The U.S. House wants to axe a tax credit that has driven growth of high-wage manufacturing jobs in rural areas

President Donald Trump wants to boost American manufacturing, a goal that has eluded other presidents in the so-called “post-industrial” era but a laudatory one nonetheless.

However, many of the manufacturing jobs that he and other administration officials talk most prominently about are likely minimum-wage or other low-wage positions. Meanwhile, the “big, beautiful” bill now moving through Congress would likely slow the growth of one fast-growing manufacturing sector where the average annual income is $81,600. Furthermore, those jobs are concentrated in places that voted for Trump in 2024, meaning that some Republican members of Congress are finding themselves in the position of potentially slowing manufacturing growth in their own districts.

What we have here is a conflict between political ideology that is often quite clear and economic realities that are more complicated and don’t fit easily into standard left-right political alignments. Some of this conflict is playing out in Virginia, most notably in Pittsylvania and Pulaski counties. Let’s walk through what’s going on here.

Manufacturing jobs in the United States started falling in 1979, then fell dramatically after 2000 (which coincides with both the North American Free Trade Agreement and China’s entry into the World Trade Organization) and bottomed out in 2010. Since then, their numbers have grown sluggishly, no matter which president or which party was in power. There are lots of factors at play, but generally speaking, many jobs have gone overseas to lower-wage countries and many others have been automated. 

Trump’s solution to this 21st-century problem is to bring back a tax most popular in the 19th century: tariffs, or taxes on imports. The theory is that if imported goods cost more, companies will be encouraged to reshore their manufacturing to the United States so they don’t lose customers. 

Last week, Trump threatened to impose a 25% tariff on Apple’s iPhones if they’re not manufactured in the United States. This is not the first time those devices — and other consumer technology — have been singled out. Earlier this year, Commerce Secretary Howard Lutnick declared: “The army of millions and millions of human beings screwing in little screws to make iPhones — that kind of thing is going to come to America.” 

If they did, though, that iPhone would cost a whole lot more than it does now. Workers at one assembly plant in China make $244 a month, or $2,928 a year. Let’s assume Apple opened an assembly line in the United States and paid workers at the same rate that I see being advertised for some convenience store employees — $15 an hour. That’s $31,200 a year, or more than 10 times what those China iPhone assemblers are making. It is simply unrealistic to expect American consumers to pay that much more for their cherished phones, and unrealistic to expect Apple shareholders to make do with lower dividends. American consumers demand inexpensive products and American investors demand a return, which is why low-skilled manufacturing has gone overseas and will stay there. The economics just don’t work otherwise. Americans don’t get paid enough money to afford the prices that companies would have to charge if they made their products with American labor.

The manufacturing that can — and is — growing in the United States involves more high-skilled work. Conveniently, we have some — but some of the provisions in the Republican tax bill put those jobs in jeopardy.

The bill sets out to roll back certain tax credits for renewable energy that were enacted under the Biden-era Inflation Reduction Act, which was really more of a climate bill than an anti-inflation bill. Both the politics and the economics seem simple: Republicans have never been as keen on renewable energy as Democrats have been, and they want to get rid of those tax credits to make it easier to cut spending elsewhere. Here’s where things get complicated for them and interesting to those of us who follow politics: Those tax credits have created green manufacturing jobs in red states and red districts. The stereotype of an electric vehicle driver might be a Democrat, but those vehicles — and especially their batteries — are being built by Republicans. A study by Massachusetts Institute of Technology and a Denver-based research firm, the Rhodium Group, found that since the Inflation Reduction Act was passed, the U.S. has seen $662 billion invested in clean energy projects, with $115 billion of that in manufacturing. Of that, almost 82% of those projects have been in Republican congressional districts. In terms of jobs, CNBC reports that about 86,700 clean energy manufacturing jobs are in Republican districts, nearly triple the 30,400 in Democratic districts; that’s 74% of clean tech manufacturing jobs going to Republican districts.

Furthermore, the manufacturing news website Manufacturing Dive reports that in 2024 clean energy was one of the three biggest drivers of manufacturing investment in the U.S. — the others were semiconductors and pharmaceuticals. Of those three, clean energy manufacturing appears to have added the most new jobs. At a time when overall manufacturing growth is sluggish (and actually declined in 2024), these are the growth areas that you’d think the federal government would want to encourage further.

