Bruce Murphy
Murphy’s Law

Foxconn Deal Allows Low-Ball Wages

Documents show state will allow 93 percent of workers to earn less than $15 hour.

By - Jul 17th, 2018 10:56 am
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Foxconn chairman Terry Gou and Governor Scott Walker signing a memorandum of understanding. Photo from the State of Wisconsin.

Foxconn chairman Terry Gou and Governor Scott Walker signing a memorandum of understanding. Photo from the State of Wisconsin.

It hardly seems possible, but the Foxconn deal has gotten even worse. Yet again.

New documents released by the Wisconsin Department of Administration, and reported by Milwaukee’s BizTimes, show the administration of Gov. Scott Walker signed a deal with Foxconn that would allow the company to pay up to 93 percent of its workers just $30,000 a year, or slightly less than $15 an hour. For a family of four, that’s a low enough salary to be eligible for federal food assistance, and is anything but a family-supporting job. 

At issue was the company’s promise to pay workers at Foxconn an average wage of $53,875, which the state was requiring in order for the company to get the massive, multi-billion state subsidy — the largest ever given in America to a foreign company — the Walker administration was promising. The story by reporter Arthur Thomas, who continues to scoop the Milwaukee Journal Sentinel in covering Foxconn, reveals the Walker administration originally proposed to count only wages under $100,000 in computing the average wage while Foxconn’s negotiators wanted no “artificial cap” on the average wage. “Foxconn expects all wages to be considered for the average annual wage calculation,” attorneys for the company wrote.

The state’s negotiations were handled by the Wisconsin Economic Development Corporation, which has a dreadful record of protecting taxpayers. A 2017 Legislative Audit Bureau report found that of hundreds of millions in tax credits, grants and loans authorized since 2011, the agency “cannot be certain about the number of jobs actually created or retained as a result of any awards.” In fact only 12.5 percent of contract awards “even had an expected result of job creation or retention.”

The agency was just as lax in dealing with Foxconn. Instead of sticking to its position that only wages under $100,000 count for a subsidy, WEDC representatives “expressed a willingness to increase the cap first from $100,000 to $200,000 and then again to $250,000,” Thomas reports. Ultimately, the agency agreed to count a salary of up to $400,000 annually in computing the average salary.

Under a $100,000 cap, Thomas notes, Foxconn could have paid 65 percent of its workers a $30,000 salary and “still met its average salary commitment. A $400,000 cap allows for 93 percent of the workforce to be paid $30,000 while still meeting the requirement.” In short, WEDC simply caved in to Foxconn’s demand. 

It’s hardly surprising Foxconn wanted as much flexibility as possible to pay low wages. A key reason it grew from a tiny 1970s business into the world’s largest contract electronics company was Foxconn’s ruthless efficiency at keeping labor costs low by exploiting its employees.

But why did the Walker administration give in so easily to a company with such a history? Representatives of WEDC “declined to comment on specific parts of the negotiation,” Thomas reports.

Thomas notes that since the contract was signed, Foxconn officials have predicted they may rely increasingly on robotics and a workforce that skews toward higher levels of training. “Peter Buck, a Foxconn senior advisor responsible for the Wisconn Valley Science and Technology Park, told attendees of Foxconn’s groundbreaking celebration the split would be about 70-30 between knowledge workers and those with a more basic skillset.”

This could mean only 30 percent of workers might be paid a low-ball salary — but that assumes Buck’s claim turns out to be true. 

Keep in mind this is a company with a long history of breaking its promises and walking away from deals. The latest information from the company says it could be building not a $10 billion plant but a $2 billion to $3 billion one, which would mean far fewer employees would be hired. The company has said it is still committed to a $10 billion plant and 13,000 employees but might get there in “phases” whose details weren’t spelled out. These later phases will come after the November election, which if Walker is reelected could open the door to Foxconn demanding yet more subsidies, after state and local taxpayers have already invested $1 billion in the project, as Urban Milwaukee has reported.  

But however this plays out, we now know the Walker administration had little concern about creating family supporting jobs with this massive taxpayer subsidy. The original legislation for the Foxconn deal stipulated that the payroll tax credit awarded to the company would apply for jobs earning at least $22,620, which is actually below the poverty line. While the revised legislation raised the limit to a $30,000 salary, this was supposed to be the low end of a deal that Walker promised would bring the state “13,000 high tech jobs.”

