It’s ‘outrageous’ that N.J. gives tax incentives to companies that exploit workers, labor groups say
By Alberto Arroyo and Brandon Castro
The warehouse sector that supports the multibillion dollar e-commerce economy is booming. New Jersey shouldn’t give tax breaks to corporations that exploit the warehouse workers who make it happen.
There are major problems with our state’s controversial tax incentive program, administered by the New Jersey Economic Development Authority. Over the past year, alarming reports of a lack of oversight and a tangled mess of corporate cronyism at the NJEDA have become a symbol for economic and political dysfunction in New Jersey.
NJEDA reform must focus on the quality of jobs we incentivize with our limited taxpayer resources – a topic largely missing from the tax incentive debate.
Warehouse operators rely on our state’s ports, highway infrastructure, and proximity to millions of customers in the New York City metro area. If New Jersey’s strategic location wasn’t enough, many warehouse operators receive huge tax breaks from the NJEDA to stay here. In the last five years, the NJEDA has awarded $230 million in tax incentives to warehouse operators.
While profits soar for Amazon and big e-commerce corporations, the quality of warehouse workers’ jobs has not.
More than 49,000 people work in warehouse distribution centers in New Jersey. This includes an increase of nearly 25,000 jobs over the past four years. New Jersey also has the highest proportion of “hand laborers and freight material movers” jobs in the country.
The median wage of these workers actually fell from $13.03 an hour in 2017 to $12.93 an hour in 2018, the 40th lowest in the country. These low-wage jobs are often part-time, temp, or seasonal with intense production quotas, and often unpredictable schedules.
Yet the NJEDA has awarded millions in taxpayer subsidies to build warehouses in the last five years with no strings attached – and no requirements to create good, quality jobs.
Recently it’s been revealed the NJEDA awarded tens of millions in incentives to companies that concealed or tried to hide their mistreatment of workers when applying for taxpayer assistance.
E-commerce company goPuff was awarded $39 million in tax credits in 2018 to open a new warehouse distribution center in Gloucester County, but failed to disclose wage and hour violations resulting from worker misclassification on their subsidy application.
Logistics company NFI Industries was awarded approximately $80 million in NJEDA Grow NJ credits in 2017 but failed to disclose violating wage and hour laws and even a criminal conviction on the part of an affiliate.
This is outrageous. Corporations should not receive generous subsidies if they exploit their workers and refuse to invest in New Jersey’s communities.
This is especially true for warehouse operators and developers moving here for access to our infrastructure and location. Companies with terrible labor records like goPuff and NFI should have never received subsidies. The state should cancel these immediately.
Rather than rewarding low-road warehouse operators, any new tax incentive program must require companies receiving taxpayer subsidies to create living wages, family-sustaining jobs – and include stringent oversight to ensure compliance.
The reality is that companies want to expand their e-commerce operations in New Jersey, given our state’s competitive advantage. And they’d love to receive millions in incentives to help reduce the cost.
Gov. Phil Murphy has proposed important reforms to these tax incentive programs: an immediate $15 minimum wage as well as improved oversight, reporting and enforcement measures and an-onsite safety and health consultation. Those are important steps in the right direction, but we must do more.
The governor and legislative leaders are currently negotiating a new tax incentive program. That program must require warehouse developers and operators seeking tax incentives to provide permanent, full-time jobs with fair wages, affordable healthcare, safe working conditions, and respect for workers’ right to organize.
Additionally, these companies should be subject to increased oversight and enforcement policies that hold them accountable to their commitments.
If large corporations tell us that tax breaks will help our communities by driving economic development to our state, they should be required to create jobs that provide pathways out of poverty.
Warehouse work could be an important ladder into the middle class for tens of thousands of New Jerseyans. We must not let corporate greed and political corruption get in the way.
It’s time to ensure that subsidies for warehouse operators create jobs that empower thousands of New Jersey residents who work in this rapidly growing sector. Only responsible companies who respect their workers and provide good jobs should receive tax incentives.
Anything less is unacceptable.
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