Obama economy
U.S. President Barack Obama delivers remarks at the White House Summit on Working Families at the Omni Shoreham Hotel in Washington June 23. Reuters/Larry Downing

After an outcry by labor unions and consumer groups, the Obama administration announced Friday it would delay a controversial proposal to classify so-called factoryless goods producers as domestic manufacturers, even if the manufacturing jobs associated with those producers are offshore.

In a Federal Register announcement, Howard Shelanski, administrator of the White House Office of Information and Regulatory Affairs, said the “large number of comments on this topic indicate that agencies need an opportunity to perform additional research, testing and evaluation” of the new classification before moving forward. The announcement said the Office of Management and Budget therefore has “remove[d] the requirement for agencies to implement” the proposed change.

The classification was set to begin within three years, but the announcement said that, because current research results have failed to provide accurate data and because of the nature of “the large number of public comments submitted on the topic,” the new classification “will not be implemented in 2017.”

Labor unions and consumer groups organized 26,000 comments against the proposed change, as the International Business Times reported last month. Those organizations argued the reclassification could undermine government procurement laws preferencing U.S.-made goods. Citing data provided by researchers at the Dartmouth College Tuck School of Business, they also said the reclassification would wrongly inflate the number of domestic manufacturing jobs reported by the government, thus hiding the true state of the economy.