What the GM strikers teach us about government subsidies

This month General Motors (GM) announced it would stop paying health care benefits to its striking employees. Meanwhile, the company has made record profits – $30 billion in the past five years – thanks, in part, to the billions of dollars in subsidies, tax credits and government bailouts funded by taxpayers.  

For years, cities and states, worried about losing local jobs, have agreed to provide the nation’s largest automaker with cash rewards, worker training, tax breaks and free buildings. 

Even as the 50,000-worker strike at GM plants across the nation continues, the company is in talks with Missouri about a $50 million incentive package that would allow it to expand and upgrade a truck and van plant west of St. Louis. This push for tax subsidies comes at a time when GM is closing five plants in North America and laying off more than 14,000 workers.

Supporters of the plan say the package will help Missouri avoid a similar fate and protect jobs. But GM received record tax breaks as a result of the GOP’s tax bill last year, and that hasn’t stopped it from eliminating jobs. 

It remains unclear whether the subsidy package GM is pursuing in Missouri would include enforceable commitments to job creation or standards. The company has received over $57 billion in subsidies, loans and bailouts from the government. As part of the bailout during the Great Recession of 2008, GM’s workers agreed to major concessions to keep the company afloat, including a two-tier wage structure and pay cuts. 

Now that GM is making record profits, workers are on strike to demand the company limit the number of lower-paid temporary workers, provide workers with affordable quality health care, and carry on production at four U.S. plants it has targeted for closure.

The question is not whether the companies should get government help, The question is how cities and states hold corporations accountable and create high-quality jobs with good benefits that strengthen communities.

The good news is that communities, advocates and policymakers are taking action. For example, political leaders in New York have proposed legislation that would limit states and cities from entering into secrecy agreements with companies when the conversation kept from the public involves public resources, a reaction to the non-disclosure agreements that shielded many cities’ Amazon HQ2 bids from the public eye.

Missouri and Kansas have agreed to a “ceasefire” to stop subsidizing what they called “interstate job fraud” – when a company moves a job from one state to another and calls it a “new” job to reap more subsidies – in the Kansas City metropolitan region. 

While Missouri, Kansas and New York are ahead of the game, more must be done. We need elected officials to think about how economic development plans can be used to create good jobs and better opportunities for our communities. 

One city that’s thinking creatively about how to do this is Los Angeles. The city has used innovative contract language that requires companies bidding for public contracts to commit to creating good jobs and providing detailed information about wages, benefits and other job quality indicators.

My organization, Jobs to Move America (JMA), was involved in one such program with LA Metro, where we worked with our community and labor partners to institute a good jobs and equity policy called the U.S. Employment Plan, which has resulted in LA Metro requiring its public contractors to commit to hiring from underrepresented and underserved communities. JMA has since deployed this model in other cities as a means to get strong wages and benefits concretely stated in a company’s contract.

In Illinois, the Chicago Transit Authority included a U.S. Employment Plan provision in its purchase of up to 846 railcars. The company that won the bid constructed a new factory in Chicago’s Southeast Side, created more than 200 jobs and will spend over $7 million to train its workforce. The provision has ensured that there is a written commitment from the company, rather than verbal or vague promises.

What GM is teaching us is that government subsidies and tax credits should not be a handshake deal. Ultimately, taxpayers are footing the bill. Our government – at federal, state and local levels – must ensure that public money is spent wisely, and not at the expense of American workers and communities.

Alaa Milbes is communications director for Jobs to Move America, a national non-profit organization that works to ensure that public support for economic development deals results in the creation of good jobs, a strong worker voice and community benefits.