SSTI Digest

Which should be more valuable for an economic development minded investment program? Company A, which yields a 2x return on investment and has a technology that reduces carbon emissions and energy use, Company B, which returns 12x to investors through an impressive IPO but contributes more to climate change, or Company C, which returns 3x and the climate impacts of its technology and production process aren’t as easily measured so remain unknown.

The Federal Trade Commission has issued a final rule to promote competition by banning noncompetes against workers nationwide. According to the FTC press release, this final rule protects the fundamental freedom of workers to change jobs, increases innovation, and fosters new business formation.The FTC estimates that the final rule banning noncompetes will lead to new business formation growing by 2.7% per year, resulting in more than 8,500 additional new businesses created each year. In Part IV.B.3.b.i, “non-competes inhibit new business formation,” the final rule details the studies it reviewed and weighted in credibility to reach its conclusion about the number of additional new businesses that would be created. It includes a discussion of each study along with justification for weighing their conclusions heavily or not. The studies given high weight included “The Impact of Restricting Labor Mobility on Corporate Investment and Entrepreneurship,” which found a 7% impact from noncompetes. Another study, Employee Non-Compete Agreements, Gender, and Entrepreneurship,” found that an average increase in non-compete enforceability decreases the entry rate by 3.2…

Pending congressional appropriations, NSF announced a solicitation  for a new set of NSF Regional Innovation Engines (NSF Engines). These NSF Engines would be in addition to the 10 inaugural engines the agency announced in January. In this proposed round of funding, NSF would only accept proposals for full NSF Engines, competing for up to $160 million over 10 years. Proposers would be asked to submit a letter of intent in place of a concept outline and a short preliminary proposal. NSF would not require that proposers have an NSF Engines Development Award nor previous support from NSF or other federal agencies. Any organization that meets the eligibility requirements specified in the funding opportunity may apply. In this round of funding, tribal nations and state and local government agencies would be eligible to submit a proposal as the lead organization. Letters of intent would be due by June 18 by 5 p.m. submitter’s time. More information can be found on the NSF Engines program website. Register for the “2024 NSF Engines Funding Opportunity Webinar” on April 25, 2024, at 2 p.m. ET.

SSTI and more than 160 state and local governments, institutions of higher education, businesses, trade associations, and nonprofit organizations sent a letter to Congress asking for Tech Hubs appropriations in the FY 2025 budget. As the letter points out, “America’s economic and security needs depend on the country’s ability to remain at the forefront of technological frontiers,” and the bipartisan CHIPS and Science Act envisioned a scale for this effort that would see approximately $6 billion in funding through FY 2025—well above the $541 million that Congress has provided to date. Read the full letter, add your organization’s support, and share with your regional stakeholders. 

The U.S. Department of Commerce has recently signed two non-binding preliminary memorandums of terms (PMTs) with semiconductor companies to provide direct funding under the CHIPS and Science Act. One company, the TSMC Arizona Corporation (TSMC Arizona), a subsidiary of Taiwan Semiconductor Manufacturing Company Limited (TSMC), will receive up to $6.6 billion to support the company’s investment of more than $65 billion in three greenfield fabs in Phoenix, Arizona. The second company, Samsung Electronics (Samsung), will receive up to $6.4 billion for two new logic fabs, an R&D fab, and an advanced packaging facility in Taylor, Texas, as well as an expansion to their existing Austin facility. In addition to the proposed direct funding to TSMC, the CHIPS Program Office would make approximately $5 billion of proposed loans—which is part of the $75 billion in loan authority provided by the CHIPS and Science Act—available to TSMC Arizona under the PMT. The company has indicated that it is planning to claim the Department of the Treasury’s Investment Tax Credit, which is expected to be up to 25% of qualified capital expenditures. TSMC Arizona is committing to build…

The National Institute of Standards and Technology (NIST) have posted the position for director, Hollings Manufacturing Extension Partnership (MEP) Program after the recent announcement that the previous director had left to become director of the CDFI Fund. The director “directs and controls the activities of the MEP,” according to the posting. Qualifications required include, “A broad knowledge of and demonstrated experience in manufacturing, manufacturing and industrial extension programs, and/or technology-based economic development.” The posting is open to May 8 with applicants encouraged not to wait until the last day to apply. Historically, MEP has partnered closely with the states and most SSTI members.

