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A Jobs Race to the Top

by Jennifer M. Granholm

 

Washington has been the incubator of bad practices lately, from gridlock to shutdown to utter inaction on the country's crucial needs. The most pressing of those needs is a strategy to create good-paying middle class jobs in America - when we are competing for those jobs globally. We need to be creative and daring. And we need to think less top-down and more bottom-up. 

We need a jobs moon shot - a Jobs Race to the Top. The goal: create three million new jobs in three yeras. It's doable with an aggressive strategy that respects and incentivizes the governors to act. 

Here's how it could work:
  • The US currently spends about $170 billion across agencies on various economic development programs. Take a small portion — say, 2% — of those dollars and redirect the funds toward a Jobs Race to the Top competition among the nation’s governors and regions. For it to have an effect, it must be the size of the education Race to the Top in 2009, which was initially $3.4 billion. That competition convinced 48 governors — Democrats and Republicans — to persuade 48 state legislatures to change their education standards. If a competition can stoke massive educational change across the nation, it can also stoke job creation. Believe me, governors love to cut ribbons.
  • Focus the competition on clean energy job creation, which has been called the “mother of all markets,” and which can create all kinds of jobs for all kinds of people in all kinds of regions in the country. In 2012, the private sector invested over $260 billion globally in this sector, but the US is continually losing to China in the race to attract those investments. Unlike the US, China has aggressively courted this sector.
  • Devote the Jobs Race to the Top competition to rewarding the most effective public-private partnerships developed at the state and local level. Define “effective” by the numbers of lasting jobs created quickly.
  • Reward states that build on their strengths, partner with the private sector and change public policy to drive jobs results. Take the Sunbelt states: in exchange for federal dollars to offset a company’s upfront capital costs or new technology installation, these states might create a dramatically streamlined permitting process for solar farms. Or they could offer a partnership with specific private-sector solar energy producers to build out the energy generation, and ensure strong demand for renewable energy inside the state through a robust Renewable Energy Standard. Or they could partner with their universities and colleges to dramatically accelerate solar technology transfer from labs to factories, and to train workers for those jobs. The regional governments might lease land tracts at low rates, or even offer them for free. State governments might provide incentives for solar production. Public utility commissions might offer ways to partner with the Federal Energy Regulatory Commission to streamline electric grid siting.The Sunbelt states might team together to create a regional clean energy bank to provide access to capital for solar manufacturing or distributed generation. Allow states to partner to make their best competitive case, developing the most dynamic and effective public policy and use those federal dollars to drive technological advances and investment that might otherwise head to another country.
  • The same analysis could be done for other regions — including the nation’s high wind areas, or the best places to manufacture clean energy or energy efficiency products, or regions with the potential to develop biofuels, nuclear, hydro-energy, geothermal or waste-toenergy technologies. Every region of the country has something to offer to our clean energy future, and every region could be creating all kinds of jobs for their citizens right now — if the incentives were right.
  • To get quick results, announce the competition in early 2014 and announce the winners within six months.

In Michigan we tried our own version of this race — focused on the lithium-ion battery for the electric car, a high-tech product previously manufactured almost exclusively in Asia. We offered irresistible state tax incentives for manufacturers of “advanced energy storage.” We pancaked our state incentives on top of the competitive federal Department of Energy grants to advanced battery companies and suppliers. We created robust public-private partnerships. In just over a year, we attracted 18 domestic and international battery companies, projected to created 60,000 private sector jobs in Michigan. With breathtaking speed, we built an entire advanced battery “ecosystem” for the purpose of electrifying the automobile. If the states are the laboratories of democracy, if the federal government and Congress want to respect the states, Washington can take a lesson from what has been happening in Michigan.

Comprehensive clean energy projects require lots of local collaboration and private sector involvement. Without a financial carrot, the difficult regulatory changes at the local level would take years, if not decades. As we saw with the education Race to the Top, a financial incentive in these fiscally tight times can cause dramatic changes at the state level. A clean energy Jobs Race to the Top will ensure that America will actually be at the table to feast on this explosive growth jobs sector — instead of watching our global economic competitors eat us for lunch.

This new era of joblessness and partisan gridlock demands a bottom-up economic development approach: businesses creating jobs through local public-private partnerships in an economic sector critical to our national strength and incentivized by the federal government. The models are there. The federal experiment with Race to the Top worked. The state experiments with public-private partnerships are working. Let’s combine the two and create millions of jobs in America.

Jennifer M. Granholm is a Distinguished Practitioner of Law and Public Policy. She served as Michigan's 47th governor from 2003 to 2011. Her TED talk, “A Clean Energy Proposal - Race to the Top,” can be found here