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Group calls on lawmakers to strengthen economic incentive accountability standards

MONTGOMERY, Ala. – In its annual State of Working Alabama report, the low-income advocacy group Alabama Arise called on lawmakers to institute a number of changes to increase worker pay, particularly through strengthening accountability standards for businesses receiving economic incentive packages.

Published annually since 2021, the most recent State of Working Alabama report analyzes 30 years’ worth of the Alabama Department of Commerce economic incentive packages, which totaled $4.5 billion since 1993. 

At 63 pages, the report primarily looks at economic incentives awarded to automakers – which made up more than a third of the money awarded in the last 20 years – and whether or not those state dollars could come with more accountability standards attached to increase worker wages and benefits.

Commerce has awarded $1.6 billion in economic incentives to automakers since 1993, starting with roughly $400 million in state investment for the construction of Mercedes-Benz’s first U.S. plant near Tuscaloosa. As of September, Mercedes’ total investment in Alabama has neared $7 billion, and its workforce at around 6,300, which doesn’t include the thousands of additional jobs created by partnering automotive suppliers.

The amount of economic incentives awarded to various automakers in Alabama.

As a result, Alabama has become among the top five states for auto manufacturing, with vehicles being the state’s top export. And while wages for autoworkers in Alabama have increased substantially since 1993, according to data from the U.S. Bureau of Labor Statistics compiled in the report, real wages when adjusted for inflation had fallen for autoworkers by 11% between 2002 and 2019.

In 2002, the average salary for an autoworker in Alabama was about $50,900, and in 2019, about $64,700. When adjusted for inflation, however, that $50,900 comes out to around $72,500 in 2019 dollars, representing a fall in wages of nearly $7,800.

Furthermore, the report notes that this trend of falling wages, when adjusted for inflation, was not seen in other industries, be it general manufacturing or otherwise. In general manufacturing, wages had risen by 12% between 2002 and 2019 when adjusted for inflation, and all workers saw a 9% wage increase during the same period.

The solutions to falling wages, the Alabama Arise proposes, were for lawmakers to adopt several measures that could see economic incentives come with greater accountability measures.

Firstly, Alabama Arise recommended that lawmakers update the Jobs Act to include stricter eligibility requirements for businesses to receive state dollars.

First passed in 2015 and renewed in April, the Jobs Act awards businesses with rebates on employee payroll taxes, and saw its annual cap increased from $350 million to $475 million by 2027. Currently, eligibility provisions are included in the Jobs Act that require recipients to pay the prevailing wages within their respective communities, as well as other provisions that ensure businesses follow through on their stated investment and job creation plans.

Alabama Arise argues in its report that the Jobs Act should be expanded by increasing the required wages and benefits businesses must agree to pay to be eligible for economic incentives.

In response, Stefania Jones, a spokesperson for Commerce, said that the Jobs Act already had “very strict wage and benefit standards applied to it,” and that reversing falling autoworker wages was largely outside the scope of her agency.

“The Jobs Act has very strict standards for wage and benefits that we tie to the Jobs Act,” Jones told Alabama Daily News on Thursday. “Any (wage) fluctuation beyond the lifetime of the project agreement would be more of a reflection of the overall state of the economy, not our economic development incentives, which is the primary focus of the Department of Commerce.”

Furthermore, Jones said that there was a point at which increasing wage and benefit requirements for economic incentives would start to deter businesses from investing in the state.

“Let’s face it, if the requirements we put on (economic incentives) are so far above what they would get in other states, we’d lose those projects,” she said.

Among the dozens of other proposals offered in the report also include ending the state’s right-to-work laws, which are laws that prohibit union security agreements, a tool that allow unions to compel new employees to join its ranks.

Proponents of right-to-work laws argue that they protect the right of workers to decide whether or not to join a union, whereas opponents often argue them to be a tool to weaken collective bargaining power.

Other proposals in the report include giving preference to businesses that have unionized workforces or employee ownership, as well as repealing House Bill 174. Sponsored in 2016 by Rep. David Faulkner, R-Mountain Brook, HB174 prohibits cities and towns from setting their own minimum wage, and was largely a response to the city of Birmingham attempting to raise minimum wage there to $10.10.

To read the full State of Working Alabama report, click here.

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