It doesn’t matter that Trump’s preposterously named “A New Foundation for American Greatness” budget is “dead on arrival” according to even staunch Republican, Texas Senator John Cornyn. Much of it is the long-time wet dream of Paul Ryan and Republicans whose singular ambition has been to destroy the New Deal, Square Deal, Great Society. They would eliminate the minimum wage, child labor laws, food and product safety, Clean Air & Water protections, Social Security and Medicare and most notably Medicaid, sell off national parks and monuments to mining and oil and gas industrialists. And this is before taking into account tax “reform” that would take $2 trillion out of the national budget to put into the pockets of the wealthiest and corporations, so they have even more extra pocket change to spend on political campaigns.
Indeed, the Trump budget is everything that the Republicans have been dying to do, but didn’t dare. But Trump doesn’t care. He has shown that it really isn’t hard atall to cut the budget when you really don’t care what the numbers represent,when you have no clue and no interest.
The Trump Budget is built on “Trumponomics, as Office of Management and Budget Director Mike Mulvaney proudly exclaimed, “It’s a taxpayer-first budget, going line by line through the budget, trying to put yourself in the shoes of the people who are paying for those lines….What Trumponomics is and what this budget is a part of is an effort to get to sustained 3 percent economic growth in this country again..And by the way, we do not believe that that is something fanciful.”
Indeed, this is a “tough love” approach to force malingerers off things like food stamps – it’s not non-living wages paid by companies pocketing record profits that keep workers below the poverty line that’s the problem.
“Getting people back to work. Create an environment where people more comfortable staying at …We no longer measure compassion by the number of programs or number of people on programs. We measure success by how many get off programs and have success in lives.”
But the figures don’t actually add up.
Economists from across the spectrum say that the math that underlies the main selling point for Trump’s budget, that it will “balance the budget” in 10 years, is a crock. It doesn’t take into account the $1 trillion or so in tax cuts that will go entirely to the wealthiest and to corporations that Trump sketched out; it assumes a 3% rate of annual economic growth, which would mean 50% more economic activity, which everyone says is beyond pie-in-the-sky; and it actually double-counts $2 trillion, prompting headlines like this one from Slate, “Donald Trump’s budget is based on a hilarious accounting fraud” and “The dumb accounting error at the heart of Trump’s budget “ from Vox.
Health care a right, not a privilege? Trump’s budget projects a 28.3% DROP in spending for health services, $2 trillion less spending, over a 10-year period – despite the aging and increase in population. This includes a 27% decrease in spending for the Centers for Disease Control & Prevention (imagine another Ebola, Zika or Swine Flu outbreak); 25% drop in Substance Abuse and Mental Health Services Administration (even as Trumpcare will no longer include mental health or addiction), 25% less spending for research and training, including 25% cut for the National Institutes of Health (no interest in finding therapies or cures for Zika, Alzheimers or “orphan” diseases that wouldn’t be profitable enough for Big Pharma); 40% cut for the Food & Drug Administration (let Big Pharma do what they will); 15% drop in food safety and inspection; 17% cut to the Consumer Product Safety Commission, 16% cut in already strapped Occupation and Mine Safety and Health spending even as he overturned regulations.
$1.4 trillion gap in infrastructure spending to repair decaying roads, bridges airports? Trump would cut Transportation spending by 25% cut (65% cut to National Infrastructure Investments; 50% cut to air transportation which is already woefully in need of upgrades); 28% cut to Education, Training, Employment and Social Services.
His cuts to environmental protection – on top of slashing regulations that give communities a fighting chance to protect their air, water and public health – amount to Hague Tribunal level of war criminality for what he will do to the planet, let alone our communities. The allocation is cut 27.1% – $132 billion worth – including a 34% cut in Pollution control and abatement, 42% cut in Regulatory, enforcement and research programs, 37% cut in Hazardous substance superfund ($330 million less in 2018).
Trump would end funding for the Clean Power Plan, international climate change programs, climate change research and partnership programs, and related efforts—“saving” over $100 million in 2018. He cuts out $129 million in funding for the EPA’s Office of Enforcement. He cuts out $233 million in 2018 for the EPA’s Research & Development (ie. climate change science). It eliminates more than 50 EPA programs, $347 million worth in 2018; and ends funding for specific regional efforts such as the Great Lakes Restoration Initiative and the Chesapeake Bay, amounting to $427 million in 2018.
Trump would cut General Science, Space & Technology spending by 14.7%, including 18.9% cut to General Science and basic research.
International Affairs would be cut nearly in half, including 26% cut in spending for Global Health programs; 74% cut in Refugee programs; 66% percent cut in International Disaster Assistance, 83% cut in “other” development and humanitarian assistance.”
Setting aside for a moment that Trump and his billionaire friends don’t actually pay their fare share of taxes, nor do many profitable American companies which have stashed $2 trillion in offshore accounts, the Republicans’ approach is what Hillary Clinton correctly observed, “trickle down economics on steroids.” It didn’t work with Reagan or George W. Bush. And this is even worse.
No matter: the extremity of Trump’s proposed budget, the callousness of it, will give cover to Ryan and the House Republicans and make anything they do seem “moderate”, even “compassionate.” So they cut Medicaid by $600 billion instead of $866 billion and call it a “win” for the little people; they cut the State Department by 20% instead of 30% and pat themselves on the head; they cut the EPA by 25% instead of 31%.
Here’s what Senator Elizabeth Warren (D-Massachusetts) wrote: “Speaker of the House Paul Ryan says that Donald Trump’s new budget is ‘right on the target.’ That’s all you need to know about just how devastating Trump’s budget will be for working families in Massachusetts and across this country.
“It’s obscene:
$5 billion in cuts to public education
$73 billion in cuts to Social Security
$191 billion in cuts to food stamps
$610 billion in cuts to Medicaid (and that’s in addition to the $880 billion the House Republicans are slashing in their so-called “health care” bill)
“Those are just a few of the highlights. What else gets cut? Money for children’s health care, money to combat the opioid epidemic, money for medical research, money for the Corporation for Public Broadcasting, and so much more.
“This budget is ‘right on the target’ only if the target is to sucker-punch kids, seniors, the poor and the sick. If the Republicans make good on this budget, they could deliver the final blow to America’s working families.
“We don’t build a future by ripping health care away from tens of millions of people. We don’t build a future by starving education, by letting our roads crumble and our bridges collapse, and by shutting down the big pipeline of medical and scientific research in this country.
“We build a future by making the investments in ourselves and all of our people – so the next kid can get ahead, and the kid after that, and the kid after that. We’ve done this before in our country, and we can do it again.
”Budgets aren’t just about dollars and cents. Budgets are about our values, and this budget is morally bankrupt,” Warren wrote.
Trump and the Republicans would cut out all the things that have “made America great,” and a world leader in innovation and entrepreneurship, not to mention the main tools for spreading democracy and human rights across the globe (through capitalist investment, which is what China and Russia are now doing).
This is the midst of an actually strong economy, near “full employment” and as we keep hearing, a record stock market.
The Trump budget is the essence of everything that Trump is doing to weaken the US as an economic power, a world power, and its ability to be a moral leader, that Reaganesque “beacon on a hill” of political righteousness.
As we marked Memorial Day this past weekend, a New York Times book review of “The Allure of Battle: A History of How Wars Have Been Won and Lost,” by Cathal J. Nolan, pointed out that “Generally, one side, usually the one with a smaller economy and population, becomes exhausted, and gives up. Talk about élan and audacity all you like, he counsels, but what wins wars is demography and economic strength.” That is to say, winning a war is more a matter of “hearts and minds” vs. “bombs and brigades” as we have been seeing in America’s longest wars, in Afghanistan and Iraq.
Everything that Trump has done so far (putting aside the fact that he is an illegitimate occupier of the Oval Office by selling out to an adversary government), will weaken the US as an economic power, a world power, and its ability to be a moral leader, that Reaganesque “beacon on a hill” of political righteousness.
Indeed, Trump, who cozied up to the Saudis while hectoring NATO allies and the G7, on his “epic” overseas trip, came back declaring “a home run”, while Germany’s Angela Merkel told Europe, “We can no longer depend on the US or UK. We are on our own.”
New York State, along with other “blue” states like California, already send way more income tax money to Washington than we get back while the “red” states, which so pride themselves in low state taxes and low wages get far more than they send. Like tenants with a legal fight against their landlord, I would propose that New Yorkers collect their federal income tax money in an escrow account, to pay for services that should be paid by the federal government, such as police and security protection (which Trump is threatening to cut to New York and other states that don’t cooperate in his roundup of undocumented individuals), environmental restoration, health care for those whose subsidies have been eliminated, public schools, infrastructure repair, food stamps and school lunch program.
Eight Years of Labor Market Progress and the Employment Situation in December
WASHINGTON, DC – Jason Furman, Chairman of the Council of Economic Advisers, issued the following statement on the employment situation in December and reviewing eight years of job growth including the longest streak of total job growth on record, adding 15.8 million jobs.
Summary: The economy added 156,000 jobs in December, extending the longest streak of total job growth on record, with U.S. businesses adding 15.8 million jobs over the recovery.
Employment grew at a solid rate of 156,000 jobs in December as the longest streak of total job growth by far on record continued. Average hourly earnings for private employees increased 2.9 percent in 2016, the fastest twelve-month pace since the financial crisis. U.S. businesses have now added 15.8 million jobs since early 2010 amid the U.S. economy’s strong recovery from its worst crisis since the Great Depression. The unemployment rate—4.7 percent in December—has been cut by more than half since its peak, falling much faster and further than expected, and nearly all measures of labor underutilization have fallen below their pre-recession averages. Real wages have grown faster over the current business cycle than in any since the early 1970s, and in 2015 U.S. households saw the largest increase in real median income on record. Since 2010, the United States has put more people back to work than all other G-7 economies combined. Thanks in part to the forceful response to the crisis and policies throughout the eight years of the Obama Administration to promote robust, shared growth, the U.S. economy is stronger, more resilient, and better positioned for the 21st century than ever before. Even with this remarkable progress, it remains important to build on these efforts to support further job creation and real wage growth in the years ahead.
THIRTEEN KEY POINTS ON LABOR MARKET PROGRESS OVER THE LAST EIGHT YEARS
1. U.S. businesses have now added 15.8 million jobs since private-sector job growth turned positive in early 2010. Today, we learned that private employment rose by 144,000 jobs in December. Total nonfarm employment rose by 156,000 jobs, slightly below the monthly average for 2016 as a whole but substantially higher than the pace of about 80,000 jobs per month that CEA estimates is necessary to maintain a low and stable unemployment rate given the impact of demographic trends on labor force participation. The unemployment rate ticked up to 4.7 percent in December, less than half its peak during the recession, while the labor force participation rate—which has been largely unchanged over the past three years despite downward pressure from demographic trends—increased to 62.7 percent. Average hourly earnings for all private workers increased 2.9 percent over the past year, the fastest twelve-month pace since the end of the recession and above the pace of inflation in 2016.
2. Since job growth turned positive in October 2010, the U.S. economy has added jobs for 75 straight months—the longest streak of job growth on record and more than two years longer than the next-longest streak. Over this period, nonfarm employment growth has averaged a robust 199,000 jobs a month. On a calendar-year basis, the pace of job growth peaked at 251,000 jobs a month in 2014, the best year for job creation since the 1990s. In 2016, job growth remained strong, averaging 180,000 jobs a month. As of December 2016, total nonfarm employment exceeded its pre-recession peak by 6.9 million jobs. All of the net job creation in the current recovery has been in the private sector, as private-sector payroll employment exceeded its pre-recession peak by 7.0 million jobs as of December.
3. The unemployment rate has been cut by more than half since its peak in 2009, falling much faster and further than expected. After peaking at 10.0 percent in October 2009, the unemployment rate fell rapidly over the course of the recovery, and by mid-2015 had recovered fully to its pre-recession average. Since then, it has fallen even further, standing at 4.7 percent at the end of 2016. The rapid decline in the unemployment rate came far more quickly than most economists predicted: as recently as March 2014, private forecasters expected the unemployment rate to remain above 5.0 percent until at least 2020.
4. Real hourly wages have grown faster over the current business cycle than in any cycle since the early 1970s. In recent years, American workers have seen sustained real wage gains, as hourly earnings have grown faster than inflation. The chart below plots the average annual growth of real hourly earnings for private production and nonsupervisory workers—a group comprising about four-fifths of private nonfarm employment—over each business cycle, including both recessions and recoveries. (Economists prefer comparing across entire business cycles, as they generally represent economically comparable periods.) Since the beginning of the current business cycle in December 2007, real wages have grown at a rate of 0.8 percent a year, faster than in any other cycle since 1973.
5. Since the end of 2012, real wages for non-managerial workers have grown nearly 18 times faster than they did from 1980 to 2007. In fact, since the end of 2012, real wages for private production and nonsupervisory workers have grown over 5 percent cumulatively, more than double their 2.1-percent total growth from the business cycle peak in 1980 to the business cycle peak in 2007—a sign of the remarkable progress made by American families in the current recovery after years of slow growth in wages.
6. Robust real wage growth and strong employment growth have translated into rising real incomes for households, with the largest gains going to low- and middle-income families. From 2014 to 2015, real median household income increased by $2,800, or 5.2 percent, the largest annual increase on record. Gains were even larger in the lower half of the income distribution, ranging from an increase of 5.5 percent for households at the 40th percentile to an increase of nearly 8 percent for households at the 10th percentile. While households in the top half of the income distribution also saw increases, their gains were smaller, with an increase of 2.9 percent at the 90thpercentile of household income. Growth in both real wages and employment in 2016 point to continued gains in real incomes for American households.
7. On net, essentially all of the increase in employment over the recovery has been in full-time jobs. As measured by the household survey, U.S. employment reached a trough in December 2009. Since then, full-time employment has increased by 13.7 million. In contrast, part-time employment has increased by just 420,000 over the course of the recovery.
8. Broader measures of labor underutilization have also steadily improved, and all but one are below their pre-recession averages. The headline unemployment rate, the U-3 rate, includes unemployed persons who have looked for work in the last four weeks. Broader measures of labor underutilization each include a progressively larger group of individuals: U-4 counts discouraged workers in addition to the unemployed, U-5 adds in others who are marginally attached to the labor force, and U-6 also includes people working part-time who would prefer a full-time job (“part-time for economic reasons”). Like the headline unemployment rate, all of these measures saw large increases during the recession, with the U-6 rate in particular reaching a record high. However, U-3, U-4, and U-5 all recovered fully to their respective pre-recession averages in the summer of 2015 and have fallen further since. As of December, the U-6 rate was just 0.1 percentage point above its pre-recession average.
9. Real average hourly wages have risen in every major industry over the current business cycle—and in nearly all, the pace of increase has been faster than in the previous cycle. Since the beginning of the current business cycle, real wages for non-managerial workers have grown at an average rate of 0.8 percent a year. However, this average masks considerable variation in real wage growth among workers in different industries. As the chart below shows, workers in all major sectors have seen real increases in their hourly earnings, ranging from average gains of 0.1 percent a year for workers in the transportation and warehousing industry to gains of 1.7 percent a year for workers in the financial activities sector. For nearly all major industries, real wage gains so far in the current business cycle have outpaced gains in the 2000s business cycle.
10. Unemployment rates for all major demographic groups have recovered to below their respective pre-recession averages, though more work remains to close longstanding disparities in the labor market. The unemployment rates for African Americans and Hispanic Americans peaked at 16.8 percent and 13.0 percent, respectively, after experiencing larger percentage-point increases from their pre-recession averages than the overall unemployment rate did. By mid-2015, both the African-American and Hispanic-American unemployment rates had recovered to their respective pre-recession averages. Similarly, the unemployment rates for white Americans and for Asian Americans, which have historically tended to be lower than the overall unemployment rate, have more than recovered to their pre-recession averages. Still, the fact that the unemployment rates for African Americans and Hispanic Americans are much higher than the overall unemployment rate is a reminder that much more work remains to ensure that the benefits of the strong labor market are shared among all Americans, including through efforts like the My Brother’s Keeper initiative.
11. Initial claims for unemployment insurance (UI) have been below 300,000 for 96 consecutive weeks, the longest such streak since 1970. During the Great Recession, claims for unemployment insurance—which are an important leading indicator of recessions—rose sharply to near-record highs. However, they have since declined to well below their pre-recession average, and average weekly initial claims in 2016 were the lowest of any calendar year since 1973. Still, the share of unemployed workers eligible for unemployment insurance has fallen in recent years, in part as a result of reductions in coverage within States’ UI programs. A number of reforms—including several in the President’s Fiscal Year 2017 Budget—would build on the strengths of the UI system to ensure that it both provides effective assistance for those who lose a job through no fault of their own and helps to stabilize the U.S. economy during future downturns.
