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The extraordinary impact of unemployment levels unprecedented
since the Great Depression is arguably the most dire domestic crisis facing
the American people. In this edition, we begin a multi-week examination
of a dilemma that has eluded all attempts at resolution by the current
administration. We begin with a recitation of the statistics that reveal the
extraordinary extent of the problem.
The Statistics
The current unemployment
rate is 8.1%. Factcheck.org notes that when public sector jobs are
included in the total, America has experienced a net decrease of 316,000 jobs
since President Obama's inauguration.
At the start of the Obama administration, unemployment was
7.8%. Despite vast sums spent on President's stimulus package, it has
never been below 8% during his administration. This year, the rate reached
8.1% in April, but rose again to 8.3 before returning to 8.1 in August. Most
analysts believe the only reason it dipped back to 8.1 from almost 8.3 was
because the unemployed gave up looking.
The percentage of Americans working or actively looking for
work has descended to 63.5%, the worst number since 1981.
The number of Americans working part time because they couldn't
find full time positions rose to 9.3 million from 8.8 million. This means the
total underemployment rate, including both the unemployed, the forced part
timers, and those who have given up, is to 16.5, an increase from 16.2% the
prior month, according to a USA Today study.
Most worrisome, the number of long term unemployed (those
jobless for 27 weeks or more) is 5 million, or 40% of the unemployed.
Both the civilian labor force (154.6 million) and the labor force
participation rate (63.9%) declined in August. the employment-population
ratio is 58.3%. There are 844,000 "discouraged workers"--
those who have given up looking.
Job growth has gotten worse in 2012, averaging 139,000 per
month compared to 153,000 in 2011. Much of the very limited growth was
in low paying jobs such as leisure and food. Manufacturing edged down
in August. Average hourly earnings went down 0.1%, and "real
average hourly earnings" fell 0.7% in August, according to the Bureau of
Labor Statistics. 12.5 million workers remain idled,
according to the National
Conference of State Legislators.
As this report went to press, the number of jobless claims held
near two month highs and the 4 week moving average for new claims rose by
2,000 to 377,750, according to a CNBC study. It was the fifth consecutive
weekly increase. The rate of growth in jobs went down in the latest
report. Altogether, numbers this bad haven't been seen since the Great
Depression.
Well-paid manufacturing jobs declined 15,000, the first decline
since September of last year, according to a Yahoo!finance report.
Average weeks unemployed rose to 39.2 from 38.8. The
meager reduction in the unemployment rate "is not so much in jobs
created, but instead people dropping out of the labor force" according
to Hamilton
Place Strategies.
The Economy
Writing in the Wall Street journal, Mortimer Zuckerman notes that average wage increases have
dropped to 1.6%, the lowest in the past 30 years. He also expressed
concerns that of the paltry number of private sector jobs available, 40% are
in low paying categories. Zuckerman believes that we are experiencing a
modern-day depression. California's Democrat Rep. Henry Waxman, as quoted in Beltway
Confidential, also calls the
current economic climate a depression. Josh Mitchell, also writing in WSJ, notes that the median annual household
income fell in 18 states in 2011 from a year earlier after adjusting for
inflation.
The economy is not growing fast enough to produce adequate
number of jobs. From April-June, job creation rose only 1.7%, down from
2% in Jan.-March and way down from 4.1 in the final quarter of last year,
according toHuffingtonpost.
According to Sentier Reserch, the median household income in August fell 1.1% to
$50,678. "The August decline in real median annual household
income is indicative of a struggling economy. Even though we are technically
in an economic recovery, real median annual household income is having a
difficult time maintaining its present level, much less "recovering."
While real income may have declined, costs went up. The CPI
rose 0.6% in August, gas index rises 9.0%, according to the Bureau of
Labor Statistics.
The Associated
Press reports that, home
ownership has dropped to 64.6%, the worst level in over ten years. 14.9
million, or 13% of all American households, received food stamps-the highest
level ever. The official poverty rate is a record 15%, 46.2 million
people.
Despite an extraordinary $787 billion spent in
"stimulus" spending, the economy has not only stagnated but
actually gotten worse in many areas.
