The Climate for Workers in the U.S.: Summary of a Study by the Southern Labor Institute. A Special Project of the Southern Regional Council

By Ray Marshall

Vol. 8, No. 4, 1986, pp. 1-2

The challenge facing the South is to create jobs with the income and benefits needed to bring the region’s workers above the poverty level – not just new jobs, but jobs that will significantly improve the standard of living for people who work full-time, year-round.

“THE ‘BUSINESS climate’ and ‘ideal places to live’ are regularly assessed, but there have rarely been indexes of good places to work. Indeed, the criteria used by most business climate reports assume that low wages, limited unemployment compensation and worker protection, and weak unions, are good

---

Page 2

for business. This is a strange assumption for people who also profess to believe that people are our most important asset. The Climate for Workers report demonstrates the error in this traditional assumption.

“To attract business by maintaining and encouraging low wages and weak worker protection was always shortsighted, but in an internationalized information world it is ludicrous. American companies cannot compete in the international arena on the basis of low wages. Workers in many developing countries earn less than one-fifth as much as their American counterparts. Competitiveness therefore requires greater attention to productivity, technological innovation, and world class management systems, and these factors are not likely to be highly correlated with low wages and weak worker protections. However, international competitiveness and high and rising standards of living are likely to be highly correlated with a high quality workforce and strong worker development programs. The Climate for Workers is therefore a good indicator of those places that are likely to have long-run development potential. Fortunately, far-sighted leader in these states realize the connection between economic and human resource development and have made strong efforts to improve their education systems. These leaders recognize the futility of the all-too-frequent strategy of attempting to compete by depressing wages. Attention must be focused on other aspects of human resource development, that also are important in improving workers’ welfare and therefore the quality of life in any state.

“This report puts job growth in the Southeast into proper perspective and evaluates the overall benefits of work. The climate for workers in the sunny South is rather chilly. Those who believe that ‘the Southern economy no longer exists’ or that ‘the South has thrown off its history,’ should consider the findings of The Climate for Workers.

“As with any new indexing undertaking, The Climate for Workers has technical weaknesses. However, its thrust is sound and it should initiate discussion to improve technical quality in future reports.”

Dr. Ray Marshall, former U. S. Secretary of Labor, holds the Audre and Bernard Rapoport Chair in Economics and Public Affairs at the LBJ School of Public Affairs, University of Texas at Austin; is Board Chairman of the Southern Labor Institute; and Vice President of the Southern Regional Council.

The Climate for Workers: Where Does the South Stand?

By Kenny Johnson and Marilyn Scurlock

Vol. 8, No. 4, 1986, pp. 3-15

We believe the true test of economic conditions is how working people–the vast majority of citizens–fare in these times of economic change. This report examines how the economic climates in the states affect most workers.

Although it experienced extraordinary job growth during the past ten years, the Southeast remains the least favorable region of the nation when considered from the perspective of working people and their families. More than in any other region, workers in the twelve states of the Southeast fail to enjoy the full fruits of their labors.

During a major restructuring away from traditional manufacturing jobs (furniture, textiles, apparel) and toward service jobs (especially business and health services), manufacturing growth where it does occur is generally in machinery, electronic equipment, and related fields. Yet in the Southeast, state governments and chambers of commerce have clung to the refrain of cheap land and cheap labor that produced the region’s heavy dependence on-low wage, traditional manufacturing jobs and the largest proportion of working poor in the country. Even the new service jobs in the region have wages at the low end of the pay scale. In the final analysis it must be realized that recent and phenomenal job growth in the Southeast has occurred in large part at the bottom end of the wage scale, and has not improved significantly the conditions and prospects for the wage earners of the region. As the Southeast’s economy follows the national trend of fewer manufacturing and more service sector jobs, the region’s employed and unemployed workers are unlikely to see much change in their personal conditions.

Southern states fill the bottom rungs of nearly all of the more than two dozen indicators considered in this study of the nation’s labor climate. This situation is graphically depicted in the map on the next page. The top five states, meanwhile, are Massachusetts, Connecticut, Minnesota, California, and New York.1

The Southeast’s extraordinary growth in jobs during the past ten years has been accompanied by the least change in personal income of any U.S. region. While four Southeastern states rank among the top nine in job growth for this ten year period, eight Southeastern states fall among the bottom eleven in personal income growth during the same years. Table VI shows the correlation in each geographic region between job growth, income and wage growth.

More and more people are working full-time year-round yet have incomes below the poverty level. These are the working poor. Working people are much more likely to be poor in the Southeast than in any other U.S. region. Of the ten worst states, eight are in the Southeast–ranging from Tennessee, with 8.2 percent of its workers below poverty level, to Mississippi at 12.7 percent (the highest proportion in the nation).

Similarly, Southeastern states today have the lowest per capita incomes in the U.S., and nine of the twelve Southeastern states are among the bottom thirteen in manufacturing wages, averaging less than $8 per hour. The range in these states extends from $7.97 in Alabama to the national low of $6.95 per hour in Mississippi.

The Southeast region can rank high in job growth, and yet rank low in wages and income, because in eight of the Southeastern states, more than 40 percent of the manufacturing jobs are in low-wage industries (those with national average wages of less than $8 per hour). These include lumber and wood products, furniture and fixtures, food and related products, textiles and apparel, rubber and plastics, leather and tanning, and miscellaneous manufacturing jobs.

Not surprisingly, the eight states with the least worker protection are in the Southeast. When it comes to state statutes and labor department policies governing the workplace, protecting workers’ rights and safety, and providing compensation for disability and unemployment, the South falls considerably below all other U.S. regions. At the bottom of the benefit scale, five of the six states that pay the least for permanent total disability–under $200 per week–are in the Southeast. In the nation’s twelve worst states, the weekly unemployment benefit is $140 or less. Eight of these twelve are in the Southeast. At the bottom in the South and in the country is Mississippi ($105).

Until recently, blacks and women have been

---

Page 4

excluded from traditionally white male occupations: officials/administrators, professionals, technicians, and craft workers. Southeastern states rank on the bottom in the percent of working blacks and women employed in these jobs.

Findings related to the quality of life in the states also echo some historically familiar refrains.

* The Northeastern states report the lowest rates of poverty, ranging from 8 percent in Connecticut to 13 percent in New York.

* The Southeast remains the nation’s poorest region and Mississippi (with 24 percent of its population impoverished) ranks at the bottom of the South.

* Blacks are most likely to be poor in the Southeast. The nine states with the highest proportions of black poor are in the Southeast. Rates of poverty for blacks in the South range from Virginia’s 25 percent to Mississippi’s 44 percent (highest in the nation).

* A baby is less likely to survive its first year of life in the Southeast. The two states with the worst infant mortality rates–over fifteen deaths for every one thousand successful births–are Mississippi and South Carolina. The eleven worst states, all with death rates of thirteen or higher, include six more states from the Southeast.

These and other study results are detailed in this report.

Sidebar: FINDINGS:

Jobs and Income

The relationship between job growth and personal income is perhaps the best of all signs of the economic health of a state, addressing work opportunity as it increases or decreases over time, and the degree to which those jobs provide workers with an adequate standard of living. This section of the report examines employment change–the increase or decrease in the actual number of employees–in the top five states, the bottom five states, and the Southeast region, and then looks at income change in the Southeast and in the nation.2

Employment Change

Top Five States

During the ten-year period from 1975 to 1984, three states gained more than one million jobs: 2.7 million in California; 2 million in Texas; and 1.5 million in Florida. Other top ten states gained over 450,000 employees: New York, New Jersey, Georgia, North Carolina,

---

Page 5

Virginia, Massachusetts, and Arizona.

Based on the index and ranking system, the five states with the highest level of job growth over the long-term period (1975-1984) were California, Texas, Florida, New York, and Georgia. During these ten years, 17.4 million new jobs were created in the United States. Of this number, 7.6 million or 43.5 percent were created in the top five states (see Table I, next page).

For the intermediate length period (1980-1984), the same five states were again the top job growth performers, this time accounting for 2.6 million or 65 percent of the 3.9 million new jobs in the United States.

Analysis of the short-term period (1984-1985) shows that California, Florida, Texas and New York retained positions in the top five states in producing new jobs. Michigan rebounded from the loss of 100,000 jobs and 48th ranking for the 1980-1984 period to edge out Georgia for the number five position. Over the short term, 2.75 million new jobs were created and 40 percent were created in the top five states.

The economies of these top five states are similar. In the 1970s, the national economy was dominated by manufacturing, as were the economies of the top five job creation states. In the 1980s, the rate of job growth in the manufacturing sector has been steadily declining with a corresponding rise in the rate of job creation in the service sector. During the recession years (1980-1983), the top five states lost 430,243 manufacturing jobs and gained 346,923 new service jobs. The intermediate period (1980-1984) saw only a one percent increase in manufacturing jobs (56,800), but a 22 percent increase in the service sector (1,331,900 new jobs) for the top five I performers in job growth.

The economy of the Deep South state of Georgia, like other Southern states, continues to be dominated by the apparel and textiles industries. The service sector, which still ranks third behind trade and manufacturing, accounted for 29 percent of the job growth in the three primary sectors and 30.6 percent of the total job growth for the 1980-84 period. Georgia, like California and Florida, did not lose jobs in the manufacturing sector; however, the rate of job growth in manufacturing declined (7.39 percent of total job growth) in the state for the 1980-1984 period.

A much clearer picture of the similarities in the economies of the top five job producing states and the U.S. economy can be seen through a comparison over the 1980-1984 period. The U.S. experienced a very slight increase in jobs (4.14 percent) as it moved from an employment base of 90.4 million in 1980 to 94.2 million in 1984. The increase in the number of service sector jobs was almost three-fourths of the net increase in jobs in the U.S. for these five years.

In 1980, the three leading industry sectors for job growth in the U.S. economy were manufacturing, services and retail trade. Manufacturing accounted for 22.4 percent of the total jobs, services for 19.8 percent, and retail trade for 16.6 percent. These three sectors accounted for almost 60 percent of the jobs created in the nation. By 1984, the service sector had moved to number one and accounted for 22 percent of total U.S. jobs. Manufacturing was second at 21 percent and retail was third at 17.3 percent. Over the five-year period, this represented a 3.4 percent decrease in manufacturing jobs, an 8.1 percent increase in retail jobs, and a 15.5 percent increase in jobs in the service sector.

