A Wealthy Few Pick Up The Cash, We Pay The Costs

Dave Johnson

A few weeks back I wrote about Whirlpool closing their Evansville, Indiana plant and moving the work to Mexico. I wrote about the lunacy of an economic system that encourages companies to destroy lives, communities and the very economy that the Whirlpools depend on. This company was taking stimulus dollars with one hand and laying people off with the other.

Whirlpool did this because they could do it, making a wealthy few a bit more wealthy, and because you and I – not Whirlpool – have to pick up all the costs. This is called externalizing costs. It means you and I pick up the costs and an already-wealthy, connected few pick up the cash. It’s the way our system currently is designed.

A step toward a solution to this problem would be to require companies to start estimating the externalized effects of their actions. What is the cost of cleaning up all the discarded cigarette butts? What is the cost of cleaning up the trash near a McDonald’s? What are the costs from the health effects of added salt or sugar? So how about requiring companies to just estimate externalized costs so that We, the People can start getting a handle on this problem. Just start Is that too much to ask?

Now there is a study of the ripple effects of the Evansville plant closing. The full study, Layoff at Whirlpool: Costs to the Evansville Metro Area and Indiana Taxpayers, written by Greg LeRoy, executive director of Good Jobs First, concludes that direct costs to the community (us) will include:

- An additional 1,536 “ripple effect” jobs, for a total loss of 2,502 jobs;
- The loss of $138 million in income, including about 90 cents in additional income lost for every dollar lost by a Whirlpool employee; and
- A decline in tax revenues of $17.7 million, especially property, sales and both personal and corporate income taxes.

But that’s not all.

This taxpayer-cost estimate is incomplete because it does not include substantial lost federal revenues (in the form of federal income and payroll taxes for Social Security and Medicare). Nor does it include social safety-net programs to assist the dislocated workers. However, for one such program alone we conservatively estimate that:
- Unemployment Insurance Benefits for the dislocated Indiana Whirlpool workers will cost more than $4.15 million. This does not include other assistance such as retraining programs, Trade Adjustment Assistance, food stamps or Medicaid.

Combining tax losses with Unemployment Insurance costs generates a conservative taxpayer-cost estimate of more than $21.8 million—or $22,588 per worker dislocated in Indiana. It is reasonable to assume that Kentucky, with an estimated 18 percent of the affected workers, will suffer job, income, and taxpayer losses of almost one fourth more, above and beyond those experienced by Indiana.

WE pick up those costs. A wealthy few get a bit wealthier. Welcome to the system.

But that’s not all.

The surrounding retail stores, gas stations, and all other places these workers spend will see a drop in sales. Teachers, police, etc. will be under pressure as the local economy dries up. Homes will be foreclosed and property values for all will drop. The costs of those foreclosures will fall on others. Etc. All so a few already-wealthy will get a bit wealthier.

At least skim through the study to see all the ways the rest of us will be affected.

WE pick up those costs. A wealthy few get a bit wealthier. WE CAN CHANGE THE SYSTEM.

Past posts on Whirlpool’s Evansville plant closing:

Whirlpool: Mexican Workers Paid $70/Week Can’t Buy Refrigerators
Whirlpool Tells Callers: Call Congress. They’re Right!
Whirlpool Exec Responds: The System Made Us Do It
Whirlpool Bites Hands Of American Taxpayers That Feed It

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