But in fact Walker knew that up to 93 percent of these jobs could be anything but high tech and instead could pay so low a salary the workers could be eligible for Food Stamps. At $30,000 for a family of four, these workers would also be eligible for a tax-paid subsidy of more than $7,000 under the Affordable Care Act.

This, in short, is a deal that offers a guarantee that only 7 percent of the jobs being offered will pay family supporting salaries. And to get this the state has agreed to give Foxconn a total subsidy that is now at $4.1 billion and counting, and which will cost the state’s taxpayers $1,773 per household. Yet even with this massive subsidy, the greatest ever given to a foreign company in America, the taxpayers could also be on the line to help pay federal subsidies for food assistance and health care to these workers.  

“It certainly is my fiduciary role to protect taxpayers in the state,” Walker has said of the Foxconn deal. And it’s now crystal clear he failed to do this. 

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More about the Foxconn Facility

51 thoughts on “Murphy’s Law: Foxconn Deal Allows Low-Ball Wages”

  1. PMD says:

    I look forward to Troll and WCD calling this fake news while continuing to defend Walker and this deal no matter what.

  2. Dumbledore says:

    For what it’s worth, even the average wage of $53,875 is barely even a family-supporting salary for what is supposed to be a high-tech plant employing professional staff. Based on federal standards, the Racine Unified School District indicates that annual income of $53,243 for a family of five qualifies for reduced or free school lunch.

    https://www.rusd.org/sites/default/files/uploads/Food_Service/Application/17-18%20Free%20%26%20Reduced%20Meals%20Application.pdf

  3. andsoitgoes says:

    Lined up will also be shysters hawking insurance scams and investment scams to lighten workers paychecks as they sell these as ‘benefits’. Walker is a despicable tool for the globalist class. I wonder just how much of his funding originated/s from out of the country.

  4. Wisconsin Conservative Digest says:

    I am in SE Wisconsin every week. You could not even hire Irish for that low amount. Murphy sure work there but he would never pass all the tests.

  5. Troll says:

    Well we know who’s not getting low ball wages. Another Milwaukee County employee received his $300,000 lump payment before his generous pension. Is that how it works Murphy? We protect the high ballers as long as its government redistributing wealth to one of its main interest groups…themselves.

  6. PMD says:

    Right because Bruce has never written about that subject before. You have been a vociferous Foxconn cheerleader. That’s the best you got? Doesn’t bode well for supporters.

  7. Terry says:

    Woooooo! They don’t call it Wississippi for nothing! Yee ha! Career Politician and Biggest Big Government moocher in the state Scott Walker’s FoxCON boondoggle has come to full fruition. Act 10, right to poverty, enjoy Wisconsin! Suckers!

    Dump Walker 2018

  8. AA says:

    Yes, let’s find additional things to complain about. They haven’t even cut one employee check and the negative Nancies are already coming out from under their rocks blindly speculating the worst case scenario. Oh, I also guess people will be “forced” to take $15/hr jobs. No, if employees don’t respond to the open positions at $15 then the employer must increase its incentives. Basic economics. Maybe we can hire more democrats to job “create” more government sheep employment opportunities or $9/hr McDonalds careers.

  9. Mary Kay Wagner says:

    AA, if companies really raised wages to attract applicants, then why is there still such a shortage of welders? electricians? plumbers? The fact is, corporations set wages low and cry for government subsidies when they can’t fill positions.

    Capitalism as defined by Adam Smith was never about suppressing wages. It was about the marketplace (supply and demand) setting wages. The divide and conquer and keep wages low mentality that has dominated management/labor relations throughout most of our country’s history dates back to colonial times. There is a reason slavery flourished in this country. It has everything to do with the lack of value placed on the contributions of working people.

  10. Thomas says:

    Thanks, Mary K, for schooling AA of the imagined “negative Nancies” on capitalism. He must have been down by a Nancy. Around here we have “North Shore Nancies,” primarily positive in disposition, high maintenance, good looking in nice clothes …

    Thank you, Terry, for your observation in post # 7 that this new bad news re FoxCon conforms with the Wississippi direction Walker has been taking us.

    No thanks to WCD for his effort to restore the 19th Century prejudice vs the Irish in America.

    May all but WCD enjoy Irish Fest this August.

  11. Thomas says:

    Corrections to post # 10. I missed a word in the second sentence of that post. I meant to say that AA “must have been shut down by a Nancy.” I should also apologize to North Shore Nancies who suspect that I suggested that they need nice clothes to look good. My intention was to say that they wear nice clothes well.

