Inflation Reduction Act Two Years Later: Auto Manufacturing Jobs At 34-Year Peak

This is part of a series exploring the Inflation Reduction Act’s impact after two years. The first article summarizes its total impact, the second details historic industry investment.

Growing up in southeast Michigan in the 1970s and 80s provided a front row seat for the American auto industry’s downward slide. Auto factories were closing, workers were getting laid-off, and communities were suffering as foreign automakers gained market share. But thanks to the Inflation Reduction Act, that trend has been thrown in reverse.

Recent United States Bureau of Labor Statistics data suggest a renaissance for American vehicle manufacturing jobs is already happening. As of June 2024, vehicle manufacturing jobs have reached a 34-year peak in the U.S., representing the strongest growth in a generation.

Manufacturing job growth is sought after because of its accessibility and significant impact on community prosperity. These positions offer good pay and strong career development pathways, often only requiring 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 broader economic health.

Now those jobs are being generated by a historic investment in our country’s clean energy economy.

A Domestic Automotive Manufacturing Jobs Strategy

The current U.S. administration’s clean tech and modern supply-side industrial policy is central to its goals for job creation, with the IRA serving as a cornerstone.

Two years after the IRA’s passage, its provisions have boosted domestic manufacturing jobs, particularly through clean vehicle manufacturing incentives. The act offers substantial tax incentives for domestic EV manufacturing, including up to $7,500 in tax credits for consumers purchasing new EVs that meet specific domestic content requirements.

The IRA also includes tax credits for domestically produced batteries, reflecting a federal policy strategy that targets manufacturing job growth across all segments of the auto supply chain, and has spurred a “Battery Belt” of factories across the Southeast.

Beyond the IRA, the administration’s broader strategy promotes American automotive manufacturing through various initiatives. $1.7 billion in grants were recently allocated to help factories transition to electric vehicle production, aiming to support manufacturers and protect jobs. Among the recipients is a Jeep plant in Illinois which closed last year, but will restore 1,450 jobs once it is reopened.

Additionally, the Advanced Technology Vehicles Manufacturing Loan Program, under the U.S. Department of Energy, is making $10 billion in loan authority available for automotive manufacturing conversion projects that retain high-quality jobs in existing manufacturing communities.

For example, a $2 billion loan commitment to a lithium-ion battery recycling project in Nevada is expected to create 3,400 construction jobs, ultimately employing approximately 1,600 full-time employees

Fresh Data Analysis Uncovers Historic Automotive Job Growth

Recent data reveals that the current administration’s strategy has achieved remarkable success in creating new manufacturing jobs. As of July 2024, vehicle manufacturing jobs have reached a 34-year peak, with 308,000 workers—the highest level recorded in the available BLS data, going back to January 1990.

Comparing job trends across presidential administrations highlights these findings. During the Biden administration, the U.S. added an average of 19,500 vehicle manufacturing jobs annually, the strongest growth under any recent presidency. By contrast, the industry experienced significant declines during the Bush administration, with an average loss of 14,100 jobs per year. The Obama administration, despite inheriting a struggling auto industry, managed to spur growth, adding an average of 6,200 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 category of transportation equipment manufacturing, 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 across presidential administrations show a consistent pattern, with the Biden administration leading in job creation and the Bush administration seeing the most significant losses.

What’s moving the needle

Federal strategy has not only significantly boosted investment in EV manufacturing, it’s created clean energy jobs and prepared American manufacturing to compete on a global scale. It’s also increased the nation’s share of international investment flows. From 18% of international investment flows before the pandemic, the U.S. share has increased to almost one-third of the global total, contrasting with stagnant investment levels in Europe.

In the automotive sector, the IRA sparked substantial investment in EV and battery manufacturing. An analysis earlier this year found $114 billion in private-sector EV-related investments are expected to generate around 99,600 jobs.

The EV supply chain is emerging as a significant source of employment. Research indicates that vehicle electrification could lead to increased automotive manufacturing jobs because producing and assembling battery packs is labor intensive. A recent analysis estimates that 13,400 people are currently employed in manufacturing vehicle battery packs.

Current federal strategy is positioning American manufacturing to compete in next-generation transportation technologies. While the U.S. is making progress, European and Chinese markets currently lead in EV adoption. EVs recently surpassed 50% of sales in China, setting a new monthly record in July. And while global internal combustion engine vehicle sales peaked in 2017 and have declined since, EV sales have surged from 1 million to 14 million in 2023, representing 18% of total sales.

Add up all for an international perspective and it’s clear EVs are transforming global markets with the future is headed toward battery-electric vehicles.

Automotive Manufacturing Once Again An Economic Engine

The American automotive manufacturing jobs resurgence is not a statistical anomaly; it is the result of strategic policies and targeted investments in clean technology. The IRA’s incentives for EV and battery manufacturing, along with a broader federal focus on domestic production, have revitalized a sector once considered in decline.

The data says it all: Vehicle manufacturing jobs have reached a 34-year peak, and transportation equipment employment has reached levels not seen in over two decades.

This industrial renaissance signifies expanding opportunities for upward mobility, a critical development amid growing concerns about the erosion of the American Dream.

As the industry increasingly shifts towards electric vehicles, the IRA’s impact has established a strong foundation for enhancing U.S. automotive competitiveness. The shift from the industry’s decline in the 70s and 80s to its current revival underscores the vital role of proactive policy and investment in fostering economic growth and technological innovation.