Retooling education for high tech manufacturing, expanding employment opportunities

High tech manufacturing is transforming the economic landscape. Bruce Katz at The Brookings Institution suggests Detroit is becoming the new Silicon Valley (and vice versa). For our state, which likens itself much more to the innovative tech cluster of the valley than to Rust Belt Motor City, the transformation is important. 

In his blog post, Katz briefly outlines how software has revolutionized manufacturing and other industries, creating new opportunities and bringing jobs back to the U.S. Further, the new jobs have powerful multipliers.

…it helps to look at a recent Brookings report, which lists a group of 50 advanced industries, ranging from automobile manufacturing to software development. Together, they contain our nation’s most competitive and innovative firms. Nationally, these industries have an outsized impact on the economy—just 9% of the workforce, they produce 17% of gross domestic product and, since the end of the recession, advanced industries have created 65% of new jobs.

The trends are good news, particularly for a state that is already home to some of the world’s most innovative tech companies. Katz concludes,

At a time of increasing economic inequality, the higher productivity offered by advanced manufacturing often leads to higher wages for workers. (The Brookings report found that workers in advanced industries earned nearly double that of the average worker in other industries.) The innovation and increased productivity of advanced industries also hold the promise of cheaper and more widely available goods and services for the country as a whole, increasing standards of living across the board.

Private, public and civic leaders would be wise to embrace the convergence underway and retool economic development—workforce training, community college programs, applied research investments—to this new reality.

Opportunity Washington: Priorities for Shared Prosperity makes a similar point, noting the potential economic and social benefits that could be realized by closing the skills gap. Citing research conducted by the Boston Consulting Group for the Washington Roundtable, we wrote:

The BCG analysis projects the existing skills gap to reach 50,000 persistently unfilled jobs by 2017. Using conservative multipliers, the consultants calculate that filling those jobs would generate a total of 160,000 jobs in the state and an additional $720 million in state taxes and $80 million in local taxes annually.

Ultimately, education systems must align with the skills needed for individual success in Washington’s economy and the global marketplace. To create this alignment, Washington will need to dedicate resources to improving access and increasing the number of degrees awarded — particularly at the bachelor’s degree level and especially within high-demand career fields.

Washington stands to benefit greatly from this 21st Century economic transformation. To do so, policymakers must assure that investments, accountability, and reforms align to produce optimal education outcomes.

 

 

Taxes influence behavior – evidence from cigarettes

Here’s something that’s easily overlooked. When sin taxes get too high, sinners figure out a way to beat the system. 

Melissa Santos writes in The News Tribune about cigarette taxes. 

Washington state has steadily raised its cigarette taxes in the last 20 years as a means to both curb smoking and raise revenue.

At the same time, though, something else has gone up: The rate at which people evade the tax by buying cigarettes out of state or online.

Nearly one-third of Washington’s potential cigarette tax revenues were lost to smuggling or tax evasion in the 2013 fiscal year, according to estimates by the state Department of Revenue.

It’s a nicely researched article, underscoring the tale of diminishing returns. 

Tax evasion is a crime. But taxation does influence behavior in other, legal, ways. High business taxes, for example, can cause industry to relocate or expand in more tax friendly jurisdictions. It’s not just the sinners that understand the system.