President Joe Biden's economic agenda seeks to achieve one of his main goals: That means focusing more private investment in smaller communities that have been losing ground for years.
That's the conclusion of a new study published today. In conjunction with three major pieces of legislation Biden passed early in his presidency, it was found that economically distressed counties are receiving a higher share of private investment in new manufacturing plants. “After decades of economic disparity, strategic sector investment patterns are including more regions that have historically been excluded from economic growth,” Brookings Metro and the MIT Center for Energy and Environmental Policy Research said. “He concluded.
Major manufacturing investments in economically stressed counties announced by Biden include steel plants in Mason County, West Virginia, and Mississippi County, Arkansas. expansion of a semiconductor manufacturing plant in Schuylkill County, Pennsylvania; a plant processing lithium used in electric vehicle (EV) batteries in Chester County, South Carolina; an electric vehicle manufacturing plant in Haywood County, Tennessee; a battery manufacturing plant for EVs in Montgomery County, Tennessee; Vigo County, Indiana; and Fayette County, Ohio.
These are all among the 1,071 counties (about one-third of the country's total) that Brookings defines as economically distressed due to high unemployment and relatively low median incomes. As of 2022, these counties have 13% of the U.S. population but only 8% of the nation's economic output, according to the report.
But since 2021, these struggling counties have received about $82 billion in private sector investment from industries targeted by the three major economic development bills signed by Biden. This included a bipartisan infrastructure bill and legislation to promote domestic manufacturing of semiconductors and clean energy, including electric vehicles and solar and wind power equipment.
Brookings and MIT say that $82 billion is spread across 100 projects in 70 counties at risk. Overall, starting in 2021, struggling counties have received 16% of total investments in industrial sectors targeted by the Biden agenda. This is twice its share of the country's GDP. This is also double the share of all private sector investment they received from 2010 to 2020. Providing more investment and jobs to economically underserved communities “is really key. [Biden] Lael Brainard, director of Biden's National Economic Council, told me. “The president talked a lot about the communities that were left behind, but now he’s talking a lot about the communities that are coming back.”
Mark Muro, a senior fellow at Brookings Metro and one of the report's authors, said the surge in investment in smaller areas is a significant change from previous patterns of focusing investment and employment in a few “superstar” metropolitan areas.
“As rich places got richer, the social media/tech economy was something that was happening elsewhere,” Muro said. “Clearly this is a different kind of recovery that is happening elsewhere and is impacting communities that are struggling right now.”
One such place is Fayette County in south-central Ohio, roughly equidistant from Dayton, Cincinnati, and Columbus. Fayette's population of approximately 28,000 is mostly white and rural with few college graduates. The median income is about a quarter lower than the national average, and the poverty rate is about a quarter higher.
In early 2023, Honda and partner LG Energy Solutions broke ground on a large new plant in Fayette to produce batteries for Honda and Acura EVs. The Honda project has already created a significant number of construction jobs, and there is also a large Intel semiconductor manufacturing plant under construction about an hour away in Licking County, outside Columbus. “A trade association for electrical workers, plumbers and more will keep jobs in Ohio for years,” said Jeff Hoagland, CEO of the Dayton Development Coalition. “It’s a great facility. “The Honda facility is the size of 78 football fields.”
Honda is already advertising to fill some engineering jobs and expects to employ about 2,200 people when the plant comes online in late 2024 or early 2025. Most of these jobs won't require a college degree, Hoagland said. He added that more jobs would be created from factory suppliers moving to set up facilities in the area. “There are already companies purchasing land,” Hoagland said.
Hoagland said there was no doubt that the massive Biden bill's federal tax incentives for clean energy and domestic production of semiconductors were key to the decision. Hoagland said federal incentives are “100 percent important, and we know that firsthand from Intel and Honda.” “The company needed something like that. [incentives] Commence full implementation of a strategy to rebuild our manufacturing and supply chain base in the United States. Now we’re seeing all these companies coming back to central Ohio for manufacturing.” Another company, Joby Aviation, announced last September that it planned to build a plant near Dayton to build electric air taxis with the support of a federal clean energy loan guarantee.
