1/13/08

'Delaware is not a right-to-work state.'

Toyota broke ground in April last year to build an automotive assembly plant in Blue Springs, Miss. Delaware's Chrysler plant is scheduled to be idled next year.

Why didn't Toyota choose the Delaware site, with its thousands of skilled automotive workers and easy access to transportation hubs?

Automotive assembly plants are very attractive economic development targets for a state.

For every person they directly employ, there are two additional jobs generated in the region, in companies supplying auto parts, in restaurants and liquor stores, and in construction and housing production.

The Chrysler plant has approximately 2000 workers in a 3 million square foot plan. The Toyota plant in Mississippi is expected to directly employ 2000 workers when production begins in 2010.

The Toyota plant in Mississippi will produce Highlanders, a hybrid SUV. The Chrysler plant here produces Dodge Durangos and Chrysler Aspens, both SUVs.

Fifteen years ago, Delaware's auto plants, including General Motors, assembled 3 percent of all the cars bought in the U.S. Today the Delaware plants only assemble 1 percent of the cars driven by Americans.

The primary locational advantages for Mississippi over Delaware appear to be government decisions, some rooted in history, and others of more recent origin.

Mississippi is a right-to-work state. Right-to-work laws are enforced in twenty-two states and prohibit agreements between trade unions and employers making union membership (or dues paying) a condition of employment.

Delaware is not a right-to-work state. Approximately 12 percent of Delaware workers belong to unions, compared to less than 6 percent in Mississippi.

In the past, labor unions initiated many much needed and very important practices which protected the health and safety of workers. Today most of these initiatives are mandated by state law. Union workers typically receive pay and benefit premiums when compared with non-union workers.

In Delaware, that premium pay is approximately 20 percent.

Delaware has a state-wide prevailing wage law; Mississippi does not.

Delaware's prevailing wage law mandates union wages on all government contracts, increasing labor costs by 20 percent. Since half of the construction costs of buildings such as schools is labor, this adds 10 percent to all government contracts, increasing the cost of the same government services in Delaware, when compared with other states without prevailing wages.

Other state law differences are significant.

Delaware's personal income taxes are the third highest of any state, when measured on a per capita basis, and 32 percent higher than those in the average state.

Mississippi's personal income taxes are the 40th from the highest, and are 50 percent lower than those in the average state.

Empirical evidence frequently cites personal income tax burdens as one of the most predictive indicators of economic growth for states, the more heavy the burden, the less growth in income and employment.

(delawareonline.com)

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