In his State of the Union address, President Joe Biden highlighted how his administration’s actions are creating tens of thousands of new jobs and attracting billions of dollars in investment in areas such as clean energy and advanced manufacturing. The remarks underlined what is shaping up to be a hallmark of Biden’s economic agenda: industrial policy.
It appears that this once-shunned economic strategy is experiencing something of a renaissance. Throughout my career at the U.S. Department of Labor, which spanned three very different administrations, I witnessed a common aversion to industrial policy. On the rare occasions that leaders broached the topic, my colleagues’ responses mostly ranged from discomfort to contempt. Democrats – and, to some extent, mainstream economists – have bristled at the idea of directing policy toward distinct industries. The hesitancy has been, in part, fueled by distrust – what economist Dani Rodrik describes as “instinctive hostility” – towards businesses betting on maintaining their commitment to the broader economy and its workers.
Republicans, meanwhile, may have had more faith in the private sector, but have often been reluctant to intervene in the market through public investment. As Brian Deese, former director of the National Economic Council, puts it, “For much of the last half century, even uttering the words ‘industrial policy’ has been met with something between derision and concern.”
A dramatic political change
But times are changing. Under President Biden, the White House not only secured major investments in the semiconductor, manufacturing, and clean energy sectors, as well as construction, transportation, and broadband, but did so largely with the support bipartisan. It is clear that industrial policy is gaining support across the political spectrum. Less clear is whether these investments will succeed where past attempts have struggled to make an impact. Federal, state and workforce leaders will need to work together to ensure this dramatic policy shift lives up to its immense potential to transform the lives of American workers for the better.
This starts with ensuring that workers who have traditionally been excluded and left behind are able to benefit – and thrive – from the jobs these investments can create.
Spurred by laws like CHIPS and the Science Act, chipmakers are building plants across the country. In recent months, some major manufacturers have announced delays, citing a lack of skilled workers. In fact, Deloitte estimates that the semiconductor industry will lack around 90,000 such workers in the coming years. The Biden administration’s recent $5 billion investment is, in part, a recognition of this challenge, with hundreds of millions of those dollars going toward training more semiconductor engineers. But with demand for skilled workers growing rapidly in a number of critical sectors, much more effort and funding will be needed to successfully scale up the nation’s job training infrastructure.
Workforce as a priority
While state workforce systems play a crucial role in connecting workers to opportunities, they struggle to keep pace with Biden’s ambitious industrial policy strategy. Regions are struggling to overcome the gap between federal investments in job creation and investments in job training and other supports for workers. They are also facing a mismatch between the types of training they historically provide and the needs of employers receiving federal investments. Public workforce systems and local education institutions, particularly community and technical colleges, have long had a mission to promote opportunities for workers who might otherwise be excluded. Meeting the demands of the industrial policy renaissance will require rethinking how these institutions work together to create intentional, industry-specific training opportunities for workers.
In Ohio, for example, companies like Intel, Honda and Amgen are investing billions of dollars in chip manufacturing, electric vehicle production and biomanufacturing facilities. In response, the state tapped Columbus State Community College to lead an effort to build a pipeline of thousands of skilled workers. The college is building deep partnerships with employers, labor organizations, K-12 and higher education partners, government leaders, nonprofit organizations and other stakeholders.
Equally important are investments in comprehensive supports that ensure that workers who could benefit most from accessing these new jobs are able to pursue the training needed to do so. Such workers would likely need to balance education or training opportunities with their current work and family obligations.
In fact, a provision within the CHIPS and Science Act recognizes these barriers. Companies seeking federal grants greater than $150 million must provide both their facilities and construction workers with access to affordable, high-quality child care. However, the need for childcare and other comprehensive supports doesn’t simply begin on a worker’s first day on the job. Likewise, workforce development initiatives should be paired with resources that allow workers to focus on the education they need to advance their careers.
Many of the jobs created by industrial policy are well paid and offer workers ample opportunities for career advancement. They are quality jobs that promote economic mobility and can serve as direct pathways to the middle class. This premise, however, depends entirely on the ability of workers to develop the skills they need to access such jobs.
As this and future administrations debate whether to continue strengthening industrial policy, it is critically important to assess the true impact of such investments. The surprise return of industrial policy must ultimately be measured not only by how the strategy helps the United States compete on the global manufacturing stage, but also by how it improves the lives of American workers and their communities.
Maria Flynn is president and CEO of the national education and workforce nonprofit Jobs for the Future (JFF) and previously served as an executive at the U.S. Department of Labor during the Clinton administrations and Bush.
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