12. Two-thirds of States have seen their unemployment rates fall below their pre-recession averages. There was extremely wide variation in the effect of the Great Recession on unemployment rates across States and the District of Columbia, with increases ranging from nearly 200 percent (Nevada) to just 13 percent (Alaska) of their respective pre-recession averages. As of November 2016, however, 34 States and the District of Columbia have seen their unemployment rates recover fully, with a number of States seeing unemployment rates substantially below their pre-recession averages. The sixteen States that still have elevated unemployment rates include the six that saw the largest percentage increases in their unemployment rates in the recession.
13. Since 2010, the United States has put more people back to work than all the other G-7 economies combined. The rebound of the U.S. economy from the Great Recession occurred much faster than in most other advanced economies and compares favorably with the historical record of countries recovering from systemic financial crises. As shown in the chart below, the United States has been responsible for a disproportionate share of employment growth in the G-7 economies during the recovery. Although the United States comprises about two-fifths of total employment in the G-7, it has been responsible for more than 55 percent of the net employment growth since 2010, a further sign of the strength and resilience of the U.S. economy and the importance of the policies of the last eight years in putting it on a sounder footing.
As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and payroll employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report, and it is informative to consider each report in the context of other data as they become available.
Donald Trump has made it clear he intends to erase Obama’s legacy. The policies Trump is prescribing – tax cuts for the richest 1% and corporations, elimination of mortgage deductions that will steal the American Dream from middle class Americans, overturning clean energy, trade wars instead of promoting 21st century manufacturing, and policies sure to balloon the national debt, overturning Obama executive orders on overtime rules, raising the federal minimum wage, paid parental leave, overturning Dodd-Frank financial protections to prevent another overheated meltdown – will reverse the progress. So it is important to have a measure. Saving the US economy from collapse, saving Americans from another Great Depression, was one of the most significant successes of Obama’s presidency. Eight years after that uncertainty and insecurity, Americans seem to have forgotten. They take for granted what Obama accomplished in face of a Republican leadership determined to make his presidency fail, rather than rescue Americans losing their jobs, homes, health care, retirement and college funds. – Karen Rubin, News & Photo Features
Here is a report on eight years of economic progress:
Eight Years of Macroeconomic Progress and the Third Estimate of Gross Domestic Product for the Third Quarter of 2016
WASHINGTON, DC – Jason Furman, Chairman of the Council of Economic Advisers, issued the following statement today on eight years of macroeconomic progress and the third estimate of Gross Domestic Product for the third quarter of 2016. You can view the statement HERE.
Summary: Real GDP grew 3.5 percent at an annual rate in the third quarter, with the U.S. economy now 11.6 percent larger than at its peak before the crisis.
Third-quarter economic growth was revised up 0.3 percentage point to 3.5 percent at an annual rate, the fastest quarterly growth since 2014. The U.S. economy is now 11.6 percent larger than its pre-crisis peak in 2007 amid its strong recovery since the worst economic crisis since the Great Depression. Rising incomes, improved household balance sheets, and high levels of consumer confidence have supported robust consumer spending growth over the recovery. Meanwhile, the housing sector has continued to recover from the crisis and shows further potential for expansion. However, economic growth has faced a number of headwinds in the current recovery, including contractions in State and local government spending, weak foreign growth (which has weighed on both exports and investment), and the demographic effects of the aging U.S. population. More work remains to further strengthen growth and to ensure that it is broadly shared, including promoting greater competition across the economy; supporting innovation; increasing investments in infrastructure; and opening new markets to U.S. exports.
SEVEN KEY POINTS ON MACROECONOMIC PROGRESS OVER THE LAST EIGHT YEARS
1. According to BEA’s third estimate, real gross domestic product (GDP) increased 3.5 percent at an annual rate in the third quarter of 2016, an upward revision of 0.3 percentage point (p.p.) from the second estimate. Real consumer spending grew a strong 3.0 percent in the third quarter following robust growth in the second quarter. Inventory investment—one of the most volatile components of GDP—added 0.5 percentage point to GDP growth in the third quarter after subtracting 1.2 percentage points in the second quarter. Residential investment declined for the second quarter in a row, though at a slower pace in the third quarter than in the second. Notably, exports grew 10.0 percent at an annual rate in the third quarter, their fastest quarterly growth since late 2013, boosted by a likely transitory jump in agricultural exports.
Real gross domestic income (GDI)—an alternative measure of output—increased 4.8 percent at an annual rate in the third quarter. (In theory, GDP and GDI should be equal, but in practice they usually differ because they use different data sources and methods.) The average of real GDP and real GDI, which CEA refers to as real gross domestic output (GDO), increased 4.1 percent at an annual rate in the third quarter. CEA research suggests that GDO is a better measure of economic activity than GDP (though not typically stronger or weaker).
The 0.3-p.p. upward revision to GDP growth was more than accounted for by upward revisions to consumer spending, business fixed investment, and State and local government spending. However, the overall contour of third-quarter growth was largely unchanged from last month’s second estimate.
2. Strong consumer spending growth over the current recovery has been supported by growth in real incomes, improvements in household balance sheets, and high levels of consumer confidence. Consumer spending accounts for over two-thirds of GDP, and has contributed disproportionately to overall real GDP growth in recent years. This strength in domestic demand reflects improved economic conditions for American households across a wide range of measures. Real wages have grown faster over the current business cycle than in any since the early 1970s (measured peak to peak), and from 2014 to 2015 real median household income increased 5.2 percent, the fastest growth on record. Meanwhile, as a share of disposable income, household debt service—the amount that households must spend on interest and principal payments for their outstanding debt—has fallen sharply in recent years, driven both by low interest rates and by sharp reductions in outstanding household debt relative to income. Taken together, these factors have left households with more disposable income available for consumer purchases. Finally, consumers have been increasingly confident in recent years. As the chart below shows, the University of Michigan index of consumer sentiment—which tends to closely track real consumer spending growth—is close to its highest level in ten years.
3. The recent slowdown in real business fixed investment growth can be explained largely by changes in the rate of U.S. and foreign GDP growth, as discussed in Chapter 2 of the 2017 Economic Report of the President. While business fixed investment—private spending on structures and equipment, as well as expenditures on intellectual property products such as software and research and development (R&D)—constitutes just 12 percent of GDP, it is crucial to long-run growth because it provides workers with more capital and improves technology, thus contributing to productivity growth. Business fixed investment growth has slowed since 2014; while oil-related investment has dragged on overall investment growth due to low oil prices, non-oil related investment growth has slowed somewhat as well. CEA analysis finds that much of the slowdown in investment growth can be explained using an “accelerator model,” which assumes that businesses invest if they expect rising demand growth for their products, meaning that rising GDP growth rates will lead to faster investment growth. The analysis also finds that several factors that have historically impacted investment growth—including credit constraints and other financial stress—have little explanatory power in understanding the recent slowdown. However, because the model predicts that investment follows changes in the rate of GDP growth, it predicts a rebound in the future, since U.S. and global output growth are expected to stabilize or pick up slightly in the years ahead.
4. Ten years after the first signs of decline in the U.S. housing market, housing activity and investment have gradually recovered, with room for future expansion. Recovery in the housing sector has been supported by strong job growth, rising real wages, and low mortgage rates, with growth in real residential investment outpacing overall real GDP growth over the course of the recovery from the Great Recession. Even with the solid growth in recent years, there is room for further expansion in residential construction. As the chart below shows, housing starts remain well below the level needed to keep pace with population growth, household formation, and typical rates of housing stock replacement. CEA analysis suggests that excess housing supply from overbuilding during the 2000s has been more than offset by underbuilding in recent years. Low household formation, particularly among young adults, may be playing a role in reducing demand for housing. On the supply side, local barriers to housing development in high-demand areas may also be one factor holding back new residential construction. Still, residential investment has further room to grow in future quarters, presenting upside potential for domestic demand in the near-to-medium term.
5. Trends in real State and local government purchases have differed sharply from prior business cycles, with meaningful contractions amid budgetary cuts. Although in a typical recovery State and local spending tends to grow quickly and at a similar pace as in the pre-recession period, State and local spending contracted sharply in the current business cycle and, after seven years, has still not rebounded to its pre-crisis levels. During the four quarters of 2010, State and local purchases subtracted 0.5 percentage point from GDP growth and then subtracted about another 0.3 percentage point in both 2011 and 2012. Spending in this sector stabilized in 2013, added modestly to GDP growth during the four quarters of 2014 and 2015, and had a negligible impact on GDP during the first three quarters of 2016. Real State and local government purchases, as well as State and local government employment, remain below their respective pre-crisis levels. If State and local government purchases had increased at the average rate of expansions excluding the current cycle (as shown in the chart below), real GDP growth would have been approximately 0.4 percentage point faster per year on average in the current recovery. Due in part to contractions in State and local government spending, total real government purchases are below their level at the business cycle peak in 2007; in other words, all of the growth in real GDP in the current business cycle is attributable to the private sector.
6. Growth in U.S. exports closely tracks global demand, with slowing global growth creating key headwinds to U.S. growth in recent years. The volume of U.S. exports to foreign countries is sensitive to foreign GDP growth, and, as shown in the chart below, four-quarter foreign GDP growth—when weighting countries by their relative importance to U.S. trade—explains much of the variance in U.S. export growth. Over the last five years, global growth has consistently underperformed relative to forecasts, and in its October World Economic Outlook, the International Monetary Fund (IMF) revised down its forecast of global growth for the four quarters of 2016. Still, the IMF currently forecasts global growth to pick up in 2017, suggesting less downward pressure on U.S. export growth—and on the manufacturing sector, which tends to be more export-oriented than other industries—from weak foreign demand going forward.
7. The aging of the U.S. population, a trend that will continue in the coming years, has placed constraints on growth in potential real GDP. The growth of the working-age (15-64) population in the United States has slowed notably in recent decades, putting downward pressure on labor force participation and real GDP growth. The working-age population grew 1.4 percent at an annual rate in the 1960s through the 1980s, but just 0.6 percent during the current business cycle. (The rate of growth of the prime-age [25-54] population has declined even more steeply, and the prime-age population even contracted between 2012 and 2015.) The decline in the growth rate of the working-age population is expected to continue through 2028, suggesting continued demographic headwinds to overall growth for at least the next decade. As noted in Chapter 2 of the 2017 Economic Report of the President, research has found that demographic shifts towards an older workforce may have also reduced productivity growth in recent years, though projections of the composition of the labor force suggest that the drag on productivity from demographics may soon abate. Still, slowing productivity growth remains a key structural challenge that the United States shares with all other major advanced economies.
As the Administration stresses every quarter, GDP figures can be volatile and are subject to substantial revision. Therefore, it is important not to read too much into any single report, and it is informative to consider each report in the context of other data as they become available.
Donald Trump made hyperbolic statements during the campaign promising to Make America Great Again and bring back lost factory jobs. But the Obama Administration has actually done it. In these waning days of Obama’s presidency, the administration is trying to get as much done as possible. Trump won’t succeed in restoring manufacturing by threatening companies with a 35% tax, or promising coal miners that their jobs (and black lung disease) will be restored. But the good news is that Obama has created a template for creating jobs – and particularly, manufacturing jobs – in a new economy shaped by emerging technology and yes, globalization. Need a job, want a job? This is where the jobs are. – Karen Rubin, News & Photo Features
Here is a Fact Sheet announcing on December 21 the third Manufacturing USA Institute awarded in three weeks:
The Advanced Regenerative Manufacturing Institute (ARMI), Inc., headquartered in Manchester, NH, brings nearly $300 million in public-private investment from leading manufacturers and universities to develop the cells, tissues, and organs that may one day restore form and function to wounded warriors and civilians.
Today, the Department of Defense is awarding the new Advanced Tissue Biofabrication Manufacturing USA institute, which brings together a consortium of 87 partners from across industry, academia, and government to develop the manufacturing technologies for life-saving cells, tissues, and organs. The winning coalition, led by ARMI, Inc. and headquartered in Manchester, NH will develop next-generation manufacturing techniques for repairing and replacing cells and tissues, which may one day lead to the ability to manufacture new skin for soldiers scarred from combat or develop organ-preserving technologies to benefit Americans waiting for an organ transplant.
The Advanced Regenerative Manufacturing Institute being announced today is the twelfth manufacturing hub awarded by the Obama Administration, and follows on the heels of two other hubs announced in the last two weeks—the National Institute for Innovation in Manufacturing Biopharmaceuticals, the first open-topic institute and the first institute awarded by the Department of Commerce, headquartered in Newark, DE; and the Rapid Advancement in Process Intensification Deployment Institute, awarded by the Department of Energy, headquartered in New York, NY.
Today at the White House, Under Secretary of Defense for Acquisition, Technology and Logistics Frank Kendall will announce the winning consortium before an audience of stakeholders from industry, academia, and government, including senior leaders from the White House, Department of Commerce, Department of Energy, and representatives from many of the existing Manufacturing USA institutes.
In the four years since its establishment, Manufacturing USA has grown from one institute with 65 members to a network of now 12 institutes with nearly 1,000 members. The institutes are already attracting new business investment to their regions, developing the cutting-edge technologies to drive American leadership, and training the workforce that will apply new skills to our manufacturing sector. Across the Manufacturing USA institutes, the Federal government has committed over $850 million, which has been matched by more than $1.8 billion in non-Federal investment. Today’s progress builds on important bipartisan action from Congress, which in 2015 passed the bipartisan Revitalize American Manufacturing and Innovation to formally authorize the program, proving that strengthening American manufacturing is a goal on which we can all agree.
After a decade of decline from 2000 to 2009, the U.S. manufacturing sector has added over 800,000 jobs since early 2010. Despite recent headwinds, the foundation for U.S. manufacturing is stronger than it has been in decades. Just this year, a new report on global manufacturing competitiveness found that manufacturing executives view the United States as the best location in the world for manufacturing in the years ahead.
The New Manufacturing USA Institute Awards
Manufacturing USA connects people, ideas, and technology to solve industry-relevant advanced manufacturing challenges, enhancing industrial competitiveness and economic growth and strengthening our national security. Each manufacturing institute is designed to build U.S. leadership and regional excellence in critical emerging manufacturing technologies by bridging the gap between early research and product development; bringing together companies, universities, and other academic and training institutions, and Federal agencies to co-invest in key technology areas that can encourage investment and production in the United States while serving as a ‘teaching factory’ for workers, small businesses, and entrepreneurs looking to develop new skills or prototype new products and processes.
Repairing and replacing cells, tissues, and organs. Announced today, the Advanced Regenerative Manufacturing Institute is poised to develop next-generation manufacturing techniques for repairing and replacing cells and tissues, which may one day lead to the ability to manufacture new skin for soldiers scarred from combat or develop organ-preserving technologies to benefit Americans stuck on organ transplant waiting lists. Headquartered in Manchester, NH, ARMI will focus on solving the cross-cutting manufacturing challenges that stand in the way of producing new synthetic tissues and organs—such as improving the availability, reproducibility, accessibility, and standardization of manufacturing materials, technologies, and processes to create tissue and organ products. ARMI will convene leaders from a multitude of disciplines, from cell biology and bioengineering to materials science and computer modeling. The partners will work to develop high-throughput culture and 3D biofabication techniques to non-invasive, real-time testing and sensing to measure the viability of engineered tissue constructs.
Industry Partners: Abbott, Autodesk, Becton Dickinson, Celularity, DEKA Research & Development, GenCure, Humacyte, Lonza, Medtronic, Rockwell Automation, and United Therapeutics
Government and non-profit organizations: FIRST, the State of New Hampshire, and Manufacturing Extension Partnerships in multiple states
Universities and Other Schools: Arizona State University, Boston University, Cedars-Sinai Medical Center, Dartmouth College, Harvard University, Massachusetts Institute of Technology, Rutgers, Stanford University, the University of Florida, the University of Minnesota, the University of New Hampshire, Worcester Polytechnic Institute, and Yale University
Life-saving bio-therapies. On December 16, Commerce Secretary Penny Pritzker announced the winner of the Department of Commerce’s first institute and the first open-topic institute competition: the National Institute for Innovation in Manufacturing Biopharmaceuticals (NIIMBL). NIIBML will be led by USA Bio Consortium, a team of more than 150 partners representing all of the elements required to make biopharmaceutical drugs—from the equipment makers and suppliers of raw materials, to the companies developing new treatments and readying them for clinical trials and regulatory approval, to the clinics treating patients. NIIMBL will work to accelerate the transition of disease-treating biopharmaceuticals from the lab to the market, with the aim to make these live-saving therapies more accessible to patients. NIIMBL will also help rapidly scale up manufacture of these advanced treatments to respond to pandemics and other biological threats, address drug shortages resulting from issues in manufacturing, and support precision medicine by exploring new processes and equipment to allow the cost-effective manufacture of single-batch biopharmaceutical exactly matched to an individual’s genetics or disease. Read more here, and how NIIMBL’s efforts will complement ARMI’s efforts here.
