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ance and its promised role. We are also familiar with what actually happens to Americans who lose jobs in the real world of the 19.0 s.
It is time to examine trade adjustment assistance honestly for what it is and what it is not.
It is not adjustment to a different job, it is welfare. It is not comparable to unemployment compensation, for that program implies a return to one's former work, a reuse of one's skills. Adjustment assistance is the declaration of a job eliminated forever and not replaced. Adjustment assistance, in its scale today, is an admission that U.S. trade laws changes have allowed the erosion of industries, the loss of occupations, the loss of wages and family security in health care, pension security and self-esteem for millions of Americans. And, this burden and loss has been heaviest among blacks, chicanos, women and other minorities in low-paid industries. Now the threat is reaching out to highly skilled Americans in our most sophisticated industries.
Adjustment assistance is not a transitional program. If fully utilized in behalf of every worker and every firm and every community stricken by losse due to import penetration, the cost could be billions of dollars in the years ahead. onderstellingen
The AFI-CIO supports worker aid programs, the same as we support unemployment compensation, black lung benefits, workers' compensation and others, but no one has ever suggested that jobless pay is a substitute for a community's industry nor that workers compensation and black lung benefits replace the need for safe and healthy working conditions.
However, instead of seeking to restore industry, we now hear disquieting reports that this program is to be made even more of a substitute for a solution. We understand that at the White House level a determination is being prepared that, if approved, will be disastrous to the shoe industry. Instead of helping workers regain their jobs in the shoe industry, where import injury has been massive, there is a strong possibility that the proposed “remedy” will be "super" adjustment assistance.
RE In other words, instead of stabilizing an important U.S. industry, the shoe industry and its workers are going to be written off and abandoned. The American people will be told that a new program of Federal task forces will be set up to spread the word of existing Federal programs to stricken shoe manufacturing areas. A new Office of Structural Adjustment will be established to coordinate the campaign. And as a backup, the super assistance proposal will include proposals to Congress to establish low-interest loans, loan guarantees, tax relief, subsidy programs, and other fund aids.
This unbelievable Rube Goldberg bureaucratic contraption, which admittedly will take considerable leadtime to assemble, is a classic example of the convolutions being undertaken to avoid coming face to face with the real problem.
Adjustment assistance was never intended as a Government subsidy to pay off and quiet the massive numbers of workers affected by sweeping changes in the world economy or the movement of multinational firms out of the United States. Nor was it designed to help foreign cartels or State-run industries wipe out American industry in the name of free trade. Nor was it designed to promote preferential
imports into the United States from oppressed labor in closed economies abroad. Such trade is not free; it is costly in jobs, taxes, and prices.
In short, the world has changed rapidly in the 1960's and early 1970's. America lost its place as the leading exporter of manufactured goods. In fact, America became a net importer of manufactured products and parts of manufactured products.
Now, in the late 1970's, full employment is nowhere in sight. Our Nation's trade makeup is a big part of the reason that our unemployment is higher than our industrial trading partners.
In 1976, the United States imported $5.9 billion more than it exported, with an added $9 billion in import costs for insurance and freight. The deficit included more manufactured imports than before and more sophisticated equipment. From Japan alone, the United States imported over $6 billion more than it exported.
According to an airgram from the U.S. Embassy in Japan in January 1977, Japanese exports to the United States could increase even more. The embassy predicts that Japanese exports in computers and electronic data processing will be strong, "Paralleling this surge in the use of computers and related EDP systems in Japan has been an increasingly high rate of growth in the domestically owned computer industry, which has been carefully fostered for years by large GOJ financial subsidies and various forms of protectionism." Chemicals, advanced electrical machinery and nonelectrical machinery, nuclear powerplants, railway equipment, commercial aircraft components including advanced aerospace equipment, were also cited.
Let's take a brief look at the history of adjustment assistance. It was originally established in an era of expected sharp increases in economic growth and employment. From 1962 to 1969, no one received any payments. Then, with no language change, some workers received benefits. More workers would benefit, we were told, if the law were changed. But the record since 1974 is still not clear, because the numher of workers who petition for trade adjustment assistance are not reported on the Labor Department calendar. The numbers of workers certified and the number denied relief are only estimated. Thus, if in
closing, 1.000 workers petition and 500 are certified, only the 500 are reported. American workers not only need fair trade, they need a fair count of jobs lost from trade.
