As part of his agenda for economic growth, U.S. President Joe Biden has said that his administration will pursue a “Worker-Centric Trade Policy.” It’s a popular phrase among Biden administration officials, and it essentially means rebuilding domestic manufacturing. That would certainly be helpful for America’s workers, given prior decades of offshoring that have resulted from failed U.S. trade policies. And it would also help to reinforce the Biden administration’s goals of “Build Back Better.” However, the Biden team has yet to take the steps needed to make this a reality.
Focusing on domestic industry would be a smart move. Policymakers often overlook the fact that manufacturing pays more than service-sector positions. Unfortunately, much of the U.S. labor force has shifted from industrial employment into lower-paying work in tourism, home health care and food services. And so, the best way to start rebuilding U.S. industry is not through more trade negotiations with foreign countries. Instead, it’s time for direct action to rebuild key industries at home.
A good example is America’s face mask industry. The American Mask Manufacturers Association (AMMA) recently proposed that Washington act to rebuild U.S. face mask production and reduce America’s dependence on imported Chinese face masks. Doing so would be a boon for U.S. workers, since the average annual income in the medical equipment industry is $60,770—8% above the U.S. average. At some of the smaller mask companies, pay levels for machine operators are around the $40k-$50k range—still superior to the alternatives available for semiskilled workers in those regions.
Reshoring face mask production would not only create good-paying jobs but also help the U.S. avoid another face mask shortage. After a series of SARS-related pandemics, the supply-chain chaos that ensued last year in PPE shows that it would be a wise and prudent policy to ensure that we have significant production capacity in the U.S. to avoid such chaos when the next pandemic inevitably arrives. Using U.S. government purchasing to guarantee a market for U.S.-made product is a simple, reliable method to ensure a basic level of demand for U.S. companies.
The face mask industry also offers a helpful window into China's aggressive trade practices. The AMMA includes 26 small companies, most of them founded during the pandemic by individual entrepreneurs. One example is Premium PPE, which, at the peak of the pandemic, employed 300 workers and churned out thousands of masks a day. At that time, AMMA’s member companies employed 7,800 workers. Now, however, many of them are laying off hundreds of workers and facing bankruptcy.
Why are AMMA’s member companies suddenly struggling to get by? In recent months, China has been shipping face masks to the U.S. at below-cost prices.
How does China do this? The AMMA explains that the raw materials in a face mask cost 3 to 6 cents per mask. However, China is now selling masks at a penny each. This is all made possible because Chinese industry is funded with multi-billion-dollar government subsidies. The result is often global oversupply across many industries.
Chinese face masks are certainly cheap. However, AMMA notes that many of the China-made masks do not meet U.S. health standards. One study found that 31% of masks imported from China did not meet U.S. standards. Another study found that a stunning 70% of Chinese masks provided to U.S. hospitals failed to meet U.S. safety standards.
The solution is to rebuild important industries such as face mask production. The AMMA proposes a simple plan: Require all hospitals and similar organizations that receive federal funds to purchase 40% of their masks from U.S. manufacturers by 2023. They also propose that the federal government review the Strategic National Stockpile of masks. They suggest that all foreign-made masks be discarded and replaced with safe, quality masks manufactured in the U.S. This could be accomplished easily, since AMMA members currently have an inventory of 260 million masks.
This type of reshoring plan follows exactly the Biden administration’s goal of “shared prosperity for all Americans.” It would also restore competition in an important healthcare industry.
Opposition to the AMMA plan would undoubtedly come from the major multinationals that manufacture masks offshore, particularly in China. The two largest U.S.-based mask producers, 3M and Honeywell, have some manufacturing in the U.S. But the majority of their production is in Asia. This is where the Biden administration needs to take a firm position—and stand up for smaller domestic producers that directly employ working Americans.
So far the Biden administration has done a lot of talking about “Build Back Better.” It’s time for the administration to take a “Rooseveltian” approach—and commission multiple experiments across a variety of industries. The U.S. mask industry would be a great place to start. The national interest requires a reliable healthcare system that is not dependent on China. Instead it’s time to rebuild domestic production and create good jobs that support a prosperous middle class and reduce income inequality.
Jeff Ferry is chief economist at the Coalition for a Prosperous America. Follow him at @menloferry.
