The CHIPS and Science Act Will Bring Technology and Manufacturing Investment to Rural Areas and Communities of Color
As one of the most significant federal investments in U.S. industry in decades, the CHIPS and Science Act provides billions of dollars in funding and subsidies to transform the nation’s science and technology landscape. One of the major components of the act—the Regional Technology and Innovation Hubs (Tech Hubs) program—aims to ensure that this funding is equitably distributed nationwide, investing in technology hubs that have the potential to benefit women, Latino, Native American, low-income, and other underrepresented communities.
As the U.S. Department of Commerce and Economic Development Administration (EDA) accept applicants for these tech hubs, they should consider making the following commitments to ensure equity and inclusion across technology sectors.
Tech Hubs program sites should incorporate minority-serving institutions and community colleges. These institutions have a significant role in diversifying the science, technology, engineering, and math (STEM) workforce and are positioned to engage in the research, development, and manufacturing reskilling that the Tech Hubs program demands. The program should also design ways to attract and retain women in the workforce, including strategies to recruit and retain women in the STEM workforce—such as providing affordable child care options and equitable pay and establishing protections against sexual harassment and discrimination in the workplace. Finally, the Tech Hubs program should support entrepreneurship among historically underrepresented communities, including by investing in entrepreneurial mentorship and training programs.
By fulfilling these commitments, the Tech Hubs program can build strong regional economies and grow the middle class while benefiting all Americans.
Last summer, Congress passed the CHIPS and Science Act of 2022, a substantial investment in industrial strategy poised to sharpen the country’s competitive edge in science and technology and promote regional economic growth. A particular component of the act—the Regional Technology and Innovation Hubs (Tech Hubs) program—will significantly boost that goal and jump-start innovation across the country. The Tech Hubs program authorizes $10 billion to establish at least 20 large-scale technology hubs that can be self-sustaining and globally competitive in the next decade. The Center for American Progress previously released a report analyzing this program, recommending locations best suited to receive the Tech Hubs program’s considerable funding allocations. The report noted that investment at this scale could spur innovation and ensure that the benefits of the science and high-tech industry are spread coast to coast, creating lasting advantages for regional economies.
In December 2022, Congress appropriated $500 million to kick-start the Tech Hubs program. And this summer, the U.S. Department of Commerce and the Economic Development Administration began receiving applications for Phase 1 of the program. As applications are received and approved, the Commerce Department and EDA will be tasked with selecting the best locations that, over a 10-year horizon, can become self-sustaining and globally competitive hubs for various technology focus areas, including biotechnology, cybersecurity, advanced manufacturing, and computing. The agencies will also be responsible for properly implementing the Tech Hubs program and ensuring that the legislative aims are met; among those aims is the vital need to promote equity and inclusion in the technology sector.
The technology industry has long struggled to be equitable and inclusive, especially in attracting, supporting, and retaining Black, Latino, and female workers. According to the Pew Research Center, Black and Hispanic workers are underrepresented in the STEM workforces compared with their participation in the workforce overall and are underpaid compared with their peers. Additionally, research shows that women are similarly underrepresented, and Latina, Black, and Indigenous women constitute only a tenth of the STEM workforce. These workforce disparities often reflect preexisting imbalances in STEM education and can be much worse given retention challenges. Studies have shown that racial disparities in STEM start as early as kindergarten in the United States. This inequity hinders the economic security of underrepresented people; those employed in STEM or simply with a STEM degree do better financially than their workforce counterparts.
Supporting workforce development and education not only benefits underrepresented populations but is also critical for the success of the Tech Hubs program. Research indicates that gender and racial disparities in the innovation process inhibit gross domestic product (GDP) growth per capita by 2.7 percent; therefore, progressive policies that support Black, Latino, and female workers will also propel the economy.
Public funding is uniquely positioned to intervene to ensure that racial and gender disparities in the STEM workforce do not become further entrenched. The Tech Hubs program is poised to do just that. The text of the CHIPS legislation clearly states equity and inclusion as a desired goal and provides guidance on how underrepresented populations can be included in what will be transformative change in the technology sector.
Specifically, the Tech Hubs program:
seek[s] to designate … regional technology hubs based on selection factors which shall include likelihood of success and may include regional factors such as the extent to which the regional technology and innovation hubs significantly engages and benefits underserved communities in and near metropolitan areas [and] encourage[s] eligible consortia to leverage institutions of higher education serving populations historically underrepresented in STEM, including historically Black Colleges and Universities, Tribal Colleges or Universities, and minority-serving institutions to significantly benefit an area or region.