According to William C. Dudley, President and Chief Executive
Officer of the Federal reserve Bank of New York:
"The
performance of the U.S. economy since the end of the recession in 2009 has
been disappointing. Real GDP has grown at an annual rate of just over 2
% over this period, and it was even slower in the first half of 2012.
As a result...unemployment remains above 8 percent-an unacceptably high
level-and participation in the jobs market remains depressed. Moreover,
about 5 million workers have been unemployed for six months or more.
This is important because long term unemployment can cause job skills to
atrophy making it more difficult for such people to find jobs in the
future. While the good news is that the job-finding rates of the
long-term unemployed have not deteriorated as many feared, we ought not to
take this for granted going forward."
Over three years after the technical end of the recession, the
share of Americans working continues at near-depression levels.
The US Commerce Department reports that:
New orders for manufactured durable goods in August 2012
decreased 13.2 percent to $198.5 billion.
Excluding transportation, new orders fell 1.6 percent. Overall
shipments fell 3.0 percent. Capital goods shipments declined 1.7 percent.
Unfilled orders fell 1.7 percent. And inventories grew 0.6 percent in August. This is the largest decrease since January 2009.
Excluding transportation, new orders decreased 1.6
percent. Excluding defense, new orders decreased 12.4 percent.
Shipments of manufactured durable goods in August, down two of
the last three months, decreased $6.8 billion or 3.0 percent to $222.5
billion. This was also the largest decrease since January 2009 and
followed a 1.9 percent July increase.
Transportation equipment, down two of the last three months,
had the largest decrease, $5.5 billion or 7.9 percent to $63.9 billion.
Unfilled orders for manufactured durable goods in August decreased
$16.9 billion or 1.7 percent to $978.7 billion. This was the largest
decrease since December 2009. Transportation equipment had the largest
decrease, $12.0 billion or 2.1 percent to $568.6 billion.
Non-defense new orders for capital goods in
August decreased $18.5 billion or 24.3 percent to $57.7 billion.
Shipments decreased $1.2 billion or 1.7 percent to $69.5 billion.
Unfilled orders decreased $11.9 billion or 2.0 percent to $580.5
billion. Inventories increased $1.5 billion or 0.9 percent to $171.9
billion.
Defense new orders for capital goods in August decreased $4.1
billion or 40.1 percent to $6.1 billion. Shipments decreased $0.1
billion or 1.7 percent to $8.1 billion.
Summary of the statistical overview
The indications are clear. The current state of the
economy is too weak to support real job growth. Issues such as the failed
stimulus program, uncontrolled deficit spending, excess regulations, the
highest corporate taxes in the developed world, uncertainty over personal
taxes, excess regulations, a partisan NLRB, international trade practices and
defense spending reductions are all taking a serious toll on the American
economy. We'll review those issues as this series continues.
|
And Nothing But The Truth
Thursday, October 4, 2012
AMERICA'S UNEMPLOYMENT CRISIS: A SURVEY OF THE ISSUES AND STATISTICS
America's Manufacturing Crisis
An Industry At Risk
"The nation's historic
leadership in manufacturing...is at risk. Manufacturing as a share of
national income has declined, as has manufacturing employment, and our
leadership in producing and exporting manufactured goods is in question."
The President's Council of Advisors on Science
and Technology's June 2011 "Report to the President on Ensuring American
Leadership in Advanced Manufacturing" (Leadership Report.) It has been
largely ignored by the White House.
A SHRINKING QUARTER
American manufacturing has shrunk for the third
straight month, the worst contraction since July 2009. Key indicators
such as new orders, production, backlogged orders, and employment contracted,
according to the Institute for Supply
Management (ISM). The weakest production
index (47.2, down from 51.3 in July) since May 2009, a weak new orders measure
(47.1, down from 48 in July) and the lowest employment measure since November
2009 (51.6, down from 52 in July) have been reported.
The only bright spots for this industry, (which accounts for about
11% of the U.S. GDP according to a Brookings Institute study, Why Does
Manufacturing Matter) came from pent-up
demands on items that consumers could no longer reasonably wait to replace, such
as autos.
