odanny
Diamond Member
We have learned how important semi conductors are, and how dangerous it is to rely on China for our supply. Instead of giving away "helicopter money" there should be conditions that must be met, and I am glad to see these will be in place. One of the conditions is helping women with children needing child care, which allows more women to be earning a good salary.
WASHINGTON — Semiconductor manufacturers seeking a slice of nearly $40 billion in new federal subsidies will need to ensure affordable child care for their workers, limit stock buybacks and share certain excess profits with the government, the Biden administration will announce on Tuesday.
The new requirements represent an aggressive attempt by the federal government to bend the behavior of corporate America to accomplish its economic and national security objectives. As the Biden administration makes the first big foray into industrial policy in decades, officials are also using the opportunity to advance policies championed by liberals that seek to empower workers.
While the moves would advance some of the left-behind portions of the president’s agenda, they could also set a fraught precedent for attaching political strings to federal funding.
On Tuesday, the Commerce Department will release its application for manufacturers seeking funds under the law. It will include a variety of requirements that go far beyond simply encouraging semiconductor production.
For example, the department will tell companies seeking awards of $150 million or more to guarantee affordable, high-quality child care for workers who build or operate a plant.
Those projects will also be required to share a portion of any unanticipated profits with the federal government. Companies applying for awards will be required to submit detailed financial projections, with the federal government entitled to share in any “upside” profits. The Commerce Department depicted that requirement as a way to encourage companies to make their projections as accurate as possible, and not exaggerate any losses to try to secure more funding.
Preference will also be given to applicants that promise to refrain from stock buybacks, which tend to enrich shareholders and corporate executives by increasing a company’s share price. The law already prohibits companies from directly using federal money to finance stock buybacks or pay dividends.
Gina Raimondo, the Commerce secretary, said in an interview that the financial rules would encourage companies to ask only for funding they really need and prevent them from diverting taxpayer dollars to pad the pockets of their shareholders.
“We don’t want to spend a dollar more than necessary to make these projects happen,” she said.
The requirements will join a growing list of administration efforts to expand the reach of President Biden’s economic policies beyond their primary intent. For instance, administration officials have attached stringent labor standards and “Buy American” provisions to money from a bipartisan infrastructure law.
Companies that receive chip subsidies to build new plants will be able to use some of the funding to meet the new child care requirement. That could include building company child care centers near construction sites or new plants, paying local child care providers to add capacity at an affordable cost for workers, directly subsidizing workers’ care costs or other, similar steps that would ensure workers have access to care for their children.
Other provisions of the program will encourage companies, universities and other parties to offer more training for American workers, in advanced sciences but also in fields like welding. The program will encourage colleges and universities to triple their graduation of new engineers over the next decade, Ms. Raimondo said in a speech last week, while also offering high-paying jobs to tens of thousands of American workers without four-year college degrees.
Ms. Raimondo outlined an ambitious vision for investing in the United States to build “a self-propelling engine of innovation and production.” The goal of the program, she said, was to create at least two manufacturing clusters for the most cutting-edge chips, as well as factories for older chips. The ultimate aim would be to spur a vibrant semiconductor ecosystem in which every leading global chip company would feel the need to have both research and manufacturing in the United States, she said.
In interviews, Ms. Raimondo said the CHIPS requirements would help companies attract women to fill open jobs at a moment when many companies are struggling with a labor shortage.
Chip makers, Ms. Raimondo said, “will not be successful unless you find a way to attract, train, put to work and retain women, and you won’t do that without child care.”
The rules for chip makers come on top of other requirements written into the law, including a ban on certain new investments in China. Under that restriction, chip manufacturers that take U.S. funding cannot make new, high-tech investments in China or other “countries of concern” for at least a decade, a prohibition designed to ensure that U.S. taxpayer money does not go toward building operations in China.
But analysts have argued that some of these restrictions may be difficult to uphold, given that money is fungible and can pass from one part of a company to another outside of public sight.
Some Republican and Democratic lawmakers have also questioned the wisdom of giving any taxpayer money to the chip industry, which is generally profitable. Executives have countered that the high cost of operating in the United States — and subsidies offered by foreign governments — make it cheaper for semiconductor companies to manufacture their products offshore.
The next few months will provide the first test of how the Commerce Department balances those concerns. Ms. Raimondo said companies would have to open their books to her team, and that the goal would be to try to “crowd in” private investment, rather than canceling it out.
According to the funding application, companies that have secured other sources of private capital will receive “strong preference” for government aid, and applicants will need to have secured some kind of incentive from a state or local government to be eligible for the funding.
Commerce officials will prioritize projects linked to state and local incentive programs that create “spillover benefits” for communities, like investments in work force, education or infrastructure, rather than policies like direct tax abatements that benefit lone companies, it said.
The rules also seek to address rising concerns among American employers, including manufacturers, that a lack of access to affordable child care is blocking millions of Americans from looking for work, particularly women.
Mr. Biden pushed Congress to address those concerns over the past two years, proposing hundreds of billions of dollars for new child care programs, but he was unable to corral support from even a majority of Senate Democrats.