Companies and Non-Profit Organizations: Agilent Technologies, AIChE, Air Liquide, Altimmune, Amgen, Amgen Foundation, Artemis Biosystems, Association of University Research Parks, ASTM, BioFactura, Biogen, BioHealth Innovation, Biologics Modular, BioPhorum Operations Group, bioVolutions, BMC Corp, Boehringer Ingelheim Fremont, California Manufacturing Technology Consulting, Celgene Corp, Charles River Laboratories, ChromaTan, Cimetrics, Colorado BioScience Association, Commissioning Agents, Inc, Connecting Connecticut’s Science Community, Continuus Pharma, Corning Life Sciences, DelawareBio, DEMEP, DVIRC, Eli Lilly Research Labs, EMD Serono, FiberCell Systems, FloDesign Sonics, Fraunhofer CMB, Fraunhofer CESE, GBSI, GE Healthcare Life Sciences, Georgia Bio, Georgia Tech MEP, Grifols S.A., IBM, ILC Dover, ImmunoGen, Indiana Health Industry Forum, Institute for BioScience & Biotechnology Research, Intellia Therapeutics, IOWABio, Janssen Pharma, Juno Therapeutics, Kentucky Life Sciences Council, LakePharma, Lewa Process Technologies, Lonza Biologics Inc., Manex, MANTEC, MassBio, MassMep, MD MEP, MedImmune, MEPOL, MilliporeSigma, National Institute for Pharmaceutical Technology and Education, NC Bio, NC MEP, NEPIRC, NewYorkBIO, North Carolina Biotechnology Center, Novartis, Novo Nordisk, NYDSTI, Orochem, Pall Corp, Parental Drug Association, PBS Biotech, Pennsylvania Bio, Pfizer, Pharma Matrix, Pharyx Inc., Protein Sciences Corp, Purdue MEP, Regeneron Pharma, RepliGen, Rooster Bio, Sanofi Pasteur, SC MEP, Shire, Southwest Research Institute, SoyMeds, Stratosphere, Sudhin Biopharma, Tech Council of MD, Terumo BCT, THBI, Thrive Bioscience, University City Science Center, Unum Therapeutics, USP, Vericel Corp, Voyager Therapeutics, VWR, Waters
Universities, Colleges and Other Schools: Bio-Link (City College of San Francisco), Carnegie Mellon University, Clemson University, Delaware State University, Delaware Technical Community College, East Carolina University, Georgia Institute of Technology, Harvard University, IVY Tech Community College, Johns Hopkins University, MARBIONC: Marine Biotechnology in NC (UNC Wilmington), Massachusetts Institute of Technology, Memorial Sloan Kettering, MiraCosta College District, Montgomery College, Northeast Biomanufacturing Center and Collaborative, North Carolina Central University, North Carolina Community College’s BioNetwork System, North Carolina State University, Pennsylvania State University, Purdue University, Quincy College, Rensselaer Polytechnic Institute, Solano Community College, The University of Texas at Austin, Tulane University, University of California Berkeley, University of Colorado Boulder, University of Connecticut, University of Delaware, University of Georgia, University of Iowa, University of Kansas, University of Kentucky, University of Maryland, University of Massachusetts, University of Minnesota, University of North Carolina Chapel Hill, University of North Carolina Charlotte, University of Pennsylvania, University of Wisconsin
State Government and Regional Organizations: Commonwealth of Pennsylvania, Massachusetts Life Sciences Center, State of Delaware, State of Maryland, State of Minnesota, State of North Carolina
States: Arizona, California, Colorado, Connecticut, Delaware, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Minnesota, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Texas, Washington, Washington D.C., Wisconsin
Ultra-efficient chemical manufacturing. On December 9, the Acting Assistant Secretary for Energy Efficiency and Renewable Energy in the Department of Energy David Friedman announced that the American Institute of Chemical Engineers will lead the Rapid Advancement in Process Intensification Deployment (RAPID) Institute. With over 130 partners from universities, companies, local and state organizations, and other Manufacturing USA institutes, the RAPID institute will work to develop new modular technologies to enable customized factories, local manufacturing in remote locations, and greater utilization of U.S. raw materials for manufacturing, while training future U.S. workers in these advanced fields. The RAPID institute will work to advance manufacturing processes used for making chemicals, refining fuels, and producing other everyday products used across the U.S. economy. By optimizing manufacturing at the molecular level, technologies developed by this institute will aim to save energy with every chemical reaction. In addition to improving energy efficiency, these technologies can lead to big savings on the manufacturing floor, such as cutting operating costs, waste, and equipment footprint. In the chemical industry alone, these technologies have the potential to save more than $9 billion in process costs annually. For example, by simplifying and shrinking the physical space needed for manufacturing, this approach may enable natural gas refining directly at the wellhead, saving up to half of the energy lost in the ethylene cracking process today. Read more here. Initial partners include:
Industry partners: Alloy Surfaces, Arkema, AspenTech, ATI Specialty Alloys, Automation Solutions, Avatar Sustainables, Ayers Group, BASF, BgtL, Biodico, Cantrell Capital, CB&I, Cermatec, CF Technologies, Compact Membrane Systems, Convergent Catalysis, Corning, Cummins, Domtar, Dow, Dow Water Solutions, DuPont, Earth Energy Renewables, Eastman Chemical, Easy Energy Systems, EcoCatalytic Technologies, Emerson Process Management, Enginuity Worldwide, Environmental & Fuel Research LLC, Environmental Engineering Solutions, ExxonMobil, Fluor, Franklin International, Full Cycle Bioplastics, FutureCeuticals, GE Water and Process Technologies, Greenway Energy, H Quest Vanguard, i3D MFG, Intellectual Assets, IntraMicron Inc., Italmatch Chemicals, Kore Infrastructure, Lubrizol, Managed Technology Solutions Group, Matric, NatureWorks, NuScale Power, Onboard Dynamics, Pall Corp., Paul Weaver Construction Equipment, Petron Scientech, Pioneer Tank & Vessel, Portland General Electric, Praxair, Process Systems Enterprise, Reliance Industries, RnD Consulting, Roeslein Alternative Energy, Saint Gobain NorPro, Secat Inc., Shell, Sigma Innova, Solar Fuels & Chemicals, Solvay, Southern Company, Strategic Analysis, United Technologies Research Center, Vacuum Process Engineering, vanZoen, Waste Resource Recovery, Xcel Energy, Zaiput Flow, Zeachem, Zeton
Local and State Organizations: Alabama Department of Commerce, Iowa Economic Development, Iowa Energy Center, State of Oregon, Oregon Manufacturing Extension Partnership, South Carolina Department of Commerce, South Carolina Manufacturing Extension Partnership
Academic Partners and Research Institutions: Auburn University, Carnegie Mellon University, Case Western University, Clemson University, Drexel University, Georgia Institute of Technology, Iowa State University, Manhattan College, Michigan State University, Massachusetts Institute of Technology, North Carolina State University, Oregon State University, Rutgers University, State University of New York, Texas A&M, Texas Tech University, University of Alabama, University of Arizona, University of California at Los Angeles, University of Delaware, University of Idaho, University of Illinois, University of Kentucky, University of Louisville, University of Michigan, University of Minnesota, University of North Dakota, University of Pittsburgh, University of South Carolina, University of Southern California, University of Texas, University of Wyoming, Worchester Polytechnic Institute, West Virginia University.
Not for Profit and Independent Associations: American Chemistry Council, American Chemical Society, Agenda 2020, Clean Energy Smart Manufacturing Institute, Digital Manufacturing and Design Innovation Institute, Gas Technology Institute, Glass Manufacturers Industry Council, Institute for Advanced Composites Manufacturing Innovation, National Society of Black Engineers, Research Triangle Institute, Society of Chemical Manufacturing and Affiliates, Southern Research Institute.
Laboratories: The Ames Laboratory, Idaho National Laboratory, Lawrence Livermore National Laboratory, National Energy Technology Laboratory, Oak Ridge National Laboratory, Pacific Northwest National Laboratory, Savannah River National Laboratory, The Forest Products Laboratory (U.S. Forest Service), The National Risk Management Laboratory (EPA).
Ongoing Institute Competitions
In addition to the three institutes announced since December 9, other Manufacturing USA institute topics are now under competition in the areas of:
Sustainable materials manufacturing. In collaboration with the Department of Energy, the winner of the competition for the Reducing Embodied Energy and Decreasing Emissions (REMADE) in Materials Manufacturing Institute will focus on reducing the total lifetime use of energy in manufactured materials by developing new cradle-to-cradle technologies for the reuse, recycling, and remanufacturing of manmade materials. U.S. manufacturing consumes nearly a third of the nation’s total energy use annually, with much of that energy embodied in the physical products made in manufacturing. New technologies to better repurpose these materials could save U.S. manufacturers and the nation up to 1.6 quadrillion BTU of energy annually, equivalent to 280 million barrels of oil, or a month’s worth of domestic oil imports. Read more here.
Collaborative robotics. Together with the Department of Defense, the winner of the competition for the Robots in Manufacturing Environments Manufacturing USA Institute will focus on building U.S. leadership in smart collaborative robotics, where advanced robots work alongside humans seamlessly, safely, and intuitively to do the heavy lifting on an assembly line or handleintricate or dangerous tasks with precision. People collaborating with robots has the potential to change a broad swath of manufacturing sectors, from defense and space to automotive and health, enabling the reliable and efficient production of high-quality, customized products. Read more here.
Industry-proposed topic. Leveraging authorities from the Revitalizing American Manufacturing and Innovation Act with broad bipartisan support in Congress, the Department of Commerce has launched the first “open topic” institute competition. This competition is open to any topic proposed by industry not already addressed by a manufacturing innovation institute. In addition to NIIMBL, which is awarded using FY2016 funds, additional institutes may be awarded from this competition, subject to the availability of additional funds. The open topic competition design allows industry to propose technology areas seen as critical by leading manufacturers to the competitiveness of U.S. manufacturing. Read more here.
Early Successes from Manufacturing USA
Together, the Manufacturing USA institutes are already enhancing U.S. competitiveness in advanced manufacturing—from helping Youngstown, OH attract over $90 million in new manufacturing investments to its region and train 14,000 workers in the fundamentals of 3D printing for businesses, to supporting companies like X-FAB in Lubbock, TX upgrade to next-generation power semiconductors and sustain hundreds of jobs. These public-private partnerships are bringing value to their members and regions by providing:
Technological Innovation: By accelerating the transition from design to Made in USA, the institutes are developing emerging manufacturing technologies—for example, America Makes, the National Additive Manufacturing Innovation Institute in Youngstown, OH enabled one of its founding members, Oxford Performance Materials, Inc., to become the first company to receive clearance from the U.S. Food & Drug Administration to manufacture 3D-printed polymer implants for use in surgical procedures in the United States.
Collaborative Constituencies: The institutes align pre-competitive industry priorities by combining the efforts of manufacturers across geographies and supply chains—for example, the American Institute for Manufacturing Integrated Photonics (AIM Photonics), the Integrated Photonics Institute in Rochester, NY, has members on both coasts that, collectively, comprise the entire supply chain for integrated photonics, from microfabrication processing training and circuit design centers in Massachusetts; to wafer foundry, packaging, and assembly centers in New York; to integrated photonic device manufacturers in California.
Leveraged Investments: For companies, institute membership provides access to unique equipment and capabilities that are too costly for any one company to undertake—for example, Advanced Functional Fabrics of America (AFFOA), the Revolutionary Fibers and Textiles institute in Cambridge, MA, is standing up a distributed, on-demand foundry to rapidly identify domestic manufacturing pathways within its membership to accelerate the design-to-product process.
Networked Expertise: Manufacturing USA is at its best when the institutes are working together— for example, to create a talent pipeline of multi-skilled manufacturing technicians. This cross-institute effort is designed to match talent demands from industry members with the best content from academia members, define promising career pathways, and align workforce investment resources across municipalities, states, and regions.
Customized Training: Institutes act as “teaching factories,” providing hands-on factory workforce training for the relevant technology– for example, NC State, the lead for Power America, has created a Master’s of Science concentration focused on wide band gap semiconductor power electronics. More than 200 graduate students at NC State and member universities of Power America are now studying power electronics each year. As a result, over 225 freshman engineering students have been introduced to wide band gap semiconductors, building a talent pipeline of future graduates.
Business Opportunities: By developing national expertise across their supply chains, the institutes are creating new reasons for companies to locate jobs and investment in their regions and the United States—for example, Leisure Pools, a polymer composite pool manufacturer originally from Australia, has relocated its facilities to be near the Institute for Advanced Composites Manufacturing Innovation (IACMI) in Knoxville, TN, as Leisure Pool moves into new areas to become an advanced manufacturer of carbon fiber composite material products and adds up to 1,000 jobs in Knoxville over the next decade.
Innovation Ecosystems: The institutes are creating trusted environments, knitting together technical expertise across supply chains to craft new business opportunities—for example, the Digital Manufacturing and Design Innovation Institute (DMDII) in Chicago, IL is providing space within its facilities for start-ups developing their business, facilitating relationships between young companies and large industrial members through collaborative projects.
Rejuvenated Neighborhoods: By anchoring regional manufacturing competitiveness, the institutes are breathing new life into the manufacturing regions where they are located—for example, Lightweight Innovations for Tomorrow (LIFT), the lightweight and modern metals manufacturing institute in Detroit, MI, has transformed a former factory that was abandoned during the wave of offshoring in the early 2000s, rejuvenating one of Detroit’s oldest neighborhoods.
To learn more about the open competitions for these next manufacturing innovation institutes, please visit Manufacturing.gov. In addition to today’s announcement, the established manufacturing innovation institutes are:
America Makes, the National Additive Manufacturing Innovation Institute (Youngstown, OH)
Digital Manufacturing and Design Innovation Institute (Chicago, IL)
Lightweight Innovations for Tomorrow (Detroit, MI)
Power America (Raleigh, NC)
Institute for Advanced Composites Manufacturing Innovation (Knoxville, TN)
American Institute for Manufacturing Integrated Photonics (Rochester, NY)
Next Flex, the Flexible Hybrid Electronics Manufacturing Innovation Institute (San Jose, CA)
Advanced Functional Fabrics of America (Cambridge, MA)
Smart Manufacturing Innovation Institute (Los Angeles, CA)
Rapid Advancement in Process Intensification Deployment (New York, NY)
National Institute for Innovation in Manufacturing Biopharmaceuticals (Newark, DE)
Obama Administration initiatives like TechHire have contributed to the record job creation and are in strong contrast to the feeble “score” Donald Trump is touting in retaining 800 jobs at Carrier Air Conditioners by throwing $7 million in tax incentives, paid for by Indiana citizens. It should have been a model to be continued and expanded. In contrast to Trump’s corporate welfare approach – which will be manifest in massive corporate tax cuts which will have to be paid for by working people – job-training programs like Obama’s would have helped those who are being displaced by advanced manufacturing technologies and the transition to clean, renewable energy enterprises, capturing more of the 5.5 million jobs that employers are having difficulty filling. Here’s yet another Fact Sheet of what America will lose with the incoming Administration. – Karen Rubin, News & Photo Features
FACT SHEET: Progress and Momentum in Support of TechHire Initiative
In March 2015, the President launched the TechHire initiative based on a simple idea: Building a pipeline of tech talent can bring new jobs to local economies, facilitate business growth, and give local residents a pathway into the middle class. To build such a pipeline, TechHire addresses employers’ great need for technology talent with emerging models for quickly training people with limited ingoing technology skills to be job-ready in months, not years.
Today, there are nearly 600,000 open IT jobs across all sectors—more than two-thirds of which are in fields outside the tech sector, such as manufacturing, financial services and healthcare. These jobs pay one and a half times more than the average private-sector job, and training takes less than a year with emerging programs like “coding bootcamps,” free open data trainings, and online courses like the Department of Commerce’s Data Usability Project and massive open online courses (MOOCs) by the Federal government, academic institutions, non-profit organizations, and the private sector.
Since its launch, TechHire communities across the country have piloted fast-track training programs designed to give people skills that are in high demand by employers. So far over 4,000 people have been trained and connected to work opportunities with local employers, earning average salaries of well over median income. Today, U.S. Chief Technology Officer Megan Smith announced how private organizations will seize on this progress with new steps to meet the scale of the opportunity.
Expansion of TechHire to over 70 Cities, States, and Rural Areas. Earlier this spring, we announced that communities had exceeded the President’s goal of doubling the size of the TechHire initiative, reaching a total of 50 communities. Yet even after we made the announcement, new communities continued expressing interest to participate—so today, we are announcing 20 new communities joining the TechHire initiative, working with about 500 employers (and counting). As of today, communities in 39 states, plus DC and Puerto Rico, have joined TechHire.
Growth of the TechHire Action Network. Today, we are announcing a partnership between Opportunity@Work, an independent social enterprise, and the U.S. Department of Education to take the lead in continuing to support, organize and grow the more than 70 cities, states, and rural areas participating in the TechHire initiative.
TechUP’s Include.io 27-City Roadshow 2017. TechUP | WeTechUP.com is launching the Include.io 2017 Roadshow across 27 cities in the United States to ignite 100,000 diverse and non-traditional tech talent and help 1,000 companies build their best teams.
