For the past two years, tech workers who lost their jobs because of offshore outsourcing could get federal benefits to help with education, healthcare and even relocation costs. But the benefits will disappear next month unless Congress extends them.
The benefits came through an expansion of the Trade Adjustment Assistance (TAA) program, created in the 1960s to help manufacturing workers displaced by foreign competition. When offshoring began to hit IT, tech workers wanted these same benefits, but were often denied them because software isn’t viewed as a tangible good by the U.S. government.
But in 2009, as part of the stimulus bill, Congress changed the TAA program to make laid-off tech workers broadly eligible for benefits . Some 155,000 people who might have otherwise been ineligible for benefits have received them since that change was enacted, according to the Labor Department.
The expanded TAA benefits were due to expire at the end of 2010, but in December Congress extended them for six weeks, through Feb. 12. After that date, and absent Congressional action, the TAA program will revert to the rules in effect before the 2009 changes.
The potential loss of TAA benefits for tech workers may renew what has been a long battle. Among its veterans is James Fusco, a former IBM mainframe programmer who was laid off in 2002 and ultimately challenged the fairness of the TAA program in court.
Fusco says that if Congress doesn’t extend the law, “we’re back in the same boat we were in prior to the stimulus package, and each person in a company affected (by offshore outsourcing ) is going to be on their own.”
Fusco’s lawsuit didn’t change the law, but it prompted the Justice Department to extend benefits for some IBM workers. It was a partial victory that had little affect on him because of another job opportunity.
But the core issue remains: Should laid-off tech workers be treated differently from manufacturing workers? Not in Fusco’s view. “In either case, you had a source of income, a source of livelihood, that is suddenly gone due to foreign competition,” he said.
The Labor Department says that if the expanded TAA program isn’t renewed, the states, which distribute the funds, will lose about $267 million next year.
“There’s a consensus from all observers that trade and offshoring displaces American workers,” said Ron Hira, an associate professor of public policy at the Rochester Institute of Technology. “Every standard economics textbook explains this fact of trade. Given the meteoric rise of services trade and outsourcing, there is simply no defensible reason why TAA should be limited to workers who make physical products.”
Under the expansion approved in 2009, TAA provides a number of financial benefits, including help for college; up to $1,500 in job search allowances; a relocation lump sum payment of up to $1,500; and a tax credit covering 80% of eligible health insurance premiums. Older works above age 50 who obtain new full-time employment at wages of less than $50,000, can receive a wage subsidy of 50% of the difference between the old and new wages up to $10,000 over a period of two years.
If service workers are again excluded, IT workers could launch new challenges over the program’s fairness — but they may face a difficult task. Workers who are laid off need the cooperation of the former employer to get benefits, and if the government rejects the initial application a lengthy review process may ensue.
In late 2003, for instance, laid-off BMC Software Inc. employees sought TAA benefits that were initially denied . Federal officials said “a software product must be tangible, fungible, and widely marketed. ” But after finding that BMC had mass replicated software on CDs, the government said it was an “article” under the law. It took the government a year to consider this case.
In 2006, Computer Science Corp. workers were also denied TAA benefits, but the government later relented after deciding that software “if embodied in a physical medium” is an article under the law.
The fate of the TAA expansion in Congress is uncertain. In its final actions last year, Congress might have rejected extending general unemployment benefits had it not been for a larger tax deal negotiated by President Obama and Republicans in Congress. A potential source of funding for expanded TAA benefits, the additional $2,000 H-1B fee applied to offshore companies, is being used to pay for border security and healthcare benefits for 9/11 rescue workers.
About 85% of American workers are in the services sectors “so denying them the assistance they need, especially during this grueling jobs crisis, is a morally bankrupt position,” Hira said. “IT workers are even more concentrated in the services sector. The fact that the extension of TAA benefits for services workers is not permanent, given the current state of offshoring of a wide variety of services jobs, is a perfect indication of just how disingenuous the offshoring cheerleaders are and how little influence that American workers have over policymaking.”