How Taxpayers Subsidize Union Avoidance by Wal-Mart and Nissan

Most Americans have been made to believe that they have no stake in private sector labor issues. Unions, we are told, are irrelevant to the working life of the vast majority of the population, whose economic fate is supposedly being determined solely by their employers or by individual skills in maneuvering through the labor market.

This narrative, however, is being challenged by organizing campaigns that are taking on two giant corporations – Wal-Mart and Nissan – and showing that collective action is not defunct. And two reports related to the campaigns show that not only the workers involved, but also taxpayers in general, have a stake in their outcome.

For the past 30 years, Wal-Mart has fought bitterly against the efforts of its employees to organize for better pay and benefits. It showed no hesitation in firing workers who supported union drives and routinely closed down operations where successful representation elections were held.

A new wave of non-traditional organizing by Making Change at Walmart and OUR Walmart has revived the prospects for change at the giant retailer. Strikes have become a frequent occurrence at Wal-Mart stores in recent weeks, and large numbers of Wal-Mart workers and their supporters have been converging on Bentonville, Arkansas to make their voices heard at the company’s annual meeting.

A recent report by the Democratic staff of the U.S. House Committee on Education and the Workforce is a reminder that taxpayers are put in a position of subsidizing the low wages and poor benefits that the Wal-Mart campaigners are protesting. The study, which updates a 2004 report by the committee, reviews the hidden taxpayer costs stemming from the fact that many Wal-Mart workers have no choice but to use social safety net programs—such as Medicaid, Section 8 Housing, food stamps and the Earned Income Tax Credit—that were designed for individuals not in the labor force or those working for small companies that failed to provide decent compensation, not a leviathan with $17 billion in annual profits.

The Democratic staff report estimates that today the workers in a typical Wal-Mart Supercenter (Wisconsin is used as the example) make use of programs that cost taxpayers at least $904,542 a year and possibly as much as $1.7 million. Since Wal-Mart has more than 3,000 Supercenters in the U.S., plus hundreds of other types of stores, those costs run into the billions.

Nissan has been following in Wal-Mart’s footsteps in Mississippi, where it opened a large assembly plant a decade ago. The plant brought several thousand direct jobs to the state, but the problem is that many of the jobs are substandard. The company makes extensive use of temps, who are currently paid only about $12 an hour.

In response to the use of temps as well as issues concerning the conditions faced by regular employees, Nissan workers have been organizing themselves with the help of the United Auto Workers. Rather than accepting labor representation, as it does in numerous other countries, Nissan is seeking to intimidate workers using the usual toolbox of union avoidance techniques such as threats and bombarding workers with anti-union propaganda.  The workers, however, have been bolstered by strong community support from groups such as the Mississippi Alliance for Fairness at Nissan.

My colleagues and I at Good Jobs First recently issued a report commissioned by the UAW documenting the extent to which Nissan has enjoyed lavish tax breaks and other financial assistance from state and local government agencies. We found that the subsidies, which were originally estimated at around $300 million when the company first came to the state in 2000, have mushroomed to the point that they could be worth some $1.3 billion. That works out to some $290,000 per job. Noting the over-dependence on temps, we state that Mississippi taxpayers are paying “premium amounts for jobs that in many cases are far from premium.”

Although it was outside the scope of our report, it is clear that the Nissan temps, like the Wal-Mart workers, are also generating hidden taxpayer costs through their use of safety net programs. And we have previously documented that Wal-Mart frequently gets the kind of economic development subsidies Nissan is enjoying in Mississippi.

Whether through hidden taxpayer costs or job subsidies, the public is frequently put in the position of aiding companies like Wal-Mart and Nissan that disregard labor rights while failing to pay their fair share of the cost of government. Perhaps the interests of taxpayers and workers are not so different after all.