A grim bargain


A grim bargain

Once a weakness, low-skilled workers who get paid little have become the Deep South’s strength

Published on December 1, 2015

In Sunny South, Ala.

People here were so accustomed to the rural quiet, even the distant noises tipped off that something big was coming to the most impoverished corner of Alabama. First they heard chain saws buzzing through the forest, and then they heard trucks jangling along rutted roads, hauling away the timber. Next they heard pavers blazing new asphalt past a cow pasture. And finally they heard the rumblings of a different kind, the first rumors of what was planned for the clearing.

That’s when James Deshler decided he had to go see it for himself.

Read Part 1: An opportunity gamed away
Read Part 2: Graduating, but to what?
Read Part 4: A lonely road

So one Friday night, after finishing his shift at the roadside quick mart that his family owned, Deshler told his girlfriend and two buddies to pile into his Crown Victoria, and they turned on the high beams and found the dirt beginnings of the best new opportunity in Wilcox County in a half-century. Here, tractors and bulldozers were making way for a quarter-mile-long copper plant that would be owned and run by a Chinese company lured to the area with a massive package of state and local tax breaks. Five hundred people would have jobs, and Alabama’s government called the project a “catalyst” that would “lift the fortunes” in a county where 1 in 5 workers could not get a job. Deshler scanned the site, snapping a few dark photos of the machinery. Though he could see his breath, he stood there for five minutes.

Above: A truck passes through what amounts to downtown Sunny South, Ala. State and local officials lobbied to convince the Chinese-owned Golden Dragon, one of the world’s largest makers of coils for air conditioners, to move a factory to Wilcox County, where jobs were desperately needed. The plant now employs about 200 workers with some mixed results.

“A blessing,” Deshler remembers saying. “This place is going to be a blessing.”

Two years later, Deshler, 29, looks back on that moment as a time when it was still easy to believe that his life, like his home town,was about to change markedly for the better. He hadn’t yet started working at the copper plant at a wage nearly half of what he was expecting while saving coins so he could buy an engagement ring at Wal-Mart. He hadn’t yet watched his bank account dwindle below $10, falling back on his father for help. And he hadn’t yet started wondering if the Chinese flag towering in the employee parking lot in fact said something about the cost of economic progress not just in this southwest corner of Alabama but across the Deep South, a region that has increasingly enticed foreign companies with the prospect of lavish tax breaks, plentiful land and cheap American labor.

“I look up at that flag,” Deshler says now, “and, man, I think about shooting a flaming arrow into it.”

Deshler’s frustration reflects the desperate steps being taken in a part of America simply trying to survive economically. In wide swaths of the Deep South, public schools struggle, turning out workers who lack basic skills. Agricultural work has long faded, while job opportunities in once-prosperous industries such as textiles and timber have been lost to cheaper options in Latin America or automation at home. Politicians say they must give freebies to lure companies here, or offer nothing at all and watch the region — which already lags behind the rest of the country on most measures of well-being — fall even further behind.

But in some cases, when opportunity arrives, it highlights a grim bargain: Jobs come at great cost but offer only a slightly better version of a hard life. The region’s weaknesses — a low-skill workforce that doesn’t expect particularly high wages — become its competitive strengths. And suddenly, the only opportunity for somebody such as Deshler becomes a Chinese company looking for a place from which to do more business in the United States.

Golden Dragon Precise Copper Tube Group, which is based in Xinxiang, China, and is one of the world’s largest makers of coils for air conditioners, announced its arrival with blue and gold “Now hiring” posters pinned across southwestern Alabama in libraries and event halls. Deshler had been waiting for a job much like this one. Five years ago, he moved back in with his parents and enrolled in a machinist program at the only community college in the area, using his savings from a job in Montgomery for tuition. He figured he would raise his earning power.

Instead, he found himself stuck. He spent long shifts at the family’s struggling quick mart, a place his grandmother had bought in the 1970s when it was the only liquor store for miles. Deshler worked the counter and ordered gasoline and sold barbecue and Bud. He split a minimum-wage salary with his brother, taking in $3.70 per hour.

