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Dale Crafts is a small business owner, former Maine state representative and former candidate for U.S. Congress.
Scroll through the headlines and the economic news isn’t promising. Recession fears spurred by negative real GDP growth continue to be a concern. The annual inflation rate accelerated in May to a level not seen since December 1981 while the Federal Reserve responds with rate hikes and promises of more to come.
Furthermore, the goods purchased despite the higher prices are slower to arrive than usual due to problems with the supply chain. All these concerns create a collective urge in the public to cry out for someone to “do something” but with such division in our country who will and what will it be? A good place to start is to increase our capacity to manufacture products domestically.
America reached its peak of manufacturing employment in 1979 when it represented 22 percent of nonfarm employment in the country, according to the Bureau of Labor Statistics. Manufacturing employment had fallen to 9 percent by 2019 while manufacturing as a percentage of GDP was 10.93 percent.
The semiconductor industry is feeling the impact of declines in domestic manufacturing and supply chain issues acutely. Much like the numbers for manufacturing overall, our nation was a world leader in the development and production of semiconductor chips four decades ago.
As a former state representative, small business owner and candidate for Congress, I know firsthand how this impacts our economic prosperity here in Maine and across the country. Right now, we rely on overseas trade to supply our chips, with the majority made in Taiwan, China, and South Korea. This reliance makes us susceptible to supply chain issues, which are causing a backlog of many products that require chips, such as automobiles, but also makes us vulnerable to disruption caused by trade disagreements and hostile nations like China who do not share our interests.
Due to industry consolidation and the governments of other countries prioritizing investment incentives in their own chip manufacturing, U.S. manufacturing capabilities represent a shrinking share of global capacity as a whole. This is where Congress has an opportunity to do something. Congress passed legislation that addresses our need to boost domestic semiconductor manufacturing capability. But, they have not funded it.
Here’s what needs to happen to truly make a difference: full funding of the CHIPS Act and an investment tax credit, as originally proposed in the Facilitating American-Built Semiconductors Act. Funding for the CHIPS Act will help plants in America now with $52 billion to start constructing semiconductor fabrication plants. An ITC will ensure American chip manufacturers have a path toward continued growth into the next decade.
Investing in chip manufacturing in America is a win-win for American workers. The U.S. semiconductor industry accounts for over 275,000 direct, good-paying jobs and each semiconductor that is manufactured here at home supports almost six jobs in other parts of our economy. That amounts to 1.85 million employed Americans taking in more than $160 billion in income each year.
The Semiconductor Industry Alliance projects CHIPS funding alone would support 185,000 temporary jobs and almost $25 billion into the U.S. economy. We have an opportunity in Maine to attract some of the investment and jobs created. Those are great jobs in an important industry with annual salaries as high as $170,000.
This funding legislation has broad support in both chambers of Congress and among members from both political parties, an anachronism in our current climate. Today’s faltering economy has shown that we cannot continue to depend on foreign nations for vital products that power our economy. Sens. Susan Collins and Angus King should fight to pass legislation that includes funding for the CHIPS Act and an investment tax credit.
