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Cheap American Labor

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Dothan Mayor Mike Schmitz (left) and Lian Ning (center) gesture with Schmitz's signature go-go-go sign after announcing that his company, Nanjing Zijin-Lead Electronics, would open a small 3D printer manufacturing facility in Dothan during the U.S.-China Symposium inside the Dothan Civic Center on Friday.
Dothan Mayor Mike Schmitz (left) and Lian Ning (center) gesture with Schmitz’s signature go-go-go sign after announcing that his company, Nanjing Zijin-Lead Electronics, would open a small 3D printer manufacturing facility in Dothan during the U.S.-China Symposium inside the Dothan Civic Center on Friday.

It’s hardly surprising that if American companies are scouring the globe looking for the cheapest and most easily exploitable labor possible that Chinese companies would do the same within the United States when it is in their interests to do so. This story of how Alabama gave a ridiculous package of tax breaks and benefits to a Chinese company in order to draw low-wage work with no chance of advancement is quite depressing.

To help push the deal, Alabama Gov. Robert Bentley (R) dined with Li. Company executives visiting the region were greeted with imported Chinese tea and Mandarin video messages. Alabama’s state workforce team explained how, if chosen for the job, they would visit Golden Dragon’s Chinese headquarters, study the process, and make videos and training courses for the new U.S. employees. In Alabama, Golden Dragon wouldn’t pay taxes for 20 years; it would get free roads and land.

Alabama also did something no other state was willing to try: Its legislature passed the “Made in Alabama” act, a tailored law that allowed the state to reimburse Golden Dragon for several prior years of tariffs. A version of the law had first been drafted by Cheng and a lawyer, according to Cheng and a lawmaker who sponsored the bill.

Ultimately, the company was given the choice of the reimbursements or an extra $20 million in cash. Golden Dragon chose the cash.

All told, according to interviews and documents reviewed by The Washington Post, Golden Dragon received subsidies worth some $200 million — the bulk of it in local and state tax abatements, plus the cash, $5 million in land and road costs, and nearly $2 million in worker training. County leaders say they had little choice: They had spent years trying to lure companies, reaching out unsuccessfully to more than 100. Even Golden Dragon only settled on Wilcox after a site in a neighboring county proved too small.

The problems here are multiple. First, if the poorest counties in the country are giving these tax breaks, that means that there are no taxes to improve the reasons why the counties are so poor to begin with–poor education, underdeveloped infrastructure, under-trained workforce, etc. Second, the workers, as this article explains in good detail, simply cannot live middle-class lives with these jobs. They barely make enough money to survive. The promises of the Asian companies that this will benefit the states and the workers aren’t proving out. These jobs are better than unemployment–but they aren’t that much better. These jobs don’t build hope and they don’t build a future. The county is no better off than before.

Given that it’s Alabama, I’m amazed that the workers voted to form a union–but it passed by a single vote, giving the company little reason to take it seriously and it has naturally dragged its feet. Good luck to them. But as a whole, this is no way for Alabama to build up its economy.

It’s also worth noting that today is the anniversary of Alabama repealing its child labor law in 1894 in order to attract New England textile factories fleeing worker agitation and state restrictions on how it treated labor. That really built the Alabama economy too.

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