  12. dragonkat says:

    Act 10, right to poverty, FoxJoke, no rights,

    So glad I live in Illinois!!!!

    http://www.transitchicago.com

  13. Sixsidestodice says:

    You’re right the starting salary should be $100/ hour. And where I agree $30,000 a year can’t support a family of 4. But if both parents worked that’s $60,000 a year. And instead of looking at Foxconn try looking at the source of this article. Starting salary for journalists is as low as $21,000 a year! Click here you’ll see. https://www.sokanu.com/careers/journalist/salary/wisconsin/

  14. Wisconsin Conservative Digest says:

    Shortage of those skills cause Obama had lousy economy for 8 years and there was excess so nobody trained. Trump has booming economy and now we must train till the next stupid Left gets in power and we have another recession.

    My wife and kids are Irish, it is family joke. Also dig at Murphy and his left wing site..

  15. PMD says:

    Yeah rich people and corporations are doing great right now. The rest of us? Not so much. I also love how WCD can’t defend this bad Foxconn news so he just goes after Obama instead. Just like Troll can’t defend it so he attacks the county. And AA is like hey wait it’s too early. Those are some weak defenses, to put it mildly.

  16. LenaTaylorNeedsToResign says:

    I never thought dragonkat and I would enthusiastically agree on something… but I’m glad he lives in Illinois, too!! Now, hopefully he’ll just keep recruiting hundreds, if not thousands, of other left-wingers to join him in FIB Paradise… that would be heavenly.

  17. AA says:

    Mary- a main reason employers can’t find skilled workers most of the time is due the inability to pass the drug screen or hard work ethic (no shows after a few days or even a week). As a business owner, I have never asked for government subsidies to pay employees…? I can assure you the insane mentality that employers are sitting in a room devising a divide and conquer strategy on wages does not exist. We have to bend over backwards in good times to attract and retain quality workers. The market speaks and people aren’t forced to take jobs they don’t want. As for Thomas, quit trying to hide behind Mary and add something relevant to the conversation.

  18. Wisconsin Conservative Digest says:

    Mary Kay that stupid theory is what Doyle/Earl used to drive 300,000 jobs out of Wisconsin and left people on the dole. 90% of our jobs in this state are small guys that work 100 hours per week running their businesses, providing jobs while stupid Lefties make dopey comments.
    They usually are teachers or work for the govt. The Lefties want to tax the businesses to death.
    Foxconn is the best deal in our history.
    With Multipliers we will have over 50,000 great jobs fro the kids in racine, Milwaukee, Kenosha that need jobs to get them off drugs and off the street.

  19. Dumbledore says:

    @AA – your comments about wages, acceptance by workers, etc. is fine in a free market economy. The problem is that the state is providing about $4.5 billion in incentives, improvements and other financial support for Foxconn. That is far from a free market situation and the public has a right to scrutinize its operations, including its wage structure. In fact, the only reason this issue is coming up is precisely because the state’s economic support programs REQUIRE wage reporting.

    If you don’t want to have your company’s wages posted in the news or be the subject of public discussion, then don’t go seeking public funds to support your company. You don’t see talk about wages at NML, Johnson Controls, Epic, etc. because they aren’t seeking massive public support.

  20. AA says:

    @Dumbledore- All 3 of the companies you mentioned in fact had incentives created and provided to attract and grow their operations. Scrutinizing is great and the right of everyone. However, we are NOT in a back alley handing them a suitcase full of $4.5 billion. That rhetoric and argument is flawed and getting worn out.

    The constant negativity boggles the mind of anyone that wants to see the region flourish and not get left behind like we have for decades. As a region, we were LAST for job growth for years. Now we are in the top 10. Why? Because we are actually doing things different and competing. Investments need to be made in order to be a relevant option. I would love us to be the best option. I moved here 17 years ago and decided to stay and invest in the area because of the massive potential. Can’t bury our heads in the sand like we’ve done in the past and “hope” for the best. Not an aggressive, positive strategy.

  21. cwr says:

    Typical liberal histrionics. WOULD, COULD!! liberals demand guarantees theyll be nurtured and coddled, like 12 yr old girls.