Moreover, the notice of funding opportunity (NOFO)—released by the EDA in May 2023 with a Phase 1 deadline of August 15, 2023—explicitly set the expectation that projects should advance equity to unrepresented populations. This includes, but is not limited to, racial and ethnic minorities, reduced English proficiency populations, people with disabilities, and racially and ethnically concentrated areas of poverty. The NOFO states:
Specifically, applicants are expected to articulate which populations or communities will benefit from the project and how the project will provide for inclusive community engagement, ensuring that the economic benefits of the project will be shared by all communities in the project area, including any underserved communities. EDA seeks evidence-driven equity and inclusion initiatives, including those that effectively support more historically underrepresented innovators and those that focus on a core technology area that includes significant job opportunities for a wide range of skill and experience levels. Consortium members’ historical commitments to equity and diversity and their prior concrete successes related to equity and diversity will be relevant. The application should include letters of support from entities that represent underserved communities, businesses, and workers. As with all letters of support, EDA puts a premium on quality over quantity.
The requirements included in both the legislation and the NOFO affirm the importance of diversity and inclusion in implementing the Tech Hubs program and signal to applicants that their applications must have thoughtful strategies in place to affirm that these objectives can be met. The Commerce Department and EDA must further ensure that the selection process uplifts and rewards applications that prioritize equitable distribution of benefits.
Including minority-serving institutions (MSIs) of higher education and community colleges in the Tech Hubs program is a vital way for the CHIPS and Science Act to help increase diversity in the technology and manufacturing workforce. These institutions play an outsize role in providing postsecondary educational opportunities to groups that are underrepresented in STEM fields. The inclusion of MSIs in the Tech Hubs consortia will help ensure the benefits from the development and implementation of the technology hubs are equitably distributed.
Research shows that MSIs are more likely to cultivate educational environments that take proactive approaches to dismantling barriers and ensuring underrepresented students have the tools they need to succeed. A 2019 study by the National Academies of Sciences, Engineering, and Medicine identified institutional qualities of MSIs that fostered underrepresented students’ success, including mission-driven leadership, responsiveness to student needs, supportive campus environments, tailored academic and social supports, and the availability of mentorship and undergraduate research experiences. The study concluded that MSIs are an underutilized avenue for diversifying the STEM workforce, a matter important to “America’s economic growth, national security, and global prosperity.”
There are a variety of MSIs that enroll different student populations and are guided by different missions. Historically Black colleges and universities (HBCUs) and Tribal colleges and universities (TCUs) are special-mission institutions that are designated in legislation. Other types of MSIs, such as Hispanic-serving institutions (HSIs) and Alaska Native and Native Hawaiian-serving institutions (ANNHSIs), receive their designation based on shares of enrollments. Enrollment-based MSIs must also meet criteria related to institutional expenditures and enroll high numbers of students receiving need-based federal financial aid. Meeting these criteria then qualifies institutions to apply for additional federal funding geared toward strengthening their capacities to serve underrepresented students.
The table below shows the relative share of enrollment of underrepresented students at different types of MSIs. On average, they far exceed the proportion of underrepresented students enrolled at other kinds of institutions.
MSIs also play an outsize role in diversifying the STEM workforce. HBCUs, for example, graduate a high proportion of Black graduates in STEM relative to the small number of institutions: While HBCUs only award 1.6 percent of the nation’s bachelor’s degrees annually, they are responsible for 15 percent of all engineering degrees awarded to Black graduates. HBCUs have played a significant role in the education of Black Americans in recent decades, particularly in preparing more Black graduates for careers in high-paying professional fields. Today, HBCUs enroll 9 percent of Black postsecondary students despite representing only about 1.7 percent of postsecondary institutions. HBCUs work as engines of economic mobility, enrolling high proportions of low-income students and offering them cost-effective pathways into and beyond the middle class.
HSIs, similarly, are essential drivers of diversity in the STEM workforce. While HSIs awarded 17 percent of all degrees in 2021, they were responsible for 40 percent of all engineering degrees awarded to Hispanic or Latino graduates that year. Many MSIs are well-positioned to compete for the technology, manufacturing, and research work the Tech Hubs program demands. In 2021, 12 percent of MSIs were categorized as having “very high” or “high” research activity, more than double the rate of colleges and universities nationwide, of which 5 percent fit into this category. This may be because many comprehensive public universities qualify as MSIs because they are more likely than other types of institutions to meet MSI qualifications including “low educational and general [E&G] expenditures” and “a requisite enrollment of needy students,” due to their public support and missions as access-oriented institutions.
The special consideration the EDA will give to consortia that include MSIs, as stated in the NOFO, will help advance the equity goals of the Tech Hubs program and ensure the legislation’s benefits flow to those high-research institutions that serve greater proportions of underrepresented students than their predominantly white peer institutions.
