On October 31st, the Trade and Globalization Readjustment Act (H.R. 3920) passed in the House 264-147.  Sponsored by Representative Rangel (D-NY), Chair of the House Committee on Ways and Means, this bill seeks to expand government benefits for workers who are left jobless by foreign competition by renewing the Trade Adjustment Assistance Program, now temporarily reauthorized until Dec 31.  Incorporated in this bill is an expansion of state unemployment insurance programs, known as the Unemployment Insurance Modernization Act.  Representative Jim McDermott, who chairs the Income Security and Family Support Subcommittee of the House Ways and Means Committee, is the sponsor of this provision.The Unemployment Insurance Modernization Act provides financial incentives for states to improve unemployment insurance (UI) by implementing certain reforms that will allow more low-wage workers to qualify for benefits.

First, states are encouraged to count workers’ most recent earnings (as opposed to counting earnings in the last full quarter of employment) in calculating UI eligibility.  Workers often lose out on unemployment insurance benefits because they may not have been employed for a complete quarter before they leave their jobs.  This measure addresses the reality of sporadic employment facing many low-income workers who seek unemployment insurance and also helps more recent entrants into the labor force. If states agree to count a worker’s most recent employment, one-third of its share of incentive funds will be provided from $7 billion to be made available by the renewal of the Federal Unemployment Tax Act surtax.

The remaining two-thirds of a state’s share of incentive funds will be provided if two of the following three options are implemented: allowing UI benefits for people seeking part-time work, permitting UI for workers who voluntarily leave their jobs for compelling family reasons, and/or allowing the extension of benefits to unemployed workers in state-approved training programs related to a high-demand occupation.  The revamped UI program encourages states to be more conscious of the realities facing a growing number of workers in the low-wage labor market whose work is unstable, and for whom job loss occurs for reasons beyond their control.  Because the antiquated unemployment insurance system does not accommodate these workers in many states, only 35 percent of unemployed workers qualified for UI benefits in 2006, down from about 50 percent in the 1950s.  In providing these options, states will receive financial incentives if they choose to modernize their systems; states are not required to change their UI programs.

While relatively similar to H.R. 3920 with regard to providing assistance to workers who have lost their jobs as a result of increased imports or production shifts, the Senate version of the Trade and Globalization Readjustment Act, S. 1848, does not include the Unemployment Insurance Modernization Act.  Sponsored by Finance Chairman Max Baucus (D-MT), S. 1848 has been referred to the Senate Finance Committee.  No date has been set for markup.

While the bill has moved on to the Senate, the White House has threatened to veto.  In an attempt to overcome this threat, Senator Baucus is considering pairing the Trade and Globalization Readjustment Act with one of the pending trade agreements that President Bush seeks to implement.

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