To help manufacturing in Ohio, think beyond tariffs

CLEVELAND -- This week, President Donald Trump imposed tariffs on imported steel and aluminum in an effort to help U.S. manufacturers -- companies like ArcelorMittal in Cleveland -- that have long been hurt by deindustrialization and offshoring. The announcement has sparked a firestorm of debate, dividing workers, advocates, and economic experts across the political aisle, and even manufacturers themselves.

 

What this debate is really about, though, is not tariffs, but jobs, and whether preserving (and growing) manufacturing jobs is a lost cause or a goal within reach.

 

We see evidence that it is an attainable goal. With the right choices by government -- choices that include, but are not limited to, enforcing existing fair trade laws -- manufacturing can once again be a driver of shared prosperity and good jobs here in Ohio and across the country.

 

Many people, especially young people, have reason to be skeptical of manufacturing's future. Deindustrialization has left once-prosperous communities across the state poorer, weaker, and in some cases smaller.

Michael Shields is a researcher at Policy Matters Ohio.

 

By 2016, Ohio had lost half its peak manufacturing jobs, spurring population declines in Cleveland, Akron, and Youngstown, among other cities. Median household income trailed the national average by nearly $5,300.

Manufacturing helped Northeast Ohio's economy outpace national productivity gains last year, according to the 2018 regional manufacturing survey released last month. In this 2015 file photo, foreman Mike Bonner carefully sets measurement for an engine lathe on which he was pre-machining a new part prior to its being metallized at Cleveland's AISCO Metallizing Corp.(Thomas Ondrey, The Plain Dealer, File, 2015)

 

Structural changes to the sector mean that once-lucrative jobs in manufacturing are no longer a given. In 2016, manufacturing wages still paid $11,000 more than other jobs, but that average obscures growing stratification driven by outsourcing and increased use of contingent workers. Assembly-line wages have dropped 3.7 percent from 1999, as established companies have contracted out operations to a fiercely competitive supplier market, and fewer workers are unionized.

 

Yet, there are bright spots in Ohio's manufacturing landscape. Since bottoming out in 2009, manufacturers have expanded their revenues by 24.5 percent and now represent a greater share of the state's economy than in 2009.

 

Ohio has the third most manufacturing jobs in the nation, trailing only much larger California and Texas.

 

Plus, nearly half of Ohio's manufacturing jobs are in one of 35 "advanced" manufacturing industries -- jobs that pay 18 percent more ($65,000 a year) and have long-term growth potential.

 

So how can Ohio build on this recent momentum, grow good-paying manufacturing jobs, and help families make up lost economic ground?

To start, we must abandon policies that are not working, such as giving away massive corporate tax credits that force communities to compete for firms to move into the state. Such policies cost the state vital resources that are needed to invest in communities and a reinvigorated workforce.

 

As we outline in a new report to be released next week, Ohio should invest resources in university-based public-private partnerships that can develop new advanced manufacturing technologies, rather than chasing firms in a race-to-the-bottom competition.

 

Through things like Manufacturing Extension Partnerships, the America Makes - National Additive Manufacturing Innovation Institute in Youngstown, and layoff aversion programs, the state can make its existing manufacturers more productive, competitive, and well-paying.

 

Similarly, Ohio must refresh its manufacturing workforce with a new generation of talented and equipped workers. This requires significant government action, starting with efforts in the kindergarten-through-12th-grade education system to expose young people to an array of manufacturing careers. It also requires the state to invest more in industrial apprenticeships to restock skilled trades like machinists and mechanics.

 

And for manufacturing to help lift up the rest of the state, policies must focus on increasing prosperity for workers who spend their wages in their own communities. That means rejecting proposals in Columbus to make it harder for workers to form unions, and phasing in a $15 minimum wage by 2025. Ohio policymakers should also provide adequate unemployment compensation to restore viability to the unemployment trust fund, which workers need to regroup and retrain, through an adequate employer tax and a payroll tax.

 

President Trump's tariff announcement, its imperfections notwithstanding, was aimed at a real problem. But more can -- and must -- be done. With a level playing field, Ohio's manufacturing workers can compete with anyone in the world. And with the right policies and investments, Ohio can once again become a destination for good jobs and an envy of the nation.

 

Andrew Stettner, based in Washington, D.C., is a senior fellow at The Century Foundation's Bernard L. Schwartz Rediscovering Government Initiative. The foundation's funding comes largely from an endowment established in 1919 by progressive businessman Edward Filene. Cleveland-based Michael Shields, based in Cleveland, is a researcher at the liberal think tank Policy Matters Ohio and author of the new report, "Protected: Manufacturing a High-Wage Ohio." Policy Matters Ohio is funded by foundation grants and individual donations.

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