Monday, July 24, 2006

Gazette: Corporate Welfare's "Cool"

This morning's (July 24) Gazette includes among its "Homers" and "Gomers" features this "Cool Announcement" as one of its "Homers: What's Going Right":

"COOL ANNOUNCEMENT: Locations in other states and Mexico were considered, but Iowa's Middle Amana Whirlpool plant has landed an $11 million expansion to meet consumer demand for bottom-freezer models. A good relationship between the plant's management and the Machinists Local 1526 played a key role in bringing 438 new jobs to Eastern Iowa instead of elsewhere. State incentives worth $7.3 million and local incentives worth $1 million were also essential to persuading Whirlpool to expand."

"Homers: What's Going Right; Cool Announcement," The Gazette, July 24, 2006, p. 4A.

Where to begin?

OK, I'm happy for the 438 employees, and whatever impact they and their wages may have on the economy of Eastern Iowa in general and the Amanas in particular. I'm strongly in favor of employment.

But, "new jobs"? How quickly we forget. It was scarcely two months ago that we were reading, "Whirlpool announced Wednesday it would close the laundry factory with nearly 1,000 workers and the Maytag corporate headquarters with about 900 employees late next year." See, e.g., Associated Press, "Iowa Loses Maytag Jobs," Quad City Times, May 11, 2006.

Unless my math is off, shouldn't the Gazette's "Homer" have been headlined, "Whirlpool Cuts Its Contribution to Iowa's Unemployment from 1900 to 1562 Jobs"?

And "landed an $11 million expansion"? Again, you can question my math, but an $11 million project, for which Iowa taxpayers have paid $8.3 million, and Whirlpool has paid $2.7 million, looks to me more like a $2.7 million than an $11 million contribution to the Iowa economy. What the heck, if generous taxpaying Iowans would build me an $11 million plant I'd be willing to build refrigerators here.

Locations in other states and Mexico were considered"? "Considered," or used as a negotiating gambit? "Gee, if they're considering paying Mexican workers $2.00 an hour to make these refrigerators, how much can we realistically ask for in wages?"

What is this "good relationship" between Whirlpool and Machinists Local 1526 going to cost those who possess these "438 new jobs"? What are their hourly wages, health care and retirement benefits? How do they compare to union members elsewhere around the United States? Does this "good relationship" represent a negotiated reduction below what the Machinists usually get, or initially asked for? Does the corporate welfare sacrifice of Iowans take the form of lower pay as well as higher taxes?

Were either of these sacrifices "
essential to persuading Whirlpool to expand"? Would the expansion not occur "but for" this financial contribution? Remember, this was the same Whirlpool that turned down Governor Vilsack's generous offer of $100 million of Iowans' tax money to build a washing machine factory in Newton. So $100 million wasn't enough to be persuasive, but now $8.3 million is? That doesn't compute.

How much of this decision by Whirlpool is just a part of its public relations and marketing efforts? Iowans buy washing machines and refrigerators, just like everyone else. A lot of Iowans were plenty pissed when it chose to close down Maytag in Newton, and were willing to boycott the company -- as, if not the only, at least an effective way to express their displeasure. Is this an effort to win them back?

There's a lot of hand wringing about keeping our children in Iowa. It's not just about "jobs." It's about jobs that pay a "liveable wage," enable a young person (or couple) to buy a home, raise children, send them to college (with ever-escallating tuition), and enjoy some of the pleasures of life. Iowa remains in that shameful category of states that won't even raise their minimim wage above the federal $5.15 hourly rate. The rest of the state's salary scale reflects this approach -- except for football coaches. One of the quickest, easiest things we could do to keep Iowans' children in this state is to pay them.

How will this 438 Whirlpool jobs measure up by this standard? Are they an effort to drive down pay to the lowest possible level for this type of skilled labor, or will they offer an incentive to our high school and college graduates who are considering whether to leave home or stay?

A "Homer"? Well, maybe.

1 comment:

Anonymous said...

In michigan, we know why the math doesn't compute--it's because the governor here apparently promised Whirlpool a beautiful, valuable park on lake michigan.
But maybe they wish now they opted for Newton instead of Michigan.