If we don’t have enough industrial-type jobs, how about using some government money to restart a factory? Create some jobs.
Not necessarily a bad idea, just one that doesn’t work. The problem is (and taking the best case scenario here) government wants to create jobs, while industry wants to make money. The two do not always coincide. Here’s what happened with Saturn and General Motors in Spring Hill, Tennessee. The U.S. government gave GM and other car makers $80 billion, a bailout. GM then turned around and shut down the Spring Hill Saturn plant after nineteen years of operation. The success we were told was that after GM agreed to restart the factory, many of those Spring Hill jobs were expected to go to Mexico but were able to remain in the United States only thanks to a deal that included a second-tier wage scale for new employees. About 700 older workers remained on layoff even as GM hired new people at the lower wage. Pensions were cut, too. Meanwhile, GM had a record profit of $7.6 billion but still owed the taxpayers $25 billion.
Japanese automaker Nissan built a plant in Mississippi, largely because the state gave them $363 million in subsidies, paid out of taxpayer money of course, in hopes of creating jobs. Indeed, Nissan claims never to have laid anyone off at their car plant. The problem is that more than a quarter of their workers are employed by temp agencies and laid off at will, but by the temp agency, not Nissan, with its clean hands. The workers say in eight years they have never seen a temp promoted to full-time status, with benefits and higher pay.
Sometimes the idea just doesn’t connect. Detroit is one of our poorest cities, a burnt shell that once was the highest peak of America’s industrial mountain. In 2007, Marathon Oil was given a package of tax breaks, the largest in Detroit history, $175 million, to encourage it to expand a refinery. Along with the expansion, the company promised jobs for local residents. They did add about 200 jobs at the refinery, but almost none of them went to people from Detroit. Fewer than six percent of Marathon’s workers at the refinery– representing only 15 jobs– live in the city. The company said “certain difficulties and challenges and obligations” required them to bring in out-of-towners to work the jobs Detroit paid for.
Next in this series: Aren’t People Actually Quitting Their Full-Time Jobs to Get Cheaper, Subsidized Health-ObamaCare?
(c) Peter Van Buren, 2014
Image via http://en.wikipedia.org/wiki/Great_Depression