For years, American civic boosters lived with the threat (and reality) of the local plant closing up shop and moving overseas. Now, with U.S. manufacturing trending up (from 2010 to 2012, the sector grew 4.3 percent), mayors and economic development directors increasingly are worrying more about the city next door than the city halfway around the world. For many, that worry translates into using tax credits to lure big companies — even though the benefit of such incentive packages is questionable.
Yesterday, Mercedes-Benz USA announced it would relocate its New Jersey headquarters to the Atlanta area — even though, according to the New York Times, N.J. “officials attempted to dissuade executives of the automaker by offering ‘sizable’ financial incentives to keep its headquarters in the state.” (And New Jersey knows something about incentives: Gov. Chris Christie has handed out billions to keep corporations cozy in the Garden State.)
So what can Atlantans expect to get out of Georgia’s seduction deal, estimated at $50 million? A hint can be found in a new National Employment Law Project (NELP) report that looks at how the rise in U.S. manufacturing jobs has coincided with a decline in pay for those same jobs.
NELP points out that the bulk of positions that have opened up since the recession have lower wages, come with fewer benefits and — because much of the hiring is done through staffing and temp agencies — lack stability.
While Chinese, Japanese and U.S. car manufacturers have been establishing plants in towns across the South (and have added nearly 350,000 U.S. jobs since 2009), according to NELP, “about 14 percent of auto parts workers are employed by staffing agencies today.” (Parts suppliers cluster near car assembly.) And these workers make less: when it comes to auto parts makers, NELP says, about 29 percent less.
“[Domestic outsourcing] is a type of work that employers are relying on increasingly to separate themselves from their workers to evade responsibility, both legal and moral for certain workplace laws and protections that employees are entitled to,” says Sarah Leberstein, one of the report’s authors.
NELP cites Texas Power Systems, which supplies engines to a Caterpillar plant in Seguin, Texas, as an example of the disparity of the wage gap between direct hiring and hiring done by staffing agencies. Workers hired through an agency make $10.50 and hour. If they are subsequently hired as a direct employee, they are given a whopping $10.75 raise. The wage distribution graph below shows how more than 1.5 million workers make less than $11.91 an hour and more than 600,000 workers make less than $9.60 an hour.
Because the U.S. Census Bureau doesn’t collect data on temporary workers, it’s difficult to ascertain the full extent to which domestic outsourcing has propped up the resurrection of manufacturing in the United States. What is known is that the narrative that manufacturing jobs are “good jobs” creates frenzied competitions with corporate hand-outs thrown around — often in exchange for anemic jobs.
As I wrote last month, there are many flaws in such corporate welfare. For one, most agreements fail to dictate conditions on the quality of jobs created. This metric has one of the most meaningful impacts on workers’ quality of life. “Many [subsidies] require little if any job creation; fewer than half provide any kind of wage standard for the workers in subsidized companies; and fewer than a quarter require any level of health coverage,” the NELP report notes.
“The foregone conclusion is that collectively as a country, we shouldn’t be throwing as much money at manufacturers to locate [in specific places],” says Leberstein. “And if we are going to do that we should hold the companies accountable to what they’ve promised and what the subsidies promise to do, which is to spur economic growth.”
The Equity Factor is made possible with the support of the Surdna Foundation.
Alexis Stephens was Next City’s 2014-2015 equitable cities fellow. She’s written about housing, pop culture, global music subcultures, and more for publications like Shelterforce, Rolling Stone, SPIN, and MTV Iggy. She has a B.A. in urban studies from Barnard College and an M.S. in historic preservation from the University of Pennsylvania.