The Tech Hubs program also encourages consortia that include community colleges, which enroll high proportions of low-income students, first-generation students, and students of color, including 57 percent of Native American and 52 percent of Hispanic or Latino students. Community colleges play a role in educating almost half of students who eventually earn a bachelor’s degree. However, community college graduates are underrepresented among those who earn a bachelor’s degree in STEM fields. Including community colleges in regional tech hubs is another path to improving STEM diversity, offering an opportunity to improve completion rates and post-graduate employment opportunities at these institutions. Specifically, the tech hubs will foster direct connections between postsecondary institutions and employers and offer additional funding that could be used for completion-boosting student support services.
MSIs and community colleges are poised to train “middle skill” workers as well—an occupational category that will be important to the future of the U.S. science and manufacturing workforce. Middle-skill roles require education beyond high school but less than a four-year degree. Career-focused programs are at the heart of community colleges’ degree offerings, and these institutions regularly adapt to the workforce demands of their regions. In 2021, about 6 percent of eligible MSIs were categorized as primarily associate-level institutions focusing on career and technical training, slightly above the nationwide rate of 5 percent.
To the extent that reskilling will be valuable to the future U.S. manufacturing and technology workforce, community colleges remain an important and underutilized resource to train both traditional and nontraditional students for in-demand careers. Community colleges can act as an “accessible point of entry” for students to gain exposure to these sectors, as flexible and affordable programs help fill skills gaps and prepare students for industry jobs. In addition, two-year institutions enroll a higher proportion of students above the age of 25 than four-year institutions, positioning these colleges to help adult learners gain new skills and complete career transitions. While many roles in the technology and manufacturing workforce are open to individuals without four-year degrees, technical backgrounds—such as maintaining and troubleshooting manufacturing equipment—are often required across positions. Community colleges can lead in this workforce reskilling process.
The EDA and Commerce Department should consider applicants who devise partnerships between community colleges, four-year institutions, and industry, which may include facility or faculty sharing, curriculum development, or hands-on experiences such as shadowing programs, local internships, career day visits, and mentorships. These partnerships will help leverage the strengths of community colleges within Tech Hubs regions, effectively training and incorporating a diverse workforce.
Engaging MSIs and community colleges is essential to ensuring the Tech Hubs program accomplishes the goal of equitably distributing the benefits of high-growth industries to underrepresented groups, rural areas, and communities of color. These institutions have track records of enrolling, supporting, and graduating students from underrepresented groups and from underresourced areas; their knowledge, expertise, and cultures should be leveraged to ensure the Tech Hubs program increases diversity in STEM fields.
As part of these diversity and inclusion goals, it is essential that applicants to the Tech Hubs program design ways to attract and retain women in the STEM workforce. Gender disparity in STEM develops for various reasons, including gaps in educational attainment, with women less likely than men to study STEM at both the undergraduate and graduate level. This imbalance has improved in the past decade: Women represented 45 percent of students majoring in STEM fields in 2020, compared with 40 percent in 2010 and 34 percent in 1994. But there are still significant disparities within the field. Although women have narrowed the gap in the STEM workforce, their progress has been uneven; for instance, women are underrepresented in engineering and have lower participation in computer science now than they did in 1990. Moreover, even though the gap has lessened, women still only constitute 34 percent of the STEM workforce, compared with 48 percent of the total workforce.
In the transition to the workplace, women face various barriers—including being in the minority, bias and discrimination, caregiving responsibilities, and pay gaps that inhibit their placement and growth in STEM roles—that can lead to them dropping out. These retention challenges are compounded for Black women and Latinas. To make a lasting shift toward an equitable workforce in the future, these challenges must be addressed.
In particular, the Tech Hubs program provides opportunities for Black women and Latinas with educational backgrounds in STEM, but also for women without such backgrounds. Through the Tech Hubs program, women without STEM degrees will be able to contribute to the success of the program and obtain skills necessary for them to build careers in the sector. According to the Department of Commerce, “more than 60% of the jobs in a [semiconductor fabrication facility] don’t require a college degree.” These positions will be increasingly available as regional tech hubs are established. However, grantees must make a concerted effort to hire and retain women in these positions, as there is a large gender gap in the manufacturing industry.
Recruiting women into the workforce and ensuring that they can benefit from regional tech hubs can help solidify the progress that has begun to equalize STEM. To that end, applicants to Tech Hubs should emphasize meaningful avenues to train and upskill women by offering apprenticeships or training programs to ensure that they are equipped with the necessary tools to engage with the Tech Hubs program and by partnering with MSIs and community colleges.
