Economist claims Michigan picking winners and losers in EV race
(The Center Square) – The state of Michigan will give $750,000 of taxpayer money to private electric vehicle (EV) maker Rivian for investing $4.6 million in its Plymouth service support operations, which is anticipated to create 100 jobs.
Despite Whitmer’s claims that Michigan is a leader in “the future of mobility and electrification,” as of Nov. 2020, Michigan ranked 14th-to-last in the nation for the number of EV chargers per 100,000 people and most residents don’t drive EVs. The Secretary of State’s office counts 5.8 million gas vehicles, and 13,545 EVs, and 105,651 hybrid vehicles registered in the state.
The state claims that without a $750,000 taxpayer subsidy via the Michigan Economic Development Corporation, Rivian would have picked another state. But John Mozena, president of the Center for Economic Accountability, a nonprofit organization for transparent economic development policy, told The Center Square that subsidies don’t change business decisions most of the time.
An Upjohn Institute for Employment Research study concluded between 75% and 98% of all subsidized investments would have happened without the subsidy.
While Michigan employers struggle to fill job openings in a tight labor market, Mozena said Michigan is picking winners and losers by granting some companies subsidies while other companies are left to rely on private investment.
“This announcement should tick off every other employer in Michigan who’s struggling to find workers right now,” Mozena said. “The downside of subsidizing one company’s jobs is that you’ve made it harder and more expensive for every other company to hire those workers.”
In a state with a workforce of 4.7 million, adding 100 jobs won’t make a big difference on the grand scale, he said. However, the cumulative amount of taxpayer-funded subsidies add up quickly.
“There was more money going out in tax breaks than money coming in in corporate income tax around 2015- 2016,” Mozena said in a phone interview. “The cost of these deals is very real, and it’s way more than the benefits we’re getting in return.”
One of Rivian’s financial backers is Amazon, which means Michigan is giving away taxpayer money to a company funded by the third-largest U.S. company; a company approaching a market cap of $2 trillion.
The Rivian announcement follows Whitmer launching other EV programs funded by taxpayers, although most Michiganders don’t drive EVs. The plan aims to calm “range anxiety” since batteries provide less range and fewer “refueling” options than gas engines.
The spending aims to keep Michigan competitive in the future of transportation. Rivian welcomed the incentive.
“This center provides a base of service to our Rivian owners. This team will be the most all-around knowledgeable and most highly-trained group on Rivian vehicles,” Rivian Roadside and Service Support Operations Senior Manager Tracy Stevens said in a statement. “The program includes six weeks of in-depth training for our service support advisors, and we will add about 15 new hires every other month throughout 2022 to ensure coverage as production ramps up. Our expansion in Plymouth is part of a long-term strategy that will allow access to the talented workforce Michigan offers.”
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