L.A. (that would be Lower Alabama) has been pretty much atwitter since the announcement a few days ago that ThyssenKrupp, A.G., a German steel firm, would open a huge facility near Mobile that would employ some 2,700 people. How did Alabama officials secure the affections of this European mega-employer? They paid for them, of course, with an estimated total concessions package ultimately worth a conservatively estimated $811 million. By way of perspective, that’s a shade over $300 grand per job, a figure that makes the $167,000 per job initially given Mercedes for its agreement to open a plant in Tuscaloosa, Alabama in 1993 seem almost insulting by comparison.
As escalating interstate competition for new payrolls has steadily upped the antes, the scenario for these job-buying extravaganzas has become nothing short of a ritual. For example, ThyssenKrupp’s representatives will deny that it was the size of the subsidy that turned their heads or that they used their flirtation with another state to wheedle a monster giveaway package out of Alabama. (In other words, they really were seriously thinking about building a plant in that Louisiana swamp.) Meanwhile, Alabama developers and assorted politicos will pat themselves on the back for creating 2,700 new jobs and trot out an economist or two to estimate the incredible economic multiplier effect that is sure to come as a result.. The assumption here always seems to be that everybody who goes to work for the new plant was out of work at the time, when, in fact, a sizable percentage of the new plant’s work force will probably be leaving their old jobs, many of them with small employers who have never seen a subsidy and can’t compete with the heavily underwritten newcomer’s wages and benefits package.
One of these days, I hope somebody will try to calculate how many old jobs are simply lost as established employers simply pack it in when they find they can’t maintain a stable work force after their current employees head out to ThyssenKrupp or other “greener pastures” that have been fertilized heavily by state incentives at taxpayer expense. Aggregate employment figures will doubtless still show net local growth, but claims that landing ThyssenKrupp will offset heavy job losses due to textile and apparel plants shutting down elsewhere in Alabama are a bit misleading. In the perfectly market-driven world, this might be true, but how many of the 200-plus workers who will be laid off by Vanity Fair later this year in Monroeville, Alabama will actually be able to pull up stakes and move 80 miles or so down the road to claim one of the slots at Thyssenkrupp? Things like age, family obligations, and non-existent real estate markets in deindustrializing areas tend to make migration to a new location with better opportunities a little more complicated than a simple dollars and cents calculation for lots of folks.
Alabama officials made it a point to assure everybody that Thyssenkrupp was not exempt from paying school taxes. That’s something, I suppose, but after locals get through footing the bill for all the new infrastructure and such that the new plant will require, I doubt that they’ll be too receptive to any liberal do-gooder’s entreaties for a greater investment in public education anytime soon. As he hailed the ThyssenKrupp announcement, Alabama senator Richard Shelby reportedly observed that it was now up to the state to provide a better educated work force, including scientists, mathematicians, and engineers, necessary to attract even more ThyssenKrupps. Fat chance. Has the good senator taken a gander at the math proficiency scores of Alabama eighth graders, who, according to the most recent stats available, bested only their counterparts in D.C. and Mississippi the last time out?
In the past, Alabama’s leader’s have not proven particularly squeamish about shortchanging education in order to keep their new corporate benefactors happy. Only a threatened law suit by a teacher’s group kept Governor Fob James from raiding the state’s school fund reserve to pay off a $43 million obligation to Mercedes back in 1995. In fairness, there is some evidence of increased support for public education since the state started buying big time industrial plants like Mercedes, Honda, and ThyssenKrupp. Alabama sat at 47 in state rankings of per pupil expenditures in 1993, and the most recent figures available show that by 2003 it had shot all the way up to 44. By the same token, however, the state’s ranking in teacher’s salaries has actually slipped from 41 to 47 since 1993.
There’s no doubt that Alabama’s aggressive subsidy program has resulted in a net increase in jobs and wages in the last decade or so. Yet, like their counterparts throughout not only the South but much of the nation, instead of cashing in on some of these gains in order to make their state something more than the equivalent of an ugly kid who has to wear a pork chop around his neck to get the dog to play with him, Alabama officials are simply resorting to bigger pork chops.
