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President's Column

Friday, July 10

Manufacturing jobs still offer path to middle class

Manufacturing is making a comeback in America, but not in California.

Since 2010, the U.S. economy has added 660,000 new manufacturing jobs, but California only saw 8,000 of them. That’s a growth rate of just 0.6 percent. Meanwhile, Texas added 72,000 industrial jobs during the same period.

As Washington leaders debate adding new taxes — including a cap-and-trade energy tax similar to one adopted in California — it’s worth paying attention to the economy in the Golden State.

Although parts of California’s economy appear to be doing well, the stagnation of its manufacturing sector raises important questions about the future of our own state, which, like California, has seen rapid growth in high-tech employment.

What does it mean for future generations if the technology and service sectors flourish, but manufacturing jobs disappear? How can we make sure that prosperity reaches all corners of the state, versus only the Puget Sound region? What happens to our economy if the price of energy — which has long been a competitive advantage for Washington — goes up dramatically?

In May, the Association of Washington Business sent a tweet to followers about the decline in California manufacturing jobs, suggesting a link to California’s cap-and-trade system.

State Rep. Cyrus Habib, D-Kirkland, saw the tweet replied with his own tweet: “Or maybe it’s because California’s economy has transitioned to intellectual property and services.”

Perhaps, but is this a good thing? Is this what we want for Washington state?

Information Technology jobs are undeniably valuable for Washington’s economy. The growth of the tech sector is not only helping Washington emerge from the recession, but is literally transforming the Seattle skyline. Even so, it would be a mistake to give up on manufacturing jobs and to believe that the attraction of
wealth is a suitable substitute, as some have suggested.

As Jay Timmons, president and CEO of the National Association of Manufacturers, often notes, America’s successes as a nation are intertwined with the success of its manufacturing sector.

Manufacturing helped rebuild the nation following the Civil War, the Great Depression, and world wars. Even now, after many had written off manufacturing, industrial jobs are leading the recovery out of the Great Recession. Instead of reading news stories about off-shoring, we are now reading about “on-shoring” and the rebirth of manufacturing.

For generations of Americans, manufacturing has provided a path into the middle class. Here in
Washington, with average wages of nearly $83,000, manufacturing jobs continue to provide that path forward. And we know that a single manufacturing job can lead to the creation of three to five additional jobs.

Michael Shires, a public policy professor at Pepperdine University, highlighted what’s at risk in a 2014 study examining the effects of California’s energy policy on opportunity in Los Angeles County.

Shires notes that manufacturing jobs — which are frequently energy-dependent — are threatened by new regulations and costs in Southern California.

"Once lost, these jobs will not return," Shires warns. "This loss will undermine an important part of Los Angeles County’s opportunity engine. Even with the national trend toward onshoring — bringing previously exported jobs back to the U.S. — the rising cost of energy will make the region less competitive for precisely the kinds of lower-entry skill jobs that create opportunity and mobility for poorer Angelenos."
California’s reputation as a national trendsetter is long and well-documented, especially when it comes to politics.

But Washington’s leaders need to chart their own course on taxes and energy regulation — a course that leaves room for all sectors of the economy, including high-tech and manufacturing.

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