Tax Credits for New Jobs, but Really for Union Busting?

[Omaha Steve]

http://inthesetimes.com/working/entry/13335/tax_credits_for_new_jobs_but_really_for_union_busting/

Thursday Jun 7, 2012 4:24 pm

By Mike Elk

A California-based company called VWR is busting its union, moving work to a non-union workforce a few hours away and receiving both federal and state tax incentives to do it. The scandal is yet another example of how companies can game the tax systems while hurting workers, and the government does little to stop them.

In Brisbane, Calif., 183 workers, members of Teamsters Local 853 that work at VWR, will lose their jobs at the end of the year when their scientific chemical warehouse closes. VWR, which is owned by Chicago-based private equity firm Madison Dearborn Partners, is moving the warehouse 230 miles away to Visalia, Calif. At the warehouse in Visalia, workers will be non-union and are expected to make half of what the current workers in Brisbane earn, according to the Teamsters.

The job losses will devastate local workers, many of whom are close to retirement age and will have difficulty finding jobs elsewhere. It will also devastate the city of Brisbane. A study conducted by the Federal-State Inquiry into Job Losses and Misdirected Tax Policy, chaired by Rep. Jackie Speier (D-Calif.) and California State Treasurer Bill Lockyer, found that the warehouse closure will result in the loss of 183 direct jobs and 83 indirect jobs among the suppliers and surrounding community in the Brisbane area. The loss of jobs will also reduce the City of Brisbane’s tax revenue by 18.5 percent.

The company, though, will benefit financially not only from halving workers' salaries, but from a large amount of federal and state incentives to move. The City of Visalia, where the warehouse is being moved to, has received $2 million in federal Department of Commerce grants to do infrastructure improvements to the industrial park where the new warehouse will be located. VWR will also receive a total amount of $30,000 over a five-year period in tax credits from the state of California for every new worker hired.

FULL story at link.

[hay rick]

1. Madison Dearborn Partners.

From the article:

"The company, though, will benefit financially not only from halving workers' salaries, but from a large amount of federal and state incentives to move. The City of Visalia, where the warehouse is being moved to, has received $2 million in federal Department of Commerce grants to do infrastructure improvements to the industrial park where the new warehouse will be located. VWR will also receive a total amount of $30,000 over a five-year period in tax credits from the state of California for every new worker hired."

In short, the Department of Commerce helps pay for the improvements to one industrial park so that the lessees can abandon another industrial park and community. The State of California then kicks in tax credits worth over $500,000 so that a company can replace union workers with lower-paid non-union workers. Sweet.

The article notes that VWR is owned by Madison Dearborn Partners, a Chicago private equity firm. Madison Dearborn also happens to be Rahm Emanuel's largest lifetime campaign contributors. Link here: http://www.opensecrets.org/politicians/contrib.php?cycle=Career&cid=N00024813