The Challenge and Opportunity
People Need Opportunities to Retool and Retrain for Good Jobs More than Ever
Over the past decade, towns across America have experienced shifts in prevalent industries and jobs due to rapidly evolving technologies and other factors. These changes have too often made workers’ skills less relevant, impacting their employment options and, in some cases, leading to spells of unemployment that make it difficult for families to meet even their most basic of needs.
When workers lose their jobs or get stuck in lower-wage jobs because of local economic shifts due to no fault of their own, they should have clear pathways to the middle class. Technology jobs can offer this pathway. Nearly 40 percent of these jobs do not require a four-year degree. In recent years, there has been a proliferation of fast-track tech training programs like “coding bootcamps” that prepare people with little technical know-how for tech jobs, often in just a few months. A recent survey from Course Report found that bootcamp graduates saw salary gains of 38 percent (or about $18,000 annually) after completing their programs.
The U.S. is Massively Underinvesting in Training for Jobs in Technology and Other In-Demand Fields to Meet Employers’ Needs
In the face of a large and growing need of companies and workers to retool and retrain, the U.S. is massively underinvesting in job training programs. The federal government’s largest job training investment program only trains about 180,000 U.S. workers per year. America spends 0.03 percent of GDP on training while other countries are investing nearly 20 times more. And in spite of the evidence that apprenticeships are one of the most effective training tools, fewer than five percent of workers in the U.S. train as apprentices, relative to 60 percent in Germany.
In early 2010, there were 14.4 million unemployed Americans. Current funding levels would only allocate $212 per person for training and reemployment services, an insufficient amount compared to a $1,700 average semester cost for a community college. During times of high unemployment in 2009, many states reported training waiting lists of thousands of people long due to funding gaps.
Training workers in the US for 21st-century jobs will require a significant increase in investment from current levels, which are far below Germany and other European countries. This investment would benefit our businesses, our workers, and our economy by focusing on technology and other in-demand skills that are critical to fill existing jobs and attract and create new jobs in communities.
Expansion of TechHire to over 70 Cities, States, and Rural Areaswith 20 New Communities Signing on Today
The TechHire initiative began in March 2015 with 21 communities, and today it has grown to over 70 communities working with 1,500 employers on three key actions:
Opening up recruiting and hiring pathways for people without traditional credentials who can demonstrate that they have the skills to succeed in a tech job regardless of where those skills were attained.
Recruiting, incubating, and expanding accelerated tech learning programs – such as high quality coding bootcamps and innovative online training – which enable interested, unexperienced students to rapidly gain tech skills.
Connecting people to jobs by investing in and working with organizations that can vouch for those who have the skills to do the job, but who may lack the typical profile of education and experience.
20 New TechHire Communities Announced Today
Today, the following 20 communities are joining the TechHire initiative:
Alachua and Bradford
Counties, FL
Anchorage, AL
Arizona (State of)
Bellevue, WA
Boston, MA
Carroll County, MD
Central Florida
El Paso County, TX
Howard County, MD
Mobile, AL
Oklahoma City, OK
Omaha, NE
Pensacola, FL
Santa Fe and Northern New Mexico
Tampa Bay, FL
Trenton City, NJ
Tulsa, OK
Puerto Rico
Toledo, OH
Stamford, CT
A detailed summary of each community can be found at the end of this document.
Growth of TechHire Action Network
Opportunity@Work, an independent social enterprise, will partner with the U.S. Department of Education and others to continue to support TechHire communities to implement, grow, amplify, and sustain their TechHire initiatives locally and across the country and organize the Action Network. Key goals of TechHire and the Action Network include:
(1) Connecting employers to nontraditional, often overlooked, and more diverse tech talent and lifting up best practices from model companies.
(2) Aggregating resources and partnerships to help underrepresented groups access and progress on tech career pathways.
(3) Recruiting new TechHire communities and partners across sectors to support TechHire and advance the goal to expand access to fast-track tech training for underrepresented groups.
(4) Developing and collecting tools and resources on TechHire.org to support job seekers, employers, educators, and community partners.
(5) Working with communities to identify and leverage federal, state, local, and philanthropic funding more effectively to support TechHire activities and accelerated tech training.
(6) Expanding the learning network of TechHire leaders across the country, convenenational and regional events to promote collaboration among TechHire hubs, share best practices, and troubleshoot common challenges.
(7) For more details, visit the TechHire.org page.
TechUP’s Include.io 27-City Roadshow 2017
The TechUP + Include.io roadshow will bring together TechHire partners, technologists, recruiting leaders, and local community innovators to showcase the depth and breadth of incredible, diverse tech talent across the Unites States. Each city event features tech demos, workshops, and a career fair to highlight the next generation of technologists, thought leaders, and scale human connections. Their goal will be to spark local tech ecosystems, build momentum around inclusion, fill open tech jobs and change the face of technology.
Summary Descriptions of the 20 Communities Joining TechHire Today
We are pleased that communities continue to spread the TechHire initiative across the country, and today we announce an additional 20 communities who have developed cross-sector coalitions to train workers with the tech skills they need for the open tech jobs that local employers are seeking to fill. A summary of each of the communities is below:
Alachua and Bradford Counties, FL
In Alachua and Bradford counties, Santa Fe College in Gainesville, FL, CareerSource of North Central Florida (CSNCFL), the Gainesville Area Chamber of Commerce, and the North Florida Regional Chamber of Commerce will collaborate with Gainesville Dev Academy and others to train and place at least 300 individuals into programming and app development jobs by 2020. This program will help serve local tech jobs across all sectors, including local tech companies like Immersed Games, MindTree, Onward Development, NextGen, and Verigo.
Anchorage, AL
Led by the Anchorage Economic Development Corporation, the Anchorage Mayor’s Office will work with Anchorage Community Land Trust, Code for Anchorage, Future Coders of Alaska, Lynda.com, Coursera, and other programs to train and place over 500 workers into tech jobs by 2020. Once trained, program graduates will fill the needs of local employers including GCI, Municipality of Anchorage, Resource Data. Inc, and PangoMedia, as well as help retain Anchorage’s top talent. To help connect graduates to jobs, the Alaska Department of Labor aims to revamp the interface for the state job-seeker platform.
Arizona (State of)
The State of Arizona Office of Economic Opportunity will leverage a “No Wrong Door” approach to recruit disconnected youth and nontraditional candidates into tech training and jobs across industries from aerospace & defense to financial services. The Arizona Tech Council, Arizona’s premier trade association for science and tech companies, will help leverage the resources of the tech community to focus on expanding tech talent, along with the Greater Phoenix Chamber of Commerce and other local organizations. In partnership with the University of Arizona and other local training providers, TechHire Arizona aims to train and place over 100 individuals across southern Arizona and Maricopa County over the next year, which is slated to increase to well over 500 individuals across Arizona by 2020.
Bellevue, WA
TechHire Bellevue will bring together local employers, government and workforce development resources, with educational support from Coding Dojo and Bellevue College to facilitate training and hiring of local talent into tech jobs. The TechHire effort aligns with local employers’ missions to increase workforce diversity. Examples include Microsoft’s LEAP and Civic Tech programs, as well as Expedia, which has hired nearly a dozen Coding Dojo graduates to date. TechHire Bellevue will specifically target under-served populations locally, including minorities, veterans and the homeless, to help them learn and connect with local tech jobs.
Boston, MA
A regional consortium of Boston employers and training providers are blazing the path to IT jobs, led by the Boston Private Industry Council (PIC), the City’s workforce development board, and SkillWorks, a regional funders’ collaborative. Companies from a range of sectors—including healthcare, education, government, technology, and finance—will support the initiative. TechHire Boston plans to more than double the number of high school Tech Apprentices from 100 to 250 and increase the number of individuals connected to IT-related jobs to 500 by 2020.
Carroll County, MD
Carroll County employers, training providers, and community organizations are uniting to train and employ more than 200 local tech workers by 2020. Led by Carroll Community College, the Carroll Technology Council and the Mid-Atlantic Gigabit Innovation Collaboratory, Inc. (MAGIC), a broad group of partnering organizations will connect local participants in leading-edge tech training programs to a network of over 520 county employers.
Central Florida
CareerSource Central Florida is developing a coalition across sectors to train and place 100 people within the year and 400 people by 2020 into tech jobs, with an emphasis on serving underemployed, minority, and female candidates. The University of Central Florida, Valencia College, and Florida Institute of Technology will each play a role in developing trainings for students to quickly learn tech skills. Businesses from across Florida that participate in the Florida High Tech Corridor Council will support the initiative with an array of commitments, including commitments to consult on course design, interview candidates, and provide on-the-job learning opportunities.
El Paso County, TX
Emerging companies in El Paso County will soon have an influx of talent, thanks to collaboration among the Workforce Solutions Borderplex Development Board Area and local partners to lead Reboot El Paso, a collective effort to create and expand IT career pathways. The initiative aims to train and place 400 individuals into tech jobs by 2020. First, the coalition will build awareness among non-traditional candidates, with an emphasis on veterans, the long-term unemployed, and youth. Then, the coalition commits to develop a pipeline to jobs with employer partners and assess applicants for fit to the jobs with competencies rather than credentials. Finally, the coalition will connect graduates to jobs.
Howard County, MD
Howard Community College and the Howard Tech Council (HTC) will come together to train individuals for jobs in tech fields including computer science, information technology, cybersecurity, and computer forensics. Howard County’s TechHire initiative will leverage an apprenticeship model, whereby trainees can participate in on-the-job learning with the over 200 regional employers that participate in Howard Tech Council. By 2020, the Howard County TechHire initiative aims to train and place 800 individuals, with an emphasis on the long-term unemployed, minorities, and the military.
Mobile, AL
The City of Mobile, Alabama will partner with the Gulf Coast Technology Council and 17 employers to develop industry-driven training, including customized capacity building for incumbent workers, a coding bootcamp pilot, and advanced manufacturing technical trainings for entry-level job seekers. The trainings will be facilitated by Depot/U, Iron Yard, and General Assembly. This program will include opportunities for trainees to network with local employers seeking talent, including Accureg Software, AM/NS Calvert, Rural Sourcing Inc., and The Red Square Agency. By 2020, the collaborative aims to train and hire 500 technical workers, including those who are underemployed and dislocated, boosting Mobile’s burgeoning tech community.
Oklahoma City, OK
StarSpace46, Inc., Creative Oklahoma, and Techlahoma Foundation will work with fast-track and agile training programs to train and place 500 IT workers by 2020. With commitments from employers spanning from the aerospace sector to the not-for-profit sector, trainees will gain and utilize skills in native mobile development, user interface design, and front-end and application development. Students will also gain access to mentorship in entrepreneurship and business.
Omaha, NE
Omaha is bringing together AIM and the Greater Omaha Chamber of Commerce, including traditional and start-up employers alike, in their effort to develop a local tech training and employment ecosystem. Local training bootcamps have committed to help train over 1,000 people by 2020, to help fill local tech jobs in industries from financial services to tech.
Pensacola, FL
Pensacola State College will collaborate with employer convener Innovation Coast, Inc., including community workforce partners Global Business Solutions, Inc. (GBSI), Technical Software Services, Inc. (TECHSOFT), Gulf Power Company, AppRiver, and the Institute of Human & Machine Cognition (IHMC), to train and place 200 technology workers by 2020. With a focus on veterans, minorities, and economically disadvantaged individuals in the Pensacola area, students can gain skills across IT fields, including cybersecurity, coding, and networking. In addition to training, this initiative includes opportunities to make connections with potential employers and reduce unemployment.
Santa Fe and Northern New Mexico
NMTechWorks is a community coalition in Santa Fe and Northern New Mexico with support from the Mayor’s Office, local employers, and non-profits. This multi-sector effort is designed to map, expand, and link pathways to tech careers, especially for rural, Native American, and Spanish-speaking community members. The Community Learning Network and StartUp Santa Fe are teaming with Cultivating Coders, a locally-based accelerated training provider, and others to grow the IT pipeline and train more than 500 students by 2020 for high-demand tech jobs with employers such as the Los Alamos National Laboratory, OpenEye Scientific Software, and Descartes Labs.
Tampa Bay, FL
CareerSource Tampa Bay, Hillsborough County’s workforce development board, will fast-track critical IT training and employment opportunities for well over 1,000 local out-of-school youth and young adults through 2020. Employers across industries, such as BayCare Health Systems and Cognizant Technology Solutions, are partnering with the initiative in order to advance the economic health and technology industry of the community.
Trenton City, NJ
The Trenton TechHire initiative is a cross-sector partnership between employers, City of Trenton’s My Brother’s Keeper Initiative, and Agile Strategies group, local education institutions, and local nonprofit organizations. This collaboration will prepare over 150 residents for tech jobs across sectors by 2020. Partners such as FCC Consulting Services, Tektite Industries, Inc., New Jersey Manufacturing Extension Program, and Power Magnetics, Inc. will meet regularly with Shiloh Community Development Corporation and the City of Trenton to strengthen and sustain the initiative.
Tulsa, OK
In Tulsa, 36 Degrees North, Techlahoma and a network of workforce and education partners will collaborate to quickly train candidates for tech jobs with local employers including ConsumerAffairs and Mozilla. With strong support from the Mayor’s Office, Tulsa TechHire plans to train and place 600 candidates, including women and youth, into tech jobs across sectors by 2020.
Puerto Rico
In Puerto Rico, co-working space Piloto 151 and Codetrotters Academy have launched a strong public-private partnership with support from the Puerto Rico IT Cluster, the Puerto Rico Department of Economic Development (DDEC) and the Puerto Rico Science & Technology Research Trust. The Puerto Rico TechHire initiative will bring together a wide range of local technology companies and startups, including Rock Solid Technologies, Spotery, Migo IQ, and Wovenware, among others, in order to train and place 100 workers into tech jobs over the next year, ramping up to 300 workers by 2020.
Toledo. OH
Tech Toledo, the Toledo Regional Chamber of Commerce, and OhioMeansJobs Lucas County are initiating an information technology workforce alliance to address short-term needs and develop longer-term programs for IT internships and apprenticeship programs. Tech Toledo will work with employers such as Meyer Hill Lynch, Toledo Lucas County Public Library, and The Andersons, Inc., to find and develop training to help fill their in-demand IT job needs. Tech Toledo will place at least 100 workers into tech jobs by 2020.
Stamford, CT
The City of Stamford and the Connecticut Department of Labor are working with Crashcode and The Business Council of Fairfield County to train and place 1,000 new workers into tech jobs by 2020 via an accelerated training program. Regional tech companies including Datto, CometaWorks, Comradity, GoNation, CTFN, and others will support with training design and hiring opportunities for graduates.
With Donald Trump continuing to rewrite history, advance falsehoods about Obama’s Presidency, it is important to examine the Employment report for November. Trumpsters depend upon disaffection and dissatisfaction. A strong economy is the antithesis. Also, Trump wants to take credit as the forward momentum of Obama’s policies continue on into the new administration, before the administration’s policies, undoing everything Obama accomplished, have their impact.
Trump was able to exploit years of propaganda from the Republicans aimed at destroying his presidency. Obama found a way to thread the needle in coming up with solutions, despite unprecedented obstruction of infrastructure spending, the America Jobs Act, spending for transportation and highways, defeating his plans to build high-speed rail and invest in clean, renewable energy.
Obama was almost a victim of his own success – like President Bill Clinton before him, who presided over a golden era of peace and prosperity, when everyone’s income and standard of living rose, only to see Al Gore denied the presidency – people take for granted how much better they are off from when Obama took office, when 850,000 jobs a month were being lost, 20,000 people a month were losing their health care, millions were losing their homes to foreclosure.
Obama also had in place programs to help the people who found themselves unable to pursue the 5.5 million unfilled jobs because of lack of training. He had programs to boost advanced manufacture, and open up markets to the 95% of the world that is outside the US.
Trump is profiting from being handed a growing economy, and he has signaled he will install the very same people who profited from millions of Americans misery, he will undo the financial and consumer protections, he will throw people back into the insecurity of losing health insurance and jobs and homes. He has shown in his appointments and in his business record that he will exploit workers and further weaken unions.
Statement on the Employment Situation in November
WASHINGTON, DC – Jason Furman, Chairman of the Council of Economic Advisers, issued the following statement today on the employment situation in November.
Summary: The economy added 178,000 jobs in November, extending the longest streak of total job growth on record, as the unemployment rate fell to 4.6 percent.
The economy added a solid 178,000 jobs in November as the longest streak of total job growth on record continued. U.S. businesses have now added 15.6 million jobs since early 2010. The unemployment rate fell to 4.6 percent in November, its lowest level since August 2007, and the broadest measure of underemployment fell for the second month in a row. Average hourly earnings for private employees have increased at an annual rate of 2.7 percent so far in 2016, faster than the pace of inflation. Nevertheless, more work remains to ensure that the benefits of the recovery are broadly shared, including opening new markets to U.S. exports; taking steps to spur competition to benefit consumers, workers, and entrepreneurs; and raising the minimum wage.