In politics, this is called cross-pressure, where an officeholder is pulled two different ways — the desire to cut renewable energy credits versus the desire to grow manufacturing jobs.

Some more numbers:

1. Under the overall umbrella of clean energy technology, battery manufacturing has been a particularly strong growth sector, and about 90% of that growth has been due to electric vehicles, according to the Environmental Defense Fund. About 84% of the investment in electric vehicle-related facilities (and electric vehicles are basically big batteries on wheels) has come in 10 states. Last year, all but one of them voted for Trump. The one exception was Illinois. In all, the battery-related jobs in those 10 states account for 72,500 jobs. Lead-acid batteries account for about 60% of the market; the average wage at those jobs is $81,600, according to the Battery Council. 

2. Over the past two years, solar panel manufacturers have announced more than 44,000 jobs in the United States. Of the 10 states with the most solar jobs, six voted for Trump, according to the Interstate Renewable Energy Council. Solar manufacturing jobs average about $60,000 a year, according to Indeed.com.

3. The single fastest-growing job in the country, according to the Bureau of Labor Statistics, is that of wind turbine technician, for which the median pay is about $62,000 a year. Of the eight states with the biggest demand, six voted for Trump. 

Republicans would not dare call this the Green New Deal, but this is the Green New Deal — the premise that the transition to renewable energy can and will create jobs. The catch, of course, is that it’s not creating those jobs in the same places where fossil fuel jobs are going away, such as Appalachia, but that’s a topic I’ve harped on before. Nonetheless, renewable energy is creating manufacturing jobs and doing so mostly in Republican areas, largely because Republicans govern the states in the Sunbelt where manufacturing of all types is growing fastest (a topic for a future column), although in the case of wind, it’s because the windiest states are Republican ones in the Midwest.

Republicans may not like the economics involved — they may prefer to see a more free-market approach without any tax credits to goose a particular sector — but as a practical matter, a bill they didn’t like is helping to create jobs for their constituents. You can see why some Republican senators are now starting to raise questions about the House bill, with a particular focus on the phaseout of many of these renewable energy credits. In the coming weeks, as these details get debated, we’re not going to hear about carbon emissions or melting ice caps or rising sea levels, we’re going to hear about investment dollars and job counts, which makes for a very different discussion.

Last week, Virginia’s Commission on Electric Utility Regulation — known by the unflattering acronym of CEUR, pronounced “sewer” — heard from Ben Norris of the Solar Energy Industries Association. He warned that the U.S. House bill would cripple further growth of solar energy. That might seem good news for those in rural areas who think solar “farms” are an ugly, industrial blight on the landscape but not such good news for those who want the lights to come on: Norris spelled out how much solar wouldn’t be developed — enough to supply the entire state of Pennsylvania is how he measured it. That might bother those who wonder how we’re going to meet rising power demands but might not bother those who think we should just power the grid with natural gas and coal, anyway.

However, Norris also said doing away with the tax credit would eliminate more than 300,000 solar-related jobs over the next three years, with 86,000 of those in manufacturing and more than 200,000 in construction. While doing away with those credits may satisfy one set of Republican goals, they seem to run directly counter to other Republican goals — specifically creating manufacturing jobs, particularly good-paying ones (and good-paying ones in rural areas). As William Shakespeare once observed, “aye, there’s the rub.”

The Rhodium Group recently came up with a data set of all the energy-related jobs eligible for tax credits under the Inflation Reduction Act, and organized that data set by congressional district. Here’s what it shows for Virginia, with congressional districts ranked by order of investment announced:

Whether you go by investment already in the ground, or investment promised, the two districts with the most investment, and four of the top five, are Republican districts. The bottom five districts, including three with zero IRA-eligible districts, are all Democratic districts. Going simply by that, you’d think these tax credits were a Republican invention, not a Democratic one.

