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Working In These Times

Friday, May 24, 2013, 12:16 pm

Mississippi Lavishes $1.3 Billion in Subsidies on Nissan as Workers Get the Shaft

BY Roger Bybee

Student Justice Alliance members rally outside the State Capitol in Jackson, Miss., during a Good Jobs First press conference on May 17.   (Photo courtesy of Do Better Nissan)

Thirteen years after Japan-based automaker Nissan chose the small, impoverished community of Canton, Miss., as the site of a new auto-assembly plant, a just-released study shows that the company is failing to deliver on its promise of high-wage job creation in Mississippi—while at the same time draining the state of revenue used to pay for a massive package of subsidies.

According to a study released on Friday by the Washington, D.C.-based research group Good Jobs First, the citizens of Mississippi—which ranks dead last among U.S. states in median household income—are bestowing an estimated $1.33 billion in subsidies on Nissan over a 30-year period for the privilege of hosting the factory. 

“This is the largest incentive package that we have encountered in the auto industry,” declared Philip Mattera, research director of Good Jobs First and co-author, with Good Jobs First research analyst Kasia Tarczynska, of the report, titled “A Good Deal for Mississippi?” (The costs of the study were financed by the United Auto Workers, which is a sponsor of In These Times.)

The Mississippi subsidies, as calculated by Good Jobs First, are 3.4 times as large as the $387 million figure claimed by the state Economic Development Authority (EDA) in an April 4 e-mail to Working In These Times. The average subsidy package for 12 other new auto-assembly plants across the South is $236.6 million, In These Times estimates (see box at bottom).

“Our report raises the question of whether the Legislature, media and public were given an accurate account of what the cost of the package would be.” Mattera stated. 

Meanwhile, the report shows that Nissan is failing to meet its end of the bargain with the state in providing high-wage jobs, even as the company continues to be a highly profitable firm, earning $3.3 billion in 2012.

Mississippi EDA officials have claimed that subsidies to Nissan have resulted in jobs and tax revenues for the state, and Gov. Phil Bryant dismissed the study’s results as “just another desperate attempt by big union bosses to scare Nissan’s Canton employees.”

But Mattera said that the Good Jobs First report took a much more comprehensive look at the wide array of taxpayer-funded “incentives” provided to Nissan, and also provided a close-up perspective of the quality of jobs being created by Nissan.

“Mississippi is paying a premium amount for jobs that are far less than premium,” he warned.

According to the incentive package to which Mississippi and Nissan agreed in 2000 and modified as Nissan added more jobs, Nissan jobs were to start at a minimum of 125 percent of the state or county average—whichever was lower—before rising to 150 percent of the average in the surrounding county.

But “[s]tate auditor reports did not address the issue of wage rates,” the Good Job First report notes critically.  With no monitoring, Nissan’s wages initially started at $13.25 an hour for the first two years of employment as preliminary work at the plant began in 2001, only slightly above the state average of $12.64 or the Madison county average of $12.88.

Pay for full-time workers has stagnated at around $22 an hour over the past five years, although Nissan is promising an increase later this year. However, the overall wage average is pulled down by the large contingent of part-timers making $9.25 to $12 an hour. These workers, hired from temporary agencies rather than Nissan itself, now comprise 35 percent to 40 percent of the Canton workforce, according to worker estimates.

To be eligible for the “Advantage Jobs” tax break which Nissan has been enjoying, Nissan “should be paying an average of at least $19.70 an hour to workers who are counted toward qualifying” for the lucrative program, the Good Jobs First report states.

“The report also raises the question of whether the subsidies actually made sense, both in what the state can afford and the kind of jobs that are being provided, particularly in terms of temps,” said Mattera. “Clearly the temporary jobs are sub-standard.”

Mattera delivered the study’s powerful findings at a news conference at the State Capitol in Jackson attended by Nissan workers seeking representation by the United Auto Workers, the clergy-led Mississippi Alliance For Fairness at Nissan (MAFFAN) and a large contingent of student leaders from historically-black colleges across the South who were unsuccessfully seeking a meeting with Nissan officials in support of allowing the UAW equal access to the workers inside the Canton plant.

The report caused ripples across Mississippi because it comes in the midst of an unprecedented effort by the United Auto Workers to organize about 5,200 workers—about 80 percent of whom are African-American—at Nissan’s assembly plant. The union drive, drawing upon Dr. Martin Luther King’s fusing of labor rights and human rights, is gaining wide national and international attention through the efforts of the UAW, as well as prominent allies such as actor Danny Glover and former Brazilian President Luis Ignacio “Lula” da Silva.

Meanwhile, Nissan has been waging an intensive anti-union campaign inside the Canton plant, even while it works constructively with unions in Japan, Brazil, South Africa and many other nations. For much of the workforce and surrounding community, Nissan’s intransigent stance against union representation in Canton is perceived as yet another familiar form of “second-class” treatment reserved for poor and working-class Mississippians, especially African Americans. The Nissan plant is sited in a region where the deadly violence of white segregationists against civil rights activists in the 1960s, and longstanding economic inequality, have left the issues of economic and social justice tightly intertwined.

“The concern of people across Mississippi,” says Mattera, “is whether the state is getting everything it should be getting, and is Nissan living up to its moral obligations?”

 “We are happy Nissan operates in Mississippi,” explained John C. Allen, associate minister at Canton’s Buckhorn Missionary Baptist Church, at MAFFAN’s news conference. “We aren’t against subsidies,” provided that the working people of Mississippi genuinely benefit from high-wage jobs and the right to a fair process on union representation at Nissan.

 “But we’re glad this issue has come to light,” Allen said. “This community built Nissan, but Nissan does not build this community.”

Roger Bybee is a Milwaukee-based freelance writer and University of Illinois visiting professor in Labor Education. Roger's work has appeared in numerous national publications, including Z magazine, Dollars & Sense, The Progressive, Progressive Populist, Huffington Post, The American Prospect, Yes! and Foreign Policy in Focus. More of his work can be found at zcommunications.org/zspace/rogerdbybee.

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