In comparing job growth in the top five states to the U.S. job growth performance for the 19801984 period in the manufacturing, trade, and service sectors, the decline in manufacturing is seen in all of the top five states. Indeed, there has been a loss of jobs in this sector in New York and Texas and only modest increases in California (2 percent) and Georgia (6 percent).

In all of the top five states, the service sector is producing jobs at an increasing rate (37 percent and 33 percent in Florida and Georgia, and 25 percent and 18 percent in Texas and California). The relatively low growth rate for service jobs in New York is somewhat misleading since that has long been the dominant sector in its economy.

The net effect over the five-year period in the top five states was a 1.9 percent decrease in manufacturing jobs and a 43.5 percent increase in service sector jobs (see Table I).

Bottom Five States

In ranking states according to job growth, the top five states performed consistently. The bottom five states, however, had no discernible job growth patterns over the long, intermediate, and short-term time periods.

From 1975-1984, the bottom five states in job growth were North Dakota, Montana, South Dakota, District of Columbia, and West Virginia. During the 1975-1984 period, these five states added only 183,000 new jobs, representing 1.05 percent of total job growth in the U.S. for the period.

The states in the bottom five for the 1980-1984 period; by rank, were West Virginia, Michigan, Pennsylvania, Ohio and Illinois. Job growth was negative for these states, with a loss of 599,000 jobs, a decline-of 15.3 percent.

For the short-term period (1984-1985), the bottom five job growth states were Oklahoma, West Virginia, North Dakota, Montana and Louisiana. The job loss total for this period was 8,700, a decline of 0.3 percent.

For the intermediate period (1980-1984), the manufacturing sector lost 673,600 jobs in these five states while services added 375,400. In every state, however, the increase in services was insufficient to keep the net job growth from being negative.

In Table II, the percentage of jobs in manufacturing, wholesale and retail trade, and services are shown in 1980 and 1984 for the bottom five states. In 1980 manufacturing is clearly the dominant job sector in all except West Virginia. In 1984, manufacturing is still dominant in Michigan and Ohio, though less so. In every bottom five state, the percentage of services jobs i had increased.

Each of the bottom five states experienced job loss): levels significantly worse than the U.S. as a whole dur-

---

Page 6

ing this period. Indeed, as a group they account for 36 percent of the U.S. total loss of 1,864,207 jobs. On an individual state basis, this represented a loss of 257,200 jobs or -5.3 percent for Illinois; Michigan declined by 93,400 jobs (-2.91 percent); Ohio lost 126,300 jobs (-2.89 percent); Pennsylvania lost 128,000 jobs (-2.67 percent); and West Virginia lost 62,700 jobs (-9.71 percent).

The Southeast

Despite its overall bottom national rank in The Climate for U.S. Workers, employment change is one category where the Southeastern United States did exceedingly well. In fact, for each of the three time periods surveyed, the Southeast ranked number one as a region in job growth, both in absolute numbers and percentage change.

Between 1975 and 1984, the Southeast gained 5.2 million jobs, a 32 percent increase over the ten years. Florida had the largest gain, 58.9 percent, while the smallest gain was made by West Virginia at 1.48 percent. After Kentucky’s modest gain of almost 15 percent, the rest of the Southeastern states gained at least 20 percent. Four states in the region had employment increases greater than 500,000, and seven states gained between 100,000 and 300,000 jobs. West Virginia was the only state gaining less than 30,000 jobs for the ten years.

When examined by sectors of the Southeast’s economy, job growth shows greater variation,withl3.5 million jobs, or 63 percent of the total employment in 1984, in manufacturing, retail and services. The 1984 employment was distributed relatively evenly among the three sectors in absolute and percentage terms. Manufacturing was second in relation to the three leading sectors, encompassing 33 percent of the employment in the three sectors, and 21 percent of the total for all sectors.

Income Change

The Southeast

The substantial and sustained performance of the Southeast in job growth is undercut by its personal income statistics. Here, the region is at the bottom of the scale (see Table III).

In 1985, personal income per capita for the region was $11,169, last among all regions of the nation. When measured in absolute change for 1984-1985, the region does only slightly better, moving from the bottom rank of eighth to seventh, an absolute change of $537.

During the 1975-1984 period, personal income per capita for the Southeast more than doubled, gaining $6,114, a 121 percent increase. Over the ten-year period, however, the region does not climb from its bottom rank. In fact, the picture is even bleaker. Among the twelve states of the Southeast, eight are ranked at fortieth or below in personal income per capita. Only Virginia, (number 11) and Florida (ranked 14) are above the bottom grouping. The deviation of these two states from the regional pattern is perhaps because, unlike most Southern states, Virginia and Florida have the largest share of their jobs in trade, government and services, not manufacturing.

The performance of the Southeast during 1980-1984 was a slight improvement. For this period, the region had an absolute gain in personal income of $3,020 and a regional rank of five (out of nine). This represented a 37 percent gain, exceeded only by New England at 44 percent and the Mideast at 38 percent. As mentioned earlier, however, this rate of growth was insufficient to move the region’s personal income off the bottom of the scale at $11,168.

Analysts and state development officials have long argued that industry is attracted to the South by its low wages and low income. Certainly this correlation appears

---

Page 7

to hold for the ten years between 1975-1984 (see Table III), when the region ranked number one in job growth, eighth in personal income and seventh in hourly wages for production workers in manufacturing.

As Table III reveals, however, this relationship does not hold true for all regions of the country. For example, the Far West region is ranked number two in job growth and number three in personal income. With a rank of four in wages, there is a correlation between wages and income. Another example at the other end of the employment change scale is the Rocky Mountain region, which is eighth in job growth and seventh in personal income, yet comes in second among the regions in wage growth.

These variations are perhaps attributable to the job mix in each region’s economy and, to a much larger degree, the incidence of low-wage manufacturing as a percent of the job total. For example, in the Far West, low-wage manufacturing represents 26 percent of the employment total, and in the Rocky Mountain region, 29 percent. In the Southeast, however, almost half (42 percent) of all jobs are classified as low-wage manufacturing for the ten-year period.

In the final analysis, the significant job growth in the Southeast region, due in large measure to its reliance upon an industries with jobs at the lower end of the wage scale, has not led to an adequate standard of living for a sizeable portion of its population. More specifically, personal income change has not kept pace with the changes in employment. The situation is one in which more and more people work full-time year-round and still have incomes below the poverty level. Indeed, the Southeast ranked worst of all regions when measured in terms of the incidence of working poor as well as income distribution, i.e., the proportion of families earning less than an adequate income.

The Nation: Low-Wage Jobs, the Working Poor, Unemployment, and Incidence of Low-Wage Manufacturing

One way to understand differences between states in wages and income is to look at the number of low-wage jobs in the state economy. Low-wage industries–those with national average wages of less than $8 per hour–include lumber and wood products, furniture and fixtures, food and related products, textiles and apparel, rubber and plastics, leather and tanning, and miscellaneous manufacturing jobs. We looked at these low-wage jobs as a percent of all the manufacturing jobs in each state in 1982, and the results show why the Southeast can rank high in job growth and yet low in wages and income.

Only four of the twelve Southeastern states have less than 40 percent low-wage jobs (Kentucky, West Virginia, Louisiana and Florida). The other eight range from 40 percent in Virginia to 62 percent low-wage jobs in North Carolina. Also at the bottom in this category are Oregon in the Far West, Maine in New England, and Idaho in the Rocky Mountain region. Only the two Pacific states have a greater dependence on low-wage jobs: Hawaii with 66 percent; and Alaska with 77 percent of its manufacturing jobs in low-wage industries.

Jobs in these low-wage industry groups are too few to be counted by our source, the Bureau of Labor Statistics, in the Plains states of North Dakota and South Dakota and the Rocky Mountain state of Wyoming. The remaining seven states in the top ten–those having less than 18 percent low-wage manufacturing jobs–range from 6 percent in the District of Columbia in the Mideast to 18 percent in the Southeastern state of West Virginia. Included in this top group are Nevada in the Far West, Arizona in the Southwest, Michigan in the Great Lakes, Kansas in the Plains, and Utah in the rocky Mountain Region.

Incidence of Working Poor

Due in large part to the shift from manufacturing to services jobs and to the inadequacy of the minimum wage, more and more people work full-time year-round and still have income below the poverty level. These are the working poor, and they are measured here as a percent of all householders who worked in 1979. Only three regions are represented in the ten states with the lowest proportion of working poor: New England with three states, the Mideast with four states, and the Great Lakes with three states.

States with less than 4 percent working poor are Connecticut, Massachusetts, New York, and New Jersey. States with 4 to 4.5 percent working poor are Maryland, Pennsylvania, Michigan, Wisconsin, Illinois, and New Hampshire.

A person is much more likely to be poor despite working if they live in the Southeast: of the ten worst states, eight are in the Southeast. These range from Tennessee, with 8.2 percent of its workers below poverty level, to Mississippi, with 12.7 percent, the highest proportion of working poor in the nation. The only states to join the Southeast at the bottom in this category are New Mexico and South Dakota. The only Southeastern states with lower percentages of working poor are North Carolina (7.7 percent), West Virginia (7.2 percent), Florida (7.1 percent), and Virginia (5.8 percent).

Unemployment Rates

There is considerably more controversy about the accuracy of measures of joblessness and the connection between unemployment and economic hardship. It is generally conceded that the rate of long-term unemployed, if considered separately, would be lower; and

---

Page 8

that the rate for short-term unemployment would be considerably higher if there were more adequate measurement of economic distress in rural areas and of blacks and many other urban residents.

Unemployment compensation, for example, is often used to supplement survey information in determining rates, yet many rural people traditionally do not apply for unemployment, and many are not eligible in the first place. Further, since labor on a family farm is counted as employed whether paid or not, even farmers facing foreclosure would not be reflected in the statistics. In urban areas the count misses many in distress–black youth and black men, the homeless, migrant workers and illegal immigrants–who distrust the system and evade attempts to measure them.

The unemployment rate ignores the underground economy, unemployment compensation and multiple incomes within the same family. Yet it also misses the many people who work full-time at low incomes–an issue we discuss in connection with low-wage jobs and the working poor. The rate would also be a great deal higher if it measured workers who have become so discouraged about finding a job that they have stopped looking for one, or workers forced into part-time jobs because full-time jobs are not available. The discouraged worker is not counted in the survey at all; the part-time worker is counted as employed. We must recognize, then, that the unemployment rates we discuss are but indications of the true depth of economic distress.

