The Tesla Tango

Tesla Here’s the paragraph from PLAN’s letter to the Nevada state legislature which should capture attention:

If we are to use our state’s threadbare tax coffers to subsidize this multi-billion dollar corporation, we urge you, in the strongest possible terms, to hold Tesla accountable for creating family-wage jobs with Nevadans first in line, and other benefits for our state. Specifically, you should attach job quality standards regarding wages and benefits, indexed to inflation over the 20-year deal, to the Tesla tax breaks. You should also mandate customized training and first-source hiring procedures to maximize hiring opportunities for Nevadans. And to deter outsourcing or the use of temp agencies, all of Tesla’s tax breaks (not just the refundable credits) should require direct employment and be pegged to employment levels (so that property and sales tax exemptions would be scaled back if Tesla does not reach and maintain 6,500 employees). (emphasis added)

If Nevada is to experience the benefits from tax incentives offered to TESLA, then it needs to have the wage levels secured to a level which would allow for increased demand for goods and services.  In a state without an income tax, the state revenues have to filter through the sales and business taxes.  For that to happen there has to be an increased level of consumer spending.

‘Minimum wage jobs, temporary employment, outsourced temp employment will simply shave potential demand from the equation.  The current “half the loaf” proposal is problematic:

“The bill requires half of the construction workers and half of the permanent factory workers be from Nevada. Tesla will be required to keep such things as driver’s licenses and car registrations of its employees on file to prove the quota has been met. However, if Tesla can demonstrate it can’t find enough qualified employees in Nevada, it can ask the economic development director for a waiver.” [RGJ]

Why 50%? Why not 67%.  Or are we to be pleased that we’re getting the 50%?  The type of jobs included is another issue for stakeholders.  TESLA will no doubt import its own upper level management team for its plant, this is standard practice and will bring in incomes which could drive local demand for goods and services.  It’s the intermediate positions about which Nevadans might want to be concerned.   And, there’s this:

“Tesla will get a $12,500 transferable tax credit for up to 6,000 qualified employees, who work at least 30 hours a week and make an average of $22 an hour.”  [RGJ]

30 hours?  The last time we looked, 30 hours is a part time job, and which average are we talking about?  Is that the median wage? (half the paychecks above and half below the $22 mark) Or, is it an arithmetical mean, in which the salaries of the top employees are averaged in with the lowest paid workers?  In other words, if we use the arithmetical mean to get the average between a person paid $10 per hour with the income of the Sultan of Brunei wouldn’t that yield an artificially higher average wage?  Or, are we using the mode, the most common wage paid by the company? If there are more people earning $22 per hour than any other group – except there are profound disparities between the top and bottom – then would this be a clear picture of the salary and wage distribution of the firm?

No doubt there will be more questions as the Nevada legislature continues to debate the bill to offer TESLA tax incentives to locate its plant in the state. Stay tuned.

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