The EDA and Commerce Department should also prioritize establishing clear rules and guidance for equity and nondiscrimination at these hubs. One area of attention, for example, could be equal pay. Women working in STEM sectors face lower pay, on average, than their male counterparts: A 2017 survey from the National Science Foundation found that women earned $61,000 in their first jobs in engineering and computer science, compared with $65,000 for men with the same qualifications. Furthermore, the aforementioned racial inequities in the STEM workforce are overlaid onto gender inequities, so women of color are particularly underrepresented and underpaid. The officials in charge of implementing the Tech Hubs program should pay attention to closing these gaps. For instance, the EDA and Commerce Department could prioritize applicants who engage in efforts to support pay equity, including by posting salary ranges in job postings and collecting and reporting comprehensive pay data.
Accordingly, there should be strong protections against sexual harassment and discrimination in the workplace, which would help attract and retain women in the STEM workforce. In addition to the research provisions passed in the Combating Sexual Harassment in Science portion of the CHIPS and Science Act, the EDA and Commerce Department should ensure that applicants to the Tech Hubs program have safeguards in place for workers who could experience sexual harassment, including limiting preemployment barriers that inhibit workers’ ability to utilize important anti-discrimination protections and enforcement tools.
Moreover, in some states, laws restricting—and even criminalizing—abortion create an unsafe environment for women and their loved ones, working against the ability of Tech Hubs to be truly equitable and inclusive. Notably, these laws can make it more difficult to attract and retain women in the workforce and are also known to have a negative impact on women’s economic security. Furthermore, women living in states with abortion bans often face hostile conditions overall that lead to poor health and economic outcomes, including higher-than-average wage gaps and significantly increased maternal mortality rates. The EDA and Department of Commerce should consider this risk to the success of Tech Hubs applicants, along with their geographic proximity to legal access to abortion. At a minimum, in addition to the other policies discussed within this report to foster supportive and attractive workplaces for women, applicants should also seek to help overcome these specific risks through the provision of strong health benefits that include supports for abortion.
Access to affordable and high-quality child care is, likewise, essential to diversifying the workforce, particularly for mothers of young children who are disproportionately forced out of the workforce due to caregiving responsibilities. Recent research shows that nearly 3 in 5 part-time or nonworking parents would choose to work full time if they had access to affordable, quality child care. This lack of access creates a substantial barrier for parents—particularly mothers—to work or attend training and education programs, which could inhibit the success and equitable implementation of Tech Hubs.
The Department of Commerce has required grant applicants to provide a plan for access to child care as part of a separate CHIPS NOFO, recognizing the critical role that care will play in the long-term success of these investments. Similarly, the EDA and Commerce Department should work with applicants who receive Phase 1 planning grants for regional hubs to include access to affordable, high-quality child care—whether on site or nearby—with the funding they receive.
Along with uplifting women and people of color, programs should highlight their plans to elevate other underrepresented community members, including small-business owners. A 2022 report from the Century Foundation suggests Tech Hubs program funds can boost entrepreneurship among historically underrepresented communities, promoting equity. Nationwide, only a small share of manufacturing businesses are Hispanic- or Asian-owned—4.6 percent are Hispanic-owned and 4.5 percent are Asian-owned—and an even smaller share, less than 1 percent, are Black-owned. Meanwhile, 16 percent of manufacturing businesses have women owners, with only 8 percent of all women-owned manufacturing businesses owned by a women of color.
One of the four key uses of Tech Hubs program funds is “business and entrepreneurial development.” The Century Foundation report argues that this use of funds is an opportunity to reverse long-standing disparities within entrepreneurship, particularly between Black entrepreneurs and their peers. Thousands of new businesses will be eligible to take advantage of the subsidies and research supported by the CHIPS Act, which can be directed toward underrepresented entrepreneurs. Specifically, the Tech Hubs program can help facilitate entrepreneurial mentorship programs and invest in HBCUs and MSIs that train future business leaders. Boosting entrepreneurship uplifts communities and begins the process of closing gaps and promoting intergenerational wealth.
The EDA and Commerce Department should consider these models during the selection process for the Tech Hubs program. There is significant potential to create educational and mentorship opportunities to engage underrepresented individuals within the technology industry. By encouraging entrepreneurship, the Tech Hubs program can deliver broad benefits for diverse communities while simultaneously boosting regional economies.
