|An Enterprise Zone victim speaks out at a hearing.|
The program allows businesses to receive tax breaks of $37,500 for each new employee they hire in one of California's 40 Enterprise Zones. The program encouraged two Teamster employers to dump their union workers, move to an Enterprise Zone, hire cheaper workers and get tax breaks in the bargain.
One employer, Atlanta-based Blue Linx, is a building products distributor. And get this: it lists "safety, respect and learning" as its values for "People." VWR is a laboratory supply and distribution company owned by a
Sara Flocks at the California Labor Federation writes in the Labor's Edge blog,
Workers at VWR International and Blue Linx are living proof of the devastation that EZs can cause. Teamsters Local 853 has represented workers at both VWR and Blue Linx for years, and workers had good union wages and benefits...
But these companies realized that the EZ program offered them perks that they couldn’t refuse. They could move into an Enterprise Zone and enjoy lavish benefits like a $37,500 hiring credit for each employee hired, sales tax credits for any new equipment bought, and a whole host of local perks.
Workers were actually willing to move to follow their jobs given the good union wages and benefits and their long tenure with the companies. But here's the catch -- in order to get the EZ hiring credit, the companies could not bring along any of their current workers. Not that the companies saw that as an obstacle—by ditching union workers they could not only slash wages to $10 an hour with no benefits, and they could also get generous hiring credits for each new low-wage worker they hire.Blue Linx at first told workers they could follow their jobs. Then managers clammed up. Then Teamsters found through a Google search that the company was hiring at the new location. Now they're scrambling to find work.
VWR workers got similar treatment. To receive severance pay, they had to sign an agreement that they wouldn't try to follow their jobs to the Visalia Enterprise Zone. And VWR got $5.6 million in tax subsidies.
Research shows enterprise zones don't create jobs, don't stimulate business activity and cost taxpayers $700 million. Worse yet, it's growing at 30 percent annually.
Gov. Jerry Brown wants to reform the
Flocks puts it best:
Workers paid money to lose their jobs—and they’ll keep paying until we take action to stop this devastating and expensive program.Stay tuned.