Welcome to the Letter from the Chief Economist.
When working with labor market data, it can sometimes feel like work moves very slowly, running analysis after analysis and making just incremental progress in the real world. But then there are the breakthroughs that make it all worth it, when the right opportunity comes at the right time to make a tangible difference.
The CHIPS Act presents one such opportunity. I mentioned this a few weeks ago, but to quickly summarize, the US has allocated over $50 billion to spur domestic manufacture of computer chips—and a dramatic increase in semiconductor production requires a dramatic increase in the number of US workers producing them. To better understand that need, and how to meet it, Lightcast has released Rebuilding Our Semiconductor Workforce: Making the Most of the CHIPS Act.
Yesterday, our CEO Chris Kibarian and KKR Global Impact Co-Head Ken Mehlman articulated the urgent need and huge opportunity of the CHIPS Act in Fast Company: “An economic strategy as ambitious as the CHIPS Act also needs a talent strategy,” they write. “The days when businesses and governments could create jobs and feel confident that the workers would show up are behind us. The fact is that if America is going to build more semiconductors, it will also need to build more semiconductor workers.”
The CHIPS Act was also a focus this weekend, when I had the privilege of speaking at the Center Forward conference outside Washington, DC, on what it takes, and what it means, to invest in the American workforce. Center Forward is a nonprofit that promotes national policies that the right and left can both agree on, and supporting US innovation and competitiveness in things like semiconductor manufacturing is very much in that category. It’s a great initiative and event, and I was glad to be part of it.
I spoke on a panel called “American Innovation: The Path to Prosperity” which included Adrienne Elrod of the Department of Commerce’s CHIPS Program, Joe Hoellerer of the Information Technology Industry Council, and moderated by Center Forward’s Cori Kramer. We had a great conversation on what it means to create a modern public-private partnership with something as significant as semiconductor manufacturing, and how vital it is that big investments like the CHIPS Act are made with deliberate care so that they can maximize success for businesses, education institutions, communities, and workers most of all (and how that all starts with data).
And speaking of data on investment, I also want to point out a map the White House put out this week about hundreds of billions of dollars’ worth of new investment over the past few years. Semiconductors/electronics and clean energy lead the way, and I was particularly glad to see so much investment in areas that aren’t always thought of as hotspots, like Kentucky, western Michigan, and both Carolinas.
But, just like Chris and Ken said in their Fast Company piece, investment is just the first step—workers won’t come automatically. The CHIPS act and other related initiatives are focusing on rebuilding our ability to manufacture/create new cutting-edge products in the US. But at the same time, we also need to focus on rebuilding our ability to create more and bring talent to the US. Maybe even something like a TALENT act (“Talent Acquisition and Learning for an Entrepreneurial New Tomorrow”).
The acronym might be a stretch, but the point stands: the crucial next step for American manufacturing is find and recruit workers to execute the growth these firms have planned. The ones who can find the needed talent will be those who succeed.
It’s the first week of the month, and we’ve got another report from the BLS to prove it. Tuesday’s JOLTS showed that US job openings dropped by 632,000 to 9.9 million in February. That’s a drop of 6%, so it’s fairly significant, but it wasn’t accompanied by an increase in layoffs. Those actually declined slightly.
During the Lightcast live discussion of the report right after its release, my colleague Layla O’Kane said that “This report is giving the Fed the first real sign of the soft landing they’ve been hoping for for quite some time now,” and I think that’s exactly right. A drop in openings indicates that employers are slowing down and the job market is cooling, but still-low layoffs mean that the change isn’t causing pain for workers themselves.
In fact, we also saw quits increase, which was a bit of a surprise. If we were heading toward a recession, workers would be less confident about finding a new job and more likely to keep their current one. Instead, we saw the opposite.
Overall, this was a very healthy report, and good to see. If its patterns keep up, we’ll be in a very good position going into the rest of the year. We’ll know more about those patterns tomorrow, when we see the Employment Situation numbers for March. I’ll be ready to discuss the new report when it comes out, and you can find me and the Lightcast team on LinkedIn and YouTube.
I’ll see you there.