The Role of the Federal Government in Worker Adjustment Assistance

Part I of this note examines worker adjustment assistance in the United States. It traces TAA’s evolution from its inception as a means of compensating trade-displaced workers while minimizing government intervention in the market adjustment process, through its amendment to reflect congressional concern over the low number of worker certifications, to the criticism of its procedures arising out of more recent congressional interest in government-sponsored retraining as a means of attaining worker adjustment. After arguing that current certification and distribution procedures continue to reflect the original goal of the program- compensation with minimal intervention in the market- the note examines alternatives to TAA proposed by the expansionists and the Reagan Administration. Part II focuses on the Japanese system of worker adjustment. It describes the lifetime employment system underlying labor relations in Japan and it examines government adjustment policies implemented in the wake of the 1973-1974 oil crisis. It concludes that government assistance encouraging local private-adjustment initiatives, rather than government designed and administered retraining and placement programs, was responsible for the post-oil crisis adjustment of a large portion of the Japanese workforce. Part III analyzes proposed alternatives to TAA in the light of the Japanese experience. Accepting that modification of the current program is necessary, it argues that neither the expansionists’ nor the current Administration’s proposals will encourage the development of local, privately directed retraining and reemployment initiatives similar to those driving the continuous adjustment of many Japanese workers. Acknowledging that different labor-management structures prevent imitation of Japanese adjustment measures by U.S. companies, part III suggests that the cooperative labor-management attitude crucial to continuous adjustment of workers in Japan could be fostered in the United States if Congress did not attempt to give expression to both the compensation and free market principles in a single program. Arguing that neither principle can be ignored, the note suggests that attempts to combine them frustrate the achievement of both their goals. Thus, it proposes a two-pronged adjustment program, the first prong of which would be devoted to compensating import-injured workers and the second to encouraging private on-the-job retraining for all workers.