Encouraging manufacturers to locate facilities in the United States rather than overseas was a key goal of the tax incentives, loan guarantees and subsidies in the Clean Energy, Semiconductor and Infrastructure Act. But the Biden administration has been using provisions in these bills and other programs to drive more domestic investment, especially in struggling communities.
According to a Brookings/MIT report, the Inflation Reduction Act's clean energy tax credits provide an additional bonus of more than 10% to companies that invest in low-income communities. The Department of Energy's loan guarantee program favors companies seeking clean energy investments in communities that have lost jobs as fossil fuel facilities close. In a speech last month, Brainard highlighted a $1 billion Department of Transportation program to fund infrastructure improvements to “reconnect” areas that have been cut off from job opportunities by highways or other transportation infrastructure. (Many of these places are minority communities.)
Likewise, under the semiconductor bill, the administration would create “regional innovation engines” through the National Science Foundation and “technology hubs” that would require communities to organize businesses, schools, and governments to develop coordinated plans for regional growth. 'We are providing significant funding to '. In high-tech industries. Winners of these grants include projects based in locations well beyond existing large tech innovation metropolitan centers, including Louisiana, Wyoming, North Dakota, South Carolina, and Oklahoma. “Those [programs] Rather than focusing on just a few large metropolitan areas, we are spreading innovation investments to clusters across the country,” Brainard said.
Joseph Parilla, director of applied research at Brookings Metro, said the large-scale manufacturing facilities being built in response to new federal incentives will naturally flow around major metropolitan areas, where many of these struggling counties are located. But Parilla believes the tax incentives and other programs the Biden administration is implementing are “having a pretty significant impact” in directing many of these investments to smaller, economically challenged areas.
Biden has made clear that he considers investing more in economically lagging regions a political and policy priority. Even in high-profile forums like the State of the Union address, he often speaks about the importance of creating jobs that allow young people to stay in the communities where they were born. As I wrote, Biden also rejected the belief of his two Democratic predecessors, Bill Clinton and Barack Obama, that the most important step toward expanding economic opportunity is helping more people obtain higher education. Instead, Biden prominently highlights how many jobs that do not require a four-year college degree are being created in projects subsidized by his own three-point bill. “What you will see in this field of dreams” is “Ph.D. “Engineers and scientists alongside community college graduates,” he declared at the 2022 groundbreaking for Intel’s plant in Ohio.
But it's unclear whether the economic benefits flowing into struggling communities will bring political benefits for Biden. Despite his small-town, blue-collar “Scranton Joe” persona in 2020, Biden leaned heavily on large, well-educated metropolitan areas thriving in the information age. A previous Brookings Metro study found Biden won only once. His county ranks sixth among all U.S. counties and generates nearly three-quarters of the nation's economic output.
In economically struggling counties, the results were very different. Brookings found that Trump won 54 of the 70 underperforming counties where new investments were announced under Biden in 2020. Some Democratic operatives are skeptical that these new jobs and opportunities will significantly change these patterns.
In part, that's because Democrats face so much headwind in these places over issues related to race and culture, including immigration and LGBTQ rights. But without unions or many local Democratic officials to get the message out, there's also a risk that workers won't realize that their new jobs are tied to the programs Biden created. Michael Podhorzer, former AFL-CIO political director, says: , argued with me.
Jim Kessler, vice president of Third Way, a centrist Democratic group that has studied the party's issues in small towns and rural areas, agrees that even big job gains won't tilt the little red section toward Biden. But in those places, it could be important to trim some of the GOP margin, he said. “There are wide red areas in some of these swing states and he has to be good enough in those areas,” Kessler said. Kessler said pointing out new jobs in previously declining areas may give Biden a symbol of economic recovery that resonates with voters far beyond those regions.
The Brookings and MIT authors expect there will be more examples Biden can cite as additional investments in industries including clean energy and semiconductors begin. “The map is not yet complete,” the report concludes. “There are hundreds of distressed counties with assets similar to those that have attracted investment but have not yet been targeted.” One of the most visible legacies of Biden's presidency may be the steady parade of new plants growing in previously blighted communities over the next few years. Whether voters in these places give him that credit will help determine whether he's still in the White House.