The dilemma that this produces for the depressed U.S. economy is of
extraordinary importance. According to the Federal Council on
Competitiveness December 2011 report, Make: An American Manufacturing
Movement:
"U.S. manufacturing is more important than ever,
employing more than 11 million Americans directly, and creating close to 7
million additional jobs in related industries. Manufacturers contributed
$1.7 trillion to the U.S. economy in 2010. Manufacturing also boasts the
highest multiplier effect among economic sectors, pays higher wages and drives
innovation. Manufacturing accounts for nearly 60 percent of U.S. exports,
and those export-related jobs pay even higher wages than non-export related
jobs."
What happens when a factory closes? A Milken
Institute review of American
manufacturing reported in The American Prospect that "Close a manufacturing plant, and a
supply chain of producers disappears with it." It noted that for every
computer manufacturing job in California, 15 jobs outside the factory are
created.
The Leadership Report, which has been largely ignored by the White
House, notes that "As U.S. manufacturing leadership is waning, other
nations are investing heavily in growing and revitalizing their manufacturing
sectors, and are crafting policies to attract and retain production facilities
and multinational companies within their borders."
The ISM Report concludes that "...our nation has
surrendered important manufacturing sectors. They were not all lost in
the pursuit of cheaper labor or as a result of products becoming low margin
commodities. We have lost production of cutting-edge innovations
developed in America because of tax, regulatory, skill, finance and
infrastructure limitations that make production elsewhere more competitive."
The traditional American role of leading the world in manufacturing
output ended in 2010, when China produced slightly more. For the first
time, U.S. output represented less than 20% of the total world figure-coming in
at about 18.24%, according to Tom Hemphill and Mark Perry, writing in Business
Economics.
The impact on the American economy of a depressed manufacturing
center is substantial. As noted in the Brookings study, it provides above-average wages, promotes
innovation by accounting for a lion's share of R&D spending, plays a key
role in reducing the trade deficit, and contributes heavily to environmental
sustainability.
The NY Analysis examination of this issue indicates that American
manufacturing is being detrimentally affected by a number of factors,
including:
·
The highest corporate
taxes among industrialized nations;
·
An increasingly
burdensome regulatory regime;
·
A weak national and
global economy
·
A downturn in federal
support for cutting-edge R&D;
·
A slowdown in military
procurement of major weapons systems;
·
The rise of China, with
its cheaply paid labor force, and that nation's unfair competitive practices,
as well as intellectual property theft;
·
An increasingly poorly
schooled workforce; and
·
High energy costs.
TAXES
On April 1, 2012, the United States gained the
unwanted distinction of having the worst combined federal/state tax rate, at
39.2%, on the planet. Japan, formerly in first place, now comes in second at
38%, followed by France, Italy, Germany, Canada, and the United Kingdom.
The Competitive
Enterprise Institute (CEI) notes that "Our tax code is among the
world's least friendly toward manufacturing."
Numerous analysts and elected officials have recommended that
Washington should reduce the corporate tax rate to 25%. Opponents to that
concept maintain that existing loopholes allow at least some international
business entities to pay less than the full rate, sometimes down to 29.2%,
according to aCNNMoney study.
Consistently, the development of internationally competitive
corporate tax rates, and reducing corporate payroll and income tax burdens on
manufacturers investing and hiring in America, ranks as a key priority to
improving manufacturing prospects within the nation.
The prospects for reform remain unclear.
Republican presidential candidate Mitt Romney advocates a 25% rate.
President Obama has proposed a rate of 28% but wants it tied in to other tax
increases and closing current breaks, which may eliminate the benefit of the
lower rate. This places him at odds with the Council on Competiveness
recommendation of replacing the current world-wide double taxation system.
First of a three part series
MANUFACTURING
An Industry At Risk
"The nation's historic
leadership in manufacturing...is at risk. Manufacturing as a share of
national income has declined, as has manufacturing employment, and our
leadership in producing and exporting manufactured goods is in question."
