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EconomicPolicyInstitute February 14, 2008

With layoffs and cutbacks becoming routine, it is tempting to write off U.S. manufacturing as an anachronism. However, a new set of EPI reports shows that actually making things remains an essential part of the economy, and can continue to be a source of good jobs.

The manufacturing sector supported 14 million jobs in 2007, or about 10.1% of total employment.  A Snapshot developed by EPI economist Robert Scott shows the sector’s importance varies from state to state. California leads the country in sheer output value, producing $169 billion worth of goods in 2006, followed by Texas with $140 billion. However, the relative importance is greatest in Indiana, where manufacturing accounts for 28% of the state’s gross domestic product.

The right policies will not only keep manufacturing jobs in the country, but they can also ensure that they are of high-quality and offer adequate wages and benefits. In her report, Renewing U.S. Manufacturing, economist Susan Helper called for adopting policies “to create a highly productive, high-wage economy” that would contribute to other critical national goals, such as environmental sustainability, energy independence, modernizing infrastructure, and maintaining a defense industrial base. Meanwhile, George Sterzinger of the Renewable Energy Policy Project argued for building a strong domestic manufacturing sector in green energy projects. These papers, along with a background piece by EPI economist Robert Scott on the continued importance of U.S. manufacturing, were presented at a Feb. 13 EPI forum that drew more than 100 spectators. Senator Sherrod Brown (D-Ohio) was the keynote speaker.

Stimulus reaction
EPI continued to closely monitor negotiations on the economic stimulus package forged by Congressional leaders and the White House. After days of intense politicking in the Senate, a package emerged that incorporated some of EPI’s recommendations, but ignored others. President Bush signed the package on Wednesday. EPI gave mixed grades to the result in commentaries by Jared Bernstein in TPM Café, Ross Eisenbrey in the Detroit News, and Nancy Cleeland in The Nation. The upshot is that the package will help soften the looming recession by quickly sending one-time payments of several hundred to several thousand dollars to low- and middle-income residents, but with a different mix of stimulus policies the package could have been far more effective. Fortunately, Senate leaders are already talking about a second package that looks at extending unemployment benefits and funding needed repairs to schools, roads, and other infrastructure, all of which were advocated by EPI from the start of the stimulus debate.

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