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EconomicPolicyInstitute April 21, 2009

As the Obama administration formulates the terms for ongoing federal assistance to the Big Three automakers, one requirement should be that they invest in America to ensure that their revival creates broadly shared prosperity for U.S. workers.

While headlines have focused on who leads GM, who Chrysler merges with, and on how much taxpayer money is needed to keep the Big Three afloat, EPI Senior Economist Robert Scott — our auto industry expert — reminds us that one of the strategies American automakers want to use to keep costs down is to shift production and jobs out of the United States into Mexico.

In a Briefing Paper, Scott finds that the growth in recent production in Mexico and planned investments to further shift production there will come at the expense of jobs for American workers. To reverse these trends, Scott argues that the administration should adopt three policy changes: Cap importation from Mexico as a share of total vehicle sales; require that domestic content requirements meet or exceed 2008 levels; and require labor rights enforcement for Mexican workers to prevent wage suppression.

Investing in America’s Future
On April 7, EPI, in conjunction with Demos and the Women of Color Policy Network, hosted a day-long symposium examining the labor market benefits of federal investment in the transportation and “green” sectors.

EPI released two Issue Briefs at the event by Economist Josh Bivens, Research and Policy Director John Irons, and Policy Analyst Ethan Pollack. The first report calculates that a $100 billion investment in transportation infrastructure will generate $160 billion in output, over 1 million jobs, and reduce wage inequality by raising earnings for workers without college degrees and expanding the number of unionized jobs.

The same authors applied their methodology (detailed in a Working Paper) to a second Issue Brief examining jobs built around a low-carbon future which finds that “green” investment may prove even more beneficial in creating jobs than generic infrastructure spending.

Saving State Budgets
EPI’s Economic Analysis and Research Network (EARN), a consortium of research and policy centers in the states, developed a letter urging that governors and state legislators avoid slashing spending on vital services and personnel as a way to meet budget shortfalls. Signed by over 200 economists from 37 states, the statement makes that case that cutting services is shortsighted — creating more need and requiring other services — and is not as effective as raising taxes on those who can afford a bigger tax bill.

This project, coordinated by EARN Policy Analyst Kai Filion, aims to help state governments realize that those states with educated, healthy workforces, strong infrastructure, and a high quality of life will be the ones best positioned to benefit from the eventual economic recovery.

From the EPI Blog
Ross Eisenbrey
Businesses Agree—It’s Time To Raise the Minimum Wage
Josh Bivens
Right Thing for Wrong Reason? Why Recent Stock Declines Should Not Motivate Fed Interest Rate Moves
Robert E. Scott
Jack Lew Sees No Evil: Treasury Fails To Name China as a Currency Manipulator for the 12th Time
Josh Bivens
Adjective Quibble: The Long-Term Unemployment Rate is NOT “Sticky” or “Stubborn”
Richard Rothstein
What Led Us to the Troubles in Ferguson?
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