The citizens of Mississippi--the poorest state in America--have bestowed $1.33 billion, the richest subsidy ever in the auto industry, to highly-profitable Nissan--even though Nissan is failing to provide the required number of high-paying jobs required in the deal with the state.
Nissan built a new auto assembly plant just outside Canton, Miss., beginning production in 2003, with a total investment of $2 billion including recent additions. The state, in its effort to nail down Nissan's decision, came up with $1.33 billion in total incentives, according to a new study by Good Jobs First, a Washington, DC -based group that monitors subsidies.
But Nissan has not held up its end of the bargain, according to Good Jobs First. Instead of the plant-wide wage average of $19.50 promised by Nissan, the automaker has created a workforce of about 5,200 that includes 35% to 40% temporary workers earning just $9.25 to $12 an hour. The workers are hired through area temporary job agencies.
With this prevalence of low-wage jobs, Mississippi taxpayers are hardly getting a good deal relative to their massive giveaway to Nissan. To secure Nissan's $2 billion investment and the promise of thousands of high-paying jobs, Mississippi provided a variety of subsidies worth fully 65% of what Nissan itself has shelled out for the plant and equipment. This is a stunningly high ratio even by corporate-cozy Southern standards.
The states of the old Confederacy have been extremely generous in handing out massive subsidies from their low-income taxpayers to the 13 foreign-owned auto assembly plants scattered from South Carolina to Texas. But the typical incentive package for the 12 other plants has been far lower than the subsidy Mississippi has handed to Nissan, at a comparatively modest average of $236.6 million. The Nissan plant in Canton thereby cost the state 5.6 times the average doled out to profitable auto firms in the other instances.
Mississippi's desperation for good jobs is understandable to a certain degree, as it has long remained dead last in income among the 50 states. Mississippians' earning have been held down by factors such as low educational attainment--the product extremely paltry spending on public education in the US-- and "right-to-work" laws that enable employers to break up unity within existing unions and hire only anti-union workers.
With a unionization rate of just 5.6%, Mississippians' median household income for 2011 was just $36,919, a mere 73% of the national median. Mississippi seems shackled to the nation's most severe poverty, afflicting 22.6% of all residents and 32% of children--highest in the nation. (The poverty rate in the US is 15.9% overall and 22% for children).
The low earning of Mississippi workers contribute to the fast-growing income gap between the richest 5% and the rest of the population. The top 5% of Mississippians earn 13.9 times as much as the bottom 20% and 4.9 times the incomes of the middle 20%, according to the Center on Budget and Policy Priorities.
The creation of thousands of high-paying auto jobs served as a powerful rationale for the incentive package granted to Nissan zipping through the State Legislature, at a point when the total cost to taxpayers was estimated at a much smaller $295 million.
But the actual total of the subsidies has been far higher than the $387 million figure now used by the Mississippi Development Authority to include tax breaks and incentives on plant expansion. Mississippi and local public entities have provided $491 million in cash expenditures and given up some $842 million in lost tax revenues.
After the $1.3 billion figure was released at a news conference the State Capitol in Jackson, Mississippi Gov. Phil Bryant tried to shift the spotlight way from the enormous subsidy to Nissan by claiming that Good Jobs First's calculations were aimed only at assisting the United Auto Workers' organizing drive among Nissan workers. Bryant called the startling new subsidy estimate "just another desperate attempt by big union bosses to scare Nissan's Canton employees." Bryant's claim that the union is using a "scare" tactic is highly ironic, coming at a time when Nissan managers are frequently warning workers that a unionized plant would result in Nissan shutting it down.
The union and its supporters in groups like the Mississippi Alliance for Fairness at Nissan are calling upon Nissan to establish a genuinely democratic atmosphere for a union-representation election. The UAW and MAFFAN, including US Rep. Bennie Thompson, argue that a fair election can take place only when Nissan drops its threats of closing the plant and allows the union an equal opportunity to present its case to the workers.
Many workers at Canton, 80% of whom are African-American, have grown weary with Nissan after a five-year wage freeze, increasing assembly-line speeds, cuts in medical benefits, and a lack of any voice on the job. Given Nissan's power as a multinational corporation that earned $3.3 billion in profits last year, the UAW has reached out to Nissan workers in Japan, Brazil, South Africa--all of whom the corporation allowed to form unions without the kind of intimidation and incessant anti-union messages Nissan is using in Canton. The unionization drive has also been ardently supported by prominent figures like actor Danny Glover and former Brazilian President Luis Ignacio "Lula" da Silva.
The campaign at Canton--not far from the site of NAACP leader Medgar Evers' assassination in 1963 and the torture and killings of three civil rights workers in 1964--has also re-kindled a crusading spirit among students at historically African-American colleges across the South. The students are drawn by the campaign's fusing of economic rights and human rights, a message that became increasingly important in the last years of his life.
The new disclosures about the true size of Mississippi's incentive package to Nissan--the corporation's failure to meet its obligations -are likely to add new fuel to the union campaign, which is increasingly assuming national and international dimensions.
Mississippi, which Good Jobs First research director Phil Mattera noted was "the birthplace of state-legislated job subsidies" in the 1930's, triggered a fierce interstate competition for jobs that costs the 50 states an estimated $80 billion annually in handouts mainly to large corporations in the name of securing or attracting jobs--a practice that often proves fruitless in retaining footloose corporations constantly seeking to maximize profit.
The Nissan case again illustrates the futility of this strategy of throwing money at corporations in the name of job creation. The corporations feel free no pressure to honor agreements with public authorities, as pro-corporate public officials are all too eager to ignore corporations' indifference to job-creation goals, and instead claim credit for any jobs that result.
Meanwhile, taxpayers of the poorest state keep shelling out hundreds of millions to a profitable corporation while it produces a high percentage of jobs which keep so many Mississippians trapped in dire poverty.
CORRECTION: This post originally misstated the last name of Mississippi Gov. Phil Bryant.
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