Congress mulls trade safety for service sector workers

WASHINGTON (Reuters) - Legislation to help win approval of three free trade deals pending in Congress could qualify millions of U.S. service industry workers, in jobs ranging from low-level data entry clerks to high-paid financial analysts, for government aid if their jobs move overseas.

For decades, only manufacturing workers have been eligible for job retraining and extended unemployment benefits under the federal trade adjustment assistance program.

Democrats want to extend the program to the huge services sector, making it "key to everything on the trade front. I can't see the free trade agreements moving through Congress until something on TAA is done," said Greg Mastel, a senior adviser at the Akin Gump Strauss Hauer & Feld law firm.

Even then, President George W. Bush faces a big challenge to win approval of trade deals with Colombia and South Korea before he leaves office in January, although a third one with Panama could be less of a problem, Mastel said.

Each year, about 50,000 to 60,000 U.S. workers who have lost their jobs due to foreign competition enroll in the TAA program, which provides up to two years of retraining and income support at a cost of about $900 million annually.

The Congressional Budget Office estimated that a bill passed last year by the House of Representatives to allow displaced service industry and public sector workers to receive the aid would eventually expand enrollment by 80,000 per year and boost costs by about $6.2 billion over 10 years.

NO WHITE HOUSE PLAN FOR REFORM

Bush has repeatedly said he wants to work with Congress on legislation to reform the decades-old program, but threatened to veto the House bill.

One reason the White House budget office gave was the House bill did "not clearly articulate" job losses must be caused by trade for service and government workers to receive aid.

The White House also has frustrated some advocates of TAA reform by failing to put forward its own proposal.

"It would be more constructive if the administration were willing to propose their own plan rather than just oppose what Congress is proposing," said Howard Rosen, executive director of the Trade Adjustment Assistance Coalition.

Right now, the best hopes for a deal rest in talks between Senate Finance Committee Chairman Max Baucus, a Montana Democrat, and Sen. Charles Grassley, an Iowa Republican.

Like the White House, Grassley has said he wants to ensure that only service industry workers who lose their job because of trade are eligible for government aid.

Grassley also said he believed passage of a TAA reform bill would be enough to persuade House Speaker Nancy Pelosi to schedule a vote on the Colombia free trade deal, even though she took steps last month to block action on it.

20.7 MILLION 'OFFSHOREABLE' SERVICES JOBS

Over time, the number of U.S. service industry jobs that move to lower-wage countries could reach into the millions, even though a smaller percentage of service industry jobs than manufacturing jobs are considered "offshoreable."

The Congressional Research Service, in a November 2007 report, estimated that about one-fifth of U.S. services jobs -- or some 20.7 million -- could potentially be offshored.

That compared with nearly 88 percent of U.S. manufacturing jobs -- or 7.7 million -- that could be lost.

"Had displaced nonmanufacturing workers been eligible for TAA from 2003 to 2005, the number of TAA-eligible workers potentially could have more than doubled from 490,000 to 1.4 million," the report said.

Brad Jensen, an associate professor at Georgetown University's McDonough School of Business, in a recent study for the Peterson Institute for International Economics estimated 15 million to 20 million U.S. jobs were "at risk of being offshored," more than half of them in services.

Low-wage, low-skilled jobs are the most likely to be moved, and vulnerable U.S. services occupations include payroll services, marketing research and public opinion polling, drafting services, document preparation services, paralegal and legal assistants, biological and chemical technicians and some credit analysts, Jensen said in an interview.

Jobs in high-paid service sectors like movie and music recording production, securities and commodities trading, software publishing and engineering are also "tradable, and in principle, could be done at a distance," Jensen said.

But since many high-paying services job require years of education, the United States should continue to have a strong advantage in those sectors, he said.

"This country is relatively abundant in highly educated people and these high-end, high-wage service activities make intensive use of educated, skilled people," Jensen said.

For some time to come, U.S. losses in low-wage, low-skilled services jobs should be offset by growth in the number of high-wage, high-skilled service jobs, he said.

"Twenty years from now it may look a lot different" if the United States fails to produce enough high-quality high school and college graduates, he said.

(Editing by Mohammad Zargham)