FIVE KEY POINTS ON THE LABOR MARKET IN NOVEMBER 2016
1. U.S. businesses have now added 15.6 million jobs since private-sector job growth turned positive in early 2010. Today, we learned that private employment rose by 156,000 jobs in November. Total nonfarm employment rose by 178,000 jobs, in line with the monthly average for 2016 so far and substantially higher than the pace of about 80,000 jobs per month that CEA estimates is necessary to maintain a low and stable unemployment rate given the impact of demographic trends on labor force participation.
In November, the unemployment rate fell to 4.6 percent, its lowest level since August 2007. The labor force participation rate ticked down, though it is largely unchanged over the last three years (see point 3 below). The U-6 rate, the broadest official measure of labor underutilization fell 0.2 percentage point for the second month in a row in part due to a reduction in the number of employees working part-time for economic reasons. (The U-6 rate is the only official measure of underutilization that has not already fallen below its pre-recession average.) So far in 2016, nominal hourly earnings for private-sector workers have increased at an annual rate of 2.7 percent, faster than the pace of inflation (1.6 percent as of October, the most recent data available).
2. New CEA analysis finds that State minimum wage increases since 2013 contributed to substantial wage increases for workers in low-wage jobs, with no discernible impact on employment. In his 2013 State of the Union address, President Obama called on Congress to raise the Federal minimum wage, which has remained at $7.25 an hour since 2009. Even as Congress has failed to act, 18 States and the District of Columbia—along with dozens of local government jurisdictions—have answered the President’s call to action and have raised their minimum wages. (In addition to the States that have already raised their minimum wages, voters in four States approved measures to raise the minimum wage in November.) To assess the impact of minimum wage increases implemented by States in recent years, CEA analyzed data from the payroll survey for workers in the leisure and hospitality industry—a group who tend to earn lower wages than those in other major industry groups and thus are most likely to be affected by changes in the minimum wage. As the chart below shows, hourly earnings grew substantially faster for leisure and hospitality workers in States that raised their minimum wages than in States that did not. By comparing trends in wage growth for the two groups, CEA estimates that increases in the minimum wage led to an increase of roughly 6.6 percent in average wages for these workers. At the same time—consistent with a large body of economic research that has tended to find little or no impact of past minimum wage increases on employment—leisure and hospitality employment followed virtually identical trends in States that did and did not raise their minimum wage since 2013. (See here for more details on CEA’s analysis.)
3. The strengthening labor market is drawing individuals into the labor force, offsetting downward pressure on employment growth from the aging of the population. Employment growth depends on three factors: population growth, the rate at which the population participates in the labor force, and the share of the labor force that is employed. The chart below decomposes employment growth (from the household survey) into contributions from each of these factors for each year of the current recovery. It further decomposes labor force participation into shifts attributable to demographics (such as the aging of the U.S. population) and shifts attributable to other factors (such as the business cycle). Throughout the recovery, demographic changes in labor force participation—primarily driven by a large increase in retirement by baby boomers that began in 2008—have consistently weighed on employment growth. In recent years, however, non-demographic changes in labor force participation have supported employment growth, as the strengthening of the labor market and increasing real wages have drawn more individuals into the labor force. The entry (or reentry) of workers into the labor force has helped employment growth maintain its recent solid pace even as the unemployment rate has fallen more slowly. These two shifts in labor force participation—demographic and non-demographic—have largely offset one another in recent months, and as a result the overall labor force participation rate has remained broadly stable since the end of 2013.
4. The number of unemployed workers per job opening, an indicator of labor market slack, is near its lowest level prior to the recession. Using data from the household survey and the Job Openings and Labor Turnover Survey, the chart below plots the ratio of unemployed workers to total job openings. In the recession, unemployment rose rapidly while job openings plummeted, sending the ratio of unemployed workers to job openings to a record peak of 6.6 in July 2009. As the unemployment rate has decreased over the course of the recovery, and as job openings have climbed to record highs this year, the ratio of unemployed workers to openings has fallen steeply, standing at 1.4 as of September (the most recent data available for openings). This is close to the ratio’s lowest level in the 2000s expansion, another indicator—in addition to recent increases in real wages—of a strengthening labor market.
5. The distribution of job growth across industries in November diverged from the pattern over the past year. Above-average gains relative to the past year were seen in professional and business services (+49,000, excluding temporary help services), while mining and logging (which includes oil extraction) posted a gain (+2,000) for the second time in recent months amid moderation in oil prices. On the other hand, retail trade (-8,000), information services (-10,000), and financial activities (+6,000) all saw weaker-than-average growth. Slow global growth has continued to weigh on the manufacturing sector, which is more export-oriented than other industries and which posted a loss of 4,000 jobs in November. Across the 17 industries shown below, the correlation between the most recent one-month percent change and the average percent change over the last twelve months was -0.06, the lowest level since September 2012.
As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and payroll employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report, and it is informative to consider each report in the context of other data as they become available.
“[I]t has been the risk-takers, the doers, the makers of things—some celebrated, but more often men and women obscure in their labor—who have carried us up the long rugged path towards prosperity and freedom.” – President Obama, Inaugural Address, January 21, 2009
In these waning days of Obama’s historic presidency, before the incoming Trump Administration can undo and erase his legacy, it is important to be reminded of his accomplishments:
America’s entrepreneurial economy is the envy of the world. Young companies account for almost 30 percent of new jobs, and as we have fought back from the worst economic crisis of our lifetimes, startups have helped the U.S. private sector create 15.5 million jobs since early 2010—the longest streak of private-sector job creation on record.
Today, in celebration of National Entrepreneurship Month, the Administration is releasing a Top 10 list of President Obama’s most significant specific actions to promote American entrepreneurship, as well as announcing new efforts to build on these successes. The President’s unprecedented focus on the role of startups in the United States’ innovation economy is exemplified by his launch of Startup America in 2011, a White House initiative to celebrate, inspire, and accelerate high-growth entrepreneurship throughout the Nation.
Thanks to the grit, determination, and creativity of entrepreneurs all across the country, American startup activity is rebounding and growing more inclusive of historically underrepresented groups and regions. Studies indicate that:
Reversing a downward cycle that began during the Great Recession, U.S. startup activity ascended last year, representing the largest year-over-year increase in the last two decades, while measures of startup revenue and employment growth have rebounded across industries as well.
New companies created 889,000 jobs in the final quarter of 2015—the highest job creation number since 2008.
Rates of entrepreneurship have increased for Latinos, African Americans, and immigrants between 1996 and 2015.
Between 2007 and 2016, the number of women-owned firms is estimated to have grown at a rate five times the national average, including a more than doubling of the number of firms owned by African American women and Latinas.
American startups are not only rebounding, they are taking root in more communities all across the country—for example, the share of U.S. metro areas that attracted early stage venture capital has increased by around 50 percent since 2009.
The number of U.S. startup accelerator programs increased from fewer than 30 in 2009 to over 170 in 2015, providing mentorship and early funding to thousands of startups across 35 states plus D.C. and 54 metro areas.
Access to capital for high-growth entrepreneurs has improved significantly since 2009, with venture capital investment up an estimated 200 percent, far exceeding its pre-recession peak, and angel investment up 40 percent, approaching its pre-recession peak.
Compared with 137 countries, the United States continues to top the rankings in the Global Entrepreneurship Index, with the world’s most favorable conditions for entrepreneurs to start and scale new companies.
Over the past 8 years, many of the President’s signature achievements have significantly increased opportunities for entrepreneurs to take smart risks and build the next generation of great American companies: the Affordable Care Act is making it easier for entrepreneurs to buy health insurance, unlocking them from traditional employer-based coverage; the Pay As You Earn program is making it easier for entrepreneurs to pay off student loan debt; the Open Data Initiative has unlocked over 200,000 government datasets as raw material for entrepreneurial innovation;ConnectED and ConnectALL are allowing aspiring entrepreneurs everywhere to access high-speed broadband, while a strong net neutrality policy ensures a free and open internet; and the President signed into law the largest annual increase inresearch and development funding in America’s history.
Breaking down barriers for all entrepreneurs is not the task of just one Administration. For example, studies suggest that the share of venture-funded startups with women founders has nearly doubled in 5 years—but it is still only 18 percent. Continuing to reverse America’s 40-year decline in startup activity will require building on the President’s record of addressing income inequality, promoting competitive markets, reducing unduly restrictive occupational licensing, and scaling up rapid training for 21st century technology skills.
In addition to releasing today’s Top 10 list of President Obama’s specific actions to promote entrepreneurship, the Administration is also announcing new private-sector actions to promote inclusive entrepreneurship.
New Actions by Organizations Answering the President’s Call to Action
Engineering deans from over 200 universities are committing to building a more-representative student talent pipeline. At the first-ever White House Demo Day in 2015, 102 engineering deans pledged to develop concrete diversity plans for their programs to tap into diverse talent. Since then, the American Society for Engineering Education (ASEE) has worked with its members to share best practices and to promote the inclusivity in engineering schools of all students regardless of visible or invisible differences. ASEE is creating a platform to disseminate best practices among participating engineering schools that will help them implement the diversity initiative. Today, at 206, the number of engineering deans that have signed the pledge has more than doubled since 2015. ASEE will continue promoting and enhancing diversity and inclusion through all its participating members. Read letter HERE.
79 companies have now joined the Tech Inclusion Pledge. At the Global Entrepreneurship Summit this past summer, President Obama announced a commitment by senior leadership from 33 companies of all sizes to fuel American innovation and economic growth by increasing the diversity of their technology workforce. Today, 46 additional companies, including Xerox, TaskRabbit, and Techstars, are joining this Tech Inclusion Pledge, committing to take concrete action to make the technology workforce at each of their companies representative of the American people as soon as possible. To facilitate additional pledge commitments and help companies meet those commitments, the National Center for Women & Information Technology (NCWIT) and CODE2040 commit to maintain a website with free research-based implementation resources. Read letter HERE.
Early-stage investors are making a new commitment to promote inclusive entrepreneurship. Today, more than 30 investment firms, angel investor groups, and startup accelerators with over $800 million under management have committed to achieving greater transparency in their funding criteria and to actively mentoring entrepreneurs from underrepresented backgrounds, in an effort to increase the diversity of startup founders in their portfolios. For example, MassMutual Foundation and Valley Venture Mentors are partnering to create a scalable model for rural startup accelerators, while Pipeline Angels is bringing its training programs for underrepresented investors to 20 additional cities. Read letter HERE.
The President’s Top 10 Actions to Accelerate American Entrepreneurship
Signed permanent tax incentives for startup investment. The President signed into law 18 tax breaks for small businesses in his first term, including tax credits for those who hire unemployed workers and veterans. In addition, in December 2015, Congress responded to the President’s call to make two critical tax incentivespermanent for the first time:
Made the Research and Experimentation (R&E) tax credit available to startups. In addition to making the R&E tax credit permanent for the first time since its enactment in the early 1980s, Congress also expanded the credit to allow pre-revenue startups and small businesses to take advantage of the credit by counting it against up to $250,000 in payroll expenses for up to 5 years.
Permanently eliminated capital gains tax on certain small business stock. First enacted on a temporary basis in the Small Business Jobs Act of 2010 and now permanent, this measure eliminates capital gains realized on the sale of certain small business stock held for more than 5 years, providing a major incentive for private-sector investment in high-growth entrepreneurial firms that fuel economic growth.
Accelerated the transition of research discoveries from lab to market.The Federal government invests over $140 billion each year on Federally-funded research and development (R&D) conducted at universities, Federal laboratories, and companies. The President issued a memorandum to agencies to accelerate the commercialization of Federal R&D, and made these Lab-to-Market efforts a core part of his management agenda.
Scaled up I-Corps, a rigorous entrepreneurship training program for scientists and engineers. The Innovation Corps (I-Corps) program, first launched in 2011 by the National Science Foundation (NSF), provides entrepreneurship training for Federally funded scientists and engineers, pairing them with business mentors for an intensive curriculum focused on discovering a truly demand-driven path from their lab work to a marketable product. Over the past 5 years, more than 800 researcher teams have completed this I-Corps training, from 192 universities in 44 states, resulting in the creation of over 320 companies that have collectively raised more than $93 million in follow-on funding. The I-Corps model has been adopted in 11 additional Federal agency partnerships, including an expansion to 17Institutes and Centers at the National Institutes of Health and the Centers for Disease Control and Prevention, and is implemented through a National Innovation Network across more than 70 universities. Additionally, the Department of Defense’s MD5 National Security Technology Accelerator is helping provide students with the training to apply a similar lean startup methodology to real-world national-security problems, soon expanding to eight institutions of higher education this spring, and including new challenges in diplomacy, urban resilience, and energy.
Facilitated personnel exchanges between Federal labs, academia, and industry. The National Institute of Standards and Technology (NIST) published a final rule on “Technology Innovation-Personnel Exchanges,” allowing Federal agencies to more easily exchange personnel with universities, non-profits, and the private sector to advance R&D commercialization.
Increased access to Federally-funded research facilities and intellectual property for entrepreneurs and innovators. Funded by NIST, the Federal Laboratory Consortium launched online tools for finding specific information and open data on more than 300 Federal laboratories with 2,500 user facilities and specialized equipment, as well as over 20,000 technologies available for licensing.
Strengthened Federal R&D funding for startups and small businesses. For the first time in a decade, in 2011 the President signed a long-term reauthorization of the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, which annually provide over $2.5 billion in Federal R&D funding to technology startups and small businesses. The U.S. Small Business Administration (SBA) and 11 participating Federal agencies have expanded access to SBIR/STTR opportunities, including by building theSBIR.gov platform and initiating a road tour that has engaged historically underrepresented communities across the country.
Cut red tape for entrepreneurs.The Administration’s Startup in a Day initiative is cutting red tape to make it easier for more entrepreneurs to get started and grow their businesses. Over 100 cities, home to nearly 38 million Americans, have taken a public pledge to streamline their business startup processes, allowing entrepreneurs to navigate requirements in as little as 24 hours. To support these streamlining efforts, the SBA sponsored a prize competition won by 28 cities and communities; examples include the City of Los Angeles and the City of Long Beach, which both created online business portals that are open-source and can be shared with cities and communities across the country. Additionally, over 52,000 small business borrowers have connected to lenders under a new SBA online matchmaking tool called LINC, while SBA One is taking SBA’s lending process entirely online, which will save hours of time and thousands of dollars per loan for entrepreneurs.
Expanded regional entrepreneurship opportunities. High-growth entrepreneurship is taking root in more and more communities across the country, in part thanks to targeted investments by this Administration.
Seeded startup accelerators in diverse communities. The SBA’s Growth Accelerator Fund Competition serves entrepreneurs in a broad set of industries and sectors—from manufacturing and tech start-ups, to farming and biotech—with many focused on creating a diverse and inclusive small business community. From 2014 to now, SBA has funded over 200 startup accelerator programs in every corner of the country, serving well over 5,000 startups that have collectively employed over 20,000 people and raised over 1.5 billion in capital.
Pioneered a regional innovation strategy. SBA’s investments in 62 Regional Innovation Clusters have helped participating small businesses achieve an average employment growth rate of more than five times faster than regional benchmarks, and more than $650 million in Federal contract opportunities.
Incentivized regional partners to work together on tech entrepreneurship. Through its Regional Innovation Strategies (RIS) program and the i6 Challenge, the Department of Commerce’s Economic Development Administration (EDA) has awarded $59 million in capacity-building grants that help entrepreneurs in diverse regions of the country move ideas to market, supporting the creation and expansion of research-commercialization centers and early-stage seed-capital funds. Earlier this month, EDA announced nearly $15 million in Federal funding plus $18 million in matching funds, reaching urban and rural areas in 19 states, including the first RIS investments that support historically black colleges and universities: a direct investment in Clark Atlanta University’s agriculture and food technology commercialization program; and an investment in a program to increase access to early-stage capital in southeast Louisiana, in which Southern University is a partner. Among the 35 organizations receiving EDA support are a female-focused early-stage capital fund in Texas, a Native American-focused proof-of-concept program in Oklahoma, and urban innovation hubs focused on fashion technology in Brooklyn and on social innovation in New Orleans.
Directly boosted entrepreneurs’ access to capital. With only three states attracting the majority of venture capital, the Administration has focused on incentivizing investment in startup communities across the country.
Catalyzed investments of $8.4 billion through theState Small Business Credit Initiative (SSBCI). The SSBCI was created through the Small Business Jobs Act of 2010, which provided $1.5 billion to strengthen state programs that support lending to small businesses and small manufacturers. Administered by the Treasury Department, SSBCI has catalyzed over $8.4 billion in more than 16,900 new loans and investments all across the country. To date, business owners report more than 190,000 jobs will be created or retained due to the new loans and investments stimulated by SSBCI funds. More than half of all SSBCI loans or investments went to young businesses less than 5 years old, and over 40 percent of the loans or investments were in low- or moderate-income communities. Over 30 states have allocated nearly half-a-billion SSBCI dollars to venture-capital programs—a dramatic increase in funding for the programs that are critical to expanding high-growth entrepreneurship into diverse regions around the country.
