For the second time in little more than a week, Washington state becomes the front line in the battle for the endangered middle class and the nation’s growing income gap, this time pivoting from a minimum wage victory to the issue of corporate welfare.
This past Saturday, the Washington state legislature overwhelmingly passed a measure granting the venerable Boeing Company nearly $9 billion in tax breaks , the largest state tax subsidy in history — extending itself past 2024 through 2040. It was signed into law on Tuesday by Democratic Governor Jay Inslee, who maintains a longstanding Washington state tradition of caving to Boeing demands. Typically, these demands are framed as a means of avoiding job losses to competitors. That part is always key to “negotiations”. In this instance, they are promising to secure the manufacture of the 777X jet in one of their Seattle-area plants. That is not enough though, as the ransom note further demands a lock on labor costs, a 1% pay raise every other year, and their workforce giving up its pensions in favor of far riskier 401(k) plans.
Boeing’s manufacturing force is represented by the Machinists Union, whose contract was rejected by a vote on Wednesday. A spokesman for the union called Boeing’s extortion deal “a piece of crap”. In short, if Boeing is going to be given yet another sweet tax deal in order to “create jobs” in Washington, asking the workers to give up their wage and retirement security goes too far.
The company’s muscle flexing is often justified because the Boeing Company is Washington’s largest employer, and for many years, its boom-and-bust cycle of manufacturing has carried the state’s fortunes with it. When Boeing would ask for a favor, the state legislature would often give — again and again. Bi-partisan collusion with Boeing demands came easily. Republicans never met a tax break they did not like, and Democrats could claim they were saving jobs for their labor constituency. Win-win, right? Boeing has a sugar daddy status in Washington state, and few question it no matter their politics. They have long enjoyed sales tax breaks and other exemptions granted to no other business in the state.
This special status means Boeing was Too Big To Fail before such a phrase was in the lexicon. The faintest threat of losing business to competitors, at home and abroad, was usually enough leverage. This was especially true before Microsoft and the dotcom boom diversified the state labor force in the 1990’s. When the dotcom bubble popped, Boeing remained number one through it all. Being on top meant more leverage for blackmail. In 2001, citing an unfriendly business climate, they moved their headquarters to Chicago, Illinois, even as their plants remained open in Washington. From 2003-2012, they paid a net of no corporate income taxes in each state they have a presence. During this same stretch, Boeing earned $35 billion in profits and received $1.8 million in federal tax rebates, in addition to their negative tax liability in “unfriendly” Washington.
If Boeing’s proposal to lock wages, sell out pensions, and secure unjustifiable tax breaks is not egregious enough, there is the unsurprising fact that Boeing’s CEO Jim McNerney heads the Business Roundtable — lobbyists who seek to increase the Social Security eligibility age to 70 and reduce payouts via adjustments of the inflation index. All this while Boeing enjoys record profits and stock prices. Protests that labor costs are too high and more tax breaks are needed do not have traction in light of these facts.
The union, embracing their traditional role as a protector of the middle class, has decided this long unassailable arrangement between Boeing and Washington state not only needs questioning, it needs confrontation. If representatives in the state and federal governments cannot be trusted to advocate for a livable minimum wage, protect our Social Security, and regulate commerce with fairness, then labor must assert itself by fighting to preserve their benefits, maintain a living wage, and demand that our tax dollars not subsidize corporate largesse at the expense of the middle class.