In Short:

“By prioritizing robust reforms to our existing unemployment and workforce systems that benefit all workers — not just those who can prove that their jobs were eliminated due to AI — Congress can help the U.S. workforce retool without repeating the mistakes of TAA.”

Abstract

As the power of generative AI tools has increased, concerns have intensified about the technology causing mass labor market disruptions. Although AI is likely not an important factor driving recent labor market deterioration, it could increasingly contribute to labor turnover over time.  We need to be ready for this possibility. While improving the nuts-and-bolts functions of our unemployment insurance system is critical to help minimize the negative impacts of AI-driven job displacement, monetary benefits alone may be insufficient. Direct job search support could be a more cost-effective way to help workers shift from declining sectors into the industries of the future.

The United States has been down this road before. Concerns about American workers who would be hurt by global trade deals led to the establishment of Trade Adjustment Assistance (TAA) in 1962. TAA was intended to assist workers whose jobs were eliminated due to increased imports or the relocation of manufacturing facilities overseas. Workers whose application for TAA was approved could receive job training and enhanced unemployment benefits. 

But TAA fell short of expectations. Persistent eligibility barriers, administrative complexity, and inadequate funding limited the program’s reach and success. After decades of mixed results, Congress allowed TAA to expire in 2022. TAA’s demise has made it all the more important to assess what went wrong with the program, and what lessons TAA offers for future worker adjustment efforts in an era of rapid technological change. This reexamination is already underway. As Senator Mark Kelly argued in his recent AI for America policy framework, “Past approaches to major disruptions, like Trade Adjustment Assistance (TAA), too often failed workers and were underfunded, underscoring the need to rethink and build a system that is more proactive, worker-focused, and responsive to the realities of technological change.”

At the same time, policymakers should be careful not to overcorrect. Benefit inaccessibility should not be mistaken for benefit ineffectiveness. Recent research indicates that the workers able to overcome program barriers greatly benefited from TAA, and that the value of TAA support often exceeded the value provided by other workforce development programs. Legislative efforts that avoid TAA’s major weaknesses and account for its strengths will produce the best results.

About the author

Alex Mechanick

Professor, School of Government and Policy

Alex Mechanick researches problems that sit at the intersection of economics, law, and public policy. His recent work has focused on reforming administrative procedure, benefit-cost analysis, and the structure of the executive branch.