In my own district there are three situations where the one-year limit has resulted in the denial of benefits to significant numbers of workers. In testimony last year I discussed these cases in some detail, so I will make only three points here.

First: The workers at the Warner Gear plant in Muncie, Indiana, actually asked the local unemployment office about applying for TRA benefits after they were laid off. This was well within the one year period for petitioning for certification. Employees of the employment office told them that they were unaware of any such program or benefits, and this clearly contributed to the late filing of the petition for these workers.

Second: Because the import related layoffs at Warner Gear occurred over a period of several months, some workers were laid off before the eligibility date and others were laid off after that date. This means that people who worked side by side at the same or similar jobs, and who lost their jobs for the same reason, are now being treated differently under the trade adjustment assistance program. Moreover, those who were laid off first and who are not receiving TRA are those with the least seniority, and in many cases they have younger children, more bills, and fewer savings than their fellow workers.

Third: One of the most striking examples of the arbitrariness of the oneyear limit occurred at the Jay Garment plant in Portland, Indiana. Their petition was filed on March 9, 1976, and the Department of Labor certified that imports has "contributed importantly" to their loss of jobs. The earliest eligibility date under the one-year limit was March 9, 1975; but that date fell on a Sunday, and most of the workers had been terminated on the previous Friday. The current law does not even allow enough flexibility to go back two days to the last previous workday in establishing the eligibility date. Understandably, many of these workers wonder why their government would allow inequities such as these to happen.

WHY A 2-YEAR LIMIT?

Late in the last session I introduced H.R. 15421, which would have simply eliminated the one-year limit. This remedy was opposed by Administration officials during a hearing of this subcommittee in large part because of the administrative difficulties in implementing an open-ended program. I accepted their arguments against "open endedness," and that is why H.R. 4460 proposes to replace the one-year limit with a two-year limit.

Section 2(b) of H.R. 4460 is also new. It provides that a worker who has already been certified as eligible to apply for adjustment assistance shall not have his benefits recomputed because of this amendment. Section 232(a)(1) and 247(4) of the Trade Act provide that the amount of a worker's benefits is based on his average weekly wage during his highest quarter among the first four of the five quarters preceding his layoff. Under certain circumstances the proposed two-year limit in Section 1 of the H.R. 4460 could force the recomputation of benefits for workers who have already received them, and, Section 2(b) will prevent this.

The subcommittee should note an error in the print of H.R. 4460. In Section 2(b), lines 3 and 4 should read as follows: "Section 223(b)(1) of the Trade Act of 1974 (as amended by the first section of this Act) shall not apply

COST

Two major concerns were voiced about last year's H.R. 15421, and although H.R. 4460 should minimize them, they may be raised again. There are cost and administrative difficulties, and I would like to deal with each of them.

The cost of any legislation is a valid concern. In the case of this bill, however, I believe it should not be considered a "new" cost, but rather the true cost of the trade adjustment assistance program adopted in the Trade Act of 1974. The Act did not intend to exclude these workers by means of the one year limit. It intended for all otherwise eligible workers who were laid off as a result of import competition to receive benefits.

If the cost of the adjustment assistance program, including the workers who have been excluded, seems too high, the fault is in the eligibility rules and the allowances established in 1974, not in this amendment. We would not attempt to control the rising costs of the Social Security program by arbitrarily ex

cluding some beneficiaries who did not apply by a certain date, and we should not arbitrarily exclude eligible workers from the adjustment assistance program in order to limit its cost.

In the hearing last year, an Administration witness estimated the cost of H.R. 15421 at about $77 million a year. I questioned the assumptions on which that estimate was based, and it is my understanding that the Department is now estimating, for H.R. 4460, a range of $40 to $53 million. This appears more reasonable but it is worth noting that the cost of this amendment, whatever it turns out to be, can also be considered a measurement of the financial inequity now being caused by the one-year limit. If an additional $40 to $53 million seems an expensive price to pay for the benefits of a liberal trade policy, keep in mind that more than this is now being paid by the workers who lost their jobs as a result of this trade policy.

One other very important point needs to be made about these cost estimates. The newness of the adjustment assistance program and the lack of informa- · tion about it were the cause of many of the late petitions during the first year or two of the program. Now that more workers are aware of the program, as are their representatives and the people in the local unemployment offices, it is unlikely that there will be as large a number of late filings in the future. Therefore the cost estimates provided by the Labor Department are valid only for the first year after enactment of this amendment; thereafter the costs should be substantially lower.

ADMINISTRATIVE DIFFICULTIES

The question of the difficulty of administering this amendment also deserves discussion. The Administration witnesses last year suggested that wage records and other company data necessary to make eligibility determinations might not be readily available if petitions were filed more than one year after layoff began. However, existing legal requirements for record keeping by employers should ensure that the information is available, and I would like to incorporate in the hearing record, at the end of my testimony, a memorandum by Leonard Page, Assistant General Counsel of the United Auto Workers, ex-› plaining these requirements. If the Department of Labor should testify con-vincingly to the need for even longer retention of certain records, the subcommittee could consider imposing such a requirement during mark-up of this bill.

