Policy: Labor

Did the Labor Department mislead Congress on jobs program's record?

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Watchdog,Jobs,Labor,Economy,Inspectors General

A $455 million federal program designed to help people put out of work by free trade helped less than one out of 10 applicants find a job, according to a new inspector general's report.

Roughly 1 person in every 12 who applied to the federal labor department's Trade Adjustment Assistance program was able to find a job due to the program's efforts.

This latest report stands in stark contrast what the labor department told Congress just two years ago: That two-thirds of everyone in the program wound up getting jobs.

The Trade Globalization Adjustment Assistance Act was enacted as part of President Obama’s $845 billion economic recovery program in 2009. Funding for the Trade Adjustment Assistance program was increased by $455 million under the Obama stimulus program.

The program is run by the Department of Labor’s Employment and Training Administration, and is designed to help individuals displaced from their jobs due to free trade find either a new job or training for work in a different field.

Jim Sherk, a Heritage Foundation labor and trade policy analyst, likened the program to the federal Supplemental Nutrition Assistance Program, commonly called food stamps.

Like SNAP, the Obama administration has expanded the Training Adjustment Act coverage to anybody whose financial situation was harmed by free trade, even if only tangentially, Sherk said.

He pointed to the green energy firm Solyndra Corp. and Twinkie-maker Hostess Brands, whose former workers could now qualify under TAA.

Solyndra went bankrupt in part because government-subsidized Chinese manufacturers were selling equivalent solar panels more cheaply. Labor Department officials say Hostess was also harmed by foreign competition.

An August 2013 Department of Labor inspector general's report found that between February 2009 and May 2012, 114,771 people participated in the program but only 7,112 found new jobs and just 2,524 people got training for new employment.

The IG also said the program lacked required documentation and oversight:

“Although" the labor department "issued guidance that states must document the offering of these services, not all of the states in our sample had effectively implemented that guidance."

According to the IG, the labor department also couldn’t document a relationship between participating in the program and getting a new job or training.

“Additionally, we found that [Labor] was not able to demonstrate that additional funding for employment and case management services resulted in increased job placement and retention for participants."

Labor "did not have accurate and complete data available to determine whether a participant received employment and case management services in either the TAPR or from documentation maintained at the state level.”

Sherk said the IG report was only the most recent of many studies showing TAA is ineffective.

But labor department executives told Congress something quite different in 2011 in reports to the House Ways and Means Committee and the Senate Finance Committee.

Labor officials suggested that two-thirds of all who entered the program were able to find employment.

"In FY 2011, over 196,000 workers participated in the TAA Program. Of these, over 86,000 participated in training and over 46,000 received TAA income support," the labor department said in a 2011 report to Congress.

“Over 161,000 workers received Employment and Case Management Services. 66 percent of those who exited the program found employment within one quarter after exit, and of those workers who became employed, 90 percent were still employed six months later with average earnings of $18,184 for that six-month period. These performance outcomes surpassed the department’s performance goals for FY 2011."

How could two groups of government officials talking about the same program reach such dramatically different conclusions?

Luiz Santos, a spokesman for the IG, said the labor department report to Congress left out a key fact by not identifying which individuals gained employment by using the program.

“Our audit was designed to determine if participants obtained a job as a result of case management services they received, which was a particular feature of the 2009 program,” Santos said.

“The department’s report doesn’t attempt address this relationship. It simply reports the total number of workers who obtained a job after participating in the TAA program, regardless of whether it was related to services provided.”

The stark conflict between the two reports was not lost on Congress. Several committees contacted by the Washington Examiner said their members were considering legislation to address the IG’s concerns.

Julia Lawless, a spokesman for Senate Finance Committee Republicans, said Sen. Orrin Hatch of Utah, the ranking minority member, is skeptical that TAA actually works and ought to be debated fully in Congress.

A committee spokesman for the House Ways and Means Committee said legislation now before it known as the SKILLS Act also addresses problems cited by the IG.

The Department of Labor didn’t respond to a request for comment for this story.

Mike Volpe is a Chicago-based independent investigative journalist.
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