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October 20, 2020 – A new report by EPI Director of Trade and Manufacturing Policy Research Robert Scott, data analyst Zane Mokhiber, and research assistant Daniel Perez examines the economic output and employment implications of a two-pronged strategy for rebuilding the economy around high-wage jobs and American manufacturing. The authors find that rebalancing trade by expanding exports, and expanding public investments in infrastructure, clean energy, and energy efficiency, are the keys to generating at least 6.9 million good jobs, rebuilding American manufacturing and the U.S. economy.

The essential elements of this two-pronged strategy for rebuilding the domestic economy begin by first, adopting trade and industrial policies that dramatically boost U.S. exports and eliminate the U.S. trade deficit—now roughly $850 billion—within four years. This includes measures to end the overvaluation of the U.S. dollar and rebuild the competitiveness of U.S. manufacturing industries. The second element of the strategy is a four-year, $2 trillion program of investments in infrastructure, clean energy, and energy efficiency improvements. This would include investments of $70.2 billion per year in schools and broadband, which would have substantial social benefits.

“Job losses due to growing U.S. trade deficits hit manufacturing industries particularly hard, shrinking the share of middle-class jobs available to workers without a college degree,” said Scott. “By rebalancing our currency and investing in desperately needed infrastructure upgrades, as well as clean energy alternatives, we could create millions of good jobs during the economic recovery. This program will bring jobs those who need them the most.”

The authors find that surging exports and major investment in infrastructure, clean energy, and energy efficiency would support between 6.9 and 12.9 million U.S. jobs annually by 2024. Of the 6.9 million direct and indirect jobs, 2.5 million would be manufacturing jobs and at least 471,200 would be construction jobs. Because the jobs supported would be concentrated in high-wage manufacturing (36.4% of jobs supported) and construction industries (6.8% of jobs supported), this strategy would help rebuild U.S. manufacturing and restructure the domestic economy away from low-wage service-sector work.

“Our policymakers urgently need to confront climate change and the deep recession caused by a global pandemic. One way to do this is investing a substantial part of our budget to reduce our carbon emissions while also creating good jobs,” said Mokhiber. “We don’t have to choose between a strong economy or a healthy environment—we can have both.”

These stimulus policies would support large numbers of high-wage jobs with excellent benefits, especially for non-college educated workers, in durable goods industries including nonelectrical machinery (436,700 jobs), fabricated metal products (383,700 jobs), transportation equipment (343,800 jobs), electrical equipment (302,700 jobs), and primary metals (248,000 jobs). These estimates include substantial growth in motor vehicles and parts (188,800 jobs), aerospace products (127,600 jobs), and the steel industry (69,900 new jobs).

“Good jobs would be created across the country if policymakers make such an investment a top priority,” said Perez. “In particular, many states in the Midwest would gain thousands of good paying jobs that could revitalize communities that have been left behind by outsourcing and it is it is no accident that they stand to gain the most from a manufacturing-centered economic development program.”

This plan would support jobs in all 50 states and the District of Columbia and would be concentrated in regions that have been hardest hit by globalization, such as the upper Midwest, where trade deals like NAFTA and trade imbalances with China have caused manufacturing jobs to leave the region. The top 10 states in terms of jobs supported as a share of state employment are: Wisconsin (6.16%, 181,000 jobs), North Dakota (6.07%, 24,300 jobs), Indiana (5.95%, 185,900 jobs), Iowa (5.91%, 94,500 jobs), Wyoming (5.69%, 16,700 jobs), Oklahoma (5.62%, 98,200 jobs), South Dakota (5.61%, 24,600 jobs), Michigan (5.55%, 251,200 jobs), Ohio (5.51%, 302,400 jobs), and Kentucky (5.37%, 104,100 jobs).

See related work on Trade and Globalization | Manufacturing

The Economic Policy Institute (EPI) is a nonprofit, nonpartisan think tank created in 1986 to include the needs of low- and middle-income workers in economic policy discussions. EPI believes every working person deserves a good job with fair pay, affordable health care, and retirement security.