We looked at the percent of the civilian labor force that was unemployed for both 1984 and 1985, and the percent of the youth labor force that was unemployed for 1984.

Unemployment rates for 1984 for the civilian labor force varied from a low of 4.3 percent in South Dakota to the national high of 15.0 percent in West Virginia. For youth the lowest rate was 9.1 percent, also in South Dakota; the highest was in Mississippi at 32.7 percent.

Looking at civilian unemployment alone for 1984, the rates were lowest in the six states with 5 percent or less of their labor force without a job: South Dakota, Nebraska, New Hampshire, Connecticut, Massachusetts, Virginia, and Arizona. Six states had double-digit rates: Alaska in the Pacific; Louisiana, Mississippi, Alabama and West Virginia in the Southeast; and Michigan in the Great Lakes region.

Youth unemployment, on the other hand, was at double-digit rates in 1984 in all but three states: South Dakota (9.1 percent unemployment); New Hampshire (9.6 percent); and Massachusetts (9.6 percent). The five worst states for young workers that year were all in the Southeast. In Mississippi youth unemployment was higher than 30 percent; in four other Southeastern states the rate exceeded 25 percent: Tennessee (25.8 percent); West Virginia (28.3 percent); and Alabama (29.5 percent.)

For the civilian labor force in 1985 unemployment rates ranged from a low of 3.9 percent in Massachusetts to a high of 13.0 percent in West Virginia. Of the seven states with rates below 5.0 percent, five are in New England: Massachusetts, New Hampshire, Vermont, Connecticut and Rhode Island. Maryland is in the Mideast; and the lone state outside the northeastern U.S. in the top group is the Plains state of Kansas.

Unemployment was worst in the three states with rates exceeding 10 percent, all in the Southeast:

---

Page 9

Mississippi (10.3 percent); Lousiana (11.5 percent); and West Virginia, which once again had the highest unemployment rate in the country (13.0 percent). Rounding out the bottom seven, the four other states with unemployment rates at 9.0 percent or higher were Illinois, Michigan, Alaska, and Kentucky, another Southeastern state.

Sharp regional differences emerge when we look at the change in the unemployment rates from 1984 to 1985. Of the seventeen states from New England to the Mideast and across to the Great Lakes region, only Connecticut had an increase in unemployment (0.3%). On the opposite coast, only one of the four states in the Far West and neither of the two Pacific states showed an increase in unemployment. Yet in all four states in the Southwest and four of five states in the Rocky Mountain region unemployment grew worse. There were similar increases from 1984 to 1985 in four of seven Plains states and four of the twelve states in the Southeast.

Measures of Income

Change in Personal Income

Personal income figures tell how well the people of a state have actually benefited from its jobs–whether those jobs provide workers with an adequate standard of living. We looked at each state’s long- and short-term change in personal income per capita–the actual dollar amount gained–over the same periods we used to examine job growth: 1975 to 1984; 1980 to 1984; and 1984 to 1985.

During the most recent period, income rose over $1,000 in four states. The greatest increase—$1,127— was in Nebraska, followed by Connecticut with $1,080, the District of Columbia with $1,039, and Massachusetts with $1,035 gained. New Jersey, New Hampshire and Maryland had gains for the year of over $900 in personal income per capita. The remaining states in the top ten–New York, Virginia and Minnesota–had increases over $800. The greatest gains, then, occurred in the northeastern part of the nation: three of the top ten states are in New England and four are in the Mideast, while two are Plains states and one is in the Southeast.

The bottom fourteen states showed gains of less than $500 in personal income per capita over the 1984-85 period. Seven of the twelve Southeastern states make up half of this group: North Carolina ($462), Arkansas ($446), West Virginia ($404), South Carolina ($403), Kentucky ($353), Mississippi ($351), and Louisiana ($274). The remaining seven include two Southwest states, New Mexico ($485) and Oklahoma ($474); three in the Rocky Mountain region, Idaho ($459), Utah ($451), and Montana ($121); South Dakota ($303) in the Plains; and Alaska ($206) in the Pacific. Montana is the only state with a gain for the year of less than $200; Alaska and Louisiana are next to last.

The dollar change in personal income per capita for the preceding five years, from 1980 to 1984, was greatest in eight states showing gains over $4,000. Connecticut topped the nation with an increase of $4,988, followed by the District of Columbia and Massachusetts. Alaska in the Pacific region is the only state in the top eight not in the northeastern U.S.; the others are in New England or the Mideast region, including New Jersey, New Hampshire, New York and Maryland.

Dollar gains over the five-year period were less than $2,000 in only two states, West Virginia and, lowest in the country, Wyoming with an increase of only $1,229. Eight other states in the bottom ten showed dollar gains less than $2,500: Nevada, Oregon, Louisiana, Mississippi, New Mexico, Montana, Idaho and Utah.

Over the ten-year period from 1975 to 1984, the largest long-term dollar gains in personal income per capita were in the top eleven states. In two of these states the gains were over $9,000: Connecticut, with a ten-year income increase of $9,582, was followed by the District of Columbia, with $9,118. In four states increases were greater than $8,000: Massachusetts, New Hampshire, New Jersey, and Alaska. The remaining five, where increases exceeded $7,500, are Maryland, New York, California, Colorado, and Virginia.

The smallest long-term increases in personal income occurred in the four states where gains were under $5,000: Idaho and Utah in the Rockies; and West Virginia and Mississippi–lowest in the nation–in the Southeast. Another five Southeastern states are among the eleven where dollar gains were lower than $5,500: South Carolina, Tennessee, Kentucky, Alabama and Arkansas. Also in this group are New Mexico in the Southwest and Montana in the Rocky Mountain region.

Income Distribution

We looked at median family income for 1979, the midpoint of our period for long-term income change, and learned that families were struggling hardest to make ends meet in the Southeast. In ten of the twelve states in the region–excluding Virginia and Louisiana–over 70 percent of families with income earned less than $25,000. Also in this bottom group are Montana, Idaho, Oklahoma, New Mexico, North Dakota, South Dakota, Vermont and Maine; in this category the proportion of families earning less than an adequate income ranges from 70.8 percent in Montana to the worst in the nationߞ79.6 percent—in Arkansas.

No Southwestern or Southeastern state, however, is among the top ten, where less than 60 percent of working families earned under $25,000. The state with the lowest proportion is Alaska, with 43.6 percent. The other Pacific state, Hawaii, is also in the top ten. In the Far West are California and Washington; in New England, Connecticut. Maryland and New Jersey from the Mideast, Illinois and Michigan from the Great Lakes, and Wyoming from the Rocky Mountain region are also among the top states with the lowest proportion of families earning less than $25,000 in 1979.

Average Annual Pay

Average annual salaries of most workers in 1983, the midpoint of our time frame for short-term income change, were examined to fill out the national income picture. The eight states where annual pay was less than $15,000 include four from the Southeast: North Carolina, South Carolina, Arkansas, and Mississippi. Also at the

---

Page 10

bottom in this category are Vermont and Maine from New England, and Nebraska and South Dakota from the Plains states.

The twelve states where workers made the most in 1983 include no Southeastern state and only one-Texas–from the Southwest. Again Alaska tops the nation, paying an average $23,844. The other ten states in the top twelve averaged annual pay between $18,000 and $20,000. Joining D.C. from the Mideast region are New York, New Jersey, and Delaware. In this category from the Great Lakes region are Michigan and Illinois, and from the Far West, California and Washington. One state in each of three other regions averaged over $18,000 in 1983: Connecticut in New England; Texas in the Southwest; and Colorado in the Rocky Mountain region.

Cost of Living

Income does not always keep pace with the cost of living, however. In the second quarter of 1985, the American Chamber of Commerce Researchers Association (ACCRA) measured the cost of living for the largest available city in 45 states. These measures and the ranking we derived from them–while limited by the considerations detailed in Appendix I–show that in some relatively high-income states such as Alaska, New York and New Jersey, there is also a relatively higher cost of living. The nine measured cities with a cost of living higher than the national average (indexed by ACCRA at 100) are topped by Anchorage, Alas., at 139.2, followed by New York City at 137.3, and the Newark, N.J., metro area at 122.7.

Lower wages, on the other hand, are not always accompanied by a lower cost of living. Of the twelve Southeastern cities measured, five are higher than the national average and seven are lower. The fifteen cities with a cost of living lower than the national average are led by Fort Smith, Ark., with the lowest ACCRA index, 92.3. The most expensive Southeastern city, Atlanta, Gal, is indexed at 106.1. Other measured cities in the region with a cost of living higher than the national average are Birmingham, Ala.; Columbia, S.C.; Jacksonville, Fla.; and Hampton Roads, Va., which includes the metro area encompassing Norfolk, Virginia Beach and Newport News.

Wages of Manufacturing Workers

To discover state and regional differences in manufacturing wages, we looked at average hourly earnings of production workers in 1984, the starting point of our one-year period for income change. Nine of the twelve Southeastern states–excluding Louisiana, West Virginia and Kentucky–are among the bottom thirteen states, where these workers average less than $8 per hour. (This figure is also the measure of a low-wage job.) The range in the states averaging the lowest hourly wage is from $7.97 in Alabama to the national low of $6.95 per hour in Mississippi. Joining the Southeast at the bottom in this category are Maine, Vermont, New Hampshire and Rhode Island from New England; New Mexico from the Southwest; and North Dakota and South Dakota from the

---

Page 11

Plains region.

The top eleven states–where production workers in manufacturing averaged over $10 per hour in 1984–include no Southwestern state and only Louisiana from the Southeast. The range here is from the highest average hourly wage in the nation, $12.25 in the Pacific state of Alaska, to $10.03 in Wisconsin in the Great Lakes region. Also in the top eleven from the Great Lakes are Michigan, Ohio, Indiana and Illinois; the Rocky Mountain state of Montana; Oregon from the Far West, Iowa among the Plains states, and from the Mideast region, the District of Columbia.

Wage Growth 1980-1984

There are also differences between states in changes in pay over time. We looked at the gain in average hourly wages of production workers in manufacturing from 1980 to 1984, the same time frame for our examination of short-term income change. Only production workers in South Dakota gained less than one dollar per hour, posting a sixty-five cents gain over the entire five-year period. Other states where workers gained less than $1.50 are North Dakota ($1.30), Nevada ($1.40), and Alabama ($1.48). Rounding out the bottom ten are Mississippi, Arkansas, Iowa, Nebraska, Colorado, and Hawaii.

