Leading Off: Tax Dollars For Workers, Or For Profitable Companies?

In our last issue, we touched on the question of the poor use of public money when it comes to economic development, which obviously is at the heart of how to clinch a “high bar” Just Transition for workers—without economic development that values good-paying jobs, Just Transition is an empty slogan.

We want to come back to this with a little more in-depth exploration of the electric vehicle (EV) industry courtesy of an important report and study entitled, “Will EVs Create Budget Potholes for States? Economic Development Megadeals for Electric Vehicle and Battery Factories” published by Good Jobs First, a non-profit focusing on… you guessed it, good jobs. Though it specifically focuses on the U.S. subsidy market, the key questions raised are relevant in every country.

We’re going to focus just on a few aspects here that inform our mission.

First point: we should be very skeptical about the promises, absent hard data and in-writing commitments, of jobs in return for any subsidies. As this report points out, the EV industry will likely reduce overall jobs:

The most significant cut in parts jobs will occur in manufacture of drive trains (i.e., engines and transmissions). The Congressional Research Service (the research arm of the U.S. Congress) reports that almost 150,000 U.S. workers make parts for internal-combustion drive trains, and that those drive trains each contain an estimated 2,000 parts. By contrast, the CRS notes, Tesla says its cars have 17 moving parts in their drive trains.

Here are some of the major types of parts that EVs do not require:

• Internal-combustion engines and transmissions and the extremely varied parts that go into them (castings, stampings, ignition, controls, sensors)
• Fuel tanks, lines and pumps
• Exhaust systems (mufflers, catalytic converters, tailpipes)
• Carburetors
• Alternators
• Oil pumps and filters
• Starter battery and ignition systems

While EVs still need tire, brake pad, suspension component, and windshield wiper replacements, their maintenance-labor requirements are lower, including little engine maintenance and of course, no engine-oil servicing. That means less future work for auto garages.

We are not here to argue that the EV industry should cease to exist. Rather, we have to pay close attention to the level of support promised to workers who will lose their jobs through decarbonization and, especially those in the current auto manufacturing sector, are likely to find a far slimmer cache of jobs in the EV industry than the rhetoric suggests. A future jobs shortage inherently should mean, in a “high bar” Just Transition environment, far more money being made available to fully make up for lost incomes.

Second point: in many of the pitches to get tax breaks and other subsidies, companies overstate, obfuscate or mislead the wage benefits offered. The case of Rivian is instructive. It landed a $5 billion investment promise from the state of Georgia. But, the wage promises in reality are slippery compared to public statements, per the report:

For example, although the contract does hold Rivian to the goals of $5 billion invested and 7,500 new jobs (with modest penalties for substantial shortfalls), its only job-quality requirements are a $20 per hour wage floor times 35 hours per week.

That annual wage floor of $36,400 is almost $20,000 below the announced average wage level of $56,000. And it has no escalator provisions (required wage increases) during either the seven-year build-out or the 25-yearanticipated lease, so Rivian could pay $20 an hour in 2046 and still be compliant.

Greg Leroy, the founder and long-time executive director of Good Jobs First, told us that he surmises that, “the state suggested touting the $56K figure to deflect criticism. The lack of a cost of living inflator is also scandalous especially in a time of higher inflation.”

Third, and finally, we continually emphasize how important unionization is when it comes to Just Transition. To, again, state the obvious: where workers have union representation, they are more likely, through collective bargaining, to be able to put on the table and secure a set of transition standards that are closer to a “high bar.” The problem is that unions are being undercut. This is certainly true in the U.S. and especially true if one looks at the EV

Because of the lack of unionization among foreign-nameplate auto-assembly factories in the United States, and because Tesla is non-union, it is possible that, absent labor-law reform or these companies ending their opposition to workers organizing, auto worker wages may stagnate. [emphasis added]

And:

If their anti-unionism persists, and these foreign producers keep gaining market share at the expense of the unionized carmakers (General Motors, Ford and Stellantis) the auto industry’s downstream ripple effects will likely shrink as EVs gain market share.

The difference between top-tier union wages and benefits versus non-union pay levels can determine whether a family can own or improve a home, buy appliances, travel, dine out much, pay for higher education or save for retirement. Those spending activities — and the state and local taxes they generate — create
more downstream jobs.

The report’s charts in the flip-book below illustrate the challenge: the vast majority of the subsidies connected to jobs are found in states that are strongly anti-union and, perhaps obviously, where the unionization rate is quite low even by the overall weak national union coverage rates.

In sum, there needs to be a society-wide cultural and ideological shift in thinking about how to evaluate jobs with an eye to moving workers from fossil-fuel industries to alternative future industries. Jobs are not automatically good jobs—and we shouldn’t be throwing money at profitable companies who are not investing in a “high bar” economy and a “high bar” Just Transition.

