Edward B. Montgomery

Director of Recovery for Auto Workers and Communities

(Melina Mara/TWP)

Why He Matters

In March 2009, President Barack Obama outlined ways the U.S. will help struggling automakers General Motors (GM) and Chrysler. But Obama made it clear that factories would also have to close, leaving a considerable number of unemployed auto workers. To aid cities that depend on the industry, Obama created the position of director of recovery for auto workers and communities. Montgomery was appointed to the job.

Montgomery's most direct tool for offering new opportunities to a workforce that has struggled mightily in recent years will come from the $787 billion economic stimulus. The stimulus money will be used to provide short-term jobs and attract new businesses, but Montgomery will also need to devise strategies to re-educate a workforce in such things as green technologies. Montgomery will focus on obtaining more funding from Congress to those communities hit hardest by auto companies' woes.

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Background

At a Glance

Career History: Dean of the College of Behavioral and Social Sciences at the University of Maryland (2003 to present); Deputy Secretary at the Labor Department; Chief Economist at the Labor Department (1997 to 1998)
Hometown: Pittsburgh, Pa.
Alma Mater: Pennsylvania State University, B.A., 1976; Havard University, A.M. (economics), 1980; Harvard, PhD (economics), 1982

Spouse: Kari
Web site

Path to Power

Born in the steel manufacturing hub of Pittsburgh, Pa., Montgomery has seen the effects of a struggling workforce as jobs begin to dwindle due to global competition. Montgomery stayed in-state for college, attending Pennsylvania State University and graduating in 1976. Soon after, he moved to Harvard University, where he spent the next six years earning his master's and Ph.D in economics.

After school, Montgomery joined the faculty of Pittsburgh's Carnegie Mellon University. In 1983, he took a leave of absence to work as a traveling scholar on the Board of Governors at the Federal Reserve System, while Paul Volcker occupied the chairman position. Montgomery stayed at Carnegie Mellon for six years, then left to become a professor at Michigan State University, where he would teach for four years.

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The Issues

The U.S. auto industry has faced a severe decline in sales over the past few years because of the increase in gas prices and fierce competition from overseas manufacturers like Nissan and Toyota. With increased debt obligations and an inability to acquire loans, GM and Chrysler begged the government for intervention starting in late 2008. In March 2009, Obama responded, rejecting viability plans from GM and Chrysler that laid out the two companies' options going forward. GM's CEO Rick Wagoner was forced to resign as the federal government guaranteed 60 days of capital so the Detroit, Mich., car company could continue its restructuring efforts. Chrysler was forced to negotiate a sale to Italian car company Fiat SpA within 30 days in order to obtain up to $6 billion in investments from the government.

But neither of these moves addressed a vast labor force that could lose jobs under major restructuring agreements. Enter Montgomery. "When a community is struck by a natural disaster, the nation responds to put it back on its feet," said Obama. "While the storm that's hit our auto towns is not a tornado or a hurricane, the damage is clear, and we must respond."

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Montgomery's job will be to cut "through red tape and ensure that the full resources of our federal government are leveraged to assist the workers, communities, and regions that rely on our auto industry," according to Obama. He'll be doing this in a variety of ways, including:

Using the $787 billion stimulus to maximize growth in state workforces through infrastructure projects, housing, education and new industry.
Deploying help to communities where plants close in order to aid struggling families and create future jobs.
Attracting green industry, defense and other projects to struggling regions.
Working to create legislative pressure for emergency funding.

Job Growth vs. Job Loss

Before Montgomery joined the Clinton Labor Department in 1997, he studied job growth, and specifically local economic development. In 1995, Montgomery co-authored a paper titled "Cyclical Versus Secular Movements in Employment Creation and Destruction." The paper examined ways in which job creation and job loss are measured and whether they differ based on regional or in-state changes in the job market. Montgomery and co-author Randall Eberts wanted to know whether the outcomes differed based on the way job creation and loss is measured. While it was a highly academic piece of work, the paper's conclusions noted two possibilities that are relevant to Mongtomery's work on the Auto Task Force.

The authors concluded that fluctuations in business cycles often results in job destruction, while differences in job numbers across different regions often result from job creation. They used their conclusion to offer a little insight into how cities and government should tackle job growth and loss.

"For instance, since regional employment differences are more correlated with job creation than with job destruction, state and local policies aimed at promoting new firm creation and expansion might be more fruitful in the long run than those aimed at ailing firms," wrote Montgomery and Eberts. "On the other hand, since cyclical employment is associated more with job destruction, it may be prudent to design policies to help firms through economic downturns so that fewer workers are laid off and less hardship is incurred."

The Network

Montgomery will work on the Auto Task Force with director Steve Rattner and Ron Bloom, the senior adviser to the Treasury Department on the auto industry. Treasury Secretary Timothy Geithner and National Economic Council Director Lawrence H. Summers head the Auto Task Force.

While Montgomery worked as the chief economist at the Clinton Labor Department, he also worked as the principal representative of the Labor Department to the Council of Economic Advisers. Janet Yellen headed the CEA during the Clinton administration. Montgomery worked under Clinton Labor Secretary Alexis Herman.

Campaign Contributions

In 2008, Montgomery donated $1,200, all of which went to Obama's presidential campaign.

Additional Resources