Strengthened investment fund program for small businesses. The Small Business Investment Company (SBIC) program, run by the SBA, is a multi-billion dollar investment program to bridge the gap between entrepreneurs’ need for capital and traditional sources of financing. This Administration has created new pathways for impact investment funds that devote growth capital to companies in underserved communities and emerging sectors, as well as for early-stage innovation funds. The recently announced Open Network for Board Diversity (ONBOARD) is a public-private initiative working to expand the presence of underrepresented groups on high-growth company advisory boards, boards of directors, and senior leadership, particularly for those supported by SBICs.
Prioritized inclusive entrepreneurship.As part of the first-ever White House Demo Day in August 2015, 40 leading venture-capital firms with more than $100 billion under management committed to advance opportunities for women and underrepresented minorities, and more than a dozen major technology companies committed to new actions to ensure diverse recruitment and hiring. These actions are complemented by today’s announcements, as well as continued progress by Federal agencies, including:
Reduced barriers faced by women entrepreneurs. SBA created the InnovateHER Business Challenge, where organizations throughout the country hold local competitions for new and innovative products and services to empower women and their families; in 2015, over 1,000 entrepreneurs participated in over 100 competitions, and these numbers doubled in 2016. Women-owned small businesses reached an important milestone in 2015, meeting the Federal contracting goal for such businesses for the first time in history; overall last year, the Federal government awarded an all-time high of 25.75 percent of government contracts to all small businesses, supporting 537,000 American jobs.
Unlocked the potential of Federal inventions with entrepreneurs from all backgrounds. The National Institute of Standards and Technology, the Minority Business Development Agency, and the Federal Laboratory Consortium partnered together to launch the Inclusive Innovation Initiative (I-3), designed to increase minority business participation in Federal technology transfer.
Trained veteran entrepreneurs for 21st century opportunities. The Department of Veterans Affairs Center for Innovation is helping to expand the 3D Veterans Bootcamp, a program that provides Veterans with technical training in 3D printing and design skills to accelerate designs to market. The training will annually prepare over 400 Veterans and transitioning service members for careers in advanced manufacturing and will provide guidance and resources for those wishing to launch their own business. Additionally, SBA launched Boots to Business, an entrepreneurship education program that provides transitioning service members with introductory business training and technical assistance. Since 2013, over 20,000 transitioning service members, including many spouses, participated in the Boots to Business introductory class on over 165 military installations worldwide.
Launched TechHire to train people for entrepreneurial opportunities and well-paying jobs. In 2015 the President launched TechHire, a multisector effort to empower more people from all backgrounds with the skills they need, through universities and community colleges but also innovative nontraditional approaches like “coding bootcamps,” that can rapidly train workers for technology jobs. Since then, 50 communities in partnership with over 1,000 employers have initiated local efforts that have placed over 2,000 people into tech jobs and entrepreneurial opportunities.
Expanded entrepreneurial opportunities for the unemployed and underserved. The Department of Labor (DOL) has funded the expansion of voluntary state-run Self-Employment Assistance (SEA) programs, designed to encourage and enable unemployed workers to create their own jobs by starting their own businesses while receiving unemployment insurance benefits; helped make entrepreneurial training available to more than 200,000 low-income and out-of-school youth with barriers to employment; and helped make it easier for formerly incarcerated persons to participate in the SBA’s microloan program.
Created opportunities for promising entrepreneurs and innovators from abroad. While there is no substitute for Congress passing commonsense immigration reform, the Administration is taking the steps it can to fix as much of the broken U.S. immigration system as possible. Many of these commonsense steps are designed to attract and retain the most talented workers, graduates, and entrepreneurs from around the world.
Released a rule tailored for international entrepreneurs. The Department of Homeland Security (DHS) published a proposed International Entrepreneur Rule, which describes new ways in which DHS will make it possible for certain promising startup founders to grow their companies within the United States. Once this rule is finalized, it will provide much-needed clarity for entrepreneurs who have been validated by experienced American funders, and who demonstrate substantial potential for rapid growth and job creation—benefiting American workers and the U.S. economy.
Acted to retain more of the scientists and engineers educated in the United States. American universities train some of the world’s most talented students in science, technology engineering, and mathematics (STEM), but the broken U.S. immigration system compels many of them to take their skills back to their home countries. DHS published a final rule on STEM Optional Practical Training allowing international students with qualifying STEM degrees from U.S. universities to extend the time they participate in practical training, while at the same time strengthening oversight and adding new features to the program.
Unlocked the talents of high-skilled Americans-in-waiting. The Administration is making it possible for high-skilled workers on temporary visas to accept promotions, change positions or employers, or start new companies while they and their families wait to receive their green cards, and ultimately become Americans, by the publication of a policy memo on job portability and a final rule improving employment-based visa programs. In addition, DHS published a new rule that has allowed the spouses of certain high-skilled immigrants to put their own education and talents to work and contribute to the American economy.
Updated securities laws for high-growth companies.Thanks to the bipartisanJumpstart Our Business Startups (JOBS) Act signed by the President in 2012, entrepreneurs have greater access to capital from the seed stage all the way to an initial public offering (IPO). These new capital-formation pathways include:
The “IPO on-ramp” makes it easier for qualifying smaller firms to responsibly access public markets. Thanks in part to the JOBS Act, which phases in regulatory requirements for smaller companies making an initial public offering (IPO), in the year ending in March 2014 smaller IPOs were at their highest level since 2000; one study estimated that the JOBS Act was responsible for a 25 percent increase in IPO activity, including among biotech startups.
Entrepreneurs can raise up to $50 million through regulated “mini public offerings.” Through the “Regulation A+” provision of the JOBS Act, the U.S. Securities and Exchange Commission (SEC) has qualified around 50 companies to make streamlined public offerings of over $840 million in aggregate—whereas the previous version of this rule was rarely used.
Entrepreneurs can raise up to $1 million from regular investors through a new class of regulated crowdfunding platforms. A new, national, SEC-regulated marketplace for securities-based crowdfunding first opened for business 6 months ago; by one measure, these new crowdfunding platforms have allowed startups and small businesses to raise $12 million from over 15,000 regular investors.
Made the U.S. patent system more efficient and responsive to innovators.The President signed the Leahy-Smith America Invents Act in September 2011, giving the U.S. Patent and Trademark Office (USPTO) new resources to significantly reduce patent application wait times. Total processing times for both patents and trademarks have been reduced by approximately 25 percent and 14 percent, respectively, since 2009. This reduction has come with both a 50-75 percent reduced cost for startups and small businesses, as well as the creation of a fast track program where applicants can get a final disposition in about 12 months. In addition, with a series of executive actions, the Administration has taken steps to increase transparency to the patent system and level the playing field for innovators, and leveraged the knowledge of the American people by crowdsourcing information about prior art. USPTO has also launched an International IP Toolkit to empowerinnovators with tools to facilitate exports and empower global expansions, a Patent Pro Bono Program across all 50 states to provide free legal assistance for inventors who file patent applications without the assistance of a patent attorney, and a fast-track review for patents related to cancer treatment as part of Vice President Biden’s Cancer Moonshot.
Unleashed entrepreneurship in the industries of the future. The President has long recognized that it is entrepreneurs in clean energy, medicine, advanced manufacturing, information technology, and other innovative fields who will build the new industries of the 21st century, and solve some of our toughest global challenges.
Encouraged private-sector investment in clean-energy innovation. The Administration has created and promoted new opportunities for clean-energy entrepreneurship, including support for student startups through business plan competitions; vouchers for services available to small businesses at National Laboratories; embedded entrepreneurial training within the National Laboratories; technical assistance and pilot testing at regionally-focused incubators and establishment of a national incubator network to support entrepreneurs and small businesses; and awards through the SunShot Incubator for startups driving down the cost of solar energy. These opportunities have doubled the number of partnership agreements between small businesses and National Laboratories, and supported hundreds of startups that have attracted well over $3 billion in follow-on funding.
Boosted innovation and entrepreneurship in the bioeconomy. In 2012, theAdministration released the first-ever National Bioeconomy Blueprint, to outline a series of steps to grow and manage a sector that is generating annual revenues greater than $300 billion and that is contributing the equivalent of at least 5 percent of annual U.S. GDP growth. In 2015, recognizing that navigating the regulatory process for biotechnology products can be unduly challenging, especially for small companies, the Administration initiated an effort to improve transparency and predictability in the regulatory system for biotechnology products.
Spurred innovation and entrepreneurship in the commercial space industry. Working with NASA, American companies have developed new spacecraft that are cost-effectively delivering cargo to the International Space Station and are working towards ferrying astronauts there by the end of 2017. U.S. companies that got their start supporting government missions have increased their share of the global commercial launch market from zero in 2011 to 36 percent in 2015. Federal agencies are also leveraging innovative procurement methods and creating a supportive regulatory environment to allow space entrepreneurs to pursue ventures in areas such as remote sensing, satellite servicing, asteroid mining, and small satellites. More venture capital was invested in America’s space industry in 2015 than in all the previous 15 years combined.
Grew innovation ecosystems for nanotechnology and advanced materials. The National Nanotechnology Initiative has invested over $150 million per year in user facilities at Federal laboratories and universities that provide entrepreneurs low- or no-cost access to state-of-the-art instrumentation; cumulatively funded more than $700 million of nanotechnology-related research by small businesses; and catalyzed the creation of a Nano and Emerging Technology Student Network and annual conference with a specific goal of promoting entrepreneurship. The Materials Genome Initiative, launched in 2011 to reduce the time and cost required to discover, manufacture, and deploy advanced materials, has opened up an array of new data and infrastructure resources to entrepreneurs, including an expanding set of open-access databases to mine the properties of hundreds of thousands of materials.
Enabled a new generation of aviation technology for commercial use. Powering a revolution in unmanned flight, this summer the Administration announcedground rules to govern commercial, scientific, public safety and other non-recreational uses of unmanned aircraft systems (UAS)—commonly known as “drones.” These rules are enabling the safe expansion of a new generation of aviation technologies and startups that will create jobs, enhance public safety, and advance scientific inquiry. Industry estimates suggest that, over the next 10 years, commercial unmanned aircraft systems could generate more than $82 billion for the U.S. economy and by 2025, the industry could be supporting as many as 100,000 new jobs.
Supported the growth of advanced robotics. In 2011, President Obama announced the National Robotics Initiative (NRI) — a multi-agency collaboration to accelerate the development of next-generation robots that can solve problems in areas of national priority, including manufacturing, sustainable agriculture, space and undersea exploration, health, transportation, personal and homeland security, and disaster resiliency and sustainable infrastructure. The NRI has invested over $135 million in 230 projects in 33 states, fueling the development of new technologies and business opportunities, including robots that can inspect bridges, monitor water quality, and even aid in future space missions.
Supported manufacturing entrepreneurship through a national network of R&D hubs.Manufacturing USA brings together industry, academia, and government to co-invest in the development of world-leading manufacturing technologies and capabilities. In the 4 years since its establishment, Manufacturing USA has grown to a network of nine institutes and over 1,300 members—of which more than one-third are small- and medium-sized enterprises. These public-private partnerships are catalyzing entrepreneurial activity by, for example, working with regional Manufacturing Extension Partnership Centers to help small manufacturers across the nation adopt advanced manufacturing techniques; and blending manufacturing technology and entrepreneurship in project-based learning programs for high schoolers.
Stimulated entrepreneurial solutions through increased use of incentive prizes. Since 2010, more than 100 Federal agencies have engaged 250,000 Americans through more than 700 incentive prizes on Challenge.gov to address tough problems ranging from fighting Ebola, to improving speech recognition, to blocking illegal robocalls. Competitions such as the NIH Breast Cancer Startup Challenge and many more have made over $220 million available to entrepreneurs and innovators and have led to the formation of over 300 startup companies with over $70 million in follow-on funding.
Fostered grassroots innovation through the maker movement. Beginning with the White House Maker Faire in June 2014 and continuing with a National Week of Making in both 2015 and 2016, the Administration has supported a growing grassroots community of makers—Americans using new tools, technologies, and spaces to design, build, and manufacture. Federal agencies, companies, non-profits, cities, and schools collectively committed to creating over 2,500 maker-oriented spaces in the United States to expand access for both students and entrepreneurs. Earlier this month, more than 300 organizations from all 50 states, with industry support including Chevron, Cognizant, and Google, came together to launch an independent nonprofit called Nation of Makers, to provide an ongoing community of practice and leadership to the maker movement.
President Obama has also elevated innovation and entrepreneurship as a foreign policy priority beyond America’s borders. Following his historic 2009 Cairo speech, the President hosted the first Global Entrepreneurship Summit (GES) at the White House in 2010; since then, annual GES events worldwide have provided over 7,000 emerging entrepreneurs with networking and investment opportunities and catalyzed over $1 billion in private-sector commitments. The U.S. Agency for International Development (USAID) Partnering to Accelerate Entrepreneurship (PACE) initiative catalyzes private-sector investment and identifies innovative models that help global entrepreneurs bridge the “pioneer gap.” Working in partnership with more than 40 incubators, accelerators, and seed-stage impact investors worldwide, USAID’s U.S. Global Development Lab creates public-private partnerships dedicated to testing ways to foster entrepreneurship, which are expected to leverage $100 million in combined public and private investments. The Presidential Ambassadors for Global Entrepreneurship (PAGE) initiative is a collaboration among American entrepreneurs, the White House, the Department of Commerce, and other Federal agencies to harness the creativity of U.S. business leaders to help develop the next generation of entrepreneurs both at home and abroad. The Department of State’s Global Innovation through Science and Technology (GIST) program has engaged with science and technology innovators and entrepreneurs in 135 emerging economies around the world, providing training and resources to help them build successful startups.
For additional information and progress updates on organizations answering the President’s Call to Action to Advance Entrepreneurship, click HERE.
FACT SHEET: Administration Announces Additional Economic and Workforce Development Resources for Coal Communities through POWER Initiative
As part of President Obama’s continuing efforts to assist communities negatively impacted by changes in the coal industry and power sector, today the Administration is announcing the second round of grants awarded this year as part of the POWER Initiative’s “POWER 2016” funding opportunity that invests in economic revitalization and workforce training in coal communities across the country. The awards announced today, totaling nearly $28 million, will support 42 economic and workforce development projects in thirteen states that are building a strong economic future in communities, and targeting various industry sectors, including manufacturing, information technology, agriculture, housing, and tourism and recreation. The awards are administered by the Appalachian Regional Commission (ARC) and the U.S. Department of Commerce’s Economic Development Administration (EDA).
The POWER (Partnerships for Opportunity and Workforce and Economic Revitalization) Initiative is a community-based Administration effort involving ten federal agencies working together to align, leverage and target a range of federal economic and workforce development programs and resources to assist communities and workers that have been affected by job losses in coal mining, coal power plant operations, and coal-related supply chain industries due to the changing economics of America’s energy sector. The POWER initiative exemplifies a collaborative approach to federal partnership with communities that President Obama and his Administration have steadily advanced, which focuses on improving coordination across federal agencies, tailoring federal support based on local needs and priorities, encouraging local long-term strategic planning, and relying on data and evidence to inform solutions that work.
The POWER Initiative is the primary economic and workforce component of President Obama’s broader POWER+ Plan, part of his FY 2017 budget request to Congress. There is bipartisan legislation in Congress consistent with two of the President’s POWER+ proposals that could have a significant positive impact on workers, communities and retirees in coal country, and complement the POWER Initiative’s investments.
The Miners Protection Act (S. 1714) and its House companion, the Coal Healthcare and Pensions Protection Act (H.R. 2403), mirror the President’s proposal to transfer federal funds to strengthen the solvency of the largest multi-employer pension plan serving retired coal miners and their families, and to extend health care coverage to additional retirees, more than twenty thousand of whom will start to lose their existing coverage at the end of this year.
The RECLAIM Act (H.R. 4456), which is consistent with the President’s proposal to invest $1 billion in projects that link abandoned coal mine reclamation to economic development strategies, while stimulating economic activity and job creation in hard hit coalfield communities.
Congress has the ability to pass this legislation before the end of the year and send it to the President’s desk for his signature.
The awards announced today are from a competitive POWER federal funding opportunity that the ARC and EDA released in March of this year by to provide implementation, planning and technical assistance grants.
POWER Implementation Award Summaries:
$3,000,000 ARC grant to Friends of Southwest Virginia in Abingdon, VA for the Building Appalachian Spring: Growing the Economy of Southwest Virginia project. This comprehensive project will significantly enhance the outdoor recreation industry as an economic driver in a four-county region in southwestern Virginia. ARC funds will be used to develop four access points to the New River that strategically link the river to nearby communities’ hospitality and tourism services; construct a 4,000 square foot Gateway Center to the High Knob Recreation Area – providing visitors with more centralized access to numerous nearby recreation assets; build an Appalachian Trail Center in downtown Damascus; and create a 30-mile, multi-use trail connecting Breaks Interstate Park directly to downtown Haysi’s business district. The project will increase travel expenditures in project locations by $30 million over the next five years, create 60 new businesses and 200 new jobs, and is supported by funding from the Virginia Tobacco Region Revitalization Commission.
