Pork Chop “Progress”

originally published August 22, 2007

A recent Flagpole piece on the Athens-Clarke County Economic Development Foundation [City Pages, Aug. 8] got me to thinking about how challenging it is to recruit new industry compatible with local needs and circumstances. Much - although perhaps still not enough - has been said about the economic disparities that lurk beneath the serene and appealing surface of this community where the percentage of people living in poverty is actually more than 40 percent higher than the state average, but unemployment is roughly 20 percent below the statewide mean. Incongruous as it may seem, the “working poor” are often a sizable presence in college towns, where universities and other employers need little bait on the hooks they dangle into a captive pool of faculty and student spouses and an assortment of hangers-on addicted to the local lifestyle and ambience. Anyone who imagines that education-oriented university communities are insulated from the vulgar realities of supply and demand need only consider that, according to the last full accounting I can find, on average, only 22 of Georgia’s 159 counties pay their teachers less than Clarke County does.

Given the drag effect of large numbers of relatively low-paying university staff jobs and the relatively high concentration of private employment in the low end of the service sector, it’s hardly surprising that only in Valdosta are Georgia’s metropolitan area production workers likely to earn less than they do here. That said, at $12.04 per hour, a typical such local worker is positively in the chips compared to a local cashier pulling down a whopping $7.57 per hour. As the folks over at EDF seem to understand, our need here is not so much more employment opportunities, but better ones that will ultimately pull local wage scales up rather than hold them down. Unfortunately, however, such jobs are most likely to be found in manufacturing, and needless to say, they are not exactly plentiful in these days of oversized executive salaries and downsized factory payrolls. Nor is our community the only one caught up in what is a fiercely competitive scramble to snag as many of the increasingly scarce new jobs as possible, sometimes, it seems, irrespective of the costs.

A Dixiefied Club

The $920,000 in tax “forgiveness” bestowed locally on SKAPS Industries over the next 20 years hardly seems worth mentioning compared to the hundreds of millions of dollars being tossed at some larger prospective employers these days, but before we go farther down this road, we might want to consider where it can lead. Georgia’s most recent high-stakes foray into the industrial bidding wars came just last year when state officials announced that a new Kia automotive assembly plant would be built over in Troup County at West Point. The facility is supposed to employ at least 2,500 people, meaning that the announced incentive package totaling $410 million in state and local concessions works out to $164,000 for each job, slightly less per worker than Alabama offered Mercedes to open a plant near Tuscaloosa way back in 1993. Still, when the Kia deal was announced an Atlanta Journal-Constitution writer gushed, “Georgia joins the club of southern states enjoying the investment and prestige that foreign automakers like BMW, Hyundai and Nissan have brought to the region over the past 15 years.”

Some club! Its highest roller is Alabama, whose $800 million in cumulative generosity to Mercedes, Hyundai, Honda and Toyota over the last 14 years seemed absolutely extraordinary until its recent announcement of a single $811 million fork-over to German steel giant ThyssenKrupp AG doubtless made the quartet of carmakers feel downright unloved. Running a distant second to Alabama, but determined to catch up, Mississippi has dumped a combined $660 million on Nissan and Toyota over the last seven years. Need I point out that, despite their industrial conquests, Alabama and Mississippi remain the states for which Georgians concerned about their own state’s image continue to thank God?

Want to know one of the big reasons why? When, as part of a $295 million show of hospitality, Mississippi ponied up $80 million in 2000 just to train workers for Nissan’s assembly plant near Canton, the cost per employee came out to more than four times the state’s per-pupil expenditures in K-12. In 1995, only a threatened lawsuit by a teachers’ group prevented Alabama Governor Fob James from raiding the state’s school fund for some of the remaining money needed to make good on Alabama’s promises to Mercedes, which included buying $75 million worth of new vehicles from the company for state use. Six years later, Alabama cut $266 million from its education budget before serving up $318 million in incentives to Hyundai and Honda. Just in case you’re wondering, when Alabama opened the floodgates with its $253 million payoff to Mercedes in 1993, the state ranked 41st overall in teachers’ salaries. 14 years later, it ranks 47th. Mississippi, meanwhile, maintains its almost proprietary grasp on 50th.

The Ugly Kid’s Game?

Georgia’s $20 million investment in training Kia’s workforce pales in comparison to what Mississippi did for Nissan, but it’s worth noting that the average Kia worker is projected to earn $50,000 annually. As close as I can figure, in order to make that much, a teacher in Troup County would need about 10 years of experience plus a master’s degree. Would it surprise you if some local would-be teachers opt for the line at Kia instead?

Teachers aren’t the only Troup Countians who stand to come out on the shorter end of the Kia deal. Developers and politicians love to brag about how many new jobs they’ve created with their subsidies, but I have yet to hear one mention how many jobs are actually lost as established employers simply pack it in because they can’t maintain a stable workforce as their employees head off to greener pastures fertilized heavily at taxpayer expense. Kia, for example, has received both a 15-year, $130-million property tax abatement and a promise of $21 million in expanded and improved local infrastructure, the bill presumably to be footed by those whose employees they are taking away as well as those whose property taxes will have to be jacked up in order to make up for what Kia isn’t paying and won’t be for quite a while.

There is no denying that subsidies to business and industry can produce some economic benefits. Still, like many quick-fix drugs that appear to work wonders in the short term, the practice of buying jobs can prove highly addictive and downright unhealthy over the long haul, especially if state and local leaders are reluctant to invest more of the benefits of economic development in human and community development. As I suggested a while back on my website, www.cobbloviate.com, instead of cashing in on some of these gains in order to make their state or town something more than the equivalent of the ugly kid whose parents have to hang a pork chop around his neck to get the dog to play with him, too many of the champions of industrial giveaways in Alabama, Mississippi and elsewhere are simply resorting to bigger pork chops.

James C. Cobb