Production workers in manufacturing gained more than $2.50 per hour from 1980 to 1984 in only one state, Michigan, where wages increased by $2.66. Other states where workers gained more than $2.25 are Ohio ($2.39), Louisiana ($2.32), and Oklahoma ($2.28). Additional states where the gain in hourly wages exceeded $2 over these five years are New Jersey, New Mexico, Kansas, Minnesota, Missouri, Connecticut, Maine, California, Illinois, and Alaska.

Poverty

Persons in Poverty

Six of the ten states with the largest proportion of poor people in 1979 are in the Southeast. All but one Southeastern state-Virginia–are in the bottom sixteen. These range from Florida with 13.5 percent poor persons to Mississippi with 23.9 percent. Joining the Southeast in the bottom ten are South Dakota, 16.9 percent poor persons; New Mexico, 17.6 percent; and the District of Columbia, 18.6 percent. Texas,14.7 percent, joins the bottom sixteen.

Wyoming has the lowest proportion of poor, 7.9 percent. Other states in the top ten–with less than 10 percent poor in their populations–are Connecticut, New Hampshire, Massachusetts, Wisconsin, Indiana, Nevada, Washington, New Jersey, Maryland, end Minnesota.

Black Persons in Poverty

In 1979, a black person was most likely to be poor in the Southeast: all of the nine states with the highest proportion of black poor persons are in the Southeast; ten of the eleven worst states are in the Southeast. The only state with a similarly high proportion of black poor is Rhode Island. The range in the bottom eleven is from 30 percent in North Carolina to 44 percent of the black population living in poverty in Mississippi. The only Southeastern states not ranked near the bottom still have over a quarter black poor: Virginia (26 percent), and West Virginia (27 percent).

The top ten states–where blacks are least likely to be poor–range from 21.3 percent in Idaho to 10.9 percent black poor in Alaska. Other states with the lowest proportion of the black population living below the poverty level are North and South Dakota in the Plains; Maine, Vermont and New Hampshire in New England; Hawaii in the Pacific; and Nevada and Washington in the Far West.

State Actions

Statutory Protection of Workers

We examined the states to see how many of fourteen common state statutes protecting workers were in effect, and whether or not their provisions made them meaningful. State statutes are not counted if they do not meet certain criteria; for example, state anti-discrimination acts covering employment practices of the state but not private employers. State laws which are counted meet the minimum standards.3

Briefly, these are laws prohibiting sexual harassment, electronic surveillance, and discrimination on the basis of race, religion, color, sex or physical handicap; laws providing whistleblower protection, access to personnel files, maternity leave, and time off to vote; laws establishing minimum wages, maximum hours, mandatory pay for overtime, timely payment of wages, and equal pay by sex; and laws guaranteeing employees’ right to know about exposure to hazardous materials on the job and to obtain information about their welfare fund.

The eight states with the least worker protection are all in the Southeast. In Alabama and Mississippi, not one of the fourteen laws had been enacted; in South Carolina only one; in Virginia and Louisiana only two; in Tenn-

---

Page 12

essee, Florida and North Carolina only three. The other two states in the bottom ten are the Plains states of Iowa and North Dakota.

The state which comes within one law of having all fourteen is California, which lacks only legislation prohibiting electronic surveillance. The other states in the top ten–those providing the most protection to workers through state statutes–are Connecticut, Rhode Island, Massachusetts, Illinois, Ohio, Alaska, West Virginia, Kentucky, and Maryland.

State Minimum Wages

At the end of 1985–when the federal minimum wage, which has not been adjusted for inflation since 1981, remained at $3.35–state minimum wages in non-farm employment ranged from a high of $3.90 in the District of Columbia to a low of $1.40 in Texas. That is among states having minimum wage standards for at least some of their workers; nine states have none at all, including six states in the Southeast: Alabama, Florida, Louisiana, Mississippi, South Carolina and Tennessee. Two of the bottom nine are Plains states, Iowa and Missouri; and one, Arizona, is in the Southwest.

Of the forty-two states with minimum wage statutes, twenty-two set a rate even lower than the federal minimum. There are many gaps and inconsistencies in coverage even where minimum standards do exist. For example, the state maximum of $3.10 in North Dakota affects only professional, technical, clerical and mercantile workers. The minimum for manufacturing workers is lower at $2.95, and for public housekeeping workers lower still at $2.80. In Utah the maximum of $2.75 applies only in the Salt Lake City area; elsewhere it is $2.50.

Three states besides the District of Columbia have a minimum wage higher than the federal minimum: Alaska, Maine, and Connecticut. Sixteen states equal the federal minimum of $3.35: Hawaii, California, Maryland, New Jersey, New York, Pennsylvania, Michigan, Illinois, Massachusetts, New Hampshire, Rhode Island, Vemlont, Minnesota, New Mexico, Oklahoma, and North Carolina.

Maximum Benefits for Disability

While all states provide disability benefits for job-related injury, there is considerable variation in the maximum weekly benefit. The maximum weekly benefit for permanent total disability of $1,114 in Alaska in the Pacific region was almost two times the next highest payment, $580 in Iowa. The top nine states, which paid over $350 per week as of January, 1985, also included Illinois, Michigan, Ohio, Maine, New Hampshire, Connecticut, and the District of Columbia.

At the bottom of the benefit scale, five of the six states that pay the least for permanent total disability–under $200 per week–are in the Southeast region: Alabama, Arkansas, Tennessee, Georgia and Mississippi. Indiana in the Great Lakes region is also in this group. Joining them in the bottom ten–where states pay less than $220 per week for job-related injury–are the Plains state of Nebraska and three Southwestern states: Oklahoma, Arizona and Texas.

Maximum Unemployment Benefits

As of January 1984, weekly unemployment benefits varied from a high in Massachusetts of $278 (where the range is from $185 to $278) to the national lows of $105 in Mississippi and Missouri. In nine states the top range of the weekly unemployment check exceeds $200: Massachusetts, Connecticut, Ohio, Illinois, Alaska, West Virginia, Louisiana, Pennsylvania, and the District of Columbia.

In the twelve worst states, the weekly unemployment benefit is $140 or less. Eight of these twelve are in the Southeast: Kentucky, Virginia, Arkansas, Georgia, Alabama, South Carolina, Tennessee, and Mississippi. The Plains states at the bottom are Missouri, Nebraska, and South Dakota; the lone Southwestern state is Arizona.

State Per Capita Expenditure

One measure of a state’s investment in its citizens is its per capita expenditures–the money spent per person (based on 1980 population) by state government in all categories. The eight states investing $1,500 or more per capita are led by Alaska ($2,548) and Wyoming ($2,132). Other states with high per capita expenditures are Hawaii, New Mexico, North Dakota, Minnesota, and Delaware.

Eight states spend less than $1,000 per capita: Ohio, Indiana, Arkansas, Florida, Tennessee, Texas, New Hampshire, and Missouri, which spends the least, $807 per person.

State Aid to Schools

As an indication of state investment in education, we looked at state revenue contributions per elementary and secondary school pupil for the 1980-81 school year. This figure was chosen to reflect state effort because the more

---

Page 13

familiar measure, per pupil expenditures, includes federal and local funds. It should be noted, however, that in some states, by law, localities bear the heavier proportion of costs, and this is not reflected here.

State revenue contributions per pupil are lowest in New Hampshire ($143.04) and second lowest in Nebraska ($688.77) The other nine states contributing less than $1,000 per pupil are Mississippi, Arkansas, South Carolina, Tennessee, Rhode Island, Connecticut, Vermont, Missouri, and South Dakota.

The state contribution is highest in Alaska ($4,210.66), and second highest in Washington ($2,366.89). Other states in the top ten, where revenue contributions per pupil exceed $1,500, are Hawaii, Delaware, New York, Georgia, Florida, Minnesota, California, and New Mexico.

Hazardous Jobs

Job-Related Death Rates

The two industry sectors with the highest job-related death rates (excluding agriculture) are construction, with a death rate of 37 per 1,000 workers from 1945 to 1983, and mining/quarrying, with a death rate for the same period of 50 per 1,000 workers. Employment in these two hazardous job sectors is measured here as a percent of all nonagricultural employment in the states for 1982. Since this was a recession year, the figures are lower than would normally be the case.

The eight states with the lowest proportion of these jobs–3.5 percent or less–are the District of Columbia, New York, Wisconsin, Michigan, Rhode Island, Massachusetts, Connecticut, and Oregon.

The seven states with the greatest dependence on these jobs–in excess of 10 percent of total employment–are Texas, New Mexico, Oklahoma, Alaska, Louisiana, West Virginia, and Wyoming, which at 25.6 percent has a proportion of hazardous jobs almost twice as large as the second worst state, 14.6 percent in West Virginia.

Rates of Occupational Disease

The U.S. Occupational Safety and Health Administration has identified six industry groups (excluding agriculture) generally considered to have unusually high rates of occupational disease. These are jobs in mining, cotton weaving mills and other cotton products industries, chemicals and allied products, rubber and miscellaneous products, and leather and tanning. Here we are looking at employment in these groups as a percent of all nonagricultural employment in the states for 1982. Again, during this recession year, the figures are lower than normal.

The states with the lowest proportion of jobs having high rates of occupational disease–less than one percent–are Oregon, Washington, and Nebraska. States with 1.5 percent or less of these jobs are South Dakota, Minnesota, Vermont, Maryland, and Florida.

The states with the most jobs having high occupational disease rates–in excess of 10 percent of all nonagricultural jobs–are Delaware, West Virginia, and Wyoming. Other states with 7 percent or higher are Kentucky, South Carolina, Louisiana, New Hampshire, and Oklahoma.

Commuting Time

Travel Time to Work

Time spent commuting to and from work is more than a measure of inconvenience, in this case, a one-way travel time of 45 minutes or more. It also reflects the geographic distribution of jobs within a state and the degree of job concentration in congested urban areas.

In the top ten states, less than 6 percent of all workers have a one-way commute of 45 minutes or more. This group is dominated by the Plains region: Nebraska, South Dakota, North Dakota, Iowa–all in the top five, with less than 5 percent of all workers–and Kansas. Also in the top five is the Rocky Mountain state of Montana. The remaining states in the top ten are Alaska, Wisconsin, Nevada, and Rhode Island.

