The State of Federal Economic Adjustment Assistance

Much of the most important work we do in economic development is about what government agencies call economic adjustment, i.e. helping workers, businesses, and communities affected by an economic shock, such as a plant closing or a wider economic downturn.  In the US, we pay lip service to supporting economic adjustment, but we don’t really deploy real money to support this important mission.  That’s my take-away from a new Government Accountability Office (GAO) inventory of Federal economic adjustment assistance programs.  This inventory is the first piece of a larger analysis of these programs requested by Senators Coons (D-DE) and Moore Capito (R-WV).  GAO researchers are always impartial and non-partisan, so the inventory offers a straight-up inventory with little editorial comment.  It identifies 15 federal programs and one tax expenditure program that support economic adjustment.  Examples include trade adjustment assistance for businesses and workers, the Pentagon’s Office of Economic Adjustment, and the POWER program focused on helping coal-impacted communities.  These are all excellent programs, and I’ve consulted for many of them.   This well-meaning and comprehensive inventory does not note (but I will) that these efforts are woefully underfunded.  My calculations suggest that total federal spending on these programs (FY 2017) was about $1.78 billion, with more than half of the funds devoted to worker retraining at the Department of Labor (WIOA Dislocated Worker Block Grants to States).  This may sound like a big number, but it is tiny in relation to the needs of laid-off workers, their families, and distressed communities.  Recent research from the OECD and others suggests that the US needs to step up its game in terms of helping displaced workers deal with job loss, and gain new skills to re-enter the workforce.   I hope this work from GAO can help stimulate more discussion on this important topic.