Between April 1975 and February 28, 1977, 1.683 petitions, covering an estimated 479.480 workers, sought adjustment assistance, according to the Labor Department. Of these, 589 cases covering an estimated 188,929 workers were certified. Through January 31, 1977, 142.000 workers had collected $192 million. The average payment is $53 a week for 25.7 weeks.
16 From April 1975 to March 1977, the program has cost $195 million in benefits. Costs are now running at an annual rate of $240 million in payouts.
As it now stands. the adjustment assistance provisions do not meet real life problems. Under the 1974 law the following criteria must be met in section 222.
ta "I think there are a numher of specific changes in criteria in section 222 of the Trade Aet that I would like to address. anter 9 One: Increases of imports of articles like or directly competitive with articles produced by such workers must have contributed im
portantly to such total or partial separation of the employees concerned and to a decline in ol. or production. Two: Sales or production of such firm or subdivision must have decreased absolutely. Three: A significant number of proportion of workers in the firm or subdivision must have become totally or partially separated; or threatened by such separation. These requirements are inadequate to cover job displacements from imports. Many changes are necessary to make the law exclusive. The section 222 requirement that imports must increase should be removed. Imports alone can contribute importantly to job loss. Current interpretations ignore the fact that rising imports over a period of time can cause a plant shutdown even where there is a decline immediately prior to the shutdown. Thus imports may have risen for 10 years but declined in the year of impact. The result is: no relief. Members of the Rubber Workers Union were denied relief when a B. F. Goodrich tire plant in California closed. The union found that the company had lost its western U.S. markets because of a heavy level of imported cars. thus the demand for American-made tire sizes declined. As the imported cars finally leveled off, the number of American cars remaining was too few for the plant to service. The other U.S. market areas were serviced by other plants of the company. “Our people were denied adjustment assistance,” a union official declared, “because imports of tires hadn't increased significantly in the period just prior to the actual layoffs. The historical development of the situation didn't seem to matter.” Also, in section 222 the term “like or directly competitive” should be amended to include more realistic situations. The definition should be changed to include “components” and/or “later or earlier stages of processing.” Imports of components are not now considered “like or directly competitive” with a product that is imported. Thus a worker who makes heels for shoes—and his companv– cannot get relief unless heels are imported in rising quantities. The fact that 50 percent of all shoes, with heels, were imported in 1977 does not count. However, if the same company makes shoes and heels. the worker and the company can be compensated. This provision discriminates against small suppliers and workers. Similarly, it has been held that a steelworker or an auto worker making bumpers for an independent supplier is not eligible, but if he works for General Motors or Ford, he is, solely because the imports of cars, not bumpers alone, are rising. Congress must give consideration to service workers. too. In a case involving the Teamsters and Pan American World Airways, the Tabor Department determined that service workers were not eligible for assistance because they did not produce an article. The heavy reduction of traffic caused by foreign-flag airlines caused the loss of their iobs, but no assistance was forthcoming. Similarly a worker in services that are related to a dislocation is not eligible unless part of a larger integrated unit. The Labor Department ruled against a Teamsters petition in behalf of drivers of Nu-Car Transportation Co. who hauled products from Chrysler manufacturing factories because they were not part of the integrated unit. The Chrvsler production workers, however, represented by the United Auto Workers, received adjustment assistance.