The President's Council of Advisors on Science
and Technology's June 2011 "Report to the President on Ensuring American
Leadership in Advanced Manufacturing" (Leadership Report.) It has been
largely ignored by the White House.
A SHRINKING QUARTER
American manufacturing has shrunk for the third
straight month, the worst contraction since July 2009. Key indicators
such as new orders, production, backlogged orders, and employment contracted,
according to the Institute for Supply
Management (ISM). The weakest production
index (47.2, down from 51.3 in July) since May 2009, a weak new orders measure
(47.1, down from 48 in July) and the lowest employment measure since November
2009 (51.6, down from 52 in July) have been reported.
The only bright spots for this industry, (which accounts for about
11% of the U.S. GDP according to a Brookings Institute study, Why Does
Manufacturing Matter) came from pent-up
demands on items that consumers could no longer reasonably wait to replace,
such as autos.
The dilemma that this produces for the depressed U.S. economy is of
extraordinary importance. According to the Federal Council on
Competitiveness December 2011 report, Make: An American Manufacturing
Movement:
"U.S. manufacturing is more important than ever,
employing more than 11 million Americans directly, and creating close to 7
million additional jobs in related industries. Manufacturers contributed
$1.7 trillion to the U.S. economy in 2010. Manufacturing also boasts the
highest multiplier effect among economic sectors, pays higher wages and drives
innovation. Manufacturing accounts for nearly 60 percent of U.S. exports,
and those export-related jobs pay even higher wages than non-export related
jobs."
What happens when a factory closes? A Milken
Institute review of American
manufacturing reported in The American Prospect that "Close a manufacturing plant, and a
supply chain of producers disappears with it." It noted that for every
computer manufacturing job in California, 15 jobs outside the factory are
created.
The Leadership Report, which has been largely ignored by the White
House, notes that "As U.S. manufacturing leadership is waning, other
nations are investing heavily in growing and revitalizing their manufacturing
sectors, and are crafting policies to attract and retain production facilities
and multinational companies within their borders."
The ISM Report concludes that "...our nation has
surrendered important manufacturing sectors. They were not all lost in
the pursuit of cheaper labor or as a result of products becoming low margin
commodities. We have lost production of cutting-edge innovations
developed in America because of tax, regulatory, skill, finance and
infrastructure limitations that make production elsewhere more
competitive."
The traditional American role of leading the world in manufacturing
output ended in 2010, when China produced slightly more. For the first
time, U.S. output represented less than 20% of the total world figure-coming in
at about 18.24%, according to Tom Hemphill and Mark Perry, writing in Business
Economics.
The impact on the American economy of a depressed manufacturing
center is substantial. As noted in the Brookings study, it provides above-average wages, promotes
innovation by accounting for a lion's share of R&D spending, plays a key
role in reducing the trade deficit, and contributes heavily to environmental
sustainability.
The NY Analysis examination of this issue indicates that American
manufacturing is being detrimentally affected by a number of factors,
including:
·
The highest corporate
taxes among industrialized nations;
·
An increasingly
burdensome regulatory regime;
·
A weak national and
global economy
·
A downturn in federal
support for cutting-edge R&D;
·
A slowdown in military
procurement of major weapons systems;
·
The rise of China, with
its cheaply paid labor force, and that nation's unfair competitive practices,
as well as intellectual property theft;
·
An increasingly poorly
schooled workforce; and
·
High energy costs.
TAXES
On April 1, 2012, the United States gained the
unwanted distinction of having the worst combined federal/state tax rate, at
39.2%, on the planet. Japan, formerly in first place, now comes in second at
38%, followed by France, Italy, Germany, Canada, and the United Kingdom.
The Competitive
Enterprise Institute (CEI) notes that "Our tax code is among the
world's least friendly toward manufacturing."
Numerous analysts and elected officials have recommended that
Washington should reduce the corporate tax rate to 25%. Opponents to that concept
maintain that existing loopholes allow at least some international business
entities to pay less than the full rate, sometimes down to 29.2%, according to
aCNNMoney
study.
Consistently, the development of internationally competitive
corporate tax rates, and reducing corporate payroll and income tax burdens on
manufacturers investing and hiring in America, ranks as a key priority to
improving manufacturing prospects within the nation.