The U.S. Environmental Protection Agency has announced its selections for $20 billion in grant awards under two competitions within the $27 billion Greenhouse Gas Reduction Fund (GGRF). The three selections under the $14 billion National Clean Investment Fund and five selections under the $6 billion Clean Communities Investment Accelerator will, according to an announcement from the EPA, “create a national clean financing network for clean energy and climate solutions across sectors…. By financing tens of thousands of projects, this national clean financing network will mobilize private capital to reduce climate and air pollution….” The eight selected applicants have supported thousands of individuals, businesses, and community organizations to access capital for climate and clean energy projects, according to the announcement from EPA. They have committed to delivering on the three objectives of the Greenhouse Gas Reduction Fund: reducing climate and air pollution; delivering benefits to communities, especially low-income and disadvantaged communities; and mobilizing financing and private capital. They will, according to the announcement, create a national clean…

Sometime in late May, the U.S. will pass a deadline that could have major repercussions for new administration rules, depending on the outcome of the 2024 federal elections. In effect, rules finalized before late May would be overturned only by going through a new, full rulemaking process, which can be a lengthy process. Rules passed after that date, however, could be overturned relatively quickly by Congress if control of the branches changes. Each new federal rule is subject to the Congressional Review Act, a piece of legislation passed in the mid-1990s that saw relatively little use until 2017. In brief, the law allows Congress to pass a resolution of disapproval against any new rule, which not only nullifies that rule but also prevents the agency from passing a similar regulation without congressional action. Because such a resolution must be passed by both chambers of Congress and signed by the president, the law does not see much use outside of sessions in which party control of one or both branches changes. According to the Congressional Research Service, the law was used to overturn only one law until 2017, when the 115th Congress introduced more than…

The Commerce Department has suspended plans to announce a funding opportunity for the construction, modernization, or expansion of commercial semiconductor R&D facilities, according to an announcement the CHIPS Program Office made in their newsletter last week. The suspension does not impact the $11 billion the CHIPS Program Office still plans to spend on semiconductor R&D through separate R&D programs, nor does it affect the awards for incentive program funding opportunities already announced. Commerce reported that they made this decision due to an “overwhelming demand” for funding from the $39 billion facility incentive program created by the CHIPS and Science Act. The four R&D programs that remain intact are the National Semiconductor Technology Center (NSTC); the National Advanced Packaging Manufacturing Program (NAPMP), including the current NAPMP funding opportunity; CHIPS Metrology; and the CHIPS Manufacturing USA Program. Information about these programs is on the CHIPS website. The CHIPS Program Office will discuss its strategy for supporting semiconductor R&D in an April 9 webinar focused on the National…

SSTI has updated data across four states, and added data for an additional two and Puerto Rico, in last week’s “SSBCI 2.0: An overview of state uses of funds” article. Select programs in Minnesota, Nevada, North Dakota and Oregon were reclassified by SSTI, and may differ from Treasury's “Capital Program Summaries”– which the original article was based on. A total of nine venture capital programs across these states were broadly classified as credit support programs by Treasury but reclassified as equity/venture capital programs by SSTI soon after the article was posted on March 28, 2024. Missouri, Vermont, and Puerto Rico were added by SSTI with information based on their respective press release documents. The analysis has been updated to reflect these changes, and will continue to be updated as more information becomes available.

Shrinking shares of job-creating, high-growth firms across the country, the topic of SSTI’s Useful Stats column in last week’s Digest, is not being experienced within all sectors of the economy, according to analysis of the Business Dynamics Statistics of High Growth Firms (BDS-HG) experimental dataset from the Census Bureau. From 1978-2021, the number of high-growth firms, measured by change in employment, has increased in five sectors, stayed the same in one, and decreased in the remaining 13 classifications of U.S. business and industrial activity. Slower-growth firms expanded their dominance of the economy, as all sectors experienced a decrease in the number of high-growth firms as a percentage of their total respective firms. The number of high-growth firms increased the most in the educational services sector, consistent with the growth of private charter schools, mentoring services, and edtech over the period. Alternately, high-growth firms in mining decreased the most relative to their 1978 values, which one might expect as the U.S. offshored resource-intensive industries and adopted mining approaches that required fewer workers. In terms of sector…

This article, written by Leonardo Vasquez and reproduced from the April 2024 issue of NBER Digest, is a summary of NBER Working Paper 31948, prepared by Luisa Gagliardi, Enrico Moretti, and Michael Seranfelli. SSTI note: We would contend the findings presented in the paper suggest state and local policymakers strongly consider making sustained, long-term investments in TBED priorities such as growing knowledge-intensive sectors and enlarging the college-educated workforce to help industrialized regions overcome negative changes in manufacturing due to technological change and global competition. Vasquez’s article for the NBER Digest: Manufacturing employment peaked in the United States and the United Kingdom in the 1970s, in France and Italy in the '80s, and in Germany and Japan in the '90s. Each of these countries experienced deindustrialization that lowered manufacturing employment. On average, between the peak manufacturing year for each country and 2010, total employment rose by 7.5 percent while manufacturing employment dropped by 7 percent. In The World's Rust Belts: The Heterogeneous Effects of Deindustrialization on 1,993 Cities in Six…