Another failed welfare program that lives to fail another day

Alex Adrianson of the Heritage Foundation’s “Insider Online” blog draws attention to a government program that will likely get another lease on life from Congress despite a dismal track record.

This one is called Trade Adjustment Assistance, which provides job training and other assistance to workers who can show that they lost their jobs because of foreign competition. As David Mulhausen, James Sherk, and John Gray write, a 2012 study by Mathematica found that TAA not only costs taxpayers a bunch of money, it doesn’t really even help the workers:

TAA participants averaged $12,674 in the first year and $12,987 in the second year in lower annual earnings than their counterparts (in 2006 dollars). TAA participants averaged $7,451 in the third year and $3,273 in the fourth year in lower annual earnings. Over the entire four-year follow-up period, TAA participants earned a total of $37,133 less than their counterparts. Further, “[w]hen TAA participants returned to work, they had lower wages and were less likely to have access to fringe benefits than their comparisons.” For their most recent jobs, TAA participants have an average hourly wage of $11.81 (in 2006 dollars), while the comparison group averaged $12.59—a difference of $0.78.

Given that TAA participants were more likely to receive job training than their counterparts, employers may place a higher value on work experience than on TAA training activities. Yet only 37 percent of TAA participants who received job training found employment in the occupations for which they trained.

Mathematica concluded that TAA financially hurt both its participants and society overall. A cost-benefit analysis found that the net benefit to society of TAA was a negative $53,802 per participant. Taxpayers bore half of the cost, and the economy could have put the resources spent on TAA to productive use elsewhere. However, displaced workers bore the other half of the program’s cost. In net present-value terms, the typical TAA participant experienced $26,837 lower total earnings and income despite receiving federal benefits.