Opinion | Biden Has a Ways to Go on That Manufacturing Renaissance - The New York Times

In his State of the Union address last Thursday, President Biden said, “Where is it written that we can’t be the manufacturing capital of the world? We are. We will.”

The next morning came the deflating news that U.S. manufacturing employment fell by 4,000 jobs in February. That doesn’t mean Biden was wrong. It does signal that he has taken on a difficult challenge.

Accentuating the positive, Biden’s Council of Economic Advisers is calling attention to the fact that the manufacturing sector has done way better than it usually does after a recession. Manufacturing employment has increased 1.4 percent in the four years since February 2020, when the short, sharp Covid recession began. Here’s a chart I put together, inspired by one from Biden’s economic team.

In the 11 recession recoveries that have occurred since 1953, there’s been only one time when manufacturing employment posted a bigger percentage gain — and that one just barely. Manufacturing cratered after the two recessions that preceded the Covid crash, as the chart shows.

On the other hand, manufacturing employment isn’t what’s leading job growth. Manufacturing’s share of nonfarm employment was 8.2 percent in February, down from 8.5 percent when Biden took office. Another way to look at the numbers is factory output. According to Federal Reserve data, industrial production in manufacturing is slightly lower now than it was in the years before the Covid recession.

In the first year after the signing of the CHIPS and Science Act in 2022, companies announced more than $166 billion worth of investments in the manufacturing of semiconductors and electronics. The Biden administration also says that since the president took office, companies have announced more than $115 billion in manufacturing for the clean energy economy.

But these things take time. One reason manufacturing employment hasn’t risen more is that manufacturers haven’t finished building a whole lot of new factories.

Also, the government has focused its largess on a handful of key industries. “If you’re doing wind and solar you’re getting a lot of money. But it’s not spreading out much,” William Dunkelberg, the chief economist of the National Federation of Independent Business, told me.

Another problem could be the time it takes to disburse federal incentive funds, even though Andrew Reamer, a research professor at George Washington University’s Institute of Public Policy, told me that people he knows in government agencies “are working nights and weekends” to evaluate and act on applications for funding.

All the above factors could be curbing the increase in employers’ demand for factory workers. To me, as I wrote in November, the bigger long-term problem in manufacturing will be a lack of skilled factory labor, rather than a lack of demand for it. That’s already an issue for companies, even before the completion of all those new factories. It would be a shame if they became white elephants because Americans weren’t equipped to staff them.

“We see just a huge imbalance” between the skills that workers have and the ones that companies need, Julia Pollak, the chief economist of ZipRecruiter, told me. “Many manufacturers are getting hundreds of applications per posting for general manual labor roles, but just a few applications for skilled trades roles,” she said. “Skilled, licensed people are retiring, they’re aging out. And young people are not going into those fields in sufficient numbers.”

Some companies are amping up training, but that’s risky because “you could pour a ton of money into somebody, give them a job, and see them walk away for a $10-a-week-higher paycheck,” Pollak said. Government can solve that problem by providing more education as a public good — and it’s beginning to happen, through manufacturing initiatives in community colleges and even high schools.

The promised surge in manufacturing employment can’t come soon enough for Biden, who’s in a tough race for re-election that could hinge on voters’ concerns about the economy. This chart shows what’s happened to manufacturing employment and overall employment in four battleground states since he took office.

Manufacturing employment has grown in all four states, but it has grown faster than overall employment in only one of them, Georgia.

Biden sees himself as a lunch-bucket Democrat. He bragged in the State of the Union address that he was the first sitting president to stand in a picket line. So bringing back factory jobs is no small matter to him. From the looks of it, he has a way to go.

Outlook: Nomura

Consumer prices excluding food and energy probably rose 0.4 percent in February from January, bringing their increase over the past 12 months to 3.8 percent, according to Aichi Amemiya, Jeremy Schwartz and Ruchir Sharma of Nomura. Prices for lodging away from home “appear to have increased at a solid pace again,” and “the decline in used vehicle prices likely moderated,” they wrote in a client note on Friday. Also, they wrote, the January acceleration in the cost of owners’ equivalent rent — how much homeowners would have to pay to rent their own homes — was probably not “fully reversed” in February. The Bureau of Labor Statistics is scheduled to release the data on Tuesday.

Quote of the Day

“Each man is locked into a system that compels him to increase his herd without limit — in a world that is limited. Ruin is the destination toward which all men rush, each pursuing his own best interest in a society that believes in the freedom of the commons. Freedom in a commons brings ruin to all.”

— Garrett Hardin, “The Tragedy of the Commons,” in the journal Science (Dec. 13, 1968)

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