Federal Trade Readjustment Allowance Definition

What Was the Federal Trade Readjustment Allowance?

The federal trade readjustment allowance was a form of supplemental unemployment income. The federal trade readjustment allowance was a provision of the Trade Adjustment Assistance (TAA) program, which was established under the Trade Act of 1974. It provided income to individuals who lost their jobs because of foreign trade/imports and after they exhausted their state unemployment compensation. Workers with reduced hours because of increased imports also qualified. The TAA expired in July 2022.

How the Federal Trade Readjustment Allowance Worked

Congress passed the Trade Act of 1974 in January 1975. The goal was to expand the United States' participation in international trade. It also provided ways to resolve trade wars and disputes. It paved the road to either reduce or completely eliminate barriers to trade along with developing trade relations with other countries.

An important part of the Act was the focus on American workers. This included provisions to help those whose livelihoods were affected by international trade. The Act established the Trade Adjustment Assistance program by offering supplemental income for those who either lost their jobs or whose hours dropped because of an increase in foreign imports and whose unemployment benefits finished. This income was referred to as the federal trade readjustment allowance.

The qualifications for the federal trade readjustment allowance were as follows:

• Individuals were required to be covered by a certification
• Individuals were separated within the certification period
• Individuals met the minimum requirements for wages and employment
• Individuals qualified for state unemployment insurance (UI)
• Individuals exhausted their UI benefits
• Individuals met the extended benefits work test
• Individuals took part in TAA training (enrollment must take place within 26 weeks of certification or the most recent separation with certification)

Federal trade readjustment allowance benefit amounts were the same as a worker's first unemployment benefit. The eligibility period for benefits depended on the type of allowance, which included basic, additional, and completion.

As noted above, Congress terminated the TAA on June 30, 2022. As such, the federal trade readjustment allowance program was discontinued. The move affected more than 100,000 workers on an annual basis. Individuals who lost their jobs due to foreign imports after the program's expiration date are no longer eligible for benefits.

Special Considerations

In order to file a TRA claim, an affected person was required to first obtain a petition to apply. This petition was first filed through the state unemployment agency, then with the U.S. Department of Labor (DOL) for approval. The DOL would determine whether the petitioner's job loss was due to foreign imports and trade. If the DOL approved and certified the petition, the affected worker was then entitled to file a claim under the TAA program.

Types of Federal Trade Readjustment Allowances

The federal trade readjustment allowance came in three different forms: basic, additional, and completion. Each had its own qualifications and paid benefits on a different timeline. Some of the most important details of each are listed below.

Basic TRA

Basic TRA requires no-cost skills or job training from a TAA-approved provider unless a worker obtained a training waiver. Waivers were granted if the affected individual was unable to participate in or complete training for health reasons or if there was no available training program nearby.

This form of financial support was computed as one's weekly unemployment benefit amount received from the worker's state multiplied by 52 weeks, minus the total amount of UI already received. Thus, Basic TRA payments were not available to people who has already received a full year of unemployment.

Additional TRA

The additional TRA gave individuals assistance to complete a TAA training program. This type of benefit kicked in after any Basic TRA benefits were exhausted and the worker required ongoing financial assistance.

This benefit provided workers with up to 65 more weeks of benefits as long as they were enrolled in ongoing training. This maximum amount was payable within a 78-week eligibility period.

Completion TRA

Completion TRA provided an additional 13 weeks of benefits if the Additional TRA benefits were exhausted and the affected individual still required assistance. Benefits were payable during a 20-week eligibility period.

Eligibility was conditional on continued enrollment in training and meeting certain benchmarks resulting from those training programs.

Example of Federal Trade Readjustment Allowance

Steel became a central focus of international trade news when President Donald Trump introduced tariffs on imported steel in March 2018. The motivation behind the move was a campaign promise Trump made during the 2016 election to protect American steelworkers.

As much as 31.5 million net tons of steel was imported in 2021, according to the American Iron and Steel Institute, which reported data from the U.S. Census Bureau. That's an increase of 43% from the previous year. Reports indicate that job losses in the steel industry were in the neighborhood of 140,000 as a result of closures due to imports.

Having said that, if a steelworker was laid off prior to the cancellation of the TAA and was unable to find work within the window of standard UI coverage, they may have been entitled to a TRA benefit if it is determined that cheap steel imports directly resulted in the loss of their job.