Washington must focus on growth
January 23rd, 2013
12:40 PM ET

Washington must focus on growth

By Bruce Katz and Mark Muro, Special to CNN

Editor’s note: Bruce Katz is a vice president at the Brookings Institution and director of the Metropolitan Policy Program. Mark Muro is a senior fellow at Brookings and policy director of the Metro Program. The views expressed are their own.

Debt and deficits have dominated our nation’s capital for the last two years. From the near government shutdown over a budget impasse in April 2011 to the debt ceiling crisis and subsequent credit downgrade in August 2011 to the recent brinksmanship to avert a fiscal cliff, it has been “all deficits all the time.”

And yet, amidst the fiscal obsession, a slow-moving economic emergency persists. The U.S. faces an overall “jobs deficit” of 11 million to make up the jobs we lost during the Great Recession and account for a wave of new entrants to the labor force. The number of poor and near poor in America skyrocketed from 81 million in 2000 to 107 million in 2011, nearly one-third of the U.S. population.

Given these trends, it is not enough for the federal government to simply get its fiscal house in order. Rather, it’s time for both sides to put aside deep ideological differences and work together to jumpstart economic growth.

Where should they begin? An obvious first step is to invest in growing the productive and innovative “advanced industry” sectors of our economy, such as advanced manufacturing.

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Reviving America’s advanced industries is a critical component of building a more productive, sustainable, and inclusive economy. U.S. manufacturing, for instance, provides an important source of quality jobs that pay, on average, nearly 20 percent higher weekly earnings than non-manufacturing jobs, and are more likely to provide employee benefits. The sector also generates the lion’s share of the country’s innovation, and trade activity. While manufacturing provides only 9 percent of U.S. jobs and 11 percent of total GDP, it employs 35 percent of all engineers, represents 68 percent of R&D spending by U.S. companies, produces 90 percent of all patents developed in America, and accounts for about 65 percent of all U.S. trade.

Despite a slight manufacturing resurgence post-recession, however, a number of persistent problems – including nagging education and training challenges and an inadequate system for commercializing the development of new innovations – impede long-term growth in the advanced production and services sectors.

The question, of course, is what new federal policies can be enacted to solve these problems at a time of fiscal austerity and deep partisan divide?

Here are a series of sensible, low-cost initiatives to bolster the competitiveness of the U.S manufacturing sector:

To address the growing gap between high-skilled manufacturing job openings and workers with the skills to fill them, the federal government should initiate a Race to the Shop competition. The $150 million program would annually challenge states and metropolitan areas to develop long-term strategies and reforms that better align education and training investments with the distinct labor demands of their primary advanced manufacturing sectors. Five states and five metro areas with the strongest plans would receive both multi-year grant awards and increased flexibility to tailor existing federal resources to address local skills gaps; perhaps, for example, by reforming community college curricula or creating a network of manufacturing high schools.

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To further grow the innovative capacity of the manufacturing sector, the federal government should designate 20 institutions of higher education as “U.S. Manufacturing Universities.” Each university would receive $25 million per year to revamp their engineering programs to be more oriented towards manufacturing engineering, with particular emphasis on work that is relevant to the industry. This would include more joint industry-university research projects, more training of students that incorporates manufacturing experiences through cooperative education, and a Ph.D. program focused on turning out more engineering Ph.D.s who would work in manufacturing.

Finally, to help bridge the innovation gap between early-stage research and commercial deployment, Congress should authorize the build-out of a national network of 25 advanced industries innovation hubs. The centers would focus on cross-cutting innovation deployment challenges of critical interest to advanced industries by drawing universities, community colleges, state and local governments, and other actors into strong, industry-led partnerships. At an annual funding level of $25 million per center, this network of hubs would greatly accelerate the pace of innovation and new-product development in the nation’s advanced industries.

All of these ideas build from the best global models, particularly from Germany, which has a well earned reputation as the production engine of Europe. Taken together, these three initiatives would cost roughly $1.3 billion per year, about 0.2 percent of the total non-defense discretionary budget in FY 2011. How to pay for it: “cut to invest” by reforming outdated and non-performing federal programs.

The return on this relatively small federal investment? A more skilled workforce, a better system for supporting promising innovations, and, ultimately, a more globally competitive American economy.

It’s time for Washington to refocus on growing the American economy.

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Topics: Economy • Education • United States

soundoff (10 Responses)
  1. matslats

    Growth? how does that square with environmental policy?
    Why should USA grow at the expense of everyone else?
    Isn't USA already the biggest country? Should it grow for ever?
    How can USA grow while resources get scarcer?
    What's the point of growth if the trickle-down effect doesn't work?
    This piece is totally simplistic.
    You can't talk about growth without understanding that it is the debt-based money system that necessitates an ever expanding money supply just to pay the interest.
    But only crazy people rant about debt-based money, right?

    January 23, 2013 at 12:50 pm | Reply
  2. The GOP Solution

    The GOP Solution: Start a war with Iran (totally unfunded and "off the books" of course). Then get the poor people to fight/die in the war while giving the rich people/war corporations "no bid" contracts (Haliburton) and tax breaks. Thus killing two GOP birds with one stone. Then use Iran's oil to pay for the war. And when the war is over, Iran will sell us cheap oil!!!!!! Just like in Iraq!!! Oh wait.......never mind.

    January 23, 2013 at 2:42 pm | Reply
    • Joseph McCarthy

      Well said. How true that rings!

      January 23, 2013 at 4:24 pm | Reply
  3. Bruce Laube

    Discussion about the US economy can not ignore the fact that we have had a negative balance of trade for over 40 years. A constant drain of 3.5% over time stifles the growth rate. Over $13 Trillion has left our economy in the last 40 years. It is primarily due to oil and low labor cost foreign goods. The movement of labor offshore is a primary reason for the job losses.. Our current monetary policy is pumping $40 Billion per month into the economy, and then the US economy sends that $40 Billion per month out of the country with our negative balance of Trade. Fix the balance of trade and you will fix the exonomy!

    January 23, 2013 at 4:09 pm | Reply
  4. rightospeak

    Well the censors did not go to the bathroom as I hoped and removed my comments the second time. The censorship is a violation of Human Rights in case you are not aware.

    January 23, 2013 at 10:42 pm | Reply
  5. rightospeak

    Since finally the censors allowed or had to go to do private business I willl quickly write that unless all troops are brought home to save money, offshored jobs and capital return from China we do not have a prayer.

    January 23, 2013 at 10:46 pm | Reply
  6. Just For Fun

    Looks like if you have NO IDEA HOW TO FIX THE PROBLEM then BLAME THE U.S.
    Our friends in Europe would love to have job growth; the people in 3rd world countries want job growth.
    Why? Because that what feeds their babies DUMMY.

    January 24, 2013 at 12:50 pm | Reply
  7. j. von hettlingen

    In many cases size does matter. The smaller a business, the more flexible and able it will be to adapt itself to the economic climate.
    Why did the author ask the Congress to "authorize the build-out of a national network of 25 advanced industries innovation hubs"? It would take years to make it happen. Man should woo private companies to do so.

    January 27, 2013 at 12:37 pm | Reply
  8. Isreal Requa

    Manufacturing takes turns under all types of economic systems. In a free market economy, manufacturing is usually directed toward the mass production of products for sale to consumers at a profit. In a collectivist economy, manufacturing is more frequently directed by the state to supply a centrally planned economy. In mixed market economies, manufacturing occurs under some degree of government regulation.'`*^

    Our blog

    June 3, 2013 at 7:49 am | Reply

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