Green Jobs -- But Where?

Aug 06, 2010 | Updated May 25, 2011

The stock market fell yesterday as unemployment rose.  This particular tick is driven by the economic cycle: Are we are or are we not coming out of the recession/depression? But there is a deeper issue. The U.S. cannot sustain full employment for its population unless it makes stuff that people want to buy -- banking and services alone won't be enough. But we have some fairly big obstacles to restoring American manufacturing, and those obstacles are on display as we stumble forward, not nearly fast enough, toward a clean-energy revolution and green jobs.

What's striking is that, for the first time, the traditional voices for manufacturing -- organized labor and the old rust belt of the Midwest -- are being joined by forceful voices from the high-tech community on the coasts. Andy Grove, the former chairman and CEO of Intel, recently wrote a provocative piece, "How to Make an American Job Before It's Too Late."

Grove argues that the problem facing the country is not a shortage of startups or new ideas and technologies -- it's scaling them up in this country. "Scaling isn't easy. The investments required are much higher than in the invention phase. And funds need to be committed early, before much is known about the potential market." Grove points out that in today's dollars, it took $3,600 in pre-IPO investment to create a job at Intel ten years after the company went public. Today the equivalent figure is $100,000.

Grove takes on what he sees as a revealed -- but flawed -- conventional wisdom: That as long as we invent things in the U.S. it doesn't matter whether we also keep making them here. He argues that while it is fine if others start making them as well, we need to keep "the chain of experience" here at home, so that it serves as a platform for the next generation of innovation. He calls for what he terms "job-centric" economic theory, one open to necessary financial incentives for production in the U.S.

On the same day that I read Grove's piece, a contact in the solar industry wrote to me in response to one of my blogs. He discussed the reality that most solar fabrication is taking place in China, initially for export, but not for the robustly funded Chinese market. He said that his own company had "made a recent announcement to discontinue a key program. This discontinuation is quietly one more step in the direction away from U.S. domestic production of solar modules. Our company continues to be very bullish on the core technology and will continue technology development. But to the likely benefit of the Chinese. Who will then determine the best means of delivering it to the rest of the world? As an American, it saddens me that most of our best efforts will come to the U.S. only after the die is cast and the world's winners already determined. The lack of foresight and the marriage to legacy protectionism cannot prevent the inevitable. But it is painful that such a legacy may relegate the U.S. to being a follower in the reformation of new energy in the 21st century..."

And a month ago, when I toured Bloom Energy and talked with its CEO, K.R. Sridhar, he too emphasized the need for a consistent, strong national policy to support manufacturing. Sridhar pointed out that electronic factories moved to Asia in the past decade -- but not for lower wages, although wages are lower. Wages are only a tiny fraction of the cost of a chip manufacturing facility. What made the difference was ease of permitting, tax policy, and even the ability to get guaranteed power supplies!

Several years ago, when I was looking at the cost differential between U.S. and foreign steel, I was stunned by the same pattern. It's not high wages that make the U.S. uncompetitive in manufacturing -- it's the lack of national policy support for manufacturing. We support banking. We support Hollywood. Why not support making stuff?

That might well be the economic-policy question of the century.