.

Normally, when a job is outsourced or terminated as a result of import competition, workers get some extra help. On top of unemployment insurance, they are also eligible for something called Trade Adjustment Assistance, an approximately $800 million a year program that provides cash and covers tuition for retraining programs to help people get back on their feet.

But the 56-year-old program doesn't cover people who lose jobs in later phases of trade disputes. The essential requirement for eligibility is that the job was lost to "foreign competition." Jobs lost due to tariffs actually levied by the United States -- which can raise domestic prices and provoke retaliatory measures from abroad -- don't qualify.

And the new tariffs promised by the Trump administration could hurt a lot of jobs. Trump announced earlier this year he would crack down on what he describes as unfair trade practices, pledging that imported steel would be taxed at 25%, and foreign aluminum at 10%. He also threatened to impose new tariffs on $150 billion of Chinese goods - with Beijing promising to push back on hundreds of US products.

Europe ready to hit back if Trump presses ahead with tariffs

Job losses in the United States could number from 25,000 to 150,000 jobs in industries that use steel, ranging from aerospace manufacturing to oil drilling, according to analyses from Moody's Analytics and the Economic Outlook Group. Overall, the loss of jobs will likely be on the lower end of the range, since Canada, Mexico, and South Korea have received waivers from the new tariffs.

But those estimates don't include the potential impact of retaliatory duties threatened by China on mostly agricultural goods. And Europe says it's ready to hit back if the Trump administration doesn't exempt it from the new tariffs starting May 1. The New York Federal Reserve estimated last week that the trade actions that ultimately go into effect would probably cost more jobs than they would save.

So far, there have been thousands of requests for exclusions from the steel tariffs from US-based companies that say making their raw material more expensive to import could force them to cut employees. For example, a producer of railway steel called Evraz, Inc. warned that it would have to lay off over 400 workers in Portland, Oregon if it didn't get an exemption. And those workers would get no help from the government, beyond unemployment insurance.

That discrepancy between those who receive special assistance and those who don't has long fueled calls for a more comprehensive system to help workers who are out of a job because of the way the economy is changing.

"It further underscores the reality that this program doesn't make a lot of sense," says Edward Alden, a fellow at the Council on Foreign Relations. "Why should a steelworker who loses their job as a result of Chinese imports be treated more favorably than a steel-using worker who loses their job because of an import tariff?"

Alden wrote a book on the subject entitled Failure to Adjust, discussing how the US fell behind in developing globally competitive industries and helping workers prepare for the jobs of the future. For example, in 2015 the United States spent less as a percentage of GDP than any other developed country on "active labor management" policies like training workers and connecting them with employment, according to the Organization for Economic Cooperation and Development.

Related: Trump renews attack on TPP: 'I don't like the deal'

A more expansive program might have even reached more steelworkers, most of whom didn't lose their jobs to unfair Chinese import competition, but rather increasing efficiency in their own plants, according to a 2015 study by economists at Duke and Princeton. The steel industry shed 75% of its workforce between 1962 and 2005 while keeping production fairly constant, largely as a result of highly productive mini-mill technology.

There have been a few proposals to help workers adapt to a changing economy, such as a San Francisco politician's idea to tax robots and use the proceeds to retrain workers. But on the federal level, the Trump administration has proposed spending less money on economic development and worker training programs, not more.

Current trade adjustment programs don't work perfectly. Government Accountability Office reports going back to 2001 document difficulties in delivering assistance, and beneficiaries on average find jobs that pay less than the jobs they lost.

But those reports also say a major problem is too few resources - for scenarios including when a worker needs to pick up and move to a new job, for example, or for free education available to people before their factory shuts down. Instead, help usually comes too little, too late.

And in the case of workers like those out of their jobs at the Tampa Bay Times, there's nothing at all.

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