The Labor Day Report: A Message from John Engler

In an open letter introducing the National Association of Manufacturers’ 2009 Labor Day Report, NAM President John Engler warned that a nascent economic recovery could easily be reversed. Below is the text of the John Engler letter, “Policies will determine whether U.S. will experience recovery or reversal,” and the full report is available here.

Labor Day 2009 arrives just as the U.S. economy shows signs of reviving from the deepest, lengthiest and most painful economic downturn since the Great Depression.

With this report, the National Association of Manufacturers (NAM) documents the harsh conditions that have plagued the U.S. and global economies during this financial crisis and recession. Consumer spending, business investment, housing and exports have dropped more than in any time since WWII. Unemployment has soared.

We naturally focus on the downturn’s impact on the manufacturing sector, which has lost nearly two million jobs since the recession began in December 2007. Industrial production has plummeted 16.4 percent during the same period.

Still, the NAM’s 2009 Report is a forward-looking document, one that identifies many reasons why Americans can expect the economy to grow in 2010 and beyond. Whether it’s improvements in the housing market, rising activity in European countries, or new orders for capital goods, indications are that a recovery may be in the early stages.

Most strikingly, the analysis by the NAM’s chief economist, David Huether, finds that over 40 percent of the manufacturing jobs lost during the recession may be regained. There is legitimate concern about the possibility of a “jobless recovery,” but the projections estimate a return of 913,000 manufacturing jobs by 2014 – bringing total manufacturing employment back up to 12.7 million.

So there are grounds for optimism, but even greater grounds for caution – caution by officials at the local, state and especially the federal level. A recovery could stall out or even shift into reverse if Congress and the Administration enact policies that discourage investment, hamper flexibility, or raise the costs of doing business in the United States. Prospects for good jobs, a strong manufacturing sector and a growing economy depend on U.S. global competitiveness.

As Congress returns to Washington after Labor Day, it is set to debate profoundly important policies that will have a direct impact on our prospect for true recovery. Health care reform should improve care and drive down costs. It should not be paid for by hundreds of billions of dollars in new taxes on individuals and small businesses. Also high on the agenda is the Waxman-Markey climate change legislation, which would increase electricity and gasoline prices, and cost millions of jobs.

Organized labor also promises to press its all-out campaign for passage of the jobs-killing Employee Free Choice Act (EFCA) this fall. The legislation is both anti-worker and anti-competitive, yet it remains a post-Labor Day priority for many in Congress.

Congress is considering these disruptive policies even as consumer confidence remains low – one of the most negative of findings in the NAM’s Labor Day Report. Without consumer confidence, economic recovery becomes extremely difficult to realize.

The American worker and the American people can spot the dawn of a recovery just rising over the horizon. This Labor Day, the NAM welcomes the signs of returning growth and jobs, and calls on Congress and the Administration to reject the policies that would stop the nation’s progress in that recovery.

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