Four of the worst five, where over 15 percent of all workers have a one-way commute of 45 minutes or more, are in the Mideast: New York with 25.3 percent of all workers, the District of Columbia (21 percent), Maryland (18 percent), and New Jersey (16 percent). Illinois (17 percent) is also in this group. Other states in the bottom ten are Louisiana, Virginia and West Virginia, Pennsylvania and California.

Health Care

Number of Physicians

As one indication of the availability of health care, we looked at the number of physicians per 100,000 people, based on the 1980 population. The rate is highest in the District of Columbia, with 511 physicians per 100,000.

---

Page 14

The top eight states in this category have a rate over 200 and except for California, all are in the Northeast: Maryland, New York, Massachusetts, Connecticut, Vermont and Rhode Island.

Six of the thirteen states with the fewest physicians are in the Southeast. Their rates range from 127 per 100,000 in West Virginia to Mississippi, where the rate is the lowest in the nation at 102. Other Southeastern states in the bottom thirteen are Kentucky, South Carolina, Alabama and Arkansas, joined by Indiana, Oklahoma, Iowa, South Dakota, Alaska, Wyoming, and Idaho.

Infant Mortality

A telling indication of the quality of health care in a state is its infant mortality rate, the number of infant deaths before age one, per thousand live births. The two states with the worst infant mortality rates–over 15 deaths for every thousand births–are Mississippi and South Carolina. The eleven worst states, all with death rates of 13 or higher, include West Virginia, Alabama, North Carolina, Florida, Louisiana and Georgia, and, from outside the Southeast, Michigan, Illinois, and Delaware.

A baby has its best chance of surviving its first year in Vermont, with 7.7 infant deaths per thousand, and in nine other states with infant mortality rates of 10 or below: New Hampshire, Massachusetts, Idaho, Utah, Colorado, Nebraska, Iowa, Hawaii and New Mexico.

Equal Employment

Traditionally White Male Jobs

Until recently, blacks and women have been excluded from traditionally white male (TWM) occupations, which are defined here as officials/administrators, professionals, technicians, and craft workers. What is being measured here is the number of blacks and women who were employed in these jobs as a percent of all blacks and women who were employed in private industry in 1981. Black men, black women, and white women are ranked separately.

The six states with the highest proportion of working black women holding TWM jobs–over 20 percent–are Montana, Idaho, Washington, California, New Hampshire and Vermont. Vermont at 32 percent outdistances second place Idaho at 24 percent.

Ten of the fourteen states where black women are more likely to be excluded from these occupations–less than 13 percent of working black women in TWM jobs–are in the Southeast. Only Virginia and West Virginia in the region have slightly higher rates. The bottom fourteen range from 12.9 percent in Alabama to 9.3 percent in South Carolina. Only Wisconsin at 9.0 percent has a lower proportion of working black women in these occupations; and only Wyoming, South Dakota and Nevada join the Southeast from other regions at the bottom in this category.

The thirteen states with the highest proportion of working black men in TWM jobs–over 30 percent–are Idaho, Montana, Utah, New Mexico, Vermont, New Hampshire, Massachusetts, Connecticut, and California.

The thirteen states where black men are still likely to be excluded from these occupations–less than 25 percent of working black men in TWM jobs–include eight of the Southeastern states: South Carolina, Kentucky, Arkansas, North Carolina, Georgia, Tennessee, Florida, and Alabama. The three states with the lowest proportions, however, are North and South Dakota and Wisconsin. North Dakota at 7 percent is significantly more exclusionary than next worst Wisconsin, where 19 percent of working black men hold jobs traditionally denied to them.

In fourteen states more than 26 percent of the working white women are employed in TWM jobs. The proportion is far higher in the District of Columbia (43 percent) than in second place New Mexico (29.3 percent). New York, Maryland, Delaware, North Dakota, Washington, California, Colorado, Montana, Massachusetts, Connecticut, Alaska, Virginia and Texas also have a high proportion of working white women in TWM jobs.

In the bottom ten states, the proportion of working white women holding TWM jobs is 21.4 percent or less. Eight of the ten are in the Southeast, from Alabama at 21.4 percent to the national low of 17.0 percent in Arkansas. The remaining bottom ten states are Mississippi, Kentucky, Tennessee, North Carolina, South Carolina and Georgia from the Southeast, and Utah and Indiana.

Labor Membership

Participation in Unions

As an indication of freedom to organize bargaining units in the workplace, we looked at labor organization membership as a percent of non-agricultural employment in 1980. States with the greatest proportion of workers affililiated with labor or membership organizations–over 30 percent–are New York, Pennsylvania, Michigan, Ohio, Illinois, Indiaian, Washington, West Virginia, and Alaska.

Sixteen states have the lowest labor organization membership in their workforces, less than 18 percent, and eight of the sixteen are in the Southeast: Lousiana, Mississipppi, Arkansas, Georgia, Virginia, Florida and North and South Carolina, which at 9.6 and 7.8 percents, respectively, have the lowest proportion in the country. Three of the remaining states are in the Plains region: North and South Dakota and Kansas. The others are Arizona, Oklahoma, Texas, New Hampshire and Utah.

Sidebar: CONCLUSIONS:

While this report began with a number of conclusions to be drawn from some thirty-three indicators of the quality of working life, the heart of the issue–the overall climate for workers in the U.S.–lies within the realm of jobs and income. From this perspective, several key points are clear:

* The U.S. economy is undergoing a major restructuring away from traditional manufacturing jobs and toward a technology-driven economy dominated by

---

Page 15

service jobs.

* Contraction in manufacturing and expansion in services and high-tech industries is uneven. The Southeast in particular lags behind the national trend, and rural areas across the nation are suffering the most, with the slowest job growth and the lowest incomes for workers.

* This unevenness in job and income growth has been exacerbated in the farm states and the energy states–notably Alaska–where conditions have deteriorated during the past two years. This time period is not covered here in the same depth as the preceding ten years, and this report may have captured a high point in their economic well-being to which they may not return for some time to come.

* The transition to the new national job mix and away from traditional manufacturing jobs is causing serious dislocations of workers which, in the absence of a human resource development policy, threaten to become longterm. The new poverty figures released August 1986, too late for consideration in this study, show a new and growing class of working poor.

* The thousands of new jobs that are being created are seldom filled by these dislocated workers, whose education and skills do not match the qualifications for high-tech manufacturing and service jobs.

* Even those dislocated workers who can make the leap from traditional manufacturing to the new kinds of jobs are earning substantially less money now. Fast food chains are not paying steelworker wages.

* These changes in the U.S. economy and the consequences for workers caught in shrinking job areas have profound implications for the Southeast. Despite numerical gains in job growth that lead the nation and recent improvements in state financing of education, the region has failed to meet the standards set by the rest of the nation in almost every other way: the smallest gains in wages and per capita personal income, the largest proportion of working poor, the highest incidences of poverty, and so on.

* The challenge and the task that face the Southeast today and in the future is to create jobs with the income and benefits needed to bring the region’s workers above the poverty level–not just new jobs as in the past, but jobs that will significantly improve the standard of living for people who work full-time, year-round.

* The reality is that in order to attract these better jobs, the Southeast must improve the quality of education. Recent steps in a number of states in the region to set higher standards and increase the state share of financing elementary and secondary schools are keys to a long-term strategy. Until it begins to take effect, another generation will leave the schools and enter the job market with skills and abilities well below those of workers in other regions, and in too many instances functionally illiterate.

* States that have been successful in attracting better jobs, as in Massachusetts, have invested in education. States that have been able to counter the shock of the structual changes in the economy, as is beginning to happen in the Great Lakes states, have successfully diversified their job mix. Not coincidentally, these are also the states and regions that provide the greatest degree of worker protection and the most consideration for workers who become disabled or unemployed. They have higher wages and lower rates of poverty, and a better chance of rebounding from periods of unemployment.

* One of the most striking and consistent regional performances is the grouping of the Southeastern states at the very bottom of the rankings for equal employment opportunity. The glaring maldistribution of the benefits of employment away from the large population of minorities and women damages the entire region.

* There are in effect two Souths: one where jobs and income are available, and one where they are not. Moreover, the effects are even more severe for blacks and women in the rural areas of the region.

* Regardless of improvements that may be made in job creation, human resource development, and education, unless these improvements are available to black and white Southerners alike, the region will remain the worst in the nation for wage-earners and their families.

* The poor, the working poor, minorities and women–especially in the rural South–have formed a permanent underclass in the region, one that has been called “disadvantaged” and “structurally unemployed” for more than twenty years. With recent changes in federal policies and programs, their lot has deteriorated below even the poverty levels of the early 1960s. Given the climate for workers in the region, there are few chances indeed for these groups to help themselves. In the absence of policies and programs that directly address their needs, there is little hope for help from other sources.

Kenny Johnson is the director of the Southern Labor Institute, a project of the Southern Regional Council. A native of Louisiana, he is a former regional director of the National Rural Center. Johnson joined the Council after having served as field director of the Voter Education Project. Marilyn Scurlock is a staff member of the Southern Labor Institute and a former staffer of the Southern Office of the National Rural Center.

Today’s Jobs at Yesterday’s Wages: GM’s Saturn Auto Plant Arrives in Spring Hill, Tennessee

By Carter Garber and Verna Fausey

Vol. 8, No. 4, 1986, pp. 16-24

Spring Hill Mayor George Jones says he learned the same time you did, if you were watching television on July 30, 1985, that General Motors planned to build the world’s most expensive manufacturing plant in his middle Tennessee community, population 1,275. By that point GM’s Saturn plant had been the object of a seven-month industrial recruiting contest involving a thousand sites in thirty-six states, a parade of governors bearing gifts, and impassioned pleas from chambers of commerce, local citizens and schoolchildren. But Saturn didn’t go to New York, which offered the billion-dollar bargain of one hundred megawatts of free electricity for twenty years, or to Minnesota, which pledged tax concessions and other prizes worth $1.3 billion, or even to Kentucky, which legislated a $306 millon educational aid package after word got out that GM considered the Bluegrass State’s school system inadequate.

Instead, Saturn came to a sleepy town off I-65 thirty miles south of Nashville. At the moment Mayor Jones watched GM’s announcement on his television set, Spring Hill had not even a single full-time police officer, fireman, or physician. The announcement, said Jones, was like something “falling from the sky.”