  22. PMD says:

    How should this deal be properly scrutinized? Is any and all criticism or skepticism off limits because that’s being too negative? Don’t we want reporters to pay close attention to a deal of this size and make sure we aren’t getting screwed or lied to? You sound Trump-ish, where the media doing their job is perceived as being negative and unfair. We all want Milwaukee and the region to flourish. That shouldn’t mean blind allegiance to this deal.

  23. old baldy says:

    wcd:

    In case you weren’t aware, there was 16 years between Tony Earl and Jim Doyle. How you can make that connection, and in the wrong order, is amazing, but not for someone like you that never let facts/history/truth be an obstacle.

    Where are they going to find 50,000 folks to work in SE WI when unemployment is almost 2%? Immigrants? What benefit does Foxconn provide for for the good taxpayers in Crandon, Boulder Junction, Park Falls, Ellsworth, Rosholt???? I’ll wait for your factual response.

  24. Dan Wilson says:

    Perhaps unrelated by why are the Racine water and wastewater utilities holding all discussions of Foxconn behind closed doors? Appears to be an abuse of the open meetings exemptions.

  25. PMD says:

    Good questions old baldy. They aren’t going to find 50,000 Wisconsin residents to work there. Hence one estimate that predicts 50% of the jobs will go to Illinois residents.

  26. Sixsidestodice says:

    I find this hilarious. Wcd, it’s just dumbicrats once again hating any business. We know the left is ignorant to the business world. And they will always swallow the blue pill into the rabbit hole of whatever the urinal sentinal says. Dear libs, the only reason the job opportunities are bad for you is you don’t have a work ethic.

  27. old baldy says:

    six:

    Since wcd can’t answer the questions, maybe a smart guy like you can:

    “Where are they going to find 50,000 folks to work in SE WI when unemployment is almost 2%? Immigrants? What benefit does Foxconn provide for for the good taxpayers in Crandon, Boulder Junction, Park Falls, Ellsworth, Rosholt????”.

  28. Sixsidestodice says:

    While I agree unemployment is at historical lows, the way to get people to work for you is to raise wages. So the initial start up will be hard. The fact is if Foxconn doesn’t meet the employee minimums the don’t get the entire tax break. And for the folks in Boulder, park, ellsworth, this is going to have as much of an affect on you as the bucks areana. The only difference is that Foxconn is spreading out into cities throughout the state.

  29. Matt says:

    The math in this article could use some clarification. For 93% of the jobs to be paid $30K and still meet the required average, that requires *all* of the rest of the jobs to be paid $400K. That’s not realistic.

    Moving the max salary that the state counts for the average from $100K to $400K does allow Foxconn to have a more unequal pay scale and still meet its average target, which I agree makes the deal worse. But it’s totally hyperbolic to say that 93% of the jobs are going to be $30K.

  30. Sixsidestodice says:

    Also, a side note $30,000 a year doesn’t sound great for a person my age 27 with a wife and a kid on the way. However in 2009 I made $20,000 and that was a ton of money for me at the time. Imagine graduating high school being 18 years old and getting paid $30,000 in your first year. And that is another side of the dice.

  31. old baldy says:

    six:

    Sorry, but I’m not buying. You won’t get folks from the north or west to move to Racine for $15/hr. An I’m not a fan of paying for the Bucks stadium either, but that is the policy of R governors, “stick it to ’em”.

    Why couldn’t some of those billions been used to encourage industry out in the rural parts of the state rather than force migration to Racine?

    Come November this Foxconn scam could cost walker a job. Maybe he can work in the private sector for $15/hr. Would be his first real job.

  32. Sixsidestodice says:

    Baldy,
    I’m not saying this is a switch your career job. I’m saying this is an opportunity for Wisconsin residents and especially Racine. My question is again, why aren’t y’all yelling at the journal sentinal for their starting pay that requires a college degree only starts off at $21,000/year? Also, not everything a governor does helps the entire state. For instance, how does Potowatomi help Rhinlander? Doyal approved of that even though someone like me has a problem living so close to a casino. And the starting pay they offered me there was under $6/hour. So I’m sorry I am not going to have my undies in a bundle over something that doesn’t affect me at all. If you think Foxconn pays too little, don’t work there. I just solved your problem. Next thing I’ll read is Foxconn is going to kill baby penguins with a lead mallet.

  33. Aggie says:

    The Foxconned apologist’s are out in numbers with name calling, misdirection, and slippery slope analogies rather than facts or intelligent debate. Sounds all too familiar, like watching Faux news.

