President Obama's State of the Union address is expected to focus heavily on jobs and the economy this year. AAM's SOTU Translator can help sort through the buzzwords and euphemisms to understand the policy and political context behind these terms. Here’s what we’ll be watching for on Tuesday evening...
Jobs: Although America’s manufacturers hired 77,000 new workers in 2013, that annual pace is too slow to meet President Obama's goal of creating 1 million new manufacturing jobs by the end of his second term. Both House and Senate Democrats are promoting a manufacturing-first agenda that includes a range of bills designed to spur job creation in the manufacturing sector. The House’s Make it In America agenda and the Senate’sManufacturing Jobs for America agenda offer a good start, but manufacturers and workers need a bipartisan commitment to strong job growth.
National Security: A strong national defense requires a robust and diverse manufacturing sector. A 2013 report by Brigadier General John Adams, Remaking American Security, urged Washington to address vulnerabilities in America’s defense supply chain. Relying on sole-source contracts with foreign suppliers for critical inputs and equipment puts the nation’s military readiness, not to mention our fighting men and women, at risk. Maintaining and expanding Buy America preferences for military procurement is a step in the right direction, but the president should consider these security vulnerabilities a top priority for the Department of Defense.
Middle Class: For millions of Americans, manufacturing jobs provide an entry to the middle class. That’s because such jobs pay 38 percent more on average than other private sector jobs. Manufacturing also offers “spillover benefits” for the rest of the economy — in fact, it produces the highest multiplier effect of any economic sector. Unfortunately, 63,000 American factories have closed their doors since 2000, and these shuttered factories have left middle-class workers unemployed, vulnerable, and struggling to stay afloat. Documentarians are capturing this in films like The Last Truck and American Made Movie.
Skills: Reinvesting in American workers pays economic dividends by providing our industries with a competitively skilled workforce. We need to rekindle the “maker mentality” in the next generation by devoting real resources to STEM education. But giving our kids concrete skills isn’t enough. America needs clear training pathways to connect skilled workers with jobs in the manufacturing sector. Building on programs like the National Science Foundation’s Advanced Technology Education Centers and the Manufacturing Extension Partnership, we can better match training to on-the-job demands. These strategies will give both American workers and manufacturers a leg up.
Taxes:Tax reform must reward investment at home. The president and Congress should set clear goals for reform that enhance economic growth, improve the climate for our nation’s manufacturers, and create a path to long-term prosperity for America’s manufacturers and the workers they employ. We must also spur innovation through the tax code by increasing incentives for industry to invest in R&D; preserving and expanding up-front expensing for plant and equipment purchases; and reducing tax rates for manufacturing activity in America.
Innovation: The president and Congress should fully fund the National Network of Manufacturing Institutes (NNMI) to spur innovation and develop the manufacturing technologies that will take center stage in the 21st Century. Building on the success of ‘America Makes’ — the first NNMI hub in Youngstown, Ohio — President Obama announced the second NNMI in Raleigh, North Carolina, just this month. This collaboration between academia, industry, and government will focus on innovating the next generation of power electronics and semiconductors so that they can eliminate up to 90 percent of power losses in electricity conversion.
Trade: First and foremost, the Administration must keep America’s trade laws strong and strictly enforced. But the current laws aren’t strong enough. We should make them better. The president and Congress should pass legislation (H.R.1276 and S.1114) to give U.S. companies and workers direct relief from the currency manipulation practiced by our trading partners. With the right tools, manufacturers and workers can hold trade cheats accountable. As the Administration works to double American exports, they must also combat subsidized imports that contributed to the $741 billion U.S. trade deficit in 2012, almost half of which ($315 billion) of which was due to unbalanced trade with China. Tackling these thorny trade issues will help make trade work for the American people.
Infrastructure: With our budget crises hopefully in the rear view mirror, it is time to refocus the federal government on rebuilding and replacing our crumbling infrastructure, including the nation’s 70,000 failing bridges. Not only will this investment lead to domestic job creation, but it will lay the foundation for a stronger 21st century economy. Key to this is funding for a large-scale, long-term infrastructure program, starting with reauthorization of MAP-21 through strong Buy America preferences to ensure tax dollars are reinvested in our own economy. This sustained, assured funding is vital to attracting new plant investment and to building reliable supply chains throughout the nation.
Keep It Made in America: Manufacturing rates very highly in polling, and it is heartening to see politicians talk about the value of manufacturing in our national economy. But revitalizing American manufacturing is about more than rhetoric. We need a national manufacturing strategy that focuses on the real goal: creating more good-paying, skilled jobs. Without a robust and diverse manufacturing base, the United States risks becoming an economic island, relying too much on the retail and finance sectors for illusory growth.
Competitiveness: America consistently enjoys the most efficient producers in the world, while boasting the most productive steel plants and the highest number of patents and inventions of any nation. Preparing our workforce and our businesses to compete in a global economy is an ongoing challenge. We must invest in STEM education, challenge our younger workers to become interested in making things again, and reinforce the link between innovation and production here at home.