Mixed News on the Jobs Front Highlights the Need for Stable Pro-Growth Tax Policy ASAP

Screen Shot 2015-11-12 at 2.10.35 PMAs the saying goes, there’s good news and bad news. Last week’s overall jobs numbers were generally viewed as good news for the overall economy and the labor market. However, as the NAM’s Chief Economist, Chad Moutray, describes it, “One of the larger exceptions to that is manufacturing, which continues to struggle. The sector lost 1,000 employees in November, with zero growth on net since January. Manufacturers remain mired by global headwinds and lower commodity prices. These challenges have dampened demand and production for manufacturers, and as a result, hiring has slowed to a standstill.”

Adding to the bad news, Dr. Moutray reports, “the Institute for Supply Management’s Manufacturing Purchasing Managers’ Index contracted for the first time in three years. The composite index fell from 50.1 in October to 48.6 in November, the first negative number since October 2012 and the lowest level since June 2009. This is one more piece of evidence that manufacturers continue to struggle in the face of a strong dollar, lower commodity prices and difficulties in growing international demand. Indeed, the index for new orders decreased from 52.9 to 48.9, representing a sharp decline from the more robust pace of 63.0 in November 2014.”

In a nutshell, while the economy is improving, six years after the end of the recession we continue to see sluggish growth and no one can say that the economy is back to full strength. Headwinds abound and for manufacturing they seem to be gaining strength. “The Institute for Supply Management’s Manufacturing Purchasing Managers’ Index contracted for the first time in three years. The composite index fell from 50.1 in October to 48.6 in November, the first negative number since October 2012 and the lowest level since June 2009,” according to Moutray.

While there’s no silver bullet to strengthen the economy here in the U.S. or in the global economy, as we’ve long said, one thing Congress must do is act in the near-term to remove uncertainty regarding tax policy which is keeping investment on the sidelines as companies wait to see what the tax rules will be on many key pro-investment tax provisions including enhanced Sec. 179 expensing, 50% first year expensing and the R&D credit to name a few. Negotiators are currently working to hash out another 11th hour deal to address these currently expired provisions that are so critical to manufacturers of all sizes. In the face of continued and perhaps growing headwinds it’s critical that the Congress act now to extend these provisions permanently or for as long as possible to ensure that tax policy is not contributing to the overall malaise in our economy. According to the most recent data, Manufacturers contributed $2.09 trillion to the economy and accounts for 12.0 percent of GDP. For every $1.00 spent in manufacturing, another $1.37 is added to the economy, the highest multiplier effect of any economic sector. Providing certainty about key investment incentives will help unleash investment in our sector and these benefits will ripple through the overall economy. Action to provide this certainty is long overdue and Congress must act now.

Carolyn Lee

Carolyn Lee

Executive Director of The Manufacturing Institute at The Manufacturing Institute
Carolyn Lee is Executive Director of The Manufacturing Institute, the non-profit affiliate of the National Association of Manufacturers (NAM), the nation’s largest industrial trade association. Carolyn drives an agenda focused on improving the manufacturing industry through its three centers: the Center for the American Workforce, the Center for Manufacturing Research, and the Center for Best Practices.

In her role, Carolyn leads the Institute’s workforce efforts to close the skills gap and inspire all Americans to enter the U.S. manufacturing workforce, focusing on women, youth, and veterans. Carolyn steers the Institute’s initiatives and programs to educate the public on manufacturing careers, improve the quality of manufacturing education, engage, develop and retain key members of the workforce, and identify and document best practices. In addition, Carolyn drives the agenda for the Center for Manufacturing Research, which partners with leading consulting firms in the country. The Institute studies the critical issues facing manufacturing and then applies that research to develop and identify solutions that are implemented by companies, schools, governments, and organizations across the country.

Prior to joining the Institute, Carolyn was Senior Director of Tax Policy at the NAM beginning in 2011, where she was responsible for key portions of the NAM’s tax portfolio representing the manufacturing community on Capitol Hill and in the business community and working closely with the NAM membership. She served as the Director of Legislative and Government Affairs at the Telecommunications Industry Association, Manager of State and Federal Government Affairs for 3M Company, and in various positions on Capitol Hill including as Legislative Director for former U.S. Senator Olympia Snowe (R-ME), and as a senior legislative staff member for former U.S. Rep. Sue Kelly (R-NY).

Carolyn is a graduate of Gettysburg College in Gettysburg, Pennsylvania graduating with a B.A. in Political Science. She resides in Northern Virginia with her husband and three children.
Carolyn Lee

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