Some senators want to increase taxes on U.S. companies’ income from China. Others want generous investment subsidies to get U.S. companies to produce more in the United States. There’s also discussion of a $25 billion fund to pay companies to exit China and come back to the U.S. The goal writ large: bring supply chains home.
“We could reshore thousands, hundreds of thousands, maybe millions of jobs if we could figure out how to bring many of that manufacturing capability back,” said Jeffrey Finkle, president of the International Economic Development Council, a group of local and state economic officials. Attention to reshoring jobs has been simmering for a while, but the supply chain shock of coronavirus has brought it to full boil.
“We discovered painfully we could not supply enough [personal protective equipment] for our health care workers,” Finkle said. He added that tax breaks or investment incentives have in the past been able to bring industries to specific locations in the U.S.
“Investment subsidies could increase American production of certain things,” said Chad Bown, a senior fellow with the Peterson Institute for International Economics. But he said that might not help in a future pandemic as much as people think.
“During the pandemic in the United States, we’ve had outbreaks of the disease at manufacturing plants, meatpacking facilities,” Bown said. Other countries, he said, could retaliate by giving their own businesses special treatment.
Rufus Yerxa, president of the National Foreign Trade Council, said tax breaks have their place, but there’s a limit to reshoring. Many companies have operations abroad in order to sell abroad.
Susan Lund, a partner at the McKinsey Global Institute, said there is an appetite right now for shifting supply chains around.
“Many companies are talking about diversifying their source of suppliers,” Lund said.
Between tsunamis and trade wars and global pandemics, it’s dawning on global businesses that having your manufacturing eggs in one basket is not a smart strategy.
“But that is different from production coming back to the U.S.,” Lund said. As per usual with international trade, things are never that simple.
COVID-19 Economy FAQs
So what’s up with “Zoom fatigue”?
It’s a real thing. The science backs it up — there’s new research from Stanford University. So why is it that the technology can be so draining? Jeremy Bailenson with Stanford’s Virtual Human Interaction Lab puts it this way: “It’s like being in an elevator where everyone in the elevator stopped and looked right at us for the entire elevator ride at close-up.” Bailenson said turning off self-view and shrinking down the video window can make interactions feel more natural and less emotionally taxing.
How are Americans spending their money these days?
Economists are predicting that pent-up demand for certain goods and services is going to burst out all over as more people get vaccinated. A lot of people had to drastically change their spending in the pandemic because they lost jobs or had their hours cut. But at the same time, most consumers “are still feeling secure or optimistic about their finances,” according to Candace Corlett, president of WSL Strategic Retail, which regularly surveys shoppers. A lot of people enjoy browsing in stores, especially after months of forced online shopping. And another area expecting a post-pandemic boost: travel.
What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?
Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”
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