Creating good jobs for all semiconductor workers with the CHIPS Act

Billions of dollars in public money will flow to semiconductor manufacturers in the coming months as part of the CHIPS and Science Act of 2022. The bill is designed to boost domestic production of the tiny components that are critical to the functioning of nearly all electronic devices.

The Biden-Harris administration touted this historic public investment of up to $175 billion in loans and grants as a way to both secure American supply chains and create thousands of high-quality jobs.

But according to a new report from the Institute for Policy Studies, there are real problems with jobs in the semiconductor industry that should be addressed before corporations jump on the Brinks bandwagon.

Many top executives in the industry earn far more than the U.S. average, but workers, observers and politicians have raised concerns about working conditions – including inadequate pay, grueling work hours and exposure to toxic chemicals.

This new report combines worker interviews and industry data to show that working conditions in the semiconductor industry need to improve – and that the CHIPS program needs to do more to fulfill its promise to working people.

The state of the industry

Semiconductor production and employment in the U.S. have declined dramatically since their peak in the late 1990s. There are currently just under 400,000 workers employed in the industry, but that number is expected to rise with all the new government funding and private commitments to retool and build factories, called “fabs.”

While the semiconductor industry claims there are not enough workers to fill the job needs created by the CHIPS Act, employment projections and graduation rates in related fields do not indicate a shortage.

The problem seems to lie in the quality of the jobs on offer. Surveys have shown that more than half of workers in the semiconductor and electronics industry are considering leaving their jobs in the next six months, often because of low pay, lack of opportunities for advancement and demanding working hours.

Instead of spreading stories about a shortage of workers – which are often used to distract from legitimate concerns about the quality of jobs or to justify hiring workers from outside local communities – the industry should make a serious effort to become an attractive place to work.

Pay and advancement

The high average salaries in the semiconductor industry obscure the reality of the workers who actually make chips. Half of manufacturing workers earn less than $20 an hour, and many factories experience frequent unpaid walkouts, leaving hourly workers struggling to make ends meet.

Companies receiving CHIPS Act funds offer similar salaries—Microchip Technology is hiring material workers for as little as $17 an hour, while GlobalFoundries is currently recruiting engineers starting at $32,000 a year. For comparison, the average salary in the U.S. was $63,795 in 2022.

Workers rarely receive raises and have little to no opportunity for internal advancement. Several people interviewed for this report said they have to work unpaid overtime on top of their grueling 12-hour days just to be considered for open positions. And they have to be available 24/7, including weekends and holidays, which can lead to severe burnout.

Safety at work

The proprietary blend of chemicals used in semiconductor production has been linked to increased rates of cancer and miscarriage. And although the companies pledged to remove dangerous toxins from their processes in the mid-1990s, testimony from chip workers overseas suggests workers are still at risk.

The Occupational Safety and Health Administration admits that its own chemical exposure limits are outdated and inadequate.

The nationwide standards cover only 500 of the tens of thousands of chemicals that may be used in the manufacture of semiconductors and are many times less restrictive than the recommendations of the medical community.

What the Biden-Harris administration should do

The Commerce Department should put four guardrails in place before signing contracts for CHIPS funds to ensure that public funds benefit well-paid workers and not just further enrich top executives.

First, the agency should work more closely with labor market experts at the Department of Labor to ensure that CHIPS grantees adhere to the Good Jobs Principles that the Biden-Harris administration adopted in 2022 to define a quality workplace.

To increase accountability for these principles, the Department of Commerce should require semiconductor companies to adhere to enforceable standards and disclose information about those standards, such as minimum rates of new job creation, investments in training, living wages, and chemical use.

The agency should also use its statutory authority to prohibit companies that receive CHIPS funds from buying back stock to ensure that the federal money benefits workers and does not inflate the stock-based compensation of CEOs.

FinallyAAlthough the CHIPS Workforce Development Guide states that companies should “remain neutral on union activities,” the semiconductor industry has a history of harsh reactions to union efforts, and responses to some early organizing efforts suggest that the same hostility toward workers remains. Business could prevent a repeat of history by encouraging labor peace agreements between semiconductor companies and unions.

All semiconductor workers make valuable contributions to their industry and should be fairly compensated for their work. A manufacturing engineer at a Micron factory in Manassas, Virginia, said in an interview: “We control the product. Without us in this factory, there would be no product to sell.”