We hear a lot about jobs creation. It is a concept espoused by political leaders all over the world. Many talk about bringing back jobs believing that the loss was due to outsourcing. Certainly, in the Western nations, some of the job loss was attributed to this. Yet, numerous studies show that more than 80% of job losses are due to automation.
This fact does not stop the political elite from still pursuing this avenue. In the United States, one of the most favored tactics is huge giveaways in the form of tax incentives. This is in return for the elusive "job creation".
One of the more noted examples of this is from the State of Wisconsin.
Photo by Daniel Berehulak/Getty Images
Last year, Wisconsin was able to lure Foxconn, the maker of Apple and Samsung phones, to the state through tax breaks totally $4.5 billion. In return, Foxconn is going to potentially provide 3,000-13,000 jobs.
All this sounds good on the surface until one really looks at the numbers.
Foxconn itself has been more circumspect on the number of jobs it will create, saying in a press release it will “create 3,000 jobs with the potential to grow to 13,000 new jobs”. Even if 13,000 new jobs are created, Wisconsin would be paying $346,153 per job at a subsidy of $4.5bn. An astronomical sum, but nothing compared to the $1.5m per job cost if the deal ends up creating just 3,000 new positions.
The taxpayers of Wisconsin will pay between $350K-$1.5M per job. This is true only if Foxconn delivers.
Nor are the jobs guaranteed. Foxconn made similar promises of huge job creation in Brazil and Pennsylvania that failed to come to pass.
Another fact that is making the situation even murkier is that Foxconn does not have a great track record, of late, at creating jobs. Actually, it is becoming rather adept at job destruction.
Being one of the leading tech firms in the world, it only makes sense that it is on the cutting edge of technology. This means robots. Being a Chinese company, the embracing of this technology is in full swing.
Two years ago, Foxconn was able to replace 60,000 workers with robots.
Apple and Samsung supplier Foxconn has reportedly replaced 60,000 factory workers with robots.
One factory has "reduced employee strength from 110,000 to 50,000 thanks to the introduction of robots", a government official told the South China Morning Post.
https://www.bbc.com/news/technology-36376966
Foxconn definitely has a spotty track record in these areas. It is not safe to presume the job creation will be there like many are anticipating. A betting person would lean more toward the 3,000 job level as opposed to the 13,000 with this company.
We would be remiss if we did not mention the fact this is creating some construction jobs in the meantime. So there is other economic activity that can spawn off this which is a good thing. The issue is that the money spent by the state is going to provide a questionable return.
This entire situation highlights the problem we are facing. This pathway is taken by the political leadership in both parties without a second thought. At the same time, a topic like Universal Basic Income cannot even get into the discussion.
The technological factor as it correlates to employment is on full display here. It is a situation that involves tens of billions of dollars in total yet there are only thousands of jobs in play. A plant this size, 30 years ago, employed tens of thousands of workers over three shifts.
It is a situation reproducing itself in multiple areas. If the return is not there for these subsidies to major corporations, is there a better way?
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