BEYOND TRADE

The pitfalls of having separate – and much more generous – unemployment benefits for workers deemed to be out of jobs because of trade rather than, say, modernization of a plant or decreased demand for goods was highlighted last week when Maine’s senators asked for Trade Adjustment Assistance for the workers at Katahdin Paper Co.

While it is thoughtful of the senators to seek extra help for the workers in a region of the state with limited opportunity, the company made it abundantly clear that it planned to shut the Millinocket paper mill because of rising oil prices.

“It wasn’t an issue of quality or our workers or can we get the orders. It’s strictly that we can’t afford to pay so much for oil,” said company spokesman Glenn Saucier.

The mill, which is unusual in that it is 100 percent reliant on oil to produce steam, used more than 400,000 barrels of oil in 2007.

The company last week announced that it plans to close the mill on July 28, putting more than 200 employees out of work.

In a May 30 letter to Labor Secretary Elaine Chao, Sens. Olympia Snowe and Susan Collins wrote that Katahdin Paper is in a rural area, so “due to limited employment offerings in the area, these displaced workers face a challenging and daunting task in finding alternative employment.”

While this is sadly true, finding alternative employment can be daunting for anyone who loses his job. That’s why increasing all unemployment benefits, not setting aside special ones for those who may have lost their jobs because of trade, is a better approach.

Trade Adjustment Assistance was started in 1962 as a way to ease the loss of manufacturing jobs to foreign competition and to get political support for trade pacts. To qualify, the company, workers, union officials or the state Department of Labor must apply to the U.S. Department of Labor and demonstrate that the job loss was tied to moving production to a country that has a free trade agreement with the United States or because of foreign imports. The department reviews sales data and surveys customers to determine whether moving jobs offshore or foreign imports are responsible for the layoffs.

Only a small fraction of laid-off workers qualify for TAA benefits, which far exceed those available to employees who lose their jobs for other reasons. Regular unemployment benefits last for a maximum of 26 weeks. Workers who qualify for TAA can extend these benefits, including retraining, for two years. Workers over age 50 may get a wage subsidy, and additional health benefits are available.

When a worker is out of a job, it doesn’t much matter whether the factory closed because of high oil prices or because of cheaper products from other countries. So instead of being more individually generous to a small group deemed affected by trade, a better approach would be to extend general unemployment benefits, which also happen to be the most effective economic stimulus. This would help more workers and the economy in general.