But Mr. Biden did persuade lawmakers to approve an assortment of new spending programs seeking to bolster American manufacturing. Now, the Commerce Department is trying to utilize a centerpiece of those efforts, which aims to expand American semiconductor manufacturing, to make at least a small dent in his large goals for the so-called care economy.
When it became clear last year that sweeping plans to expand and subsidize child care would not make it into the climate, health and tax bill, the culmination of Mr. Biden’s economic efforts in Congress, Ms. Raimondo gathered aides around a conference table. She told them, she said, that “if Congress wasn’t going to do what they should have done, we’re going to do it in implementation” of the bills that did pass.
America’s child care industry has not fully rebounded from the pandemic recession. It is still about 58,000 workers, or five percentage points, short of its prepandemic peak, according to an analysis of Labor Department data by the Center for the Study of Child Care Employment at the University of California, Berkeley.
Shortly before the pandemic, the Bipartisan Policy Center in Washington surveyed 35 states and found more than 11 million children had a potential need for child care — yet fewer than eight million slots were available.
That shortage is particularly acute in some of the areas where manufacturers are set to begin building new chip plants spurred by the new legislation. Commerce Department officials calculate that in the Syracuse, N.Y., area, where Micron announced a $100 billion chip making investment last year after Mr. Biden signed the new law, the need for slots in child care facilities is nearly three times the size of the actual care capacity in the region.
In Phoenix, where semiconductor manufacturing is booming, child care costs consume about 18 percent of a typical construction or manufacturing worker’s salary. That share is higher than the national average.
In a speech last week, Ms. Raimondo called efforts to attract more women to the work force “a simple question of math” for industries complaining of labor shortages. “We need chip manufacturers, construction companies and unions to work with us toward the national goal of hiring and training another million women in construction over the next decade to meet the demand not just in chips, but other industries and infrastructure projects as well,” she said.
Only about three in 10 U.S. manufacturing workers are women. Ms. Raimondo said the CHIPS Act would fail if the administration did not help companies change those numbers, by bringing in women who have children.
Some American manufacturers have already turned to on-site care facilities to help meet workers’ needs. The automaker Toyota has provided 24-hour care at a factory in Kentucky since 1993 and one in Indiana since 2004.
Chad Moutray, the director of the Center for Manufacturing Research at the Manufacturing Institute, which is affiliated with the National Association of Manufacturers, wrote in a report late last year that child care availability is part of the reason women do not seek more jobs in manufacturing.
“Women represent a sizable talent pool that manufacturers cannot ignore,” he wrote.
www.nytimes.com
WASHINGTON — Semiconductor manufacturers seeking a slice of nearly $40 billion in new federal subsidies will need to ensure affordable child care for their workers, limit stock buybacks and share certain excess profits with the government, the Biden administration will announce on Tuesday.
The new requirements represent an aggressive attempt by the federal government to bend the behavior of corporate America to accomplish its economic and national security objectives. As the Biden administration makes the first big foray into industrial policy in decades, officials are also using the opportunity to advance policies championed by liberals that seek to empower workers.
While the moves would advance some of the left-behind portions of the president’s agenda, they could also set a fraught precedent for attaching political strings to federal funding.
On Tuesday, the Commerce Department will release its application for manufacturers seeking funds under the law. It will include a variety of requirements that go far beyond simply encouraging semiconductor production.
For example, the department will tell companies seeking awards of $150 million or more to guarantee affordable, high-quality child care for workers who build or operate a plant.
Those projects will also be required to share a portion of any unanticipated profits with the federal government. Companies applying for awards will be required to submit detailed financial projections, with the federal government entitled to share in any “upside” profits. The Commerce Department depicted that requirement as a way to encourage companies to make their projections as accurate as possible, and not exaggerate any losses to try to secure more funding.
Preference will also be given to applicants that promise to refrain from stock buybacks, which tend to enrich shareholders and corporate executives by increasing a company’s share price. The law already prohibits companies from directly using federal money to finance stock buybacks or pay dividends.
Gina Raimondo, the Commerce secretary, said in an interview that the financial rules would encourage companies to ask only for funding they really need and prevent them from diverting taxpayer dollars to pad the pockets of their shareholders.
“We don’t want to spend a dollar more than necessary to make these projects happen,” she said.
The requirements will join a growing list of administration efforts to expand the reach of President Biden’s economic policies beyond their primary intent. For instance, administration officials have attached stringent labor standards and “Buy American” provisions to money from a bipartisan infrastructure law.
Companies that receive chip subsidies to build new plants will be able to use some of the funding to meet the new child care requirement. That could include building company child care centers near construction sites or new plants, paying local child care providers to add capacity at an affordable cost for workers, directly subsidizing workers’ care costs or other, similar steps that would ensure workers have access to care for their children.
Other provisions of the program will encourage companies, universities and other parties to offer more training for American workers, in advanced sciences but also in fields like welding. The program will encourage colleges and universities to triple their graduation of new engineers over the next decade, Ms. Raimondo said in a speech last week, while also offering high-paying jobs to tens of thousands of American workers without four-year college degrees.