Spring Hill’s experience raises many questions about corporate power in the U.S., about industrial recruiting as practiced by most state governments, about the role of organized labor in a rapidly shifting economy, and about the ability of localities to control their own destinies.

Were They Just Lucky or What?

In effect, Tennessee won a national lottery for a promised 6,000 industrial jobs and a huge addition to the tax base. After the amazement wore off, one of the first questions asked in Spring Hill was, why us? The answer may be that GM was less interested in what Spring Hill had than in what it did not have: the area decidedly lacked experience in negotiating with large companies, other prospects for economic development, county-wide planning or zoning, organized citizen groups which might have opposed GM’s plans or at least have complicated matters, and the history of labor-management antagonism that characterizes many of the locales of other auto plants.

Spring Hill residents are minor actors, if not pawns, in a grand auto industry manuever. General Motors’ plans for Saturn represent the company’s main effort to

---

Page 17

face down Japanese car competition. GM created the Saturn Corporation as a subsidiary–with its own executives, engineers, dealer network–and a “special” labor contract. The Saturn plant will use computer and robot technology to produce half a million subcompact Saturn cars a year with about one-third of the workforce that would be needed at other GM facilities. Board Chairman Roger Smith touts Saturn as the key to the giant corporation’s survival and competitiveness as a domestic producer.

Construction of the Spring Hill plant will require four thousand construction workers for two-and-a-half years. Limited production is expected to begin in late 1989. When the plant reaches full capacity (some years later), GM claims that it will provide six thousand direct jobs and twelve thousand to fourteen thousand indirect jobs among suppliers, service firms, groceries, eating places and motels.

In choosing Middle Tennessee, GM joined a Southbound migration for automakers, including a Nissan plant at Smyrna, Tenn., just thirty miles from Spring Hill, and Kentucky’s planned Toyota facility. Michigan has gone to extraordinary lengths to preserve its hold on the industry, but the mid-South has become the location of choice for both U.S. and Japanese carmakers.

In addition to presumably docile labor, Spring Hill was chosen because it lies within five-hundred miles of three-fourths of the U.S. domestic market. The area had a railroad, interstates, and could provide four million gallons of water daily. Geographically it is a flat site about two square miles in size. In the rural setting, there were a small number of landowners from whom to acquire land.

“The final ingredients were simple but of the right combination,” according to Jan White of Landauer Associates. This New York firm which researched the sites for GM never revealed the nature of that secret combination. For seven months, Landauer employees visited potential locations, examined tax structures and school systems, went to parks, and read back editions of local newspapers to determine how each community solved their problems.

With so many suitors, GM could take its time. The national media provided millions of dollars of free advertising for the future car. A GM-commissioned poll showed that Saturn had 49 percent name recognition without building a plant or even designing a product. This public relations triumph, achieved largely because of U.S. desperation for jobs, is proudly heralded by Saturn’s executives.

By early February 1985, GM had information about every realistic location “already on the computer,” according to Stan Hall, a Saturn spokesperson. Peter Laerman of the United Auto Workers (UAW) chastised the corporation for encouraging a waste of public resources. “In cases where GM knows perfectly well those sites will not be chosen, they should make that clear before any more money is spent.” But GM kept up the “search” for another five months as desperate hamlets bid higher for the prize.

The site GM chose is in Maury County, just a few miles from its border with Williamson County. The latter is Tennessee’s richest and fastest growing county with an unemployment rate of 3.1 percent in July of 1986. Williamson County Executive Robert Ring says of Saturn, “It’s definitely not good for our county. I wish they had gone somewhere else.” Williamson County residents are concerned about the rapid changes in their county which is evolving from an agricultural to a bedroom community feeding metro Nashville’s booming “office parks.” The result is a controversial growth management plan that is unprecedented in laissez-faire Tennessee.

In Maury County, with 9.6 percent unemployment, the planning infrastructure was non-existent. Judy Langston, a county native who was hired when the planning office was finally set up three months after the Saturn announcement, explains: “Maury County government did not have any land use controls, policies or plan. We did not have any zoning or subdivision controls at all and there was not a planning commission as such.” Langston and the commission have worked quickly “to get the county ready to start dealing with the growth that’s coming.” But while this unpreparedness worked to GM’s advantage in many ways, it led to the defeat of an attempt by Saturn to head off an unsightly commercial strip next to its “campus-style plant.” Even though Saturn hired the Vanderbilt Law School Dean to work with the county to develop a scenic parkway, the old neighbors quickly let their new neighbor and politicians know that it would be a long time before they would tolerate that much “governmental interference.”

What Did Tennessee Offer?

Governor Lamar Alexander trumpeted his state’s victory in full-page newspaper ads published around the country. The considerable prize was said to be the largest one-time investment in U.S. history, and Saturn thus took on mythical dimensions and qualities far beyond the jobs and related industries it will bring to Middle Tennessee. To Tennessee’s Republican administrators, Saturn testified to the state’s attractiveness to manufacturing investors and to their own competitive ability in the politically prime arena of industrial recruitment.

---

Page 18

Alexander and former Senate Majority Leader Howard Baker had lauded Tennessee’s right-to-work law, its “pro-business climate and its hardworking labor force” to GM Chairman Smith in early 1985. These same factors were among the reasons the Southern Labor Institute ranked Tennessee as the fourth-worst climate for workers in the nation, but they made the state look good to GM and other companies. The governor and senator may not have actually mentioned it, but Smith’s computers would have told him Tennessee was in the bottom twenty percent of states in terms of maximum benefits for disability and unemployment, and statutory protections for workers. Nor would the wage demands be likely to be great from citizens of a state ranked forty-second in the incidence of working poor and near the bottom in manufacturing wages and income distribution. Since Tennessee is projected to have higher than national unemployment at least through the 1990s, this would be a state which would appreciate GM, whatever its pay and benefits, for a long time to come.

Tennessee also was promoted as a state whose tax structure has been tailored for big business: a one percent investment tax credit for industrial machinery, no sales tax on industrial and pollution control machinery, a tax exemption on finished goods, low worker’s compensation insurance rate, and no personal income tax. Over forty-nine percent of the state’s regressive tax revenue comes from high sales taxes, including a tax on food.

Tennessee’s industrial recruiting ads say, “Grow with a pro-business tax structure. Only four states have a lower state and local tax burden than Tennessee. Tennessee does not offer large tax concessions to attract business to the state–the tax structure is already attractive for business!”

With the nation watching and his 1988 Vice Presidential aspirations perhaps in mind, Tennessee’s governor eagerly courted the industrialists. Alexander had won one such prize in 1982-the Nissan plant- and wanted another. (Nissan made the largest U.S. industrial investment by a Japanese company in a highly automated truck assembly plant in Smyrna, thirty miles from Spring Hill.) The earlier success may have helped guarantee the second win. If GM wanted to prove it could compete with the Japanese, why not on the same turf? And the UAW, GM’s partner in Saturn, may have desired to locate nearby in hopes that Saturn’s union influence would rub off on non-union Nissan.

Greasing GM’s Wheels

In a less than candid statement, Alexander contended, “New York offered $1.2 billion. We didn’t offer a penny.”

But Tennessee’s General Assembly rushed to provide housewarming gifts to the new corporate arrival. In early 1986 Maury County legislators introduced a bill to put a $500,000 cap on the realty transfer tax and another cap on mortgage fees. Written to benefit very large plants “such as Saturn,” the bill was the result of a prior agreement among legislators, Saturn officials and the governor. The state lost a one time payment of $2.5 million to $3 million while local governments lost $75,000. Alexander also pushed through the Legislature a seat belt law wanted by GM to help forestall national air bag legislation.

In addition to the usual benevolence to large corporations, the governor has promised Saturn $50 million worth of roads, including a new I-65 exit and a new five-mile connecting “Saturn parkway” (much like that built for Nissan). Saturn will get its cars to market faster with a proposed $135 million expressway loop south of Nashville. Spring Hill is getting a bypass, two stop lights, state-paid planners and engineers. Tennessee pays for water quality and regional impact studies. Saturn will receive and control $20 million worth of job training, with no requirement that Tennesseans will be trained.

Justifying all this is Revenue Commissioner Don Jackson, who optimistically predicts that Tennessee may get ten dollars in tax revenues for every dollar it spends on support facilities for Saturn. The state’s sales tax revenues will increase when Saturn begins to meet its $200-million-a-year payroll four years from now, but several more years will pass before the state realizes other tax dollars. Business tax income was not coming in from the Nissan plant by 1985, even though Nissan began production in 1983. Moreover, while the state

---

Page 19

government may eventually experience a return on its investment in Saturn, Saturn’s neighbors fear that the bulk of the costs will be borne by the taxpayers of the counties and municipalities.

Meanwhile, many Maury County citizens wonder just who will act in their best interest. Many feel that their local officials failed to represent all of Maury County when negotiating the in-lieu-of-tax agreement with GM. Many more, including many local officials, wonder whose side the state is on when it comes to the negotiating with Saturn and to the planning for the trauma of its arrival.

Will Tennesseans Get the Jobs?

Much of the intense courting of Saturn was inspired by the lure of thousands of new jobs.

In November 1985, four months after Saturn’s site selection, a copy of the secret labor agreement between GM and the United Auto workers was leaked to the Spring Hill Area Concerned Citizens Group. It revealed that aa majority of the full initial complement of operating and skilled technicians in Saturn will come from GM-UAW units throughout the United States.” The document concludes that “because of the qualifications and experience of the current GM-UAW workforce, they will be a primary source for the initial complement, up to full capacity of operating and skilled trades technicians. The parties will actively recruit GM-UAW employees.”

This news stunned Maury County officials, who had made large tax concessions expecting the majority of jobs for area residents. The Citizens Group leaders had been asking since early September for eighty percent of the Saturn workforce to come from the county and the state. GM says it made no promises.

---

Page 20

Not surprisingly, UAW Vice President Donald Ephlin has reported that union members all over the country are interested in the Saturn jobs. “We don’t need applications. Every day I get letters inquiring about employment,” he said. Ephlin predicts that of the estimated six thousand jobs about five thousand will be in the UAW bargaining unit. These could be filled ten times over by the fifty-four thousand UAW members now laid off, not to mention the forty-one thousand GM says it may soon lay off or the current GM workers who may want to move when Saturn begins hiring.