  34. old baldy says:

    six:

    You ever been to Forest County? The $$ from the Potowatomi casino in Milwaukee is helping to fund all sorts of projects up north. And if you were offered only $6/hr it may have been more a reflection on your resume, as they are paying more than that up at the Carter Casino. May guess is you made that all up.

    And to say that Foxconn doesn’t affect you at all is pretty silly, as we all for decades to come, will be paying for that scam. And we already are, as walker pulled $90 million out of the DOT budget designated for local projects statewide and put it all on Foxconn infrastructure.

  35. Sixsidestodice says:

    Baldy go to poto’s web site starting pay for chip runner. And once again, are you mad about journalists starting pay being under $22,000 a year? Also, Doyal was the one who stole from the dot funds.

  36. Adam says:

    @Sixsidestodice-

    Regarding the JSonline starting salary. It sucks, but how much welfare is the paper collecting from state taxpayers? We would not be having this discussion but for 4.5 billion of our tax dollars being used to subsidize a foreign company for what has been billed as a great jobs program. Do not forget the crux of the issue.

  37. Wisconsin Conservative Digest says:

    Sorry folks but up north working on campaigns. 50,000 worked will come from the 57% you unemployment in the Milwaukee, Racine, Kenosha are and from throughout out Wis. and Norther illinois. we need these kids to get work, off the street, raise families, buy homes and get off drugs. It is lifesaver for many, plus long term it is going to be tremendous. This is giant plus for our future, the biggest player int he bigger market in the world in our stare. The Left is mad cause all these people coming off welfare will not vote for them.

  38. Sixsidestodice says:

    Adam, try fact checking that 4.5 billion. I get it, now you want to complain about tax dollars being spent? It’s never a problem with healthcare.

  39. PMD says:

    How are they going to get there? How are they going to raise a family on $10 an hour? Some of you bash anyone who dares to raise perfectly legitimate and reasonable questions about this deal while also twisting yourself in knots to defend it no matter what. How is blind allegiance any better than what you believe to be unfair negativity?

  40. old baldy says:

    wcd:
    Another incomprehensible post. What are you trying to say?

  41. old baldy says:

    Anybody notice that of the 37 subcontractors selected by Foxconn announced recently, none are from north of Appleton, or west of Madison. Still not much help for rural western and northern WI, but they get to pay for it….

  42. Terry says:

    FOXCONNED!

  43. Sixsidestodice says:

    Old,
    They have a ton of subcontracting. For instance, Hunzinger construction is not the hired contractor, but they’re being sub contracted.

    Pmd,
    We can all agree, $10 is not a family supporting wage. Yes it’s true. If you’re in your 40s with two kids and your wife doesn’t work, you’re screwed. I’m sorry that I don’t want the government to decide my wage. You know why I don’t make minimum wage? Because I’m a hard worker. What is a family supporting wage? $15 an hour? $20? $100? It all depends on who you ask. What happens when the guy making a burger at McDonald’s is making $15 an hour? That’s doubling the cost per employee. What can McDonald’s do to recover that cost? Either raise it’s prices. (We can assume raised at least 50%) Or they cut staff. Either way the little guy losses.

  44. dragonkat says:

    Given that state law bans mass transit to FoxConn site, every job estimate’s report on FoxConn predicts that 80 to 95% of the jobs will go to Illinois residents.

    Isn’t that why FoxConn is Building a training center in Waukegan, and holding Job fairs on the campus of N.I.U

  45. PMD says:

    I’m glad we can agree that most of the jobs there will not pay enough to support a family nor will people be able to get there in the first place. So yeah we have some problems here.

  46. old baldy says:

    six:

    So you agree with me, or you don’t understand?

  47. Sixsidestodice says:

    I’ll say yes, not every job is a family supporting job. Just like McDonald’s, Potowatomi, the Journal Sentinal, and even in government. Do we also agree that an 18 year old doesn’t need a salary that supports a family of four?

  48. TransitRider says:

    dragonkat, what State law bans mass transit to the Foxconn site? The only things I can think of are State laws banning RTAs (regional transportation agencies) and the law specifically killing the KRM train, but I know of nothing that bars the Milwaukee, Racine, or Kenosha bus systems from going there. Do you?

  49. Wisconsin Conservative Digest says:

    There will be plenty of transportation to Foxconn, that we are assured.

  50. PMD says:

    What exactly is plenty? Buses and trains and Uber and possibly a water taxi? Can you be more specific please?

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