Private companies receiving taxpayer dollars must be accountable for job creation promises

Recent stories around the inequitable distribution of pandemic relief funds have left people in shock, wondering how we got to a place with such utter lack of transparency and accountability. Some headlines include multinational corporations sheepishly returning loans meant for small businesses or reports of companies scheming to absorb the stimulus money their employees received from the government by taking it out of their paychecks[1] These examples serve as a slap in the face to the thousands of struggling small businesses that have been shut out of pandemic relief thus far, and the time has come for us to have a hard conversation with ourselves and recognize this lack of accountability for what it is– business as usual.

While these stories make good headlines, we cannot feign ignorance and discuss these issues as if they are exceptions as opposed to the rule. For years, we have doled out taxpayer money to big corporations without real transparency or accountability for concrete commitments and created the conditions under which this type of highway robbery has become commonplace.

Take, for example, Tesla’s lack of accountability to taxpayers, despite the nearly $5 billion that Tesla has been given in government subsidies. Tesla is a perfect example of what can go wrong when we give public dollars to private companies with little accountability. Although Musk’s COVID-19 tweets[2] and refusal to obey the shutdown laws have received outsized attention, Tesla’s history of injuries and layoffs show that the company’s disregard for community accountability is a historical pattern, not simply a viral one-off.

It didn’t take a pandemic or a national recession for Musk to fire up to 700 workers in 2017, which CNBC linked to cost-cutting, not a purge of poor performance. Similarly, it didn’t take a pandemic or economic downturn for Tesla to fire 9% of its workforce in 2018, or 7% of the workforce in the first month of 2019 alone via mass-email (the group of laid off workers included, coincidentally, the entire quality control team). In fact, it is possible that Musk’s penchant for payroll purges has contributed to the reasons why California halted an employment training reimbursement to one of his companies.

Not only has Tesla repeatedly decimated its workforce with no regard for community impact, the company has fallen short in other generous states too. New York has spent over $950 million on a taxpayer-funded factory in Buffalo, where Tesla intended to build solar roofs. Tesla is facing a $41.2 million penalty for failing to fulfill its commitment to create 1,460 jobs since 2014, and has sought a waiver from the state.[3] Last year, the state entity that owns the factory on Tesla’s behalf wrote down its value by $884 million, a 92% drop.[4]

Nevada awarded Tesla $1.3 billion in public money to build its battery factory in 2014, a revenue loss compounded by the outsized burden of providing public services to the plant. USA Today found the Gigafactory has created substantially more work for OSHA inspectors compared to other area factories, including responding to multiple amputations.

Tesla blocked Nevada OSHA inspectors from entering the plant last year after serious injuries to two workers, even though they arrived with a warrant signed by a judge and were accompanied by a sheriff’s deputy. Before contempt proceedings could begin, Tesla pulled strings and had Nevada political appointees intervene on its behalf.

Jobs at Tesla facilities have been rife with health and safety risks for workers, with its Fremont plant racking up more OSHA fines in five years than 10 other major US auto manufacturing plants combined. Tesla was cited by CalOSHA earlier this year for omitting hundreds of injuries from official logs, making their injury rates appear lower.

Especially now, as we prepare for the worst economic crisis since the Great Depression, we cannot afford to repeat these costly mistakes. Taxpayers lack proper mechanisms to hold corporations accountable for the promises they make, and as long as we have only limited transparency we will be easy targets for bad actors.

One great way to increase corporate accountability around public investment is Senate Bill 749. For decades, a loophole in our public records law has allowed companies to refuse to disclose documents that would show whether or not they met their end of the bargain. If passed, SB749 would require that data around job creation, retention, and access, would be available to the public when we hand over taxpayer money.  We urge California lawmakers to pass SB749 and reaffirm our commitment that public dollars serve the public good. As we prepare to mitigate the effects of COVID on our economy, it is imperative that public officials not hand over precious tax dollars to companies without a clear mechanism for holding them accountable to the job creation commitments they make. The opportunity is right in front of us. Let’s not waste it.

 

 

 

 

[1] https://www.wjbf.com/news/company-that-wanted-its-workers-stimulus-checks-apologizes-for-ill-advised-plan/

[2] You can see compilations of Elon Musk’s tweets here:

https://www.theatlantic.com/science/archive/2020/05/elon-musk-coronavirus-pandemic-tweets/611887/

https://www.vox.com/recode/2020/3/19/21185417/elon-musk-coronavirus-tweets-panic-ventilators-chloroquine-tesla-factory

[3] Tesla needed to meet the job target by the end of April to avoid a $41.2 million penalty from the state, which spent more than $950 million to build and partially equip the South Park Avenue factory.

[4] https://www.wsj.com/articles/new-york-state-writes-down-value-of-tesla-plant-in-buffalo-11573159578