Many local people resent outsiders’ having a lock on the majority of Saturn’s jobs. GM has quietly let its Saturn partner, the union, be played off against the local communities so that the UAW is faulted by many as having taken the jobs Maury County residents thought were to be their main benefit from Saturn.

Spring Hill resident and fiberglass manufacturer Jim Miller said, “the governor kept talking about at least three thousand jobs.” But, “once we read the agreement we knew we could not get any jobs out of the project.” He added, “the governor and GM ‘foxed’ people on jobs.” Miller asked the governor why no Tennesseans were guaranteed jobs and “Dear old Alexander said that if not one Tennessean gets a job at Saturn, it will still be good for Tennessee. Now that may be good for Tennessee, but what about Maury County?”

GM Unwilling to Pay Full Property Tax

Tennessee helped Saturn choose a county with lower property rates than surrounding areas. Saturn then hammered Maury County governmental officials into an unprecedented forty year in-lieu-of-tax agreement. According to county budget director, A. C. Howell, “the forty-year term was the toughest part and the part that the county disliked most about the deal. We really didn’t want a forty-year deal. It was a GM idea and they took pretty much a hard line on it.” GM’s leverage was that its choice of this county was “tentative” until it got the deal it sought. By withholding the labor agreement from the public and county officials, GM had a further advantage in negotiations.

Maury County’s industrial board agreed to hold title to the site so Saturn is not burdened with real and personal property taxes, the county’s primary revenue source. The first year Saturn agreed to pay $7.5 million; in 1987 and 1988, $3.5 million each year; from 1989 to 1995, $3 million each year; and from 1996 to 2025, the rate rises from twenty-five percent to forty percent of the standard property tax rate. The county was pleased at being able to negotiate the larger amounts of funds up front since normally the property tax would not show up in significant amounts until the plant was fully built. “The plan of action is to use the front end money to handle the initial impacts. Then we’ll have to develop some mechanisms to make sure future developers have to pay their own way,” said Howell.

Local residents and officials were skeptical of the deal since most “high growth” counties find it impossible to make developers cover all the costs of new services. If Saturn doesn’t pay for expanded services and if the developers who follow Saturn to Maury County don’t pay, who will? The residents of Maury County, who currently enjoy a low two percent property tax rate, expect that they will have to pick up the tab.

Despite being spelled out in an official agreement there are still different estimates of just how much the county has given away to GM. Auto industry watcher Ralph Nader has estimated that the in-lieu-of-tax deal will cost Maury County almost $57 million during the first ten years. Budget director Howell figures that if the plant as proposed is built “the full tax value would have been $14 million” annually, a figure less than half the $32.9 million detailed in published reports elsewhere. Even if Howell is accurate, this means that after construction GM will pay $77 million less than the normal county tax rate during the seven year period from 1989-1995.

Nader staffer Jim Musselman said Maury County officials failed to compare what GM said it was willing to pay in property tax with what it was already paying at its facilities in Michigan and Ohio. GM wasn’t about to volunteer that it pays almost twice as much tax on smaller plants. Howell said county officials talked to officials in few other places during the six to eight weeks of negotiations, but he wishes there had been more time for research. While GM clearly benefited from the pressure of time it applied, Howell says the greatest urgency came from state officials who wanted an agreement to be reached but nevertheless offered very little assistance.

On February 28, 1986, Saturn ceremoniously made its first payment of $2 million. Its next checks were delivered in late May and September to the Maury County Industrial Development Board. Posing in front of the enlarged check, Howell wondered whether he should smile or frown. It probably is not the best deal in the world but when you go to buy a car you don’t get the deal you want. I can’t tell whether it was a good deal or not. I think it was as good a deal as we could have gotten… History will tell.”

Maury County found that, once the negotiations on an overall amount from Saturn were concluded, the wrangling had just begun. Separate agreements had to be made to divide its new revenues with the incorporated towns of Spring Hill, Columbia, and Mount Pleasant. The various county departments openly squabbled over the remainder. The School Board has even threatened to sue to get its standard forty-seven percent of county taxes.

Even with its own discounted rate Saturn has become Maury County’s largest taxpayer; its nearest contender pays less than a third of GM’s amount. Saturn’s employees will double the county’s 1985 manufacturing labor force, giving the new constituents tremendous political clout in a county which was projected to have only 25,375 households in 1990.

Further, GM’s actions in other parts of the nation suggest that Maury County will be asked in the future for more tax cuts. GM has demanded real property tax reductions of up to eighty percent in eighteen Michigan locations and has threatened to move its plants if the cuts are not forthcoming. Four Michigan towns have

---

Page 21

already given in. “For GM the Saturn plant represents another step in its ongoing experiment to discover just how far it can lower its tax obligations,” concludes labor writer Anthony Borden in The Nation (June 21,1986).

Will the Town Get its Fair Share?

“More and more it looks like GM came to this rural area of Tennessee looking for a colony to exploit instead of a community to respect,” said Ralph Nader. “The Volunteer State better start volunteering more citizen and governmental oversight and get the free-loading GM off welfare.”

“Let’s be honest. The plant is going to affect us the most,” Spring Hill Mayor Jones exclaimed in late August 1985. “We’re the ones who are going to be dealing with the traffic and having our roads and our land and our homes torn apart. Nobody seems to be interested in Spring Hill.”

Martha Torrence, a school teacher who moved from Nashville to retire in Spring Hill and is secretary of the Spring Hill Citizen’s Group, said of Saturn’s first year, “We just can’t understand why we’ve been ignored, they forgot about us, just like we were dust to be moved around.”

For several weeks, the state officials, Saturn and the UAW ignored the mayor’s letters and requests for a meeting with the townspeople to explain what was going on and to answer citizen’s questions. Only in September 1985, when Mayor Jones warned that he might oppose zoning changes needed for initial construction, did the three agree to the town meeting.

Spring Hill’s annual property tax revenue was around $21,000 before any GM payments. A recent property reappraisal had the effect of a major tax hike and Mayor Jones did not want to raise taxes so soon to pay for new facilities. When the mayor’s efforts to get a financial commitment from the county and GM failed, the city council began the procedure to annex the Saturn site, just two miles outside the city limits. This would have brought the town an estimated $8.5 million annually, instead of the $11.5 million over a forty-year period to which they eventually agreed.

Upon learning about the annexation plan, Saturn’s general counsel threatened that GM would leave the Spring Hill area before the company had turned one shovel of dirt. “I don’t know if I’d call it blackmail,” Mayor Jones told the Flint (Mich.) Journal. “I have heard accusations before that if we don’t do this or that Saturn will pull out.” Jones reports that during this period he received a number of death threats from developers who were panicked they would lose anticipated substantial profits if GM did not come.

Spring Hill’s threat to annex Saturn’s property, followed by Saturn’s threat to leave, is credited with giving the town enough leverage with Maury County to get a large part of the in-lieu-of-tax money. For $250,000 annually, Spring Hill committed itself in writing not to annex the Saturn site. Mayor Jones is adamant that the annexation proposal is merely tabled and will be activated if the county fails to pay.

Speculators Descend

“We didn’t have any real estate offices in Spring Hill before Saturn hit. The next day we had five,” says Joan W. Jackson, the manager of the only branch bank in town. “Land speculators blew into town with money in hand, bought land, and flipped it.” Two months after the announcement, land values had risen from $1,000 to $2,000 per acre to $5,000 to $10,000 per acre, with some acreage selling as high as $35,000. Activity tripled at the county’s Register of Deeds, which collected more than a million dollars in recording fees and transfer taxes.

During the early “gold rush fever,” the mayor distributed signs “My home is not for sale. Compliments of George Jones, Mayor.” He explained, Y want my neighbors to know I want to keep them.”

By Spring 1986 real estate activity had slowed to a trickle. Many local people only made money as the outsiders let their options expire. Real estate agents and bankers predict a second boom as soon as the town’s bypass location is announced and when Saturn plant

---

Page 22

construction begins.

As the unemployed began to come to the boomtown, Mayor Jones and the Board of Aldermen bought them one-way tickets to Columbia or Nashville. The bus doesn’t stop in Spring Hill, but a policeman takes the indigent newcomers to Main Street and flags it down. Legal Services personnel worry that the bus trip may await some local people as well. After Nissan was built local people with low incomes became homeless as the property values rose.

“The rental situation here is already deplorable,” says Bill Haley, Legal Services director in Maury County. “The trailer parks, which will be the primary places available for the transient construction workers, have outrageous lease provisions, which allow landlords to seize the personal possessions of the tenants if they don’t pay up. We’re going to see local people evicted, as the landlords jack up rents to lease to outsiders. Every county in the area has a long waiting list for low-income housing now. With the tremendous real estate pressures, homelessness is going to be an overwhelming problem and the counties are doing little to address it.”

The arrival of the county’s largest taxpayer frightens local residents who wonder whether they can afford to stay. Rising land values will increase taxes at the same time as the demand for new services calls for increased county revenues. While the mayor is proud of his negotiations with the county, he feels the negotiations between the county and Saturn “were very poorly handled.” Mayor Jones, a contractor, draws an analogy with his trade. “A lot of people underbid just to get the job. But when you’ve got to pay a dollar and a quarter to get a one dollar job, you’re talking one step backwards and it’s not good business. If it’s going to cost us more to have them here than we’re going to get in return, then I think we’re making a big mistake.”

“It will be the people on fixed income who will suffer,” says Mayor Jones. Citizen’s group leader Martha Torrence agrees: “We who are trying to continue here might have to move out of the area because of taxes.”

Homeowners are not the only victims. Randy Lockridge, who farms a thousand acres, declares that Saturn, named for the Roman god of agriculture, “will ruin farming in Spring Hill and have a negative effect on farming in all of Maury County.”

Dairy equipment supplier John Campbell, president of the Citizens Group, agrees that “farming’s a thing of the past in Spring Hill.” The town’s farm implement dealership is already closed, and the rapidly rising land prices seem to affirm his conclusion.

“Many people in the community who were in favor of the project have now turned against it after seeing the way GM operates,” said Campbell.

In the wake of recent elections, Jim Cathey, a landowner, said, “We really should be voting on getting that plant here.”

Cathey’s words echo the thoughts of thousands of Southerners who suddenly are faced with the rapid changes and unintended results of development decisions made secretively by a few state or local officials in pressured negotiating sessions with outside giant corporations. There are no mechanisms for public participation, much less approval.