$2,220,000 ARC grant to the Industrial Development Authority in Wise, VA for the Virginia Emerging Drone Industry Cluster Project. ARC funds will be used to position five counties in southwestern Virginia as a national destination for the development of a drone-operator workforce to support the emerging drone industry in the United States. The award will enable Mountain Empire Community College to offer courses that train students, including former coal industry workers, to operate drones and drone sensors to provide commercial and government services – including geospatial surveys, close-up inspections of fixed structures, and mapping. The award will train 64 new workers, leverage $15,000,000 in additional investment, and enable a private aerospace company in the region to perform work on a major contract – thereby creating 210 new direct and indirect jobs.
$2,040,000 EDA grant to the City of Bluefield, WV to support development of the Bluefield Commercialization Station project. Under this project the city, in partnership with the Shott Foundation, will rehabilitate and transform an existing 50,000 square foot freight station into an incubator to serve new and existing businesses. This project will provide high-tech business services including prototype development, product design and development, retooling, and supply chain assistance. This project will support the creation and retention of 72 jobs, expand at least 12 local businesses, and leverage $510,000 in private investment.
$1,800,000 ARC grant to the Appalachian Wildlife Foundation Inc. in Corbin, KY for the Appalachian Wildlife Center Infrastructure project. ARC funds will be used to install water infrastructure at the future site of the Appalachian Wildlife Center, a conservation education and research facility. The Wildlife Center facility — located on 19 miles of reclaimed mine land — will feature the largest elk restoration and viewing effort in the United States. The facility will be modeled on the successful Elk Country Visitor Center in Benezette, Pennsylvania. The project will position a 10-county region in the tri-state area of southeastern Kentucky, northeastern Tennessee, and southwestern Virginia as a national tourist attraction, and will create 86 new jobs.
$1,747,806 ARC grant to the Center for Rural Entrepreneurship in Chapel Hill, NC for the Building Entrepreneurial Communities: The Foundation of an Economic Transition for Appalachia project. The project will build and strengthen the entrepreneurial ecosystem in an 18-county region covering southeastern Ohio, southern West Virginia, and southeastern Kentucky. Project activities include establishing a support system that can identify and develop new entrepreneurs; assisting new and expanding businesses with skill development; and connecting entrepreneurs with existing capacity-building resources in the region. The project will create 72 new businesses and 250 new jobs.
$1,558,850 EDA grant to the City of Belpre, OH, which, in partnership with the Buckeye Hills-Hocking Valley Regional Development District, will implement an infrastructure improvement project and extend sewer service two miles north of the city along Ohio Route 7 to accommodate large employers and businesses in the area. The completed project is projected to contribute to the retention of existing jobs and the creation of up to 255 new jobs, and to leverage over $3 million of new private investments.
$1,502,938 ARC grant to Marshall University Research Corporation in Huntington, WV for the Sprouting Farms project. The project will facilitate the development of a vibrant agricultural industry in a nine-county area in southern West Virginia by educating new farmers, launching farm businesses, and jump-starting wholesale market channels, all while encouraging business and farm sustainability. ARC funds will be used to implement workforce and farm business accelerator training programs; secure and upgrade the project site and facilities; and provide direct business support and employment to new agricultural businesses and program graduates. The project will create 20 new businesses and 33 new jobs, and leverage $961,475 in additional investment. Additional funding is being provided by the Claude Worthington Benedum Foundation.
$1,501,499 ARC grant to Marion County, TN for the Marion County Regional Center for Higher Education Phase II & III project. ARC funds will be utilized to construct a 30,000 square foot educational facility that will house new technology and industrial training programs. The project will also conduct outreach to displaced workers from the Widows Creek Power Plant – a coal-fired facility in the area that was recently retired. The project will train 109 people for careers in advanced manufacturing and information technology, and will improve 20 existing businesses in the region.
$1,422,965 ARC grant to Hocking College in Nelsonville, OH for theAppalachia RISES (Revitalizing an Industry-ready Skilling Ecosystem for Sustainability) Initiative. The project will leverage the expertise of regional education, business, and government entities to deliver comprehensive workforce training services in employment fields that meet current and anticipated industry needs in North Central Appalachia – including advanced energy, automotive technology, petroleum technology, welding, and commercial driver’s license (CDL). The project will train 306 workers over the life of the award, and primarily serve a 17-county region covering southeastern Ohio and central West Virginia.
$1,420,219 ARC grant to Southwest Virginia Community College (SWCC) in Cedar Bluff, VA for the Southwest Virginia Regional Cybersecurity Initiative. The initiative brings together three colleges in southwestern Virginia – SWCC, Mountain Empire Community College (MECC), and University of Virginia’s College at Wise (UVa-Wise) – and aims to position this seven county southwestern Virginia area as a regional hub for the cybersecurity industry. Specific activities will include creating a certification/credential program aligned with industry needs and National Security Agency guidelines; providing support services to cybersecurity start-up companies that locate to the region; and expanding UVa-Wise’s existing bachelor’s degree program in cybersecurity through an accelerator space in which cybersecurity companies can co-locate research and development activities. Additional funding for the project is being provided by the Virginia Tobacco Region Revitalization Commission. The project will train 161 new workers, and retain 110 jobs.
$1,000,000 ARC grant to the Federation of Appalachian Housing Enterprises, Inc. (FAHE) in Berea, KY for the Appalachian HEAT Squadproject. ARC’s investment will be utilized to improve the energy efficiency of low-income homes in coal-impacted communities across a nine-county region in eastern Kentucky — while also creating entrepreneurial and skills-based training opportunities in the area. The project will partner with Hazard Community and Technical College and the Mountain Association for Community Economic Development (MACED) to deliver the entrepreneurial education and construction training component, and with two other training organizations to increase the skill-base for private housing contractors operating in the region. The project will create or retain 119 jobs, increase the quality, affordability, and performance of over 270 homes, and leverage $525,000 in private investment.
$790,118 EDA grant to the University of Utah, in Salt Lake City, UT, in support of the Coal Pitch Technical Plan. Working in partnership with the University of Kentucky, the University of Utah is addressing the regional and national contractions in the coal economy by examining new commercially-viable uses for coal byproducts. The project will evaluate the feasibility of converting coal pitch to carbon fiber to produce lightweight, high-strength composites that are increasingly in demand by manufacturers in automotive and other sectors. This grant will be used to produce, test and classify coal pitch carbon fiber, design a regional supply chain map, and pair workforce needs with the economic impact of the conversion process/market.
$662,567 ARC grant to the Southwestern Pennsylvania Corporation in Pittsburgh, PA for the Southwest Pennsylvania Economic GardeningInitiative. ARC funds will diversify the business operations of supply chain industries in a 10-county region in southwestern Pennsylvania. Working with Catalyst Connection (the regional Manufacturing Extension Partnership), the project will focus on small manufacturing establishments (SMEs) in the coal supply chain by providing mini-grants to targeted firms that enable the most impactful business development strategies to move forward quickly and efficiently – with a specific emphasis on increasing access to advanced manufacturing technologies. In addition, the project will target freight and logistics firms operating along the waterways of southwest Pennsylvania to increase their competitiveness by identifying and prioritizing new markets and opportunities. The project will create or retain 330 jobs, serve 55 supply chain businesses, and leverage $25,000,000 in private funds.
$649,958 EDA grant to Western State Colorado University, in Gunnison, CO, in support of the Innovation, Creativity, & Entrepreneurship (ICE) House and ICE Accelerator Innovation Center project. The ICE House will feature a collaborative co-working center and innovation lab for community and campus entrepreneurs to work together and support each other’s creations. Grant funds will be leveraged to attract investment from angel networks and venture capital firms to create new job opportunities for the City of Gunnison’s workforce, and provide stable and high-wage economic diversification beyond the coal and hospitality industries that the local economy is currently reliant on.
$500,000 ARC grant to Innovation Works, Inc. in Pittsburgh, PA for theRevitalization of Southwestern Pennsylvania Coal-Impacted Communities through Innovation and Entrepreneurship project. ARC funds will be used to implement five different but complimentary programs designed to deliver a variety of benefits to entrepreneurs and small businesses in a nine-county region in southwestern Pennsylvania – including the provision of human resource services to early-stage, high-growth companies, and training services for existing small businesses. Programs will target entrepreneurs who were formerly employed in the coal industry, coal-fired power plants, and suppliers to those industries. The project will create 65 new jobs and 7 new businesses, leverage $1,100,000 in additional investment, and retain 30 existing jobs.
$499,480 ARC grant to RAIN Source Capital, Inc. for the Appalachia Angel Investor Network project. ARC funds will enable the awardee to work with existing and new angel investment funds to enhance the capability of coal-impacted communities across 9 Appalachian states to make investments in start-up, early stage, and growth companies. Specifically, the project will create at least four new angel funds in target communities, and will provide tools, training, and support services to existing angel funds and networks already operating in Appalachia. The project will result in the creation of 20 new businesses and 100 new jobs, and will leverage $4,000,000 in private investment from 100 investors.
$400,000 ARC grant to Erwin Utilities in Erwin, TN for the Temple Hill & Bumpus Cove Broadband project. ARC funds will be used to install 35 miles of fiber optic cable on existing pole lines – allowing business and residential subscribers in Temple Hill and Bumpus Cove access to broadband services. The area does not currently have cable broadband available and DSL service is not offered ubiquitously. Tourism expansion is a major economic driver in the area and increased bandwidth will help expand the tourism industry and revenue base. The project will serve 680 households and 30 businesses, and will act as an economic driver in a three county area in northeast Tennessee, which has been adversely affected by the closure of a major rail yard as a result of the decline in coal shipments.
$362,989 ARC grant to the Center for Rural Health Development, Inc. in Hurricane, WV for the WV Rural Health Infrastructure Loan Fund project. ARC funds will assist in capitalizing a revolving loan fund designed to strengthen the health care industry in a 25-county region in central West Virginia. In addition, the award will provide technical and business development assistance to existing health care providers with business-related needs. The project will create or retain 65 jobs, yield $1,000,000 of financing for health care businesses, and provide 216 organizations with technical assistance.
$353,086 ARC grant to the Town of Unicoi, TN for the Mountain Harvest Kitchen Incubator & Entrepreneurial Training Program. ARC funds will purchase equipment for a shared-use, commercial kitchen where value-added processing of locally-harvested products will take place. Entrepreneurial training will be offered by partner organizations including AccelNow, the Appalachian Resource Conservation and Development Council, and the University of Tennessee Agricultural Extension for start-ups and established businesses in the agricultural sector. The program will serve a nine-county region in northeast Tennessee and northwest North Carolina, create 30 new businesses and 60 new jobs, serve 91 trainees, and leverage $1,200,000 in private investment.
$301,916 EDA grant to the Centralia College Robotics Workforce Trainingproject in Centralia, WA. This award will help fund a workforce development project in alignment with a strategic plan designed by the Lewis Economic Development Council with support from an EDA POWER 2015 planning grant in response to the retirement of a local coal power plant. The project will support the acquisition of equipment for use in a workforce training program at Centralia College, which will train the region’s workforce to use the most current robotics technology. Prospective employers and supporters of the program include The Boeing Company and the Fluke Corporation.
POWER Planning Grant and Technical Assistance Award Summaries:
$960,000 EDA grant to the Pennsylvania Department of Community and Economic Development (DCED) in Harrisburg, PA, in support of theRepositioning Pennsylvania’s Strategic Assets project. In partnership with FirstEnergy, Exelon, regional and economic development organizations, and potential buyers, DCED will coordinate efforts to evaluate the potential of commercially repurposing retired coal-fired power plant sites throughout the state. These sites are often located on strategically valuable real estate located along rivers and often near downtown areas. They have critical infrastructure already in place and feature rail and road access, and water, sewer, and transmission lines, and therefore hold the potential for commercial redevelopment and subsequent economic diversification and job creation.
$400,000 EDA grant to the National Association of Counties (NACo) and the National Association of Development Organizations (NADO) in Washington, DC in support of theTechnical Assistance for Coal Communities project targeting Colorado, Wyoming, Montana, and Utah. The project will provide technical assistance to communities whose economies have been severely impacted by the declining use of coal, and will build on the success of the Innovation Challenge for Coal-Reliant Communities, a program that the co-awardees jointly implemented from 2014 to 2016 with the support of the EDA. Community leaders will participate in intensive training workshops, and receive peer networking opportunities and mentoring resources related to economic diversification, job creation and long-term, place-based economic development strategies.
$375,000 EDA grant to Citizens Energy Group, in Indianapolis, IN, in partnership with the City of Indianapolis, the Central Indiana Community Foundation and local community development corporations. The award will fund the development of a site assessment and reuse and implementation strategy for a former coke coal manufacturing facility located in the Indianapolis Promise Zone. The project will identify potential reuse strategies for the site, including redevelopment for manufacturing companies that support economic diversification and workforce development strategies to foster local and regional economic resiliency.
$300,000 EDA grant to the Coconino County Career Center in Flagstaff, AZ, in support of the Northern Arizona Regional Resilience Initiative. The project will develop a strategic plan designed to strengthen regional economic resilience through reduced dependence on the coal industry and increased economic diversification. Project activities will include the identification of in-demand workforce development programs and training curriculum, examination of re-employment opportunities for workers in coal-related industries, identification of broadband opportunities, and development and promotion of industry sector strategies. Coconino County will leverage an additional $100,000 in U.S. Department of Labor WIOA funds.
$150,000 ARC grant to Reconnecting McDowell, Inc. in Charleston, WV to develop an economic development and diversification strategy for the City of Welch and McDowell County centered on the Renaissance Village Apartments, a housing project that will develop rental housing in downtown Welch for teachers and young professionals employed in the area. Renaissance Village will serve as an anchor for redevelopment efforts in the downtown area and provide affordable housing. The planning project will assist with an entrepreneurship and small business initiative, along with financial and operations modeling for Renaissance Village.
$140,000 ARC grant to the West Virginia Connecting Communities Inc. in Charleston, WV in partnership with the New River Gorge Trail Association for the development of an economic feasibility study for a regionally-connected bike trail system in Fayette and Nicholas Counties. The focus of the study will be the viability of linking over 500 miles of bike trails and the impact to small communities throughout the region.
$123,488 ARC grant to the Region 4 Planning and Development Council in Summersville, WV to develop a strategic plan for the Upper Kanawha Valley. In partnership with the Center for Rural Entrepreneurship, the plan will include prioritizing economic strategies, building regional collaboration across counties, and assisting communities to create greater economic diversification that fosters sustainability.
$119,460 ARC grant to Rural Action in The Plains, OH to develop a strategic plan and feasibility study for the Appalachian Ohio Solar Supply-Chain Initiative. This regional planning effort will focus on building a stakeholder partnership that will develop a regional solar manufacturing supply-chain in response to a major utility’s plan to deploy new solar resources in Ohio.
$105,000 ARC grant to Williamson Health and Wellness Center in Williamson, WV to provide grant writing assistance, and develop a feasibility study, a strategic plan, and preliminary architectural design work for a vacant building in Williamson’s downtown, a former “pill mill.” If deemed viable, the building will be rebuilt as a one-stop facility that would provide workforce training, opioid addiction and substance abuse treatment services to assist individuals in recovery to become employment ready. The service area will include counties in both Kentucky and West Virginia.
$93,495 ARC grant to the West Virginia Community Development Hub in Fairmont, WV, which, in partnership with the International Economic Development Council, will provide technical assistance to five coal-impacted counties (Boone, Greenbrier, Lincoln, McDowell and Wyoming) through economic development mentoring for local community teams. As a result of this investment, community teams will develop local economic diversification strategies.
$90,000 ARC grant to Randolph County Development Authority in Elkins, WV to develop a strategic plan focused on the promotion and expansion of the hardwood industry cluster. In partnership with the Hardwood Alliance Zone, the strategic plan will assist in strengthening the economy of the nine-county region. The project will build on the recent EDA and ARC POWER grants that are enabling a local wood products manufacturer to expand its operations.
$80,142 EDA grant to the Trustees of the University of Pennsylvania in Philadelphia, PA, in support of a Plan to Sustain Small Businesses in the Coal Economy. Working with the Kleinman Center for Energy Policy, the Pennsylvania Small Business Development Center will spearhead the development of a plan to propose strategic responses that enable small businesses to successfully adapt to the rapid transitions occurring in the power sector and in coal reliant communities and supply chains. The plan will examine how technology commercialization and entrepreneurial opportunities for displaced workers can reinvigorate and diversify regional economies; it will also analyze opportunities to create linkages with accelerator programs and rapid prototyping centers, and to bolster industry sectors in manufacturing, electronics, energy innovation and cyber security.
