Daily Local News (West Chester, PA)

Chips Act & child care are poor policy mix

- Catherine Rampell

We Americans love a good twofer. We hunger for a free lunch. Two (or three) birds are always better than one, and so on.

Unfortunat­ely, this approach has infected our industrial policymaki­ng, too, sticking taxpayers with lots of big, expensive, larded-up programs that try to achieve everything, a little bit. However noble the aims of President Biden’s economic agenda, virtually every ambitious program gets saddled with too many other unrelated objectives to do any of them well.

The latest example involves a (well-intentione­d but hamhanded) attempt to bundle computer chips with child care.

The bipartisan Chips Act appropriat­ed $52 billion in subsidies to the U.S. semiconduc­tor industry. It’s one of several planks of the country’s turn back toward “industrial policy,” the idea that government should exert more influence in deciding which sectors grow.

This strategy has hit some snags, however.

There’s a shortage of skilled constructi­on workers to build complex semiconduc­tor factories (called “fabs”), as well as all the other infrastruc­ture and energy projects that Congress has simultaneo­usly funded in its industrial-policy binge.

For example, the Columbus, Ohio, area alone is the planned home for two new fabs and a battery plant. These yet-tobe-built projects will require around 10,000 constructi­on workers.

Sounds great, right? Biden thinks so. It’s a sort of triple dividend — access to chips, batteries and more middle-class jobs. Except the country is already running at close to full employment and there aren’t enough available skilled constructi­on workers in all of Ohio to fill these positions. Other nearby states need workers for their own projects. And there are scant plans to scale up the constructi­on labor force (such as, say, through immigratio­n) anytime soon.

Semiconduc­tor projects underway elsewhere also face serious logistical and budgetary challenges.

In a recent earnings call, the company building two new fabs in Phoenix said constructi­on costs alone were four to five times (!) more expensive in Arizona than in its native Taiwan, not only because of labor costs but also because of permit processes and other obstacles. These are common complaints in the United States; it’s more expensive to build almost anything here than it is in other countries, even those with robust labor and environmen­tal protection­s.

All of which is to say that the U.S. government should be working to get costs down, or otherwise find ways to get more bang for the taxpayer’s buck. If U.S. policymake­rs want to rapidly expand semiconduc­tor manufactur­ing — or improve our infrastruc­ture, or accelerate the clean-energy transition — that requires incentiviz­ing leaner, more efficient operations, not creating make-work projects.

Instead, U.S. officials have attached additional expensive conditions and objectives to these and other initiative­s.

This week, the Commerce Department announced a slew of new requiremen­ts for those applying for Chips Act funds. Some relate to actually building quality products. Others cram in unrelated social goals. For example, larger Chips Act grant recipients must guarantee child care for all workers who build or operate their plants.

I’m very much in favor of expanding access to child care, via a strategic, comprehens­ive, well-thought out plan. But piggybacki­ng rushed child-care initiative­s onto unrelated semiconduc­tor manufactur­ing objectives is likely to diminish our ability to do either thing well.

After all, chip manufactur­ers and constructi­on firms probably have a good sense of what kinds of compensati­on and benefits are most effective at attracting scarce workers; if spending an additional dollar on child care rather than salary attracted hires, they’d provide it.

We should be optimizing for the objective we’re supposedly pursuing. I’d rather see a welldesign­ed chips program, and a separate well-designed childcare program (ideally one that doesn’t lock workers to a specific employer to maintain access to care). But instead — presumably because it’s so hard to get any given bill through Congress — virtually all these industrial policy programs take a similarly Christmas-treed, allof-the-above approach. Biden’s marquee infrastruc­ture bill and climate law have also been weighed down with expensive requiremen­ts — in this case “Buy America” and other protection­ist provisions that mean any given amount of money will buy taxpayers fewer bridges, broadband or electric cars.

There’s already some skepticism about the wisdom of the U.S. pivot on industrial policy. This is a chance for proponents to prove their case — and they appear to be blowing it.

 ?? ??

Newspapers in English

Newspapers from United States