State Needed to Manage Growth

Governor Alexander has used the Nissan and Saturn catches to catapult himself into the National Governor’s Association Chairmanship and to national political prominence great enough to cause talk about an Alexander role in the White House. Alexander has 90 tied his image to the Saturn project that he quips: “If it’s shelved, they’ll shelve me right along with it.” More than $460,000 of state funds have been spent on Saturn-oriented public relations in which media professionals have crafted Alexander’s positive, concerned image. Yet near the plant site, among officials and citizens alike, few are Alexander boosters.

“We don’t understand the governor letting such a thing come into our state. We think he should have said, “Okay, but give us so many jobs,” complains Martha Torrence. Mayor Jones’s struggles to get the governor’s attention are well known. Alexander committed the state to paying for the town’s planning, abut every time a bill comes up they want to give a run around getting it paid.” Adds County official Howell, “We really feel like they should have helped us more in planning. The city of Columbia and the county are entitled to the same thing Spring Hill was. I think they gave more to Spring Hill to hold down the press situation. We weren’t making that much noise so they didn’t have to do anything to quiet us down.”

The Saturn mishandling by the state led to a fundamental questioning of the state’s conduct of industrial recruitment by representatives of other localities, including the Tennessee Municipal Bond Fund vice president, Ed Young.

“What role should the state play in helping local governments deal with a mushrooming situation like this involving a major international corporation, the Tennessee Valley Authority, some seven or eight municipalities, several counties, a couple of development districts, at least a dozen state departments and agencies, and numerous other entities such as school and utility districts?” Young asks. Recruiting success is just the first step in a process-not the final one.”

“There were a number of task forces the governor appointed in the Spring Hill situation. They had one on transportation, one on water and sewer, but there was not the overall coordination of these functions. Only the governor can provide that,” said Young. “State officials must begin to develop an institutionalized memory and expertise regarding growth management so that the right things are done by the right people at the right time and the mistakes of the past are avoided.”

Making Modern Mythology

The Saturn myth is far more important than the Saturn reality to all concerned. This is why, what in reality is one more branch plant locating in the rural South, has captured the national imagination.

To the company, the Saturn myth represents a

---

Page 23

resurgence in thirty-eight states of the time-worn notion that “what’s good for GM is good for the country.” GM has found that even corporate giants can be given the aid and comfort Americans usually reserve for underdogs in the nationalistic crusade to beat the foreign competition (some of which is owned by GM).

The legendary dimensions of Saturn have built political careers and justified raids on public treasuries from the county’s to the nation’s. Even in the latest tax “reform” bill, the deficit-ridden Congress showed its support by writing in a special $60 million tax-break specifically for Saturn.

For the union and the industry the Saturn myth has come to symbolize the “pattern for the Twenty-first Century industrial operation.” No matter that eighty percent of it is already in practice. The union is willing to forego hard-fought contract elements like seniority and grievance systems for a chance to be a partner in this undertaking of mythic proportions.

Saturn’s shiny, state-of-the-art features mesh with the public’s desire to believe in reindustrialization–that the glories of Henry Ford’s revolution can come back in a high-tech form.

For Tennessee and Maury County Saturn’s myth is that the industrial recruitment lottery can be won. There is now hope that young people will not have to leave their rural homes to find jobs. There is the illusion that our local and state officials are in charge even as they carry out decisions made in distant corporate boardrooms.

Despite the tremendous odds against them, communities across America have gone into a period of self-flagellation and blame that GM did not choose them. Most have learned nothing from the massive expenditures of time and money. They have fallen back on the losers dictim: “Try harder next time.”

The desperate desire to win justifies all public actions on the basis of what they will do for industrial recruitment. In the wake of the Saturn success, the governor’s State of the State speech instilled fear in the legislature that, if they don’t pass his three billion dollar roads program–“jobs corridors”–they would lose the Saturn suppliers to one of the eleven other states within two hundred-fifty miles of the new plant site. Similarly, better schools, higher sales taxes, and a myriad of other unrelated governmental items are justified to Americans by industrial recruitment.

Why are Americans so vulnerable to such mythology? There simply are not enough jobs to go around. Saturn has proven that states, and even unions, are willing to do most anything for jobs. A relative few is all Saturn will really provide. While the optimistic twenty thousand eventual plant and related jobs sounds impressive, Governor Alexander in more candid moments indicates that two hundred thousand jobs, or ten percent of the state’s workforce, are lost annually to plant closings, bankruptcies and shutdowns. Saturn’s total job impact-ten percent of what is lost annually in one state-is thus miniscule.

Few will bother to look beyond the comforting myths at the reality when industrial recruitment succeeds. Maury County now is a living example-and the real effects will not be known for years.

What is known is that the three reasons for industrial recruitment–jobs for locals, a better tax

---

Page 24

base, and community improvement and an era of progress for those who reside there – have not materialized. Many long-term residents have little hope that they ever will.

“Tomorrow’s Jobs, Yesterday’s Values” is the new Tennessee state slogan. At eighty percent of the industry standard pay, Saturn will surely bring yesterday’s wages. A tax rate less than a third of normal promises a reprise of yesteryear’s company town scenario. Which of yesterday’s values are being preserved?

Saturn is preserving yesterday’s elements that corporations value–a docile, concession-prone workforce located in a community already nervous by every rumor that its corporate benefactor may leave or is having financial woes.

In self-appreciation festivals in each of Tennessee’s ninety-five counties, citizens are gathering to learn about and celebrate their past as part of Homecoming 1986. Despite the attempted parallels between the early pioneers and those charting the frontiers of Saturn, there is a real awareness that something is being forgotten, something irretrievably lost in Tennessee.

What about the values of self reliance, of community-building. of democratic local decision-making, of charting one’s own economic destiny? Tennesseans may remember that their foreparents came here to escape their economic dependence on the Saturns of yesteryear.

Amidst the booths demonstrating barnraisings, furnituremaking, spinning, and even moonshining, Tennesseans may get in touch with the real values needed to put all our unemployed citizens and resources back to work. While this may at first seem naive, economists say the majority of new jobs are being produced by small businesses, not by large corporations. Tennessee’s Economic and Community Development Department, despite its almost exclusive emphasis on industrial recruitment, documents that over a five-year period almost seventy percent of the state’s new manufacturing jobs were from Tennessee firms expanding or starting up.

As the 999 sites which didn’t get Saturn ponder Maury County’s situation, maybe they should be grateful. If they can wean themselves from the Saturn myth, they have a chance to proactively develop their economy rather than reactively awaiting the next announcement from a far-off corporate boardroom.

The states, counties, and cities have shown they are willing to subsidize every step of a company’s business -build the roads, provide all the social and physical services, do the planning and growth management, subsidize the utilities, provide job training, waive the taxes, own the factory and land, and sometimes pay the initial wages – taking all the risks. It’s time public entities use these resources to support locally-generated forms of economic development which will hire local people, complement the ways of life of current residents, and build a stable local tax base and economy.

Carter Garber is the founder of Southern Neighborhoods Network, a regional organization providing training and assistance to community economic development groups. Verna Fausey is editor of the regional bimonthly Southern Neighborhoods, and the founder of Public Interest Research. Garber and Fausey co-edit the Community Economic Reporter, a bimonthly o’ economic issues in Tennessee. The authors wish to thank Paul Elwood, a member of their editorial board, who assisted with interviewing, research, and editing. Research funding was provided by National Rural Coalition as well as SNN’s Economic Development Policy Project.

Labor Gives to Make Saturn Work

By Carter Garber and Verna Fausey

Vol. 8, No. 4, 1986, p. 19

The Saturn Agreement has set a new pattern for UAW bargaining in the automobile industry and is affecting many negotiations carried out by other unions. Despite an early GM promise to the UAW insistence that Saturn not be a precedent, GM’s Chairman Roger Smith talks of the need to “Saturnize” industry and UAW Vice President Donald Ephlin now declares “We need a lot more Saturns.”

From the beginning, the Saturn Project was a joint effort of GM and the UAW. The 1985 accord has its genesis with the establishment of a joint study center in the spring of 1983 to map out “a new approach to union-management relations and the more effective use of human resources if assembly of small cars was to be feasible in the United States.”

The unusual union contract has created controversy within UAW and a debate within the nation’s union movement. Some charge that the UAW has sold out under what Saturn calls its new “philosophy of total cooperation.” UAW leaders are defensive; perhaps because “no party to Saturn has risked more with this experiment than the UAW,” according to labor writer Anthony Border. GM’s William Hoglund stresses that the UAW is a partner and “a stakeholder in Saturn and participates in decisions. A UAW advisor is on the Saturn management staff and is a part of all enterprises.”

The contract reflects the concessions typical of the Reagan era as well as autoworkers’ desire for job security. Saturn employees, called members, will take a twenty percent pay cut in straight-time GM wages in return for profit-sharing and additional income based on meeting production, quality and productivity goals. Production will be carried out by small work units of five to twenty-five people rather than by assembly line. “Our work teams are going to do it all-seek resources, keep records, communicate and work with supplier partners and insure quality,” according to GM’s Hoglund.

In order to get a commitment of relatively secure employment for eighty percent of the workers, the union gave up normal grievance procedures, seniority rights, fixed work rules and practices, and traditional job descriptions. The Agreement reads “Saturn will not lay off Saturn members except in situations rising from unforeseen or catastrophic events or severe economic conditions.” This sounds like a weak guarantee in a country whose economy has be in an official recession for half of the past one hundred and twenty years. Yet the Chr8ysler company to give workers a sixty-day layoff notice “when practicable.” The UAW was willing to agree to this because of numerous layoffs and the rapid loss of members in an industry which has seen forty-seven facilities shut down since 1980. However, the deep concessions make it clear Saturn was designed to compete with domestic as well as foreign autoworkers.

Once the agreement was complete, GM picked a right-to-work state to test it. Saturn was to be kept away from GM’s other plants where there are strong anti-management sentiments and more traditional labor contracts. GM’s labor relations chief, Alfred S. Warren Jr., said that the UAW fought the Spring Hill location “up until the last moment” as the ninty-nine member union/management team debated sites.

While Tennessee governor Alexander has made his peace with the UAW in order to get the plant, Republican gubernatorial candidate Winfield Dunn is not bound by this peace treaty. Dunn, who was governor from 1971-1975, feels the Saturn agreement “violates the spirit of Tennessee’s right-to-work law.”