I would like to enter into the Record an article from the Economic Policy Institute which says that the shutdown of one or more U.S. automakers could eliminate up to 3.3 million U.S. jobs. [From the Economic Policy Institute, Dec. 3, 2008]…
I would like to enter into the Record an article from the Economic Policy Institute which says that the shutdown of one or more U.S. automakers could eliminate up to 3.3 million U.S. jobs.
[From the Economic Policy Institute, Dec. 3, 2008]
When Giants Fall: Shutdown of one or more U.S. automakers could
eliminate up to 3.3 million U.S. jobs
(By Robert E. Scott)
The U.S. motor vehicle industry is one of the largest, most
complex and highly integrated sectors of the U.S. economy.
The bankruptcy of one or more of the U.S. automakers and a
collapse of the domestic auto assembly industry could
eliminate up to 3.3 million U.S. jobs within the next year.
The collapse of just one company, General Motors (GM), would
lead to an estimated reduction of 900,000 jobs. Using the
range of job-loss estimates, unemployment would rise by 3.0
to 8.9 percentage points in the nine hardest hit states in
the United States. Jobs losses would be widespread throughout
the U.S. economy. After the U.S. auto market recovers from
the current historic recession the U.S. trade deficit could
rise by at least $110 billion per year as imported vehicles
displace domestic brands, increasing the deficit by 16% and
putting additional downward pressure on the U.S. dollar and
living standards.
In addition to its finding that a bankruptcy-related
shutdown of the U.S. motor vehicle industry could cost up to
3.3 million U.S. jobs, this study finds:
The 900,000 to 3.3 million jobs lost nationwide would be
distributed among all 50 states and the District of Columbia,
with the biggest losers, in numeric terms: Michigan (112,500
to 407,300 jobs lost), California (84,500 to 305,900 jobs),
Ohio (60,500 to 219,100 jobs), Texas (55,200 to 200,000),
Illinois (42,800 to 154,900), Indiana (40,700 to 147,300),
and New York (39,900 to 144,600) (Table 2a).
The hardest-hit states, as a share of total state
employment, are: Michigan (up to 407,300 jobs, 8.9% of state
employment), Indiana (up to 147,300 jobs, 5.0% of
employment), Kentucky (up to 75,000 jobs, 4.2% of
employment), Alabama (up to 76,100 jobs, 4.0% of employment),
Tennessee (up to 106,400, 4.0% of employment), and Ohio (up
to 219,100 jobs, 4.0% of employment) (Table 2b).
Between 113,900 and 412,600 jobs would be lost in the motor
vehicle and parts industries alone. Other hard hit
manufacturing sectors include fabricated metal products (up
to 60,500 jobs lost), primary metals (up to 33,700 jobs
lost), plastic and rubber products (up to 23,600 jobs lost),
non-electrical machinery (up to 19,800 jobs lost) and
computer and electronic parts (up to 16,800 jobs lost) (Table
4).
Service industries would also experience massive job losses
including wholesale trade (up to 96,400 jobs lost), retail
trade (up to 86,600 jobs lost), transportation (up to 69,6500
jobs lost), finance and insurance (up to 30,300 jobs lost),
professional, scientific, and technical services (up to
76,300 jobs lost), and administrative support and temp help
services (up to 55,300 jobs lost) (Table 4).
Jobs in the auto industry are some of the best paid in the
economy, and when workers spend those wages they generate (on
average) about 1.7 additional jobs for each job supported in
the auto and related sectors. Thus, an auto industry shutdown
would eliminate between 576,700 and 2.1 million ``re-
spending'' jobs in the domestic economy (Table 4). These
would constitute the bulk of the jobs displaced by an auto
industry bankruptcy.
If the Big Three auto firms shut down, the U.S. trade
deficit would rise by $109.3 billion, a significant (15.6%)
increase in the U.S. goods and services trade deficit
relative to 2007 levels. This increase would substantially
exceed the combined U.S. goods trade deficit with Japan and
South Korea in 2007 ($95.7 billion), which was second only to
the U.S. deficit with China. Overall U.S. motor vehicle
exports would fall by 61%, total imports would rise by 21%,
and the U.S. auto trade deficit would rise from $123.5
billion to $232.8 billion (88%).
Conclusion
The bankruptcy of one or more U.S.-based automakers would
lead to the shutdown of significant portions of the U.S.
motor vehicle industry. This would, in turn, cause a wave of
plant closures and bankruptcies throughout the manufacturing
and services sectors of our economy. Under this scenario, as
many as an estimated 3.3 million U.S. jobs would be
eliminated, with thousands of jobs lost in every state.
Massive increases in unemployment would result. But this
would just be the first wave of consequences of an auto
industry bankruptcy. Massive job loss and community
disruption would result. Increased government payments and
tax losses alone would exceed $150 billion in the first three
years following bankruptcy of all three domestic auto
companies, according to Code et al. (2008).
An airline-style (Chapter 11) bankruptcy re-organization is
not an option for U.S.-based automakers. They have already
extensively restructured product lines and labor contracts.
Academic experts (Helper and MacDuffie 2008) and the industry
itself have put forth restructuring plans that include
independent oversight committees and regular performance
benchmarking tied to future funding. These plans provide the
foundation for a rebuilt, restructured domestic auto industry
that is ready to compete and deliver good, sustainable U.S.
jobs for the future. The alternative is simply too
destructive to contemplate.
We have to understand that the implications of the failure of this legislation means that there are many industries across America that are going to be adversely affected, including tens of thousands of jobs in plastics, in rubber products, in primary metal, in fabricated metal products, in machinery, in computer and electronic products, in semiconductors, in wholesale trade and retail trade, in transportation, in finance and insurance, in professional,
scientific and technical services, in companies and enterprises, in administrative and support and waste management and remediation services.
We're not just talking about some small boutique industry here. We're talking about something that is vitally connected to the entire American economy.
Now, we may have agreement about the management of the automotive industry, but there shouldn't be any disagreement that the American workers make a good product when they are able to make their product.
We have to have confidence in our Nation. We have to have confidence in our ability to make things. We, as a Congress, should take a proprietary interest in the fact that America can make cars and that we can make steel and planes and that we can build ships. This is what made our country great. We cannot maintain any credibility in the world community if we see our automotive industry collapse. And steel will not be far behind.
Sixty-seven years ago, when this Nation was attacked, the ability to respond and defend America depended on the very industry which is facing this Congress today begging for help. But they're not begging for help for themselves. Think of millions of Americans who are watching our deliberations asking, do we have any sense about what the impact of the failure of this legislation would mean?
We are expected to be able to see into the future. People elect us to be able to hold in our hands their lives, their jobs, their economic freedom. We cannot fail them in this moment. We cannot let this industry go bankrupt. We cannot let America descend to a second-rate power. We must be strong.
I will be introducing in the next Congress the National Industrial Manufacturing Act, which is going to say that steel, automotive, aerospace and shipping are deemed to be vital to our national defense. And we need a whole new direction. Let's start today by showing we can move towards economic recovery by saving our automotive industry.
Mr. Speaker, I rise in support of the LaTourette amendment.
Transparency is vital to the success of the congressional action with the TARP, and we know that when Congress intended to get help for consumers, unless you have transparency, you don't know if consumers are actually going to be helped. The LaTourette amendment resolves that question. I thank him for introducing it, and I urge its approval.