Outlook on Jobs for America
Second Quarter 2010
MANUFACTURING INSIGHTS |
The nation’s unemployment rate continues to hover around the 10 percent mark and many industrial sectors of the economy are still experiencing difficulties recovering from the most serious downturn since the depression
A new analysis commissioned by the National Association of Manufacturers (NAM) assesses the effects of the recession on the nation, the manufacturing sector and our ability to recover in the face of fierce global competition. The analysis makes a powerful case that manufacturing can lead the U.S. into a renewed era of growth – if Congress enacts policies to promote U.S. competitiveness.
A report published by the non-partisan Milken Institute entitled Jobs for America: Investments and policies for economic growth and competitiveness is an in depth analysis that links the strength of the U.S. economy to the strength of its manufacturing sector. The report looks at policies and investments that can be made to create jobs immediately and grow our economy in both the short-term and in the years to come.
The reports great strength is its serious, substantive and detailed economic analysis. The authors demonstrate the critical need to reduce corporate tax rates, establish a permanent R&D tax credit, make major investments in energy and transportation infrastructure, and modernize the U.S. system of export controls.
As manufacturers, we commissioned the analysis to assess the effects of the recession on the nation and the manufacturing sector and our ability to recover in the face of fierce global competition. As the executive summary states, the severe downturn has left substantial underutilized resources in labor and product markets, and the U.S. must accelerate its economic growth in response.
The report makes note that unless sustainable growth is achieved, the unemployment rate will remain close to 10 percent in the immediate future and a portion of the nation’s manufacturing will continue to sit idle. The lack of sustainable growth could lead to an even further deterioration of our economy.
Economic and tax policy changes, combined with targeted investments in infrastructure, could effectively stimulate the economy in the near term while positioning the nation for sustained higher economic growth over the medium and long term.
The report attaches numbers to the policy prescriptions. The figures are striking:
Reducing the U.S. corporate income tax to match the average of other industrial countries (OECD nations) would trigger new growth. By 2019, it could boost real GDP by $375.5 billion and create an additional 350,000 manufacturing jobs – total employment rising by 2.1 million.
A permanent R&D tax credit, increased by 25 percent, could boost real GDP by $206 billion (1.2 percent) and generate 316,000 manufacturing jobs.
Modernizing U.S. export controls could increase exports in high-value areas, enhancing real GDP by $64 billion by 2019 and creating 160,000 manufacturing jobs.
A separate section of the report also demonstrates the major economic impact that would result from investments in 10 areas of infrastructure – highways, waterways and aviation (NextGen), broadband and the smart grid, and such sectors such as nuclear energy, renewable, onshore and offshore oil and natural gas, and clean coal technology.
The proposed investments amount to $425.6 billion, creating 3.4 million construction- and R&D-related jobs. Accounting for ripple effects across other sectors, the total impact would add up to more than 10 million jobs. The impact on long-term competitiveness is just as critical.
The authors write: “Many innovations have either been created or facilitated through infrastructure investment, both in the public and private sectors. Although the construction jobs created by infrastructure investment are typically only short-term, the new opportunities and economic activity fueled by infrastructure investment continue for years, if not decades, after the projects are completed.”
The Milken Institute’s report also reinforces the findings of another recent and important analysis commissioned by the NAM and its Council of Manufacturing Associations, “Manufacturing Resurgence – A Must for U.S. Prosperity.” Written by economists Joel Popkin and Kathryn Kobe, that report also substantiated the value of reducing the corporate income tax and making the R&D tax credit permanent, among other findings (it is available at www.nam.org/popkinreport).
We strongly recommend you review the “Jobs for America” report since it applies not just to U.S. manufacturing generally, but more specifically to your industry and company. With its in-depth analysis of jobs and GDP, it should prove an effective resource for your discussions of manufacturing with employees, the media and elected officials.
Jobs for America: Investments and policies for economic growth and competitiveness is truly a pro growth agenda that we can all use in our efforts in advocating for manufacturers. We need to make sure all the investments not only being made by ourselves but those by the government will make our nation stronger as a competitor in the global marketplace.