Regular Americans and D.C. Pundits Agree: To Create Jobs, Protect Manufacturing

Protecting manufacturing jobs has long been considered an issue that only people in the Midwest or in unions cared about. However, a recent USA Today/ Gallup Poll [1] showed that Americans believe the number one way to solve the jobs crisis is to keep manufacturing jobs in the U.S.

The manufacturing jobs crisis has been accelerating rapidly; 5.5 million high-paying manufacturing jobs have been lost [2] since 2000, with an incredible 2.1 million lost in the last two years alone [2]. Such rapid loss has startled even typically free-trade-loving political pundits into agreeing that something needs to be done to protect manufacturing. Establishment columnist Robert Samuelson [3] wrote in The Washington Post this weekend:

Greater conflicts and a collision of national egos seem inevitable. No longer should we sit passively while China's trade and currency policies jeopardize jobs here and elsewhere. Political differences between the countries are increasingly hard to ignore.

It's not just low-skill jobs that are disappearing anymore; it's high technology jobs that were suppose to be the new core of the U.S. economy that are leaving as well. Recently, 19 U.S. trade associations, which have traditionally backed free-trade measures [3], asked the Obama administration to take action against China’s efforts to force them to turn over advanced technologies developed with American taxpayer money.

On the trade front, President Obama has taken some preliminary steps to stem this threat to the American economy, such as enforcing an anti-dumping ruling against Chinese tire makers last year. Also, Obama released a “Framework for Revitalizing American Manufacturing,” which Steelworkers President Leo Gerard labeled a “good start.”

However, China is taking advantage of U.S. Senate inaction on stimulus investment to jockey to the top of the race to lead the global economy. China invested 70 percent of its yearly budget [4] into stimulus spending to keep its economy going through the economic downturn. Meanwhile, Senate Democrats fumble with a severely inadequate [5] $15-billion-dollar jobs package. Former AT&T Broadband Chairman Leo Hindrey argues in a must-read piece today [6] that an inadequate stimulus response is actually creating an opportunity for the Chinese [6] to pull ahead of the US:

China's economy is visibly re-booming while much of the world, especially America, continues to face severe economic problems. The Great Recession has in fact quickly turned into China's "great opportunity," with American companies cutting both their payrolls and their capital spending, thereby driving business to China at the same time that Chinese manufacturers are boosting their global competitiveness, directly on their own and indirectly through subsidies from their partner central government.

Companies aren’t moving to China simply to take advantage of cheaper labor costs in low-skill production work; today it's to build computer chips and wind turbines, taking advantage of the infrastructure subsidies, tax breaks and, of course, illegal currency manipulation that is responsible for 90 percent of the savings [6] associated with manufacturing in China. (Currency manipulation alone  accounts for 25% of the savings [6], according to  Economist Peter Moriri.

As Norbert Sporns, a Seattle-based CEO who recently moved some production to China, said, "The major reason why we're [now] sited [in China] is not because of cheaper labor, but because of government support, because of the infrastructure that is laid out properly."

As Congress looks for ways to solve the unemployment crisis it should invest in increased infrastructure spending with Strong Buy America provisions. The American Society of Civil Engineers estimates that $2.2 trillion is needed over five years [7] to bring it back to proper conditions. Investing in infrastructure does more than put people to work right away building roads, bridges, etc; it helps create the type of environment business to succeed—something China is kicking our butt in. It also helps American manufacturing grow as jobs gains from infrastructure investment can increase by up to 33 percent [8]when strong Buy America provisions are included.

In order to have a real jobs bill, we must invest heavily in infrastructure with a strong Buy America provisions. It would also would help states a $357 billion budget shortfall [9] and local governments are facing an additional $80 billion budget shortfall [9]. This could help create million of jobs, revitalize American manufacturing, and keeps states from being forced to choose between cutting education or stopping bridges from falling down.

Senate Democrats should go back to the drawing board and do a real job bills that makes America competitive with China by investing in infrastructure with Buy America provisions. A recent Gallup poll [1] shows there is broad bipartisan support for this among the American public. More importantly to some Senate Democrats, there is broad support from the establishment pundits that they often seem more concerned about pleasing. Our economy, with China on the rise, can simply not afford inaction by the United States Senate.