SPONSOR MESSAGE

A message from the Maritime Union of Australia

The MUA is proud of the high union density in the maritime industries, and encourages all maritime workers to join the union to benefit from the solidarity and collectivism that unionism brings. Learn more about our campaigns on behalf of maritime workers here.

Spotlight: Australia Advances On Just Transition

Why is there a modicum of optimism that a solid Just Transition for workers will emerge from this effort? To begin, the taskforce is anchored in the office of Prime Minister Anthony Albanese, giving it the kind of heft it needs; it includes the Treasurer, and the ministers overseeing Resources (Madeleine King), and Climate Change and Energy (Chris Bowen).

As we’ve pointed out in the past, a “high bar” Just Transition is only possible in societies in which unions have significant leverage and can negotiate, either through collective bargaining and/or political power, the kinds of income support needed. Australian unions have strong leverage in the private sector.

Another member of the taskforce is Brendan O’Connor, the minister for Skills and Training. O’Connor steers the ship when it comes to the scope of retraining workers—which we maintain has been largely a failure across the globe. O’Connor is guiding the implementation of a federal-state, free blitz of 180,o00 vocational education classes across Australia in 2023 through the country’s TAFE system (TAFE=Technical and further education), focusing on what are seen to be growth industries: care (aged care, childcare, health care and disability care), technology and digital, hospitality and tourism, construction and agriculture. Of course, the caution flag has to be waved here: wages are the key here, not just jobs.

There is some hope that when standards are set for Just Transition, Australia will opt for schemes that edge closer to the “high bar” we advocate for here. Oz already stands out as a place where wages and benefits are healthy, and that’s relative to other advanced economies.

One of the big questions will be: what kind of governmental body emerges from the taskforce to carry the work? Will it be an independent authority or an agency that exists inside the government? Stay tuned.

Ideas: Setting Standards For Job Creation

It has always been a challenge throughout the globe to set minimum standards for jobs. The competition for jobs by communities can be fierce, setting one community against another.

Here’s an idea promoted by Jobs to Move America, a non-profit policy and organizing center: a tool—the U.S. Employment Plan—that embeds high quality in any bids for publicly-financed projects. It has three basic pieces (the emphasis in bold has been added):

• Proposal tool: language that can give transportation equipment manufacturers the opportunity to earn extra credit in the bidding process by proposing the creation and/or retention of a proposed number and quality of U.S. jobs supported in connection to a contract, facilities, and commitments to hiring workers facing multiple and significant barriers through recruiting and training efforts.

• Evaluation tool: provides a system of voluntary price credits and/or a scoring method to help public agencies to evaluate the quality of proposals submitted in response to a request for procurements.

• Compliance & implementation tool: contract and enforcement language that ensures transparency and accountability for U.S. jobs, hiring and training commitments on a contract.

It seems clear that tools like this one would go a long way to ensuring high quality jobs, at least in public projects, and, thus, advance the idea of “high bar” Just Transition since workers would know they were going into a new, more secure, quality job with clear information about wages to be paid.

Opinion: Retraining Plans Should Be A Family Affair

By Jonathan Tasini

Retraining, or re-skilling, has generally been a failure over the past four decades. Almost all retraining schemes lack the kind of funding needed and, too often, workers are pushed into retraining frameworks that don’t match up with the real job market.

At heart, the problem is the underlying philosophy of re-training—the efforts are mostly political, designed to tamp down controversy rather than restructure economic systems that lead to job losses. We see a very significant problem: retraining is too often viewed through the lens of the participation in a program by one worker, which ignores how retraining influences an entire family.

Here is a very specific example: let’s say a retraining program requires a laid-off/unemployed worker to show up at a class or site ten hours a week for ten or 12 weeks, and that participation requires significant travel to and from the training location (not an unrealistic assumption in geographically spread-out communities). But, when a worker is pushed out of a job and, then, ceases to be a breadwinner for her/his family at a full-time income, it’s entirely possible that that would force a spouse/partner into the job market.

What, then, happens to childcare in a home? Who will provide childcare when a worker is required to show up for a class? Roughly 350 million children in the world lack proper childcare. UNICEF points out that, within the OECD and EU, “Luxembourg, Iceland, Sweden, Norway and Germany rank the highest on childcare provisions among high-income countries. Slovakia, the United States, Cyprus, Switzerland, and Australia rank the lowest.”

The point is: policy makers who are calculating the cost of retraining have to have a much broader field of vision. Funding has to be hefty enough to make it actually possible for a worker to take part in retraining—and, to date, the individual allocation for a worker is quite miserly. Let’s make it really affordable by putting in the equation the full costs a worker bears.

Tasini is the founder and executive director of Just Transition For All.

Links

Good Jobs First: The Washington, DC-based nonprofit remains the nation’s premiere organization tracking the use of state and local economic development subsidies and chronicling corporate misconduct.