Ms. Raimondo outlined an ambitious vision for investing in the United States to build “a self-propelling engine of innovation and production.” The goal of the program, she said, was to create at least two manufacturing clusters for the most cutting-edge chips, as well as factories for older chips. The ultimate aim would be to spur a vibrant semiconductor ecosystem in which every leading global chip company would feel the need to have both research and manufacturing in the United States, she said.
In interviews, Ms. Raimondo said the CHIPS requirements would help companies attract women to fill open jobs at a moment when many companies are struggling with a labor shortage.
Chip makers, Ms. Raimondo said, “will not be successful unless you find a way to attract, train, put to work and retain women, and you won’t do that without child care.”
The rules for chip makers come on top of other requirements written into the law, including a ban on certain new investments in China. Under that restriction, chip manufacturers that take U.S. funding cannot make new, high-tech investments in China or other “countries of concern” for at least a decade, a prohibition designed to ensure that U.S. taxpayer money does not go toward building operations in China.
But analysts have argued that some of these restrictions may be difficult to uphold, given that money is fungible and can pass from one part of a company to another outside of public sight.
Some Republican and Democratic lawmakers have also questioned the wisdom of giving any taxpayer money to the chip industry, which is generally profitable. Executives have countered that the high cost of operating in the United States — and subsidies offered by foreign governments — make it cheaper for semiconductor companies to manufacture their products offshore.
The next few months will provide the first test of how the Commerce Department balances those concerns. Ms. Raimondo said companies would have to open their books to her team, and that the goal would be to try to “crowd in” private investment, rather than canceling it out.
According to the funding application, companies that have secured other sources of private capital will receive “strong preference” for government aid, and applicants will need to have secured some kind of incentive from a state or local government to be eligible for the funding.
Commerce officials will prioritize projects linked to state and local incentive programs that create “spillover benefits” for communities, like investments in work force, education or infrastructure, rather than policies like direct tax abatements that benefit lone companies, it said.
The rules also seek to address rising concerns among American employers, including manufacturers, that a lack of access to affordable child care is blocking millions of Americans from looking for work, particularly women.
Mr. Biden pushed Congress to address those concerns over the past two years, proposing hundreds of billions of dollars for new child care programs, but he was unable to corral support from even a majority of Senate Democrats.
But Mr. Biden did persuade lawmakers to approve an assortment of new spending programs seeking to bolster American manufacturing. Now, the Commerce Department is trying to utilize a centerpiece of those efforts, which aims to expand American semiconductor manufacturing, to make at least a small dent in his large goals for the so-called care economy.
When it became clear last year that sweeping plans to expand and subsidize child care would not make it into the climate, health and tax bill, the culmination of Mr. Biden’s economic efforts in Congress, Ms. Raimondo gathered aides around a conference table. She told them, she said, that “if Congress wasn’t going to do what they should have done, we’re going to do it in implementation” of the bills that did pass.
America’s child care industry has not fully rebounded from the pandemic recession. It is still about 58,000 workers, or five percentage points, short of its prepandemic peak, according to an analysis of Labor Department data by the Center for the Study of Child Care Employment at the University of California, Berkeley.
Shortly before the pandemic, the Bipartisan Policy Center in Washington surveyed 35 states and found more than 11 million children had a potential need for child care — yet fewer than eight million slots were available.
That shortage is particularly acute in some of the areas where manufacturers are set to begin building new chip plants spurred by the new legislation. Commerce Department officials calculate that in the Syracuse, N.Y., area, where Micron announced a $100 billion chip making investment last year after Mr. Biden signed the new law, the need for slots in child care facilities is nearly three times the size of the actual care capacity in the region.
In Phoenix, where semiconductor manufacturing is booming, child care costs consume about 18 percent of a typical construction or manufacturing worker’s salary. That share is higher than the national average.
In a speech last week, Ms. Raimondo called efforts to attract more women to the work force “a simple question of math” for industries complaining of labor shortages. “We need chip manufacturers, construction companies and unions to work with us toward the national goal of hiring and training another million women in construction over the next decade to meet the demand not just in chips, but other industries and infrastructure projects as well,” she said.
Only about three in 10 U.S. manufacturing workers are women. Ms. Raimondo said the CHIPS Act would fail if the administration did not help companies change those numbers, by bringing in women who have children.
Some American manufacturers have already turned to on-site care facilities to help meet workers’ needs. The automaker Toyota has provided 24-hour care at a factory in Kentucky since 1993 and one in Indiana since 2004.
Chad Moutray, the director of the Center for Manufacturing Research at the Manufacturing Institute, which is affiliated with the National Association of Manufacturers, wrote in a report late last year that child care availability is part of the reason women do not seek more jobs in manufacturing.
“Women represent a sizable talent pool that manufacturers cannot ignore,” he wrote.
Biden’s Semiconductor Plan Flexes the Power of the Federal Government (Published 2023)
In return for vast subsidies, the Biden administration is asking the chip industry to make promises about its workers and finances.
