Jobs in the automotive industry at 34-year high

This is part of a series examining the impact of the Inflation Reduction Act two years later. The first article summarizes the overall effect, the second details historic industrial investment.

Anyone who grew up in southeast Michigan in the 1970s and '80s saw the decline of the American auto industry first hand. Auto factories closed, workers were laid off, and communities suffered as foreign automakers gained market share. But thanks to the Inflation Reduction Act, that trend was reversed.

Recent data from the U.S. Bureau of Labor Statistics suggests that a renaissance in American auto manufacturing jobs is already underway. In June 2024, auto manufacturing jobs in the U.S. will have reached a 34-year high and represent the strongest growth in a generation.

Growth in manufacturing jobs is coveted because of their accessibility and significant impact on community prosperity. These positions offer good pay and excellent career opportunities because they often require only technical training rather than a four-year degree. Policymakers prioritize these jobs because they provide a reliable foundation for middle-class stability and economic mobility, contributing to both individual success and overall economic health.

Now those jobs are being created through a historic investment in our nation's clean energy economy.

A strategy for jobs in domestic automotive manufacturing

The current U.S. administration's job creation goals focus on clean technology and modern supply-side industrial policy, with the IRA being a cornerstone.

Two years after the IRA's passage, its provisions have increased the number of jobs in the domestic manufacturing sector, particularly by incentivizing the production of clean vehicles. The law provides significant tax incentives for domestic manufacturing of electric vehicles, including tax credits of up to $7,500 for consumers who purchase new electric vehicles that meet certain domestic content requirements.

The IRA also provides tax relief for domestically produced batteries, reflecting the federal government's policy strategy aimed at creating manufacturing jobs in all segments of the automotive supply chain and which has led to the emergence of a “battery belt” of factories throughout the Southeast.

Beyond the IRA, the administration's broader strategy is boosting American auto manufacturing through various initiatives. Recently, $1.7 billion in grants were awarded to help factories transition to electric vehicle production, with the goal of supporting manufacturers and protecting jobs. Recipients include a Jeep plant in Illinois that closed last year but is expected to create 1,450 jobs when it reopens.

In addition, the U.S. Department of Energy's Advanced Technology Vehicles Manufacturing Loan Program provides $10 billion in loans for automotive manufacturing conversion projects that preserve high-quality jobs at existing manufacturing sites.

For example, a $2 billion loan commitment for a lithium-ion battery recycling project in Nevada is expected to create 3,400 construction jobs and ultimately employ about 1,600 full-time workers.

New data analysis reveals historic employment growth in the automotive industry

Recent data show that the current administration's strategy has achieved remarkable success in creating new manufacturing jobs. In July 2024, the number of jobs in automotive manufacturing reached a 34-year high of 308,000 employees – the highest level recorded in available BLS data since January 1990.

A comparison of employment trends between the different presidencies underscores these findings. During the Biden administration, the U.S. added an average of 19,500 new vehicle manufacturing jobs annually, the strongest growth under any recent presidency. In contrast, the industry experienced significant declines during the Bush administration, with an average loss of 14,100 jobs per year. The Obama administration was able to boost growth despite the faltering auto industry it inherited, adding an average of 6,200 new jobs annually over eight years. During the Trump administration, before the COVID-19 recession, the industry grew by 9,500 jobs per year.

Similar trends are evident in the broader transportation equipment manufacturing category, which includes vehicle assembly, engine manufacturing, parts suppliers, aircraft and off-road vehicle production. Employment in this sector has reached a 22-year high, returning to levels last seen in 2002. Historical comparisons between presidential administrations show a consistent pattern, with the Biden administration leading the way in job creation and the Bush administration posting the largest losses.

What moves the needle

The federal government's strategy has not only significantly increased investment in electric vehicle manufacturing, but also created jobs in clean energy and prepared the American manufacturing industry for global competition. It has also increased the country's share of international investment flows. From 18% of international investment flows before the pandemic, the US share has risen to almost a third of the global total, in contrast to stagnant investment levels in Europe.

In the automotive sector, the IRA has triggered significant investment in electric vehicle and battery manufacturing. An analysis earlier this year found that $114 billion worth of private investment in electric vehicles is expected to create around 99,600 jobs.

The electric vehicle supply chain is emerging as a significant source of employment. Research suggests that vehicle electrification could lead to more jobs in auto manufacturing, as the manufacture and assembly of battery packs is labor-intensive. According to a recent analysis, 13,400 people are currently employed in vehicle battery pack manufacturing.

The federal government's current strategy aims to position American manufacturing to be competitive in next-generation transportation technologies. While the U.S. is making progress, European and Chinese markets are currently leading the way in electric vehicle adoption. In China, electric vehicles recently reached over 50% of sales, setting a new monthly record in July. And while global sales of internal combustion engine vehicles peaked in 2017 and have declined since then, electric vehicle sales have grown from 1 million to 14 million in 2023, representing 18% of total sales.

All in all, from an international perspective, it is clear that electric vehicles are changing global markets and that the future is moving towards battery-powered electric vehicles.

Automotive manufacturing once again an economic driver

The boom in jobs in America's auto industry is not a statistical anomaly; it is the result of strategic policies and targeted investments in clean technologies. The IRA's incentives for electric vehicle and battery manufacturing, along with a broader federal focus on domestic manufacturing, have revitalized a sector once considered declining.

The data speaks for itself: the number of jobs in vehicle manufacturing has reached a 34-year high, and employment in the transportation sector is also at a level not seen for over two decades.

This industrial renaissance means expanded opportunities for advancement, a crucial development given growing concerns about the erosion of the American dream.

As the industry increasingly transitions to electric vehicles, the impact of the IRA has laid a solid foundation for improving the competitiveness of the U.S. auto industry. The transition from the industry's decline in the 1970s and 1980s to its current revival underscores the critical role of proactive policy and investment in driving economic growth and technological innovation.