Businesses coming to TN for low wages as well as incentives?

The low wage levels in Memphis are a big draw for new industry, reports the Commercial Appeal – citing some interesting statistics.

When Electrolux won more than $180 million in government incentives two years ago to create an oven factory and 1,200 jobs in Memphis, the wages that workers would earn were a back-burner issue.

In fact, the Swedish appliance maker officially told Memphis and Shelby County officials approving a property tax break only that jobs at the plant would pay an average of $14.65 an hour, not including benefits.

However, employees say that inexperienced new hires start at less than $12 an hour.
While those aren’t the solid middle-class wages that lifted factory workers a generation ago, lower labor costs turn out to be a big asset for Memphis as manufacturers look to return jobs to American shores.

Cost cutting, and not creating jobs with middle-class wages for low-skilled workers, is key as manufacturers seek to be competitive with their counterparts in China and elsewhere, said John Boyd, principal of The Boyd Co., corporate site selection consulting firm in Princeton, N.J.

“It’s a horrible reality that I think we’re all coming to grips with, but this notion of middle-class manufacturing jobs, I’d love to get back to that place again,” Boyd said.
“You look around and we live in a different world today and corporations, sadly, are very ruthless and cost cutting is paramount to survive in this global economy.”

At $14.65 an hour, a 40-hour week at Electrolux would pay $586. That’s far below the $1,559 average for the manufacturing industry in Shelby County for 2012, according to the Bureau of Labor Statistics.

But averages can be deceiving, especially with Memphis’ a wide variety of skills and industries in the mix. Nearly 850 plants have about 44,100 jobs filled.

In fact, for production workers in the Memphis area, the average entry level wage in 2013 was $9.10, according to state occupational wage statistics. For experienced workers, that rose to $18.55.

It’s the prospect of tapping a lower-wage workforce that helps make Memphis one of the most attractive areas in the United States and Canada for manufacturers seeking plant sites, said a consultant with broad experience helping companies make those decisions.