Donald Trump’s Carrier Deal Is a Scam

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Charles Floyd and Hatice Lancaster, two of 1,400 workers at Carrier Corporation in Indianapolis, Indiana, February 17. Floyd and Lancaster stand to lose their jobs when the company moves production to Mexico. The February 9 announcement by United Technologies Corp.'s Carrier unit that it was shifting production to Mexico from the U.S. thrust the long-term trend of U.S. manufacturing job decline to the foreground of the nation's election year agenda. Nick Carey/reuters

Don’t be fooled by President-elect Donald Trump’s “deal” with air conditioning manufacturer Carrier. It’s not a deal, it’s a bribe—a bad one. And it’s a fraud.

Trump and Vice President-elect Mike Pence rewarded Carrier with $7 million in tax incentives only after the company threatened to send 2,000 jobs overseas. For all of Trump’s tough talk about companies facing consequences for moving jobs out of the United States, it appears that his plan in practice is to line companies’ pockets as these companies continue to lay off their workers.

Yes, as a result of the deal, about 850 jobs that were going to leave will stay in Indianapolis—for now. But hundreds of Carrier jobs are still going to Mexico. Even worse, the remaining workers have absolutely no guarantee that their jobs won’t disappear next month, or next year. This is part of a larger trend of corporate short-termism, where short-term gains are sought at the expense of long-term stability.

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Trump may have bought those workers a little time, but he has by no means helped secure their futures. In the meantime, Trump has set a dangerous precedent for other companies: Threaten to move jobs overseas, and the government will pay you off to keep some of them in the United States.

If this deal is any indication how President-elect Trump will govern, workers should be gravely concerned. Trump’s intervention is centered on corporate bribes, not empowering workers or creating jobs.

Rather than using limited public funds to enrich large corporations that send middle-class jobs offshore, a real solution for workers would involve building their economic and political power. Workers should have more of a say in major company decisions that affect them. Giving workers more power makes it harder for companies’ short-term profit goals to influence their strategy of moving jobs overseas.

One simple way to accomplish this would be to ensure that workers are at the table when those decisions get made. German corporations, for example, cannot get a charter without having worker representation on their boards. Here, though, the union that represents many of the affected Carrier employees wasn’t even consulted during the negotiations.

Had the workers at the Carrier plant had more of a voice in major company decisions, Carrier might not have threatened to move their jobs to Mexico in the first place.

While it may be too late for the 1,000 workers in Indiana—at Carrier and its parent company, United Technologies—who are about to lose their jobs, there are still more effective ways that the Indiana government could have helped blunt the effects of offshoring. The $7 million spent to save 850 jobs, for instance, would have been better spent on worker training for all workers if they face factory closure.

Government support of retraining programs is a better public investment than tax breaks to companies shipping jobs out of the United States. Retraining helps workers get new jobs, boost their productivity and build their careers. These types of investments in people also help ensure workers’ long-term economic stability.

Training workers for modern jobs improves the entire economy. It develops high-growth industries and boosts aggregate demand, leading to the sort of economic growth that the Rust Belt needs after more than 30 years of economic decline. This is the sort of deal that the Indiana economy needs—not losing tax revenue with no long-term benefit, leaving workers and their families behind.

President-elect Trump will face many challenges like this one in the coming years. This deal makes clear that he is willing to forgo investments that will increase workers’ human capital and the U.S. economy as a whole, in favor of deals with corporate America that do little to help working families get ahead.

Even worse, it creates a bad precedent going forward, encouraging other corporations to hold their workers’ futures hostage in the pursuit of hasty deals with willing states or the federal government.

That might be a way to run a business. But it’s no way to run a country.

Angela Hanks is the associate director for workforce development policy and Kate Bahn is an economist at the Center for American Progress.

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