RETROACTIVITY

The most difficult administrative burden arising from this legislation will be the requirement that adjustment assistance be made available retroactively to those workers excluded by the one-year limit between 1974 and now. I sympathize with the Federal and State officials who will have to implement it. I am sure that they are already working very hard to make this program effective, and I realize that this legislation will make their work more difficult. But we should not let our concern about their workload prevent us from assisting those workers who are out of work. On this point there should be no compromise. During the past two years an estimated 26,450 workers have been denied benefits because of the one-year limit. To aid these workers, the change in the limit must be retroactive. To amend the limit for future petitions while ignoring workers who have already been excluded would be locking the barn door after the horse is out.

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TIMELINESS OF ASSISTANCE

Another point that was raised in last year's hearings was the need for payment of benefits in a timely fashion, so that adjustment assistance is made available to workers while they are still out of work. I agree with that aim, and I think that the affected workers and their representatives also agree. When they need help, they are not likely to delay filing their petition merely because the deadline has been extended. But I would also like to point out that many of the workers excluded from the program by the one-year limit are still out of work. In my own District, at the Warner Gear plant in Muncie, workers laid off in late 1974 have still not been called back. Workers elsewhere who are back at work may have survived their period of unemployment by going into debt or wiping out their savings. To imply that assistance is no

longer useful if it is received some length of time after a worker's layoff is just not right. The assistance is still very much needed. Moreover, the 1974 Act already allows late payment of benefits in some cases; an individual worker has up to two years to apply for benefits after his group's petition has been approved, which means that hypothetically he could receive benefits more than three years after being laid off. It seems to me to be hypocritical to argue that workers excluded by the one-year limit should not receive benefits becausethe assistance will arrive too late, when we are already allowing other workers to receive late payments.

NEED FOR PROMPT PASSAGE

The requirement that eligible workers apply for benefits within two years of certification creates some urgency for prompt action on H.R. 4460. If the bill is not enacted well before October of this year, some workers who are now excluded by the one-year limit in Section 223 will be excluded by the two-year deadline for individual applications in Section 231(1) (B). Although no such exclusions will occur before October, 1977, I stress the need for enactment as far in advance as possible because of the time required to inform newly eligible workers that they must apply.

There is a less technical and more important reason for urgency in acting on this bill-human need. Early this month I received a letter from a worker who was despondent about his unemployment and who was concerned that this legislation would be put aside in the press of other business. I would like to quote from his letter:

"You see if this amendment stays buried, so does the hopes and dreams of my fellow employees. We were not hoping for a gift, we just hoped Congress would help us get what was actually ours

I have worked at Warner Gear going on 9 years, but I have been laid off over half of this. Right now my unemployment is out! I can't find a job and right now the situation looks hopeless. The only hope I had was of getting the T.R.A. to live on and pay my bills until I could find work.

"One of my good friends (name deleted) took his own life last week because he was despondent over being laid off and having no income. I remember him telling me we would never see that T.R.A., but I told him we would get it because it was rightfully ours.

"So I hope Gentlemen you can understand why I get this sickening feeling * * *. For who is to say there won't be more of my fellow employees take the same course of action that (name deleted) took, and that list might just include me.

"I am not trying to threaten anyone, I am just trying to impose on you the importance of this bill. I don't feel sorry for myself, whatever my fate may be, but I feel sorry for all the Congresspersons who set up there in their own little world afraid to step outside it."

"I realize this letter probably won't be read by Congress or maybe no one else, and it probably won't have any impact on the T.R.A. amendment, but it might help me just by getting it off my chest * * * "

Mr. Chairman, I have told this man about today's hearing, and I have assured him that this subcommittee is concerned about the problem he and others face. It is important that we consider the amendment carefully, but let us not lose sight of the needs of the people the adjustment assistance program was designed to help.

To: Helen Kramer
From: Leonard Page

INTER-OFFICE COMMUNICATION

Subject: Amendment of One Year Limit Under Trade Act.

February 18, 1977.

The Department of Labor has opposed extending the one year time limit between loss of employment and filing for TRA benefits on the grounds that employers may not keep the proper records longer than a year. (1) Employer records are used to determine whether there have been a significant loss of employment, and (2) a drop in production or sales related to a product squeezed

119 U.S.C. § 2273 (b) (1).

by imports. However, employers should already be maintaining both employment and production/sales records adequate for TRA purposes longer than a year.

earn

The Department of Labor's Own Wage and Hour Division require that employers keep for two years: "all basic time and earning cards or sheets of the employer on which are entered the daily starting and stopping time of individual employees, or of separate work forces, or the individual employee's amounts of work accomplished *** when those amounts determine ings or wages" and "all schedules or tables of the employer which establish the hours and days of employment of individual employees or of separate workforces." That division also requires that they keep payroll records three years.* The records kept for two years (and probably those for three) are undeniably adequate purposes of the TRA Employment Standard.

