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.

 

 

Changing the rules on tax incentives in Olympia: What message do lawmakers want to send?

The House Labor Committee has scheduled a 1:30 hearing on HB 1786. The bill analysis gets into some background and detail. Jerry Cornfield’s story in the Everett Herald hits the key points.

Aerospace companies that save millions of dollars through tax breaks — or billions in the case of the Boeing Co. — could face new rules if they want to keep them.

A group of House Democrats are pushing to set a minimum wage of more than $20 an hour for veteran employees of those firms and to shrink the tax break for the Boeing Co. if the firm cuts its job force too much.

As Cornfield reports, more is in the works.

A second bill, which could become public this week, will target Boeing. As drawn up, the company would have its tax break reduced if it trims its workforce in the state by a certain number of jobs. Rep. June Robinson, D-Everett, is expected to be the prime sponsor.

Read the whole story, it’s good reporting. Here’s how HB 1786 would change the rules.

Each September, the companies would report the annual earnings of each employee who has been with the firm for three or more consecutive years. As written, the bill covers all jobs including assemblers and engineers, executives and janitors.

Under the bill, each of those employees must be paid at least the state median wage for a one-earner family as reported in the American Community Survey by the U.S. Census Bureau. That wage is currently $52,384 a year.

This mandate is phased in over three years. Starting in 2016, workers must be paid at least 80 percent of this year’s median wage or $41,900, which works out to $20 an hour for a full-time worker. Workers must make 90 percent of the median in 2017 and 100 percent by the start of 2018.

If one employee does not earn the standard in any year, the company loses its entire tax break, according to the bill. A firm can get it back the following year if it complies.

We noted earlier today the importance of manufacturing to our state. A Washington Research Council report last year put the Boeing incentive package in context, dubbing it a mythical $8.7 billion tax break. 

Cornfield’s story closes with the Everett mayor asking the right question.

Everett Mayor Ray Stephanson said he couldn’t comment on the specifics of either bill yet, because he has not seen them. If lawmakers impose new conditions on receipt of the tax breaks, it could quiet the interest of any firms eyeing a move to the city or state, he said.

“I think the risk is this: What kind of message does it send to other companies that you’re recruiting to your state?” he said.

The question answers itself, but as KPLU reports, The Boeing Company provides a clear answer.

“The 2013 incentives require Boeing to build the 777X exclusively in the state — an unprecedented safeguard for taxpayers,” the company said in the statement. “Changing the legislation undermines the confidence of all businesses that the state will honor its commitments.”

Right.