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New study paints bleak picture of Alabama’s tradeoff of tax breaks for jobs

Big companies benefit at the expense of their employees and surrounding communities, researchers at Alabama A&M say.

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Local communities don’t get much in return for making themselves friendly to large corporations, according to a report by Alabama A&M University released on Wednesday.

Researchers surveyed workers in Anniston, where a handful of prominent companies operate factories. Such facilities are lauded by public officials for bringing jobs to the city, a trend seen across the Deep South. Local leaders offer tax breaks and other incentives to attract companies that are looking to lower their manufacturing costs. 

But the money saved by these companies means that their employees struggle to pay their bills and the surrounding community has less to spend on public services like schools, libraries, parks and roads. 

In Anniston, the city’s Industrial Development Board approved $631,000 in tax abatements in 2017 for the expansion of the New Flyer plant there. The company received a total of $1.4 million in incentives from the city, Calhoun County and the state. Researchers found that the expansion created 21 new jobs that paid an average wage of $36,700.

The median household income in Anniston is less than half of the income recommended for a family of four to meet its needs. That’s in a city that has more than twice the national average of workers in manufacturing jobs.

Alabama has for decades banked on large corporations growing its economy as manufacturing facilities were relocated from northern states. The benefits for companies are clear — an auto factory with 700 employees is $7 million cheaper to operate in Alabama than in Michigan, and that’s just labor costs.

To capitalize on this migration, Alabama has spent about $4.5 billion in corporate subsidies and incentives since the early 1990s. As Anniston’s manufacturing-worker population attests, the approach succeeded in attracting companies. 

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Critics, however, charge that the details of these deals are kept out of sight, leaving questions about how the promised payoffs stack up to what companies got.

The report’s authors evaluated the quality of the jobs that are created by these arrangements. They considered things like workplace safety, wages and scheduling practices. They found that these jobs were worse in all categories, often due to the lack of worker protections typically provided by unions. 

The region’s lack of unions, or downright hostility to them, acts as an incentive for companies relocating from states with strong pro-labor communities and culture. The study suggests that once corporations set up shop, they take advantage of the lack of organized labor.

“What were good jobs in traditional, worker-friendly states of the Great Lakes have become bad jobs in the American South,” the report stated.

One in four manufacturing workers earns less than $12 per hour, and jobs in the sector are in the bottom half of all jobs.

It all provides fertile ground for the Deep South’s entrenched problems, like nepotistic “good old boy” management systems and myriad racial inequities, the report says.

Overall, it critiqued the notion that leadership’s catering to big industry can lift the region out of economic hardship as unrealistic under current conditions.

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“The quality of manufacturing jobs in the area should be higher — Anniston workers deserve good jobs,” the report concluded. “And communities and companies must work together to ensure equitable access to the jobs and advancement within the jobs. Without these two protections, it is not worth the public’s investment in manufacturing employment.”

Micah Danney
Written By

Micah Danney is a reporter at the Alabama Political Reporter. You can email him at [email protected] or reach him via Twitter.

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