In addition, the IRS requires that employers keep for four years (after the applicable due date of the tax return) records for each employee of: "the total amount and date of each payment of remuneration * * and the period of serv

ices covered by such payment." The determinations of group certification and probably individual eligibility can accurately be made from these records. Any lingering doubt about individual eligibility can accurately be resolved at hearings by the delegated state agency, which must be done already.

If individual time cards and schedules are considered crucial, amendment of the Trade Act could still extend the time limit beyond two years merely by imposing the requisite record retention as part of the amendment.

Finally, businesses are retaining the requisite production/sales records well beyond a year. They are required to "keep such permanent books or records, including inventories, as are sufficient to establish the amount gross income" "so long as the contents thereof may become material in the administration of any internal revenue law." Prosecution for fraud may begin up to six years after a return has been filed. Thus, firms should keep the records of the sales/production of individual products underlying the bottom line of their returns at least six years.

Mr. GIBBONS. Thank you, Mr. Sharp.

As I recall in your bill last year, you had an exact date of certification that, when a significant number of workers in a firm were laid off, it sort of triggered the running of the time for application. Your new bill, as I understand it, has a 2-year cutoff date instead. Mr. STEIGER. No, 1 year.

Mr. SHARP. Mr. Chairman

Mr. GIBBONS. Go ahead.

Mr. SHARP. As a result of testimony by the Department of Labor that they felt that open-endedness might drag this out too long, we acknowledged that perhaps some kind of limit, even though it would still be arbitrary, would be of value. We felt that 18 months to 2 years was necessary.

It is very clear that some organizations simply cannot put together the data in order to prove that it was import problems that actually caused the layoff of these individuals.

Of course, really what we are correcting with this 2-year retroactivity provision is a situation which developed because of the newness of the program.

Mr. GIBBONS. Did any of the workers in your area qualify? Mr. SHARP. Yes, they did. As you can imagine, that has heightened the problem. To give you an example, at the Warner Gear

229 CFR § 516.6 (a) (1).

329 CFR § 516.6 (a) (3).

29 CFR § 516.5(a).

5 26 CFR § 31.6001-1(e) (2).

26 CFR § 31.6001-5 (a) (2).

726 CFR § 1.6001-1 (a) and (e).

826 U.S.C. § 6531.

plant certain of the individuals went to the unemployment office and asked about the program early on. They were told that no such program existed or there was no awareness of it at the local government office.

This added to the delay in making any kind of petition for eligibility. Finally, once the local workers learned elsewhere that they might be eligible, they filed their petition. It was certified that this was a proper petition, that these people had been laid off because of imports, and that they would be eligible.

Unfortunately, a whole series of employees, because of the failure to file immediately, simply are not eligible, while others in that plant are and have received benefits under the act.

Mr. GIBBONS. Did any of these workers who received adjustment assistance there get any meaningful training for other employment? Are you aware of that?

Mr. SHARP. I am sorry I am not aware of it. My general impression is that no effort was made in the area of training, that they did receive the additional compensation, but that it was pretty much up to them to seek other employment or wait until at least some of the employees were able to be hired back at the Warner Gear plant, itself.

Mr. GIBBONS. You testified last year, I think you will recall I said I was going to check on what they were doing in my own area about adjustment assistance. I did check that same day. I could not find any evidence that anybody knew very much about adjustment assistance.

I checked just as recently as yesterday, and I find the same situation.

I am really disturbed that apparently very little is being done about it. Maybe my area is unique. I have 10, 12 percent unemployment in my area. Maybe it is not caused by this particular problem, but, even if it were, I don't know how anybody would ever find out about it.

Mr. STEIGER. Do we import any oranges?

Mr. GIBBONS. We import a lot of other things through our ports down there.

Mr. SHARP. As you recall, Mr. Chairman, from the hearing last fall, the Labor Department produced a pamphlet that now is available where you can find it. I understand that it may be found now in Muncie, Ind., in the unemployment office. For a long time, it was not there, and the local employees of the office were unaware of the rules of the program. Some of them apparently were not even aware of the existence of the program.

As a result, you can understand that a man or woman on the line at the factory simply did not get the word in time and are perhaps doubly bitter over the fact that some of their fellow workers managed to receive eligibility because of some arbitrary time limit, and they could not.

Very frankly, a lot of these people had become very skeptical about our trade policy prior to this, and the failure of the Federal Government to respond to their individual needs has only heightened their opposition to the Government policy.