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Here’s How Corporate Subsidies Are Exacerbating the Racial Wealth Gap

While every dollar in a city budget sustains scrutiny, the same attention isn’t applied to companies’ public subsidies.

Public subsidies exceeding $50 million have gone to companies like Amazon that neither need community support nor are inclined to provide it in return.

Janine Jackson: Under a provision of the Inflation Reduction Act, some factories making batteries for electric vehicles will each receive more than a billion dollars per year from the US government. That’s along with some $13 billion in state and local economic development incentives that factories making electronic vehicles and batteries are slated to receive.

But as Good Jobs First calls out in their new report on the subject, called Power Outrage, there are no requirements for the jobs promised—and considered key to this deal—to be permanent jobs, or even that they provide market-based wages or benefits.

We have a press corps that considers it due diligence to critically examine every dime the government offers to struggling people. But huge economic subsidies to profitable corporations are a no-comment given, no matter how not needy the grantee, and no matter how opaque the process.

There’s just little sense of any need to follow up on a government, or “taxpayer,” gift to those who we are told are the doers, the makers, the job creators. This crucial but under-examined economic phenomenon is Good Jobs First’s topic all the time. And a new report, the first in a series, takes an angle on the impact of subsidies that you pretty much never hear.

Arlene Martínez is deputy executive director and communications director at Good Jobs First, and author of the recent report “How Economic Development Subsidies Transfer Public Wealth to White Men.” She joins us now by phone; welcome to CounterSpin, Arlene Martínez.

Arlene Martínez: Hi, thanks for having me.

We see subsidies, or what you call “mega deals,” going to folks like Amazon, companies that don’t need a lift, they don’t need community support, and they don’t give back, necessarily, when they get it.

The racial unfairness is part and parcel of that. And yet I feel like, every day, we learn how irreducible white supremacy is, how it doesn’t stir into anything else and just disappear. So what did you find, and why do you think it matters?

Yeah, Good Jobs First has a subsidy tracker, which looks at economic development subsidies that have gone to companies. And we have a special category called “mega deals,” as you mentioned. And those mega deals are the biggest of those deals, anything that’s $50 million or above. So I took a look at the top 50 of those, so we’re talking all billion-dollar deals and up, very extravagant packages that go to some of the biggest well-known companies in the world.

And what we saw is that most of those companies were run by white men. And in cases when they weren’t white men, they tended to be born outside of the United States, and then there were just two women, who were also white.

So we talk a lot about this transfer of wealth, and really what you’re doing is taking a community’s very precious, limited resources and directing it towards some of the biggest, most profitable companies in the world, which isn’t what subsidies were ever meant to do in the first place; they were supposed to incentivize development that wouldn’t have otherwise taken place. And that’s just not what we’re seeing here.

So what you’re really having is, you are exacerbating this racial wealth gap through the use of subsidies. We thought we should be explicit about who the winners were.

Right. You hear, well, OK, these are big companies and they provide a lot of jobs, and a lot of those jobs might go to people of color, or to women, so we can’t help that they’re big. What about that?

That’s one of the very popular myths, we would say, we hear quite a bit: Well, these are big companies. They produce a lot of jobs.

But the truth is, that’s not what actual research shows, which is that these companies aren’t producing any type of special, extra amount of jobs. And, in fact, a lot of times they’re just simply taking jobs from smaller companies.

I think Amazon is a great example of this. Their online presence and their warehouse workers mean that a lot of the retail jobs that used to exist have been cannibalized. So it’s really just been a transfer of jobs, in a lot of cases.

And some of those times they’ve gone from good industries to really poorly paid warehouse workers, where Black and brown workers tend to be holding the poorest-paid, most dangerous jobs.

I remember talking with Dorothy Brown about tax policy, and just saying that there’s a way that, broadly, race can be related to economic outcomes, but somehow when we’re talking about policy-making, it’s not factored in.

And she was saying that people would say, race doesn’t affect tax policy, because we don’t have any data that connects that. So what you don’t study is invisible to you, but that doesn’t mean it doesn’t exist.

And, similarly, with the case of subsidies, if you don’t think the impacts of these big subsidies are race-related, or have impact that is meaningful in terms of race, well, then, I guess you don’t see it. But that doesn’t mean those impacts don’t exist.

That’s right. And Dorothy Brown, we had a conversation, and one of the points that I’ve heard her make is ProPublica, which has done a series of really damning, amazing reporting around some of the tax returns of some of the wealthiest people in the world, and just how much they’re avoiding paying taxes.