Personally, I’m not especially moved by these investment numbers. The 2nd District ranks so high because of Dominion Energy’s offshore wind project off the coast of Virginia Beach. (Disclosure: Dominion is one of our donors, but donors have no say in news decisions; see our policy.) The 5th District ranks next highest because of all the solar development across Southside. In the case of solar, there is a lot of investment across Southside, but, after construction is completed, those solar farms don’t create many jobs. That’s why I’m much more interested in the jobs analysis:

The order of the districts is different here, but the pattern is the same: The top two districts, and five of the top six, are all Republican districts. Southside’s 5th District represented by John McGuire has more than twice as many IRA-eligible jobs as the next biggest district, the 9th District represented by Morgan Griffith.

Why is this, since I just said all those solar farms don’t create many jobs? Now we’re into the details, but we need to understand these details if we want to understand what’s going on. One of the more interesting energy policy debates is on the left, between those who think nuclear energy is dangerous and dirty and those who think it may be the only way to retire a lot of fossil fuel sources. The Biden administration was pro-nuclear, so the Inflation Reduction Act has a lot of incentives for nuclear energy. That’s why the 5th District ranks so high — all those nuclear-related jobs with BWX Technologies and Framatome in Lynchburg, plus Dominion’s existing North Anna nuclear plant in Louisa County. Some might look at these rankings and think, wow, the 5th District has a lot of green energy; others who know more about the district will look at these rankings and say there sure are a lot of nuclear jobs there. 

The Republicans who want to strip out the tax credits for renewables want to keep the incentives for nuclear, so the number of jobs in the district potentially at risk if the lack of tax credits dries up the renewable energy sector isn’t nearly that high. Alas, the data doesn’t give further breakdowns, so consider those 5th District numbers with an asterisk beside them to account for all the nuclear-related jobs that aren’t endangered. 

However, even if we take out nuclear, the 5th District still has at least 2,000-plus jobs potentially at risk — the jobs that Gov. Glenn Youngkin announced last year would be coming to Pittsylvania County in the form of a Microporous battery plant. Virginia, for multiple reasons, had fallen just outside the so-called “battery belt” that has arisen in the Southeast — until that Microporous announcement. The company hasn’t commented, but that firm has been counting on growth in the battery sector. If the end of these renewable energy tax credits slows that growth, well, you can do the math. Furthermore, the Trump administration has yet to deliver a $100 million grant to Microporous that was promised by the Biden administration. In Virginia, Senate Majority Leader Scott Surovell, D-Fairfax County, last week posted a New York Times story that reported the Republican tax bill “would gut subsidies for battery manufacturing.” Surovell’s comment on X, formerly known as Twitter: “Why does the GOP hate Pittsylvania County?” I don’t think they hate Pittsylvania County, but they hate the tax credits that Pittylvania might benefit from.

It is curious that after a Republican-voting locality, and a Republican governor, worked so hard to lure a major employer whose arrival would be transformative for the region, a Republican Congress and a Republican president might undo all that economic development. The same is true for some other places. Volvo Trucks in Pulaski County and Mack Trucks in Roanoke County now produce a lot of electric vehicles; they also were promised grants that the Trump administration hasn’t followed through on. The Microporous plant in Pittsylvania has yet to come, but Volvo and Mack are already here; the green economy is very real to the shift workers there. 

Here’s where we start to tie all this together.

Microporous said the average wage for those jobs would be $60,000, above the county’s median household income of $54,115.

Trump’s basic instincts aren’t wrong on this one: The United States could do with more manufacturing jobs. However, why is he focused on people turning “little screws” for low wages when we already have a one manufacturing sector that’s not only growing but is growing high-wage jobs? Shouldn’t that one be the one we try to grow even more? This leaves me with some questions:

• Is the elimination of those renewable energy tax credits worth the slowdown in those high-wage manufacturing jobs? Or, put another way, is philosophy more important than practicality?

• Is there a way to spur that job growth in clean energy manufacturing without those tax credits?

• Given how most congressional districts are either strongly Republican or strongly Democratic, would there be any political price to be paid if that clean energy manufacturing job growth in Republican districts slows down or comes to a halt?
  
• Is this even a sector we want to grow? If you believe that renewable energy isn’t something we need, then perhaps not, even if it is producing high-paying manufacturing jobs.

Notice that none of this has to do with how you feel about carbon emissions and “saving the planet,” but everything to do with creating high-wage manufacturing jobs and building a new economy in many rural areas. Pittsylvania County may be ground zero for this debate, with Pulaski County a close second.

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