Companies stand to get $200 billion from a single provision of the Inflation Reduction Act … but what do workers get?
Under a provision of the Inflation Reduction Act, some factories making batteries for electric vehicles will each receive more than a billion dollars per year from the U.S. government, with no requirement to pay good wages to production workers. Thanks to the Advanced Manufacturing Production Credit, also called 45X for its section in the Internal Revenue Code, battery companies will receive tax credits that they can use, sell, or cash out.
The 45X program alone will cost taxpayers over $200 billion in the next decade, far more than the $31 billion estimated by Congress’s Joint Committee on Taxation. On top of 45X and other federal incentives, factories manufacturing electric vehicles and batteries have also been promised well over $13 billion in state and local economic development incentives in just the past 18 months.
That’s according to a new Good Jobs First report, “Power Outrage: Will Heavily Subsidized Battery Factories Generate Substandard Jobs?”
What do local communities get from companies in exchange for public money? The Biden administration says the IRA will create “good-paying union jobs,” but the federal tax credit has no job quality requirements for permanent jobs and doesn’t mandate companies pay market-based wages or benefits.
Good Jobs First did the math for five recently announced battery factories. Here’s what we learned:
- Total subsidies will range from $2 million to $7 million per job.
- Average annual wages, as announced, will be below the current national average for production workers in the automotive sector.
- The 45X credit alone is large enough to cover each facility’s initial capital investment cost and wage bill for the first several years of production.
For example, Ford Motor’s new $3.5 billion battery plant in Marshall, Michigan, will be eligible for an estimated $6.7 billion in federal 45X tax credits. State and local governments have already awarded it an additional $1.7 billion in subsidies. The company has promised to create 2,500 new jobs that it says will pay an average annual wage of just $45,000 a year, while reaping subsidies of $3.4 million per job.
As plans for these facilities are finalized, we recommend a set of policy actions to set the country’s emerging EV-battery industrial complex on the path to “high road” employment.
Read the full report, including our policy recommendations, here.
Good Jobs First, founded in 1998, is a non-profit resource center that promotes corporate and government accountability in economic development.