Why in the world are the taxpayers of Mississippi -- the very poorest in the nation, who are already enduring sharply-increasing economic inequality -- providing $1.33 billion in subsidies to the auto giant Nissan, which raked in profits of $3.3 billion last year?
That question has gained new urgency in the wake of a new study by Good Jobs First, the Washington, DC-based monitor of wasteful corporate subsidies, which examined the state's expenditure of public funds for Nissan's 5,200-worker auto-assembly plant outside Canton, Miss.
First, the study shows that the subsidies to Nissan are far higher than Mississippi officials have admitted up to date. Instead of the $387 million figure used by the Mississippi Development Authority to mislead legislators and the public, the actual size is 3.4 times higher.
While foreign auto firms seeking non-union sites in the South have managed to set off bidding wars among Southern elites, extorting huge packages of incentives from the nation's most impoverished states, the average subsidy for the 12 other foreign-owned auto assembly plants has been $236.6 million.
But Nissan has held up Mississippi for 5.6 times as much, meaning that $1.33 billion will be diverted away from vital needs in strengthening the state's low-achieving educational system and bolstering health care in a state lagging far behind the rest of the U.S. in almost every meaningful measure.
The Nissan subsidies even inhibit the communities near the plant from providing needed school buildings, sewage facilities, and other infrastructure expansions required by the plant.
Perhaps most tellingly, the public "investment" in Nissan is failing to generate the promised high-paying jobs. In the words of Philip Mattera, research director for Good Jobs First, "The State of Mississippi is paying a premium amount for jobs that are far less than premium."
Workers at the Canton plant estimate that about 35% to 40% of the current workforce is temporary workers that Nissan hired through area "temp" agencies and are earning between $9.25 and $12 an hour for the same work performed by full-time Nissan workers. These wages are actually below the already-pitiful prevailing wage averages at the county ($12.88) and state levels ($12.64) in 2001 when preliminary operations started at the plant.
Neither Nissan nor Mississippi officials are taking seriously the automaker's obligations upon which crucial pieces of the massive incentive package are premised. For example, Nissan "should be paying an average of at least $19.70 an hour to [the entire workforce] who are counted toward qualifying" for the lucrative Advantage Jobs program, the report pointed out. Wages at that level, backed up by a union contract, would begin to promote consumer-buying power and start Mississippi's long, steep climb out of its deeply rooted poverty.
While the "temp" workers are especially exploited, the full-time Nissan workers have also been short-changed.
Nissan, despite its study stream of profits, has held wages at about $22 an hour for full-time workers for the past five years. It appears certain that only the massive organizing drive by the United Auto Workers is finally forcing Nissan to promise a pay increase for later this year.
While holding wages down, Nissan has been steadily eroding their value by increasingly shifting health care costs to the workers. The massive flow of subsidies to Nissan produced rising prosperity for the full-time workers and the surrounding area.
The release of the study at a crowded news conference at the state capitol in Jackson produced a predictable response from Mississippi officials. Republican Gov. Phil Bryant mindlessly dismissed it as "just another desperate attempt by big union bosses to scare Nissan's Canton employees."
For its part, the Jackson Clarion-Ledger -- an ardent voice against union rights guaranteed by US law -- carried an editorial column blasting the UAW for shedding "crocodile tears" over Mississippi's development strategy. The hapless editorialist unwittingly affirmed one of the critics' central contentions that the incentives to Nissan were hardly necessary given the firm's vast resources: "The Mississippi Development Authority ... pointed to the fact that Nissan has pumped $2 billion of its own money into the Canton operation in addition to the $1.33 billion incentive package."
Why do profitable corporations like Nissan need such a sizable injection of public funds to leverage its only slightly larger investment in Mississippi?
The Nissan example shows how deeply wedded Mississippi corporate and political elites remain to the failed strategy of bribing corporations to locate in Mississippi in the name of generating jobs and raising the state out of poverty.
Roger Bybee is a Milwaukee-based journalist whose work has appeared in, among others, The Progressive, Z Magazine, Progressive Populist, Extra!, American Prospect, Isthmus, and In These Times, for whom he blogs twice a week on labor issues at workinginthesetimes.com. Bybee edited the weekly Racine Labor for fourteen years.