The requirement that an import must contribute importantly to the ... loss needs serious reexamination. This language has been used to deny relief to machinists who made shoe dies in the St. Louis area. Even though shoe production declined absolutely and unemploy: ment was significant and shoe imports increased, relief was denied to the diemakers on the ground that a decline in shoe production and a survey of customers' orders from the plants showed that other considerations were more important in the subjective view of the oministrator specifically that there had been no imports of shoe 1es. Jobs lost by a company moving abroad are not covered unless the foreign plant is in operation and imports come in before the U.S. plant is shut down or employment drops. The law is specific on this, according to a Labor Department interpretation. Therefore, the law should be changed so that adjustment assistance will compensate workers who are displaced by the threat of imports. For example, workers at the McAlester, Okla., Lockheed plant have lost half of their work to Canada. The Department of Labor denied the o for assistance because the import of air frame subassemblies will not begin until July of 1977. The workers are jobless, however, because of the impending air frame imports. Work qualifications should be changed. For example, the 1-year rule should be changed in section 223(b). Instead of requiring that the employee's separation date be less than 1 year before o 2 years before the date of filing should be retroactively included. Legislation for this purpose has been introduced by Congressman Phil Sharp and Senator Birch Bayh as H.R. 4460 and S. 939. Under ''. current law, a worker who files for relief more than 1 year after he loses his job is out of luck. But often it takes more than 1 year for a worker to get evidence to apply for adjustment assistance. If a whole industry is filing, it takes about 1 year before injury is determined. Therefore, the proposal to extend the timing to 2 years should be adopted, retroactively, as these bills propose. The attached list of plants, appendix II, that could be affected by this change shows how restrictive the payout is under present law, and how extensive the impact of imports is even in the token program now in place. Many other work qualifications should be changed. To be eligible for benefits, the worker: One: Must have been working at the time of separation under section 247 (14). Thus workers on vacation, sick leave, disability, union duty, or other absence are not eligible. Eligibility at the impact date or immediately before it should be included. Two: Must have worked for 26 of the previous 52 weeks under section 231(b)(2). This should be changed to comparable unemployment compensation standards, such as earnings in at least two quarters or at least 15 weeks in the previous 52 weeks. Three: Time for applving for training or relocation should be extended to 1 year from the present limit on applications to 6 months currently under section 233(b)(2). Four: Amounts for retraining and the $500 relocation expenses maximum should be raised substantially. These are just a few of the reasons that workers have not received what the proponents of adjustment assistance promised. But delivery of benefits cannot be entirely cured only by remedying those defects in the law, because even more fundamental delivery problems exist: One: Most workers don't know that imports cost their jobs. Companies with worldwide plants, or importers, seldom tell workers why the plant has closed. Small businesses have equal difficulty in knowing the impact of imports. For example, H. 2,700 products given preferential entry under the 1974 Trade Act are not widely known to affected workers. Two: Reporting of import data is minimal. Section 608 and 609 of the Trade Act requiring the relation to production data has become a statistical project rather than the basis for meaningful analysis. Workers and business must prove injury, but most products and parts of products come in under reports where the imports are classified as “basket categories.” For example, metal articles not elsewhere classified might, include a railroad part or a golf club handle. It makes little difference for customs purposes, but workers and businessmen must prove injury to et action. Yet the executive branch does not require adequate reporting and the trading community fights attempts to get reports. he frustration of these provisions—a legal requirement for proof from the injured while evidence of proof of injury is in the hands of the Government and the groups \!. do not want to report—has already caused problems for workers and firms adversely affected by trade. From a public policy point of view, however, these problems have become much worse. The Nation cannot know how deep the penetration of imports is unless sections 608 and 609 of the law are fully enforced. Three: Workers cannot be fully identified by company and State employment agencies. Thus the fact the certification has taken place is not enough. For delivery of benefits, the injured worker must be identified. In some plants, for example, the proof that a worker was displaced because of black and white TV imports was hard to make because workers had been involved in both black and white and color production. Four: Choosing the worker to be compensated becomes a problem: This administrative matter is magnified because of bumping by seniority in so many of the Nation's diverse collective bargaining agreements. In one case, for example, workers who had jobs for 20 years were denied benefits because they had accepted a transfer lasting as short as 12 hours immediately before becoming unemployed. A case history of that is spelled out in the Federal Mogul Bower, Roller Bearing Division, TEA-W-165. A company hard hit by imports may set in motion a series of downward bumps until someone is finally out of work. In such a situation a high-paid, long-service worker, whose job was displaced by imports, often bumps down into a lower paid job. But the job of the person finally bumped may not have been import-related. The Machinists Union had to go to court to make sure that a worker who took another job with another firm and then became unemployed was eligible for adjustment assistance benefits. That is the Rohr case. The GAO and other analysts of adjustment assistance have reported on many of these experiences, but an overall, serious study of