By Madeline Janis
This column originally appeared in Forbes.
The COVID-19 pandemic has laid bare the failure of decades of US industrial practice dictated by corporations. Corporate cost-cutting measures like skimping on inventory and offshoring production have left the country’s supply chain ill-equipped to meet the needs of the public in a time of crisis, leading to shortages of essential goods like paper towels and auto parts. The Trump Administration’s tax cuts to unaccountable corporations have undercut US manufacturing and workers even further. But the post-COVID economic recovery process offers a critical opportunity to reinvigorate the industry and create millions of new industrial jobs.
Though US manufacturing hit a more than 70-year low in terms of percentage of GDP in 2019, the industry still comprised more than 11 percent of total GDP in 2018 — or more than $2.3 trillion. And 20 percent of all purchases of manufactured goods in the U.S. are made by public agencies — with our tax dollars. That kind of spending presents an enormous opportunity for the public sector to generate high-quality manufacturing jobs.
What if we decided that most of the things public agencies buy — from parts for buses and bridges to masks — would be made in the US? It’s not out of reach, and what a difference it would make for our recovery and for the long-term health of our economy and communities.
The federal government’s existing tools for promoting US manufacturing through public procurement — including the Buy America program — present a good starting point for supporting industrial jobs in the US, but they are still far too weak and limited in scope. Though they require that a part of the manufacturing process take place in the U.S., the guidelines for these programs don’t say anything about the type or quality of jobs that companies should create. Research has also shown that the Buy America program creates far fewer jobs than its guidelines intend due to loopholes and lax enforcement of the rules. A 2015 report from the Political Economy Research Institute found that though the program technically required that 60 percent of railcar parts purchased with federal dollars be produced in the US at the time, in practice, only 40 percent of parts paid for through the program actually got made here. (Buy America has since raised the US production requirement to 70 percent.) Local governments and federal agencies also tend to award production contracts to the company offering the lowest price tag, bypassing bids that may cost more on the front end but that ultimately provide more jobs and more value.
Cities, states, and the federal government can promote US job creation by instead taking a “best-value” approach to procurement that incorporates an assessment of the employment and other economic impacts of a proposal beyond cost. The US Employment Plan (USEP) — a policy tool developed by a group of experts, including my organization Jobs to Move America, during the Obama-Biden Administration and approved for usenationally by the U.S. Department of Transportation in 2016 — is one such approach. The USEP is an innovative scoring framework that gives extra points to companies bidding on public procurement contracts for manufactured goods if they create jobs in the U.S., with higher wages and benefits and a greater commitment to recruiting employees from historically marginalized groups — people of color, women, formerly incarcerated people, and other groups that have also been disproportionately impacted by job loss during the pandemic. The USEP has already been implemented successfully in cities including Los Angeles and Chicago.
In his Build Back Better plan, Democratic presidential nominee Joe Biden makes a number of solid proposals for bolstering US industry, including reversing the Trump Administration’s corporate tax cuts and spending an additional $400 billion on purchasing products made in the US. But we can still do more. If expanded to federal agencies beyond the DOT — something a Biden administration should strongly consider if elected — a revamped Buy America framework paired with the adoption of the US Employment Plan at the federal, state, and local levels could go a long way toward boosting the manufacturing industry and creating millions of good jobs just when US workers need them most.
Merely increasing government spending isn’t enough. Maximizing the return on investment of our public spending is critical both for our post-pandemic economy recovery and the long-term health of our economy and communities.
Manufacturing is an industry ripe for this kind of approach to public procurement. Decades of deindustrialization and offshoring have set the stage for corporations to play states and cities against each other, forcing competition over who will offer them the biggest subsidy and least regulation to bring ever lower-quality and lower-paying jobs to their jurisdiction. The fierce competition over where AmazonAMZN+1.7% — a company notorious for exploiting its workers — would base its new headquarters in 2018 is one recent, high-profile example.
Rather than settle for less, states and cities should use the power of our public funds to ensure that the manufactured equipment that is purchased with tax dollars is made in the U.S., and that the companies we do business with create quality jobs for people impacted by systemic racism and other barriers to employment. Revamping and expanding Buy America and using the US Employment Plan to purchase everything from buses and solar panels to masks will create millions of good jobs and bolster our economy over the long run.
There’s no better time to rebuild US manufacturing than now. We can’t afford to miss the crucial opportunity to do it.
Image: Spencer Davis/Unsplash