The prospects for reform remain unclear.
Republican presidential candidate Mitt Romney advocates a 25% rate.
President Obama has proposed a rate of 28% but wants it tied in to other tax
increases and closing current breaks, which may eliminate the benefit of the
lower rate. This places him at odds with the Council on Competiveness
recommendation of replacing the current world-wide double taxation system.
Second of a three part series
Part one of our review of the crisis facing America's
manufacturing sector outlined the decline in the industry, and the impact of an
uncompetitive tax structure
The Impact of Regulations, High Energy Costs,
&
Inadequate Education
Regulations
Regulatory burdens are a key factor depressing
manufacturing in the United States. Kevin Williamson recently wrote in National Review that the cost of regulatory compliance--which
may be between one and two trillion dollars annually--is a bigger burden than
taxes. He noted that, in addition to the cost, the regulatory burden is more
infuriating because "you can boot out your representative if he votes for
a tax hike, but you can't vote out executive-branch bureaucrats." In
many cases, the regulatory system is geared against the very type of ingenious,
highly productive new firms the nation needs to rejuvenate its industrial base
in favor of politically connected older companies with the capital to hire
powerful lobbyists to influence politicians.
While American manufacturing has been enduring
difficult times for over a decade, the increasing burden of regulations over
the past three years, particularly those relating to the environment, have
contributed heavily to the acceleration of the crisis.
Ben Lieberman, writing for the Competitive
Enterprise Institute, notes that "...the biggest recent change--and the most
worrisome threat for American manufacturing--has been the accelerated pace of
environmental regulation since the election of Barack Obama...Manufacturers
worry about a storm of new regulations taking effect in the immediate future,
any one of which would seriously harm them, and the cumulative effect of which
would be the end of the United States as a major manufacturing nation."
The recent (ignored by the White House)
presidential study by the Council on Competiveness recommends:
1. Congress should require agencies to begin reducing the costs
and burdens of current and proposed regulations.
2. Congress should immediately reform section 404 of the
Sarbanes-Oxley Act to increase entrepreneurs' access to U.S. public capital
markets and grow new companies.
3. Congress should reduce the costs of tort litigation from the
current level of almost 2% of GDP -some $248 billion-down to 1% by 2020.
4. Congress and the Administration must take action on fiscal
reform to achieve $4 billion in debt reductions by 2021.
CEI notes that "The pace at which the Obama
administration has issued new Clean Air Act regulations unrelated to carbon
dioxide--most of them targeting manufacturers and the coal-fired power plants
on which they (and many homes) depend for electricity--is without precedent in
the statute's 40 year history..." Estimates of compliance costs are
in the trillion dollar range--if compliance can be done at all. Some of
the demands call for the purchase and implementation of technology that is not
yet available.
Legislation
In response to the growing harm caused by the
imposition of numerous regulations, and the anger engendered by the fact that
many dramatic alterations to our economy have resulted not from legislation but
by executive branch bureaucrats, the House of Representatives has passed H.R.
10: Regulations From the Executive in need of Scrutiny Act, better known as
REINS. The bill is not expected to pass the Senate and would certainly be
vetoed by President Obama if it ever did. With only minor exceptions, the
vote on the bill followed straight party lines, with Republicans favoring it
and all but four Democrats voting against it.
The legislation, which is intended "to
increase agency accountability for and transparency in the federal regulatory
process" is a direct challenge to the White House's excessive rulemaking
activities. It is also a specific rebuke to the Environmental Protection
Agency's overzealous and often poorly thought out rule making.
REINS would give Congress the ability to have a say in
"major" rule additions or changes, and would require an analysis of
how enforcement would impact employment. It would also allow a court to
review whether an agency has completed the necessary requirements for a rule to
take effect.
Energy
The past three and one-half years have been
difficult ones for domestic energy production and refinement, as the White
House has blocked the Keystone pipeline, significantly stopped offshore
drilling, kept ANWR off limits, and engaged in other activities limiting the
use of American sources and the refining thereof. The resulting cost of
energy, both at the pump for motorists and in the factories for manufacturers,
has been a drain on the economy in general and manufacturing in particular. These
actions, combined with already burdensome regulatory issues, directly affects
the viability of American manufacturing.
