The Trade Adjustment Assistance (TAA) program was established in 1974 to "assist individuals, who became unemployed [or earnings were reduced] as a result of increased imports, return to suitable employment." A companion program, the North American Free Trade Agreement - Transitional Adjustment Assistance (NAFTA-TAA) program, followed in 1993, to help those who had lost their jobs, or whose wages were reduced as a result of trade with Canada or Mexico.

We reviewed the TAA and NAFTA-TAA programs' (hereafter, collectively referred to as the Trade programs) Fiscal Year (FY) 1999 activities and evaluated the programs' performance by examining some 724 program participants' experiences in 16 states.

While Most Program Participants Found Jobs, Fewer Obtianed Suitable Employment

We estimate that 72⁽¹⁾ percent of program participants found jobs when they left the Trade programs, while 34 percent found jobs that paid enough to satisfy the Trade programs' objective of helping participants find "suitable employment."

Less Than One in FOur Participants Obtained Program-Assisted Suitable Employment

About 22 percent of participants found suitable jobs in which participants either credited the Trade programs with helping them find work or we determined the participants found training-related jobs.

Participants did not find suitable employment for a variety of reasons, and many were outside of the service providers' control. However, we believe greater emphasis on employment outcomes, post-program followup, and program evaluation could have produced better program results.

Front-End Program Activities Were Emphasized, Not Program Outcomes

Suitable employment has long been a goal of the Trade programs. However, participant outcomes have received inadequate emphasis, for a variety of reasons. There is no relationship between participants' employment outcomes and the Trade programs' funding. The legislation bases allocations on workload -- petitions for trade assistance and workers affected by the events -- not outcomes.

For many years, other DOL employment and training programs have required post-program followup and have integrated performance measures into the programs' design. In contrast, the Trade programs only recently established participant followup requirements and a system to capture post-program participant outcomes.

Program managers had little familiarity with measuring program outcomes or appreciation for using them as tools to gauge the programs' effectiveness. Efforts spent in identifying and reporting participant outcomes were often viewed as bothersome accommodations to Federal program requirements. Information that was entered into reporting systems was often inaccurate, little energy was used in determining the status of participants, and local Trade programs' activities were seldom monitored.

Training Was Moderately Successful

Overall, 9 of 10 participants received training through the Trade programs. This is a sharp increase compared to information in a past OIG program audit that indicated nearly one-half of program participants received no training.⁽²⁾

Generally, participants' training needs were assessed; however, participants who completed training enjoyed moderately better success in finding employment than their peers. We found 77 percent of participants who completed their training found jobs, compared to 68 percent of participants who received some training, but did not complete their curriculums. We also found that 37 percent of participants who completed training obtained suitable employment, compared to 29 percent who did not.

A past OIG concern has been the indiscriminate use of waivers that excused participants from training. We found the training waivers were appropriately granted and sustained during FY 1999. The absence of waiver provisions in the NAFTA-TAA program, coupled with better oversight of TAA program waivers, have greatly reduced this once troublesome concern. We also found coordination between the Trade programs and other training programs was generally effective and benefited participants.

Program Data Were Unreliable

ETA first attempted to capture participant outcomes and measure program success against a performance goal in FY 1999. The reporting system used by the states to capture data on participants that had terminated from the program was unreliable. The system was often ignored or neglected by the states.

One in five participants in our sample was not reported in the correct period. Data reported in the system were often incomplete or inaccurate. For example, less than 4 of 10 participants in our sample found employment according to the reporting system. However, we found 7 of 10 sampled participants had obtained jobs. Consequently, the reporting system was not a useful tool in managing or evaluating the Trade programs.

Causes for the ineffective reporting included implementation problems at both the system contractor and the state levels, lack of emphasis on participant outcomes, and inconsistencies in how and when data should be entered into the system.

In FY 2000, ETA expanded performance goals to include measurement of participants' employment earnings after program completion. In March 2001, ETA also implemented a new reporting system that includes participant placement and wage replacement goals. The new reporting system, which uses Unemployment Insurance (UI) wage data to confirm participants' employment and earnings, should reduce past difficulties in obtaining participant data.

Conclusion

Some 27 years after TAA's enactment, improved reporting systems offer the promise of accurate data on how participants fared, with which the Trade programs' effectiveness can be measured and used to oversee program operations. However, ETA's success will depend upon whether accurate data can be gathered by the programs' reporting system with which to measure performance. Success will also require ETA's and the states' commitment to recognize performance measurement as a management tool, and use outcome measures to help direct the program activities.

Recommendations

To improve the Trade programs' effectiveness, we recommend the Assistant Secretary for Employment and Training ensure:

• Employment goals are passed to the local levels where training and services are actually provided, so that suitable outcomes are understood and pursued.
• Clear, uniform procedures are applied that allow consistent determinations of participants' program termination dates and are linked to cessation of services or to known participant outcomes.
• States' trade adjustment activities are an integral part of their program evaluation and monitoring systems.
• Participant data in the new TAA reporting system are adequately monitored by ETA and the states to ensure it is accurate and complete.

ETA's Response

The response indicates ETA is encouraged with many of this audit's findings, particularly improvements in program performance that have occurred since our 1993 audit. However, ETA disagreed with our application of an 80 percent wage replacement standard in determining the programs' success in helping participants find reemployment.

ETA indicates the wage replacement goal is only one of several factors used to determine if a participant's training should be approved and is not a goal of the Trade Act programs that is anticipated for each participant. ETA's recently adopted 80 percent wage replacement goal is calculated by using an average of program participants' earnings, which the response credits as being a better measure of the programs' performance.

Concerning monitoring and the accuracy of program data, ETA reports it will implement a newly developed Trade Act program review guide in 2002, which will include collection of data on the degree to which the Trade Act programs are monitored. ETA also indicated it is bringing data storage in-house to its national office and implementing a new initiative to evaluate reporting inaccuracies.

Our Evaluation

ETA voiced nearly identical objections to our use of an 80 percent wage standard in its response to our 1993 audit report. However, we believe ETA's arguments are inconsistent with its having recently established wage replacement standards. We continue to believe helping participants obtain suitable employment is an appropriate expectation in serving an individual participant's needs as well as measuring the Trade programs' success.

We are encouraged by ETA's initiative to improve the accuracy of program data. However, many of the inaccuracies we identified were caused by omission of data, which are less susceptible to being discovered through edit checks of information that has been entered into a database. Ensuring data are complete will require much improved monitoring of activities at local points of entry.

² "Trade Adjustment Assistance Program, Audit of Program Outcomes in Nine Selected States," DOL, OIG, Report Number 05-93-008-03-330, dated September 30, 1993

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