Monday, 24 August 2009

Job Loss Exagerration: NUMMI edition

The Friends of NUMMI are claiming that closing the Toyota plant (called NUMMI from its days of joint operation with GM) will cost 50,000 jobs. The plant itself employees 4,500, so this would be a multiplier in excess of 10. I find that a bit hard to believe. [Addendum: I see the source is NUMMI itself, see comment for link. I would be interested in seeing the report the tabulated this to know all that is included.]

I’m not downplaying the significance of this potential plant closure. I think this closure would be significant enough to derail the economic recovery in the East Bay and Northern San Joaquin Valley. It is the most important looming risk to the regional economy, and auto manufacturing has just about the largest ripple/multiplier effects of anything. And this would be a permanent loss of high-paying jobs. At this point, I haven’t done any detailed research on this plant, but my educated guess is that the total employment impact would be closer to 20,000.

Of course, the big 50,000 lost job figure will prove to be much more effective in wringing incentives out of state government, and reports suggest the state is pulling out all the stops to keep them building Toyotas in California. No sales tax on new equipment (similar to farmers’ tax break on farm machinery), reduced electricity costs, investment in new infrastructure for shipping, offsets of losses against future taxes on profits, etc.

After so many posts beating up on the Agriculture community for exagerrating water job losses in an effort to get the Federal and State government to waive environmental restrictions and invest in increased water supply; it seems fair for me to point out that they are not alone in using very large lost job estimates to push for favorable action from government.

About the Author

Ethan Jacob

Author & Editor

I am Ethan Jacob Executive Director of the Center for Business and Policy Research at the University of the Pacific, where I have a joint faculty appointment in the Eberhardt School of Business and the Public Policy Program in the McGeorge School of Law..

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