CEI notes that "it takes energy to run a
factory, and rising energy prices tend to reduce manufacturing output.
Disproportionately high energy prices in one country encourage the outsourcing
of manufacturing to others."
Education
The U.S.
Chamber of Commerce reports that
approximately 90% of jobs in the fastest growing occupations require some level
of postsecondary education and training. However, 80 to 90 million
adults, about half the workforce, do not have the skills required to get or
advance into "family-sustaining" wage jobs.
But it's not just the lack of a degree. Our primary and high
schools are turning out individuals who are deficient in the basic skills
necessary for manufacturing or other employment. The problems begins
early, according to the Chamber, with 8th graders not proficient in the most
basic subjects, reading and math. 30% of students fail to graduate high
school in four years, and those that do eventually graduate lack the skills
needed for employment
Last of a three part series
Part one
of our review of the crisis facing America's manufacturing sector outlined the
decline in the industry, and the impact of an uncompetitive tax structure.
Part Two reviewed the impact of excess regulation, inadequate education,
and energy policy.
THE ROLE OF
CHINA,
ADVANCED
TECHNOLOGY,
AND
GOVERNMENT BIAS
China
Richard McCormack, writing in the American Prospect, notes that
"the U.S. manufacturing sector never emerged from the 2001 recession,
which coincided with China's entry into the World Trade
Organization." An article inForbes written by Professor Baizhu Chen
notes that "The average manufacturing wage in 2010 [was] $2.00 in China
and $34.75 in America."
The rise of China renders any obstacle to
U.S. manufacturing growth even more counterproductive. The University of Chicago
Law Schools notes that "Chinese exports were important in
declining trends in the [US] manufacturing during the past 20 years."
In his testimony before the U.S. House Steel Caucus, Thomas Conway, International Vice
President of the United Steel Union (USW) noted that "A greater and
greater amount of manufactured goods is being imported and more and more U.S.
companies are off-shore manufacturing. The Economic Policy Institute estimates that our trade deficit with
China alone from 2001-2008 caused the loss of 2.4 million manufacturing jobs
here."
According to the Alliance for American
Manufacturing, "China's blatant use of illegal government subsidies
and a web of predatory trade practices on a massive scale are undercutting
companies in the U.S.auto supply chain."
Costs may be going up in China, however,
reports The Economist."Costs
are soaring, starting in the coastal provinces where factories have
historically clustered. Increases in land prices, environmental and
safety regulations and taxes all play a part...labor costs have surged by 20% a
year for the past four years."
Beijing's intellectual property theft, and
the propensity to demand technology transfer as a "cost of doing
business" in China, renders the threat to American manufacturing,
especially the crucial high technology sector, significant. NSA director Keith
Alexander recently noted that China's espionage efforts have resulted in the
greatest transfer of wealth in history. This year, for the first time in
U.S. history, an economic espionage trial was conducted, convicting a Chinese-born
naturalized American citizen, Dongfan Chung, of stealing $2 billion in trade
secrets related to Space Shuttle technology from Boeing.
Advanced
Technology & Defense
Manufacturing is a research and
development-intensive industry. According to the Brookings study, "Domestic company R&D
spending is 3.6% of domestic manufacturing sales, compared to 2.4% of domestic
non-manufacturing sales...According to the National
Science Foundation's 2008 Business R&D and Innovation survey, 22% of
manufacturing companies but only 8% of non-manufacturing companies introduced a
new or significantly improved good or service between 2006 and 2008."
A drop in manufacturing eventually leads to
a drop in R&D capability, which is crucial to America's future in the
realms of both economy and defense.
Problems in American manufacturing can also
be linked to the decline in two cutting edge areas: defense and aerospace
technology. The drop in American defense inventory has been nothing short
of stunning: a navy that has lost over half its ships, an air force that has
lost almost half of its combat wings, and an army that has been reduced from 18
divisions to 10. The elimination of both the manned space program and the
dwindling down of the robotic space program further eliminate the vital
technology infrastructure and support so substantially needed for a healthy and
advanced modern manufacturing industry.
