Power Outrage: Will Heavily Subsidized Battery Factories Generate Substandard Jobs?

By Jacob Whiton and Greg LeRoy - Good Jobs First, July 2023

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.

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.

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Disclaimer: The views expressed here are not the official position of the IWW (or even the IWW’s EUC) and do not necessarily represent the views of anyone but the author.