J.D. Vance Grills Commerce Sec Over ‘Diversity Mandates’ For Fed Funding In Semiconductor Industry

 Sen. J.D. Vance (R-OH) confronted the Biden administration’s commerce secretary on Wednesday over so-called diversity mandates dictating the hiring practices for domestic semiconductor manufacturing companies seeking federal funding as the industry faces a shortfall of skilled workers.

Vance, who sits on the Senate Commerce Committee, tore into U.S. Commerce Secretary Gina Raimondo during a hearing that focused on the implementation and oversight of the $52.7 billion CHIPS and Science Act, which provides grant support for new manufacturing sites and research and development while also including various provisions aimed at promoting diversity, equity, and inclusion.

Meanwhile, the Semiconductor Industry Association (SIA) and Oxford Economics published a report over the summer that showed semiconductor manufacturers face a shortfall of roughly 67,000 workers by 2030, painting a grim future for U.S. industries needing computer scientists, engineers, and technicians.

“I’m struggling to make sense of the fact that we apparently have a shortage of skilled labor to manufacture chips on the one hand, and yet the Secretary of Commerce is telling people that they can only hire the people who check the right diversity boxes,” Vance said. “That doesn’t make a ton of sense — and seems to be counterproductive to the goal of bringing this industry back to the United States in the first place.”

The Biden administration signed the act into law last year as an effort to combat supply-driven inflationary pressures and bring American manufacturing industries back to the United States as multiple key Asian manufacturing economies enforced harsh lockdown measures two years ago in response to COVID, creating bottlenecks in the global semiconductor supply chain that persist to the present day.

The department is overseeing a $39 billion semiconductor subsidy program under the act to help create industry jobs. The department reportedly has received over 500 statements of interest from companies to work on semiconductor manufacturing and over 100 applications.

But Vance’s concerns over the particular implementation criteria could sway a company to plant a chip fabrication facility in China rather than the U.S.

“From China, they get cheap labor, massive subsidies, and a government that seems to want to work with them,” he said. “From the United States, they get a little bit of money and a human resources statement that looks like it was written by a 22-year-old gender studies graduate of Harvard or Yale.”

 

Raimondo acknowledged during the hearing the need for the U.S. to produce chips and said the federal government would use the legislation toward labor, training, and workforce, but denied companies are mandated to hire so-called diversity applicants.

“What would you call it when the Secretary of Commerce says you must do this in order to receive funding? If it’s not a mandate, what is it?” Vance asked. “They have to show us a workforce plan in order to receive money from the federal government — that is the definition of a mandate. You must do X in order to receive Y dollars.”

“Why would you locate your facility in the United States of America when you get a human resources lecture from us, but from China, you get a whole lot of money and a whole lot of facilitation for your business? What’s the market economy here? Is it the economy that makes it hard to do business or easier to do business?”

Raimondo contended her job is to “protect taxpayer money.”

“And in order to do that, these companies have to be able to meet their mission,” she said. “And in order to do that, they need to have a trained workforce, and I’m going to work with them to make sure that happens.”

Raimondo said during the hearing that her department hopes to award its first chips funding award from the government’s multi-billion dollar semiconductor subsidy program by the end of this year.

“I am moving as fast as I can, but it’s more important to get it right than move fast,” Raimondo said.