$69,831 EDA grant to Ohio University in Athens, OH, to conduct a Skillshed analysis that will identify and analyze the current skill sets of former coal industry employees, the skills requirements across various emerging and existing high-growth industries, and the gaps between these current skill sets and existing industry demand within a 32-county area and in partnership with four EDA Economic Development Districts. The findings of the final report will be used to inform the workforce development and economic resiliency strategies and projects of economic development organizations across the region.
$60,000 ARC grant to Webster County Economic Development Authority in Webster Springs, WV to conduct a feasibility study for the development of a multi-county All-Terrain Vehicle trail system in five counties. This grant will assist in developing a major tourism asset for the region and create opportunities for local small businesses. The project will work in partnership with the Hatfield McCoy Trail Authority.
$50,000 EDA grant to the Huron County Economic Development Corporation (EDC) in Bad Axe, MI, in partnership with the City of Harbor Beach, MI, in response the closure of the DTE Energy-owned coal power plant, which resulted in the loss of jobs and an important source of revenue for the local tax base. The project will support a feasibility study focusing on the viability of creating a local multipurpose space that could serve as an entrepreneurship and business start-up hub. The hub would share resources with local, regional and state organizations and entrepreneurs, while also serving the local needs of the business community. DTE is providing a $50,000 cash match to support this project.
$50,000 EDA grant to the County of St. Clair in Port Huron, MI, which, in partnership with the Economic Development Alliance of St. Clair County, will conduct a comprehensive economic impact study of the planned retirement in 2023 of the DTE Energy-owned St. Clair Power Plant. The study will identify economic activity related to the plant and the impacts of its future retirement, provide scenario-based strategies for mitigating negative impacts of the plant’s closure, and recommend strategies for economic diversification and reinvestment. DTE is providing a $50,000 cash match to support this project.
$50,000 EDA grant to the Southeastern Montana Development Corporation in Colstrip, MT. Colstrip Power Plant Units 1 and 2 will be retired by 2022. Between this anticipated closure and the resulting layoffs at the nearby Rosebud Mine, the total cumulative job losses are projected to have a significant impact on the regional workforce. This EDA investment will support the development of an economic development strategy that the City of Colstrip will use as its guide to diversifying and stabilizing the economy of Colstrip and the surrounding area that has historically depended on both coal mining and coal-fired power generation.
$14,214 ARC grant to the United Mine Workers Association Career Centers, Inc. in Prosperity, PA to provide grant writing assistance to raise funds for the development of a training program at their Greene County, PA training facility. The program will emphasize high demand occupations such as commercial driver’s license, and heavy equipment and diesel mechanics.
$11,108 ARC grant to Round the Mountain: Southwest Virginia’s Artisan Network in Abingdon, VA to provide grant writing assistance to raise funds for the creation of a regional craft beverage cluster that will strengthen Virginia’s agriculture industry and tourism in the region. The project will build off the extensive network cultivated by the Southwest Virginia Cultural Heritage Foundation.
POWER Special Research Award Summaries:
$497,000 ARC grant to the Region 1 – Planning and Development Council in Princeton, WV for the Coalfields Cluster Mapping Initiativeresearch project. ARC funds will be used to map the extent of the coal industry supply chain across the tri-state region of Kentucky, Virginia, and West Virginia. The resulting detailed information on the supply chain will complement ongoing work undertaken by other ARC-funded projects, examining the extent of the decline in the coal economy and providing business technical assistance to aid the impacted supply chain firms in their return to growth and profitability.
$349,999 ARC grant to West Virginia University Research Corporation in Morgantown, WV for the Economic Analysis of Coal Industry Ecosystem in Appalachia project. This study will examine the full ecosystem of the coal industry in Appalachia through in-depth quantitative analysis. Specifically, this research will identify, quantify, and map data on all relevant coal industry activity throughout the Appalachian Region. The three tasks of this research project are to: 1) identify all components of the coal ecosystem and estimate the supply chain impacts in Appalachia; 2) examine the implications of the coal industry downturn on freight rail, barge, and truck transportation in Appalachia; and 3) develop a typology of regional economies that surround the coal-fired plants in the Region using both econometric and input-output techniques.
$149,998 ARC grant to Downstream Strategies in Morgantown, WV for the Strengthening Economic Resilience in Appalachian Communities project. This research will explore and document strategies and policies local leaders can use to enhance the future economic prospects of coal-impacted communities throughout the Appalachian Region. There are four key components to this research project: 1) develop a comprehensive, quantitative framework to explore economic resilience; 2) identify a series of best-practice strategies for strengthening local economic resilience; 3) conduct up to 10 in-depth case studies; and 4) produce a concise guidebook that interprets and integrates findings of the research, written specifically for local economic development practitioners.
Unfortunately for Donald Trump, whose candidacy depends upon economic suffering, the US economy continues to grow, in fact, Real GDP grew 2.9% in the third quarter, and exports grew at 10%, the fastest quarterly pace since 2013, while consumer spending continued to grow at a solid pace.
But with the disinformation campaign intact, which the Trump campaign sees as the only way to an increasingly elusive victory, Dan Kowalski, Trump’s Deputy Policy Director, stated, “America can do better than the modest growth of 2.9 percent recorded for the 3rd quarter and the dismal growth of 1.5 percent for the past year. Growth hasn’t risen above 3 percent for a full year in any year of the Obama presidency. Decades of strong economic growth and global leadership have been replaced with low-paying jobs, global chaos and a national debt that has doubled under Obama-Clinton.
“The single most important issue facing the American people is an economy that has failed to deliver jobs, incomes, and opportunity. The Trump economic plan creates at least 25 million jobs and 4 percent growth through tax, trade, energy and regulatory reforms.”
In contrast, Hillary for America Senior Policy Advisor Jacob Leibenluft stated: “Today’s GDP release shows economic growth at its fastest pace in two years. With more than 15 million jobs created since early 2010 and real median incomes growing more than 5 percent last year, it’s clear we’ve made real progress coming back from the crisis. But Hillary Clinton believes there is still more we need to do to build an economy that works for everyone, not just those at the top. Independent experts agree her plan would create good-paying jobs through investments in infrastructure, innovation and education. Donald Trump, on the other hand, would take us backwards, with experts across the political spectrum warning his plans would risk another recession and cost jobs.”
Jason Furman, Chairman of the Council of Economic Advisers, issued the following statement today on the advance estimate of GDP for the third quarter of 2016. You can view the statement HERE.
Summary: Real GDP grew 2.9 percent at an annual rate in the third quarter, with strong export growth and continued strength in consumer spending.
The economy grew 2.9 percent at an annual rate in the third quarter of 2016, a noticeably faster pace than in the first half of the year. Exports, which have faced significant headwinds in recent years from slow growth abroad, grew at an annual rate of 10.0 percent in the third quarter, their fastest quarterly pace since 2013. Consumer spending continued to grow at a solid pace in the third quarter, while inventory investment (one of the most volatile components of GDP) boosted GDP growth after subtracting from it in the prior five quarters. In contrast to the pattern of recent quarters, business fixed investment also contributed positively to GDP growth, though it continues to be restrained by slower global growth. But more work remains to strengthen economic growth and ensure that it is broadly shared, and the President will continue to take steps to promote greater competition across the economy, including in the labor market; support innovation; and call on Congress to increase investments in infrastructure and to pass the high-standards Trans-Pacific Partnership.
FIVE KEY POINTS IN TODAY’S REPORT FROM THE BUREAU OF ECONOMIC ANALYSIS (BEA)
Real Gross Domestic Product (GDP) increased 2.9 percent at an annual rate in the third quarter of 2016, according to BEA’s advance estimate. Consumer spending grew 2.1 percent in the third quarter following its strong second-quarter growth of 4.3 percent, with continued solid growth in durable goods spending and a contraction in nondurable goods spending. Inventory investment—one of the most volatile components of GDP—added 0.6 percentage point to GDP growth in the third quarter after subtracting 1.2 percentage point in the second quarter. Nonresidential fixed investment contributed positively to GDP growth for the second quarter in a row, due in large part to a pickup in structures investment growth (see point 4 below). Residential investment declined for the second quarter in a row, albeit at a slower pace in the third quarter than in the second quarter. Notably, exports grew 10.0 percent at an annual rate in the third quarter, its fastest quarterly growth since late 2013, despite continued headwinds from slow growth abroad (see point 3 below).
The pace of third-quarter real GDP growth was noticeably faster than its pace in the first half of 2016. Real GDP growth averaged 1.1 percent at an annual rate in the first half of 2016. The pickup in growth in the third quarter can be attributed largely to two components of GDP: inventory investment and exports. In the first half of the year, these components contributed -0.8 percentage point and 0.1 percentage point, respectively, to overall real GDP growth. Both components saw substantial pickups in growth in the third quarter relative to the first half of the year: inventory investment contributed 0.6 percentage point to GDP growth, while exports contributed 1.2 percentage point, their second-largest quarterly contribution to growth since 2010. Other components of GDP, including both structures and equipment investment and government purchases, also saw faster growth or smaller contractions in the third quarter. These were partly offset by smaller positive contributions from consumer spending and intellectual property products investment and a larger negative contribution from residential investment.
Real exports grew 10.0 percent in the third quarter, their fastest quarterly growth since 2013. In recent years, slowing global demand has been a key headwind to U.S. growth, as the volume of U.S. exports to foreign countries is sensitive to GDP growth abroad. In its October World Economic Outlook, the International Monetary Fund (IMF) revised down its forecast of global growth for the four quarters of 2016, removing an expected pickup in growth from 2015 to 2016. The IMF currently forecasts global growth to pick up in 2017, suggesting less downward pressure on export growth going forward. Nevertheless, real export growth in the third quarter was substantially faster than in recent quarters, due in part to a large increase in agricultural exports. (As shown in the chart below, real export growth had slowed even faster in recent quarters than the slowdown in world growth would have implied, potentially explaining some of the bounce-back in the third quarter.) The sensitivity of U.S. exports to foreign demand and the large contribution of exports to overall growth in the third quarter underscore both the importance of opening foreign markets to U.S. exports by passing the high-standards Trans-Pacific Partnership and the agreement’s potential to strengthen the U.S. economy as a whole.
As oil prices have risen slightly in recent months, contractions in oil-related investment have weighed somewhat less on overall growth. The price of Brent crude oil was $31 per barrel in January 2016, nearly three-quarters lower than its recent peak in June 2014. While the decline in oil prices has benefitted consumers and the economy overall, it has weighed heavily on both mining and logging employment and on investment in mining exploration, shafts, and wells—which includes petroleum drilling structures—which declined by nearly two-thirds from the fourth quarter of 2014 through the second quarter of 2016. Partly as a result, overall structures investment subtracted an average of 0.2 percentage point from quarterly real GDP growth over this period. From its trough in January, however, the monthly price of Brent crude oil increased to $47 per barrel as of September, and the number of oil and natural gas rigs in operation (which reflects the rate of drilling for new oil and natural gas) has risen for five consecutive months. Consistent with the increase in oil prices, investment in mining exploration, shafts, and wells contracted more slowly in the third quarter of 2016 than in earlier quarters, and overall structures investment added 0.1 percentage point to GDP growth. Since both oil-related investment and employment tend to lag prices by several months, the recent moderation in oil prices may translate into a slowdown in the pace of employment losses and further slowing in the rate of contraction in mining exploration, shafts, and wells investment in future quarters.
Real private domestic final purchases (PDFP)—the sum of consumption and fixed investment—rose 1.6 percent at an annual rate in the third quarter, a somewhat slower pace than in recent quarters. PDFP—which excludes more volatile components of GDP like net exports and inventory investment, as well as government spending—is generally a more reliable indicator of next-quarter GDP growth than current GDP. In the third quarter, the divergence between overall real GDP growth and the relatively weaker contribution of PDFP to growth was largely accounted for by the large positive contributions of inventory investment and exports to real GDP growth. Overall, PDFP rose 1.9 percent over the past four quarters, above the pace of GDP growth over the same period.
As the Administration stresses every quarter, GDP figures can be volatile and are subject to substantial revision. Therefore, it is important not to read too much into any single report, and it is informative to consider each report in the context of other data as they become available.
WASHINGTON, DC – Jason Furman, Chairman of the Council of Economic Advisers, issued the following statement today on the employment situation in September.
Summary: The economy added 156,000 jobs in September, as labor force participation rose and wages continued to grow.
The economy added 156,000 jobs in September, as the unemployment rate ticked up amid rising labor force participation. U.S. businesses have now added 15.3 million jobs since early 2010, and the longest streak of total job growth on record continued in September. So far in 2016, hourly earnings for private-sector workers have increased at an annual rate of 2.8 percent, much faster than the pace of inflation. In fact, real wages have grown faster over the current business cycle than in any since the early 1970s. Sustained real wage growth in recent years, combined with continued strength in job creation, has led to increased incomes for middle-class families: last month, the Census Bureau reported that real median household income increased 5.2 percent from 2014 to 2015, the fastest annual growth on record. Still, more work remains to sustain faster wage growth and to ensure that the benefits of the recovery are broadly shared, including increasing investment in infrastructure and implementing the high-standards Trans-Pacific Partnership. Additionally, as discussed in a new White House report, Congress should follow the lead of 18 States and the District of Columbia to give millions of American workers a raise by increasing the Federal minimum wage.
FIVE KEY POINTS ON THE LABOR MARKET IN SEPTEMBER 2016
1. U.S. businesses have now added 15.3 million jobs since private-sector job growth turned positive in early 2010. Today, we learned that private employment rose by 167,000 jobs in September. Total nonfarm employment rose by 156,000 jobs, slightly below the monthly average for 2016 so far but substantially higher than the pace of about 80,000 jobs per month that CEA estimates is necessary to maintain a low and stable unemployment rate given the impact of demographic trends on labor force participation. The unemployment rate ticked up to 5.0 percent in September, while the labor force participation rate rose to 62.9 percent, the same rate as in the fourth quarter of 2013 despite downward pressure on participation from demographic trends. The share of the labor force working part-time for economic reasons (those working part-time but who would prefer full-time employment) ticked down in September to 3.7 percent, though it remains above its pre-recession average (3.0 percent).
2. For more than three and a half years, American workers have seen sustained real wage gains, as hourly earnings have grown faster than inflation. So far in 2016, nominal earnings for private-sector workers have increased at an annual rate of 2.8 percent, well above the pace of inflation (1.4 percent as of August, the latest data available). As the chart below shows, nominal wage growth has trended up over the course of the recovery as the labor market continues to strengthen amid robust job growth. At the same time, consumer price inflation fell sharply in 2014 and 2015 due to steep declines in energy prices. While inflation has picked up slightly in recent months as energy price declines have moderated, nominal earnings growth has continued its pickup, translating into continued real wage gains for American workers—a key component of rising standards of living.
3. Real hourly wages have grown faster over the current business cycle than in any cycle since the early 1970s. The chart below plots the average annual growth of real hourly earnings for private production and nonsupervisory workers over each business cycle, including both recessions and recoveries. (Economists prefer comparing across entire business cycles, as they generally represent economically comparable periods.) Since the beginning of the current business cycle in December 2007, real wages have grown at a rate of 0.9 percent a year, faster than in any other cycle since 1973. In fact, since the end of 2012, real wages for non-managerial workers have grown 5.7 percent in total, exceeding the 2.1-percent total real wage growth from the business cycle peak in 1980 to the business cycle peak in 2007—a sign of the remarkable progress made by American families in the current recovery.
4. Rising real wages, combined with continued strong employment growth, have translated into increased incomes for American families, and data from 2016 so far point to continued gains. In September, the Census Bureau reported that real median household income increased by $2,800, or 5.2 percent, the largest annual increase on record. As shown in the chart below, median household income growth tends to track growth in aggregate weekly earnings, the total amount earned by private-sector workers. (Since both income and aggregate earnings reflect the influence of rising employment as well as rising wages, aggregate earnings are conceptually linked more closely to household income than to wages.) The historically large increase in median household income from 2014 to 2015 was far above what would have been predicted based on its historical relationship with aggregate earnings growth, but even aggregate earnings would have predicted strong gains in median income. In 2014 the situation was reversed, with the Census Bureau reporting income gains that fell short of what would have been predicted based on wage data from the Bureau of Labor Statistics. Growth in both real wages and employment so far in 2016 point to continued gains in real income for the typical American household when the data become available from the Census Bureau next year.
5. The distribution of job growth across industries in September diverged somewhat from the pattern over the past year. Above-average gains relative to the past year were seen in wholesale trade (+10,000) and other services (+15,000), while mining and logging (which includes oil extraction) showed no change in September after a number of months of job losses. On the other hand, several industries, including financial activities (+6,000), health care and social assistance (+22,000), State and local government (-15,000), and transportation and warehousing (-9,000) saw weaker-than-average growth. Slow global growth has continued to weigh on the manufacturing sector, which is more export-oriented than other industries and which posted a loss of 13,000 jobs in September.Across the 17 industries shown below, the correlation between the most recent one-month percent change and the average percent change over the last twelve months was 0.28, well below the average correlation over the last three years.
As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and payroll employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report, and it is informative to consider each report in the context of other data as they become available.