And one of the points she makes is, look at the list. They’re all white people, and yet ProPublica doesn’t take that extra step to say, by the way, the people who are avoiding paying taxes, who aren’t paying what everyone else is paying, are the richest people in the world, who are white. So I think she does a good job of doing that.

Calling attention to that impact, which, if you don’t see it, you don’t have to see it, but there it is.

And I was a reporter before I joined Good Jobs First, and I remember one of the stories I was writing about was, there was, of course, a budget shortfall, as there often are in these local communities that we cover; I was a local reporter.

And the first thing on the chopping block really was a boxing gym and a library and a community center in a very heavily Latino neighborhood in the city. And it was, of course, disproportionately used by, well, that city’s Latino population.

And it wasn’t these other things that were being cut; police and fire were being fully funded. Those are both professions that tend to have, again, high populations of white men who occupy those positions, and are being paid some of the highest salaries in a community.

So, yes, I think there is a need, and communities benefit from, really, that conversation becoming a lot more explicit than it’s been.

Absolutely. Part of, I guess, what galls me about news media’s sort of soft, blurry attention to subsidies is, and I said it to Greg LeRoy last year, we don’t look to corporate news media first for critical examinations of corporate capitalism, but they do present themselves as watchdogs of the public interest, and especially of public spending. We hear about the “cost to taxpayers” a lot.

And so, if that’s true, I feel like minimally, the secrecy around public subsidies to companies like Amazon ought to be compelling stuff, and yet somehow they don’t get broken open often, and the impact and the follow-up on communities just doesn’t seem to be the kind of catnip to reporters that you would think it would be.

Yeah, and it’s amazing how the scrutiny that we give every spending dollar that seems to come out of a city budget is not at all applied in the same way to companies, and company behaviors and company press releases. Their word is taken at face value, and as if somehow it’s more legitimate, when they’re questioning every nickel and dime that’s coming out of a community.

I remember covering a county museum that was looking to get some money, and there was city council meeting after city council after city council meeting about whether this museum should get a million dollars over five years, or whatever the case was, whereas other communities, and we write about these a lot, they will approve a $300 million subsidy behind closed doors, with no one knowing about it. And it’s touted as a good thing for the community.

So I think there increasingly is more scrutiny on things like these subsidies, and people really are starting to question more whether this is really the best way that communities should be spending that money. But there is something interesting about the way that corporations and companies are reported on with such a trust that isn’t given to government, for example.

And I just want to say finally, Good Jobs First is very much about involving everyone in the process. And you referenced subsidy trackers that you have. They’re accessible for folks who are reporters or not reporters. You try to make data or databases available to folks who want to follow the money.

Yes, we have databases that we’ve purposely made fully accessible. We don’t even ask for your email, and you can look up a company. So if a company comes to your community and says, “We need some money to expand our operations,” or to even open, you can look to see where else has this company gotten money, and what did it deliver for the money that it’s gotten in other places.

Or you can look at a company in our violation tracker and say, “What’s its record on corporate conduct?” Because we have all types of misconduct records in there to say, if the company has a long track record of cheating workers or harming the environment or cheating consumers, you can say, “Is this the kind of company that this city should be investing in?”

So yes, we do try to make these databases very accessible and easy to use. We’re trying to do the research for you, for journalists.

Right? Well, if journalists won’t use it, then the public can use it and work around the press corps. I mean, the point is to get it done, right?

That’s right. That’s right. And we are thrilled that every day we get some kind of outreach, whether it’s a grassroots community group, an individual who said, “I saw this, I can’t believe what I’m seeing.” So they go to their city council, then they can question what’s going on, or whoever their official might be. And so always thrilled when we see that.

I would just add, I made this point earlier, but communities have a certain amount of money, and the money that’s being spent is precious. And there are things that actually do lift up communities, and those are excellent public schools, and they’re communities with parks that take care of their natural resources, and safe communities.

And when communities invest in those types of things, people want to live in those kinds of communities. And the companies want to be where those people are, where those workers are.

So the real wins that we see that communities do, is when they invest in those things that truly lift up people from the bottom up, rather than showering a corporation with a billion dollars and hoping somebody at the very bottom of that funnel can use it to lift themselves to a better place.

All right, then. We’ve been speaking with Arlene Martínez. She’s deputy executive director and communications director at Good Jobs First, online at Arlene Martínez, thank you so much for joining us this week on CounterSpin.

Thanks for having me.

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