As applicants prepare to respond to the Tech Hubs program NOFO, they can look to examples of how other industries have sought to engage diverse and equitable populations. As part of the CHIPS and Science Act, the Department of Commerce has also earmarked $52 billion to support the U.S. semiconductor industry. While this funding has not yet been distributed, a NOFO has likewise been released for the CHIPS Incentives Program to build commercial semiconductor fabrication facilities that underscores equity and inclusion. The NOFO requires applicants to develop an equity strategy demonstrating a commitment to recruiting and retaining diverse workers and building new pipelines for disadvantaged individuals in the region. As a response, semiconductor companies have begun to implement community-centered equity strategies hoping to receive these CHIPS funds and incentives. These equity strategies can serve as models for how future Tech Hubs might promote equity and inclusion in the technology sector.
In Syracuse, New York, for example, a “Community Investment Framework” has been developed to address the Commerce Department’s NOFO and implementation principles regarding diversity. This framework partners Micron, a major semiconductor company, with state and regional economic development boards to encourage individuals in underrepresented and rural communities to join the tech and manufacturing workforce in exchange for tax credits. The framework obtained commitments from Micron to invest in workforce development, education, and community development. Key commitments include an internship program focusing on recruiting veterans and students from traditionally underrepresented communities; contracting goals for women- and minority-owned businesses; investments in local child care centers to expand access to high-quality child care and early learning for underserved communities in the region; and funding to promote equitable access to STEM education.
These inclusive regional and workforce development approaches offer entry points for local workers and entrepreneurs into the innovation economy. They also address barriers, such as lack of access to reliable child care, that drive mothers and low-income working parents out of the workforce at alarming rates. These approaches can also pinpoint long-standing systemic injustices, such as lack of access to quality STEM education, that disrupt pipelines into the tech industry.
Similarly, Intel has recently invested in the Columbus, Ohio, region. Along with building semiconductor fabrication plants, Intel has committed to investing $100 million over the next decade, in partnership with Ohio universities and community colleges. This funding will support programming that includes designing community college programs to attract women and members of the Black and Hispanic communities; funding packages for students to prevent barriers to entry into the tech workforce; and scaling a “no wrong door” philosophy that enables individuals without traditional degrees to enter the training pipeline. In fact, 70 percent of the jobs directly created by Intel’s investment in Columbus do not require bachelor’s degrees. Substantial commitments such as these are crucial for establishing diverse avenues into the innovation economy.
The previous decade’s tech boom has often left individuals without four-year degrees behind. However, effective investment of CHIPS funds can create viable pathways for less-educated workers to participate in the technology and manufacturing sectors. These pathways include positions with livable wages—higher than those offered in the fast-food, retail, or hospitality industries—with opportunities for financial growth and worker enrichment.
These diversity, equity, and inclusion (DEI) commitments illustrate how underrepresented communities can benefit from CHIPS-influenced industry growth. Notably, the Tech Hubs program offers even greater possibilities to engage diverse and inclusive communities, as funding can be widely spent across 10 technology focus areas. From biotechnology to advanced manufacturing, the Tech Hubs program will create jobs for less formally educated workers and invest in education and community partnerships. The Commerce Department and EDA must prioritize Tech Hubs applications that integrate equity and diversity measures throughout their plans, as the Tech Hubs program offers unique opportunities to spread economic benefits throughout all communities in a project area.
The CHIPS and Science Act has presented the country with momentous opportunities. The regional technology and innovation hubs laid out by this legislation will help to revitalize the nation’s science and technological sectors to compete globally, stimulating economic growth. Moreover, this investment in economic and scientific innovation can lead to increased educational and economic opportunities for women as well as Black, Latino, Native American, low-income, and other underrepresented communities. The EDA and Commerce Department must be cognizant of selecting tech hubs to meet opportunities, accelerating regional economic growth while promoting equity and inclusion across technology sectors.
In reaching these goals, Tech Hubs program participants should consider a variety of commitments to invest in local communities, including prioritizing minority-serving institutions, community colleges, and non-STEM degree-holders in their workforce and engagement; providing workers with the resources necessary to participate in the workforce, such as child care, anti-discrimination policies, and sexual harassment protections; and enhancing entrepreneurial opportunities for underrepresented business owners. By investing in mitigating gender and racial inequities in the workforce, the CHIPS and Science Act holds the potential to grow the economy by growing the middle class and improving the lives of all Americans.
The authors would like to thank Marcella Bombardieri, Stephanie Hall, Lily Roberts, Sara Estep, Ben Olinsky, Jared Bass, Mariam Rashid, Maureen Coffey, Maggie Jo Buchanan, Emily Gee, Will Roberts, Rose Khattar, Jean Ross, Madeline Shepherd, Carl Chancellor, Chester Hawkins, Steve Bonitatibus, and all other reviewers.