The national security crisis related to
manufacturing is more than just the current weapons inventory, as terrible a
threat as it is. It also includes the capacity to grow our military might
in times of crisis, the very capacity which allowed us to win World War II and
the Cold War.
The importance of this capacity has been
recognized for over half a century, as noted by McCormack. In 1948,
Congress passed the National Industrial Reserve Act "based on the idea
that the defense of the U.S. requires a national reserve of machine tools for
the production of critical items of defense material." Almost forty
years later, President Reagan, despite being a leading advocate for free trade,
supported a Voluntary Restraint Agreement with Japan and Taiwan on imports of
machine tools based on national security grounds.
For reasons involving both cost and the
lack of domestic capability, the Pentagon now looks overseas to supply some of
its needs, including high technology items. Dr. Joel Yudken's report
entitled "Manufacturing Insecurity" notes that "Ironically,
the Pentagon and industry calls for greater reliance on foreign sourcing--often
argued in efforts to weaken Buy America requirements in defense
procurement--are a tacit recognition that the United States lacks the
commercial manufacturing capacity to supply vital products needed by America's
defense industrial base. The DoD has conceded that there are advanced
technologies critical to military systems--armor plate steel, defense-specific
integrated circuits, night vision goggles--for which domestic sources are
inadequate."
Bias
Against Industry
The importance of a strong manufacturing
sector to the American economy, to reducing the federal debt, to our national
security, and to the employment rolls is obvious. Why have so many
elected officials and bureaucrats acted in a manner that has clearly harmed
this industry?
The Washington
Time's Paul Driessen has called the Environmental Protection Agency
"the biggest single job-killing agency in government." Kurt
Bauer, writing in Wisconsin's Journal
Interactive, notes that just one of EPA's new rules, Boiler MACT, would
lead to the closing of 11 paper mills and the loss of 7,500 jobs in his
state. Similarly, Bauer notes the costly effects of the highly pro-union
partisanship of the National Labor Relations Board.
Some observers attribute these actions to
an archaic mindset that manufacturing is an industry of polluting, grimy
factories providing low-paying, low-skill jobs that constitute an increasingly
obsolete way of making a living. A whole panoply of clichéd capitalist vs.
workers and anti-environment stereotypes, none of which are true, misinforms
the biased view of current Environmental Protection Agency and NLRB
bureaucrats.
Making the openly hostile attitude of the
Environmental Protection Agency under the Obama administration towards
manufacturing more ironic is the fact that, as noted by the Brookings study,
"manufacturing makes a disproportionately large contribution to
environmental sustainability...the clean economy is nearly three times as
manufacturing-dependent as the overall economy. Of the clean economy's
2.7 million jobs, 26% are in manufacturing, compared to 9% of U.S. jobs
overall.
In great cities such as New York, this
incorrect perspective has led to land use planning policies that have resulted
in consistently high blue collar unemployment and an urban economy that is
increasingly fragile.
New York City's Pratt Center for
Community Development reports that "Even as the
demand for goods in New York City remains strong, city government's own
policies are threatening manufacturers' ability to do business here. When Mayor
Bloomberg came into office in 2002, New York City had 12,542 acres of land
where manufacturing businesses could legally operate. Today, thanks to zoning
changes, it has fewer than 10,746, and another 1,800 acres would be converted
to other uses under additional rezoning proposed by the Bloomberg
administration. If the planned rezoning goes through, New York City will
have lost 20 percent of all its manufacturing space in the span of just a few
years. Of the 95 New York City rezonings from 2003 to 2008, one-quarter
converted manufacturing districts into some other category of land use...not
one added a single acre of new space for manufacturers."
Conclusion
The combined impact of excess regulation,
ill conceived environmental controls, the highest tax rate among industrialized
nations, foreign competition (fair and unfair), and a reduced emphasis on
military and advanced technology spending constitute an unprecedented challenge
to the survival of American manufacturing.
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