Greg LeRoy is author of The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Job Creation (Berrett-Koehler, 2005) and executive director of Good Jobs First (www.goodjobsfirst.org), a national resource center promoting corporate and government accountability in economic development and smart growth for working families.
News of the labor movement has been dominated recently by the turmoil within the AFL-CIO. But as we celebrate Labor Day, let’s remember: America’s labor unions are key watchdogs against corporate tax-and-job scams.
The stakes are huge. In the name of “jobs, jobs, jobs,” states and cities spend $50 billion a year; the average state now subsidizes jobs more than 30 different ways: property tax abatements, corporate income tax credits, low-interest loans, free land and just plain cash. Such packages routinely exceed $100,000 per job.
The net result is poorer public services and a big tax-burden shift. Large corporations, with their armies of consultants and accountants, are getting huge tax cuts at the expense of small businesses and working families.
But much of this money is clearly wasted. Companies that get huge subsidies routinely fail to create as many jobs as they promised. Indeed, many actually lay people off, outsource jobs offshore, pay poverty wages and fail to provide health care.
Wal-Mart, for example, gets subsidies through the front door—and the back door. It has benefited from more than $1 billion in bricks-and-mortar subsidies at its stores and warehouses. Yet each Wal-Mart store with 200 workers also costs federal taxpayers an estimated $420,750 a year in hidden costs such as Medicaid, Children’s Health Insurance, free school lunches and housing assistance. The retail giant has more than 3,000 stores and seeks to open 300 more a year.
With big federal budget cutbacks squeezing state and local governments, our communities can ill afford such corporate freeloading. Fortunately for workers and taxpayers, the labor movement consistently steps up to the plate. Together with community groups, environmentalists, budget watchdogs, human service advocates, and elected officials of every political persuasion, unions are strong, effective advocates for more accountability and less abuse.
From the mid-1980s to the mid-1990s, for example, union leaders at many factories blew the whistle when companies announced that facilities were closing—despite having received massive taxpayer subsidies that were supposed to secure the jobs. Embarrassed by these revelations, state and local officials enacted “clawbacks,” or money-back guarantee contracts, to protect taxpayers and recoup money when companies fail to deliver. Today, clawbacks are considered “best practice.”
For the last dozen years, unions have formed coalitions through Jobs with Justice and with community groups like ACORN to win living-wage ordinances in more than 130 localities. Originally created to cover service contracts for privatized government work, many such laws have been expanded to cover some companies that receive job subsidies.
Thanks to these coalitions, governments are giving fewer subsidies to companies that stick taxpayers with hidden safety-net costs like those at Wal-Mart. Indeed, health care advocates, including unions of health care workers, and investigative journalists have gotten 16 states to disclose the names of companies with the most beneficiaries on Medicaid and/or Children’s Health Insurance. Of course, Wal- Mart tops the list in most states, along with fast food chains and temp agencies.
Unions are also backing efforts to stop subsidizing runaway suburban sprawl. Smart growth advocates are increasingly saying: no more subsidies for big-box retailers that undermine small businesses, pave farmland, and create more traffic congestion.
Union leaders also promote good jobs as members of regional Workforce Investment Boards. Aided by the AFL-CIO Working for America Institute, 1,100 labor representatives across the country promote good wages and benefits and other taxpayer safeguards at companies that benefit from federal training monies. Through joint labor-management programs in industries such as construction, manufacturing, and hospitality, unions help workers improve their skills and living standards. Such programs are extremely cost-effective compared to corporate tax giveaways.
Unions and labor federations also support tax and budget watchdog groups in many state capitols, promoting good-government reforms such as transparency and disclosure when companies get huge tax breaks for jobs. Thanks to such efforts, 12 states now have some form of company-specific reporting of subsidy costs and benefits each year.
Unions have also helped form regional non-profit groups that publish research and organize reform campaigns. The Los Angeles Alliance for a New Economy—and similar groups in Denver, San Jose, San Diego and Oakland— are pioneering the use of Community Benefits Agreements to ensure that neighborhood residents actually benefit from taxpayer-subsidized development projects.
Labor’s strong support for corporate accountability on jobs and taxes benefits all taxpayers, most of whom are not union members. But then, unions have always advocated for the good of all working families. If you like Social Security, Medicare, free public education and your weekends, thank your local unions this Labor Day. And join their coalitions for more reforms in the coming year!