And that’s when he noticed the new trucks hauling by. Deshler applied online, as did 4,500 others, and he was among the first to get hired. He started at the copper plant on March 12, 2014, two months before the ribbon-cutting, and that morning he snapped a photo of himself as he headed into the factory. “GD Copper,” his orange hard hat said, and Deshler — 6-foot-10, with red, curly hair — wore a plaid shirt and safety goggles.

“First day on it!” he wrote on Facebook, where he shared the photo.

“No more dollar menu for this guy,” a friend commented. “He’s gonna upgrade to the combo meals! LoL”

James Deshler, with his wife, Lauren, started working at the plant two months before the ribbon-cutting and often lives paycheck to paycheck. Two years later, the 29-year-old father looks back on that moment as a time when it was still easy to believe that his life, like his home town, was about to change markedly for the better. || Sue Thomas had no industrial experience before coming to Golden Dragon. She has since been trained to use a variety of power tools and now builds pallets from scratch to transport large copper coils. || A couple of miles from Golden Dragon, Rooster's Road House Grill has seen an increase in business since the factory opened.

Wilcox County sits in the center of Alabama’s Black Belt, a swath of dark-soiled farmland that over the previous decades had been drained of its economic blood: first with the mechanization of agricultural jobs, then with an exodus of people, finally with the shuttering of factories and mills. In a county that is 70 percent black, the historical inequities have dovetailed with a more modern inability to adapt economically. Between 2000 and 2010, Wilcox lost 30 percent of its jobs and 25 percent of its businesses. Its unemployment rate went from 8.7 percent to 26.3 percent.

By the time Wilcox turned to China, the median household scraped by with $23,000 per year, according to Census Bureau data, an income level almost half of the state average and 15th lowest among the 3,144 U.S. counties. Job applications from the area were riddled with basic errors, said Joy Norsworthy, head of the local employment center. Many didn’t know to capitalize sentences.

“The lack of education is severe,” Norsworthy said, “and I’m comfortable using that term.”

Wilcox had a rail line, but broad sections of the county lacked sewage, water, even cellphone service. There was no day-care center, no public transportation. The main town, Camden, was a grid of treeless streets where discount stores advertised in their windows that they accepted food stamps.

“The entire county is back in the Dark Ages,” said Jim Emerson, a board member at the Wilcox Chamber of Commerce.

In this case, Golden Dragon — or GD Copper, as it would call the U.S.-based arm — started looking for a place to build a factory in the United States after it was slapped with tariffs in 2010. A U.S.-based consultant, Raymond Cheng, who specializes in Chinese business opportunities, encouraged the company to solicit multiple bidders.

“You really need to go to the South,” Cheng recalled saying in one phone conversation with the chairman of Golden Dragon, Li Changjie. “You need a lot of land. You need cheap labor. You need to establish in friendly ground.”

Over several months in early 2011, giant three-ring binders arrived regularly at a law office used by Cheng’s company, each one touting available real estate, low utility prices, easy highway access, laws that weren’t friendly to organized labor. In total, five states and 62 towns submitted bids.

To help push the deal, Alabama Gov. Robert Bentley (R) dined with Li. Company executives visiting the region were greeted with imported Chinese tea and Mandarin video messages. Alabama’s state workforce team explained how, if chosen for the job, they would visit Golden Dragon’s Chinese headquarters, study the process, and make videos and training courses for the new U.S. employees. In Alabama, Golden Dragon wouldn’t pay taxes for 20 years; it would get free roads and land.

Alabama also did something no other state was willing to try: Its legislature passed the “Made in Alabama” act, a tailored law that allowed the state to reimburse Golden Dragon for several prior years of tariffs. A version of the law had first been drafted by Cheng and a lawyer, according to Cheng and a lawmaker who sponsored the bill.

Ultimately, the company was given the choice of the reimbursements or an extra $20 million in cash. Golden Dragon chose the cash.

What went wrong with the Deep South?

Five states in the South are much worse off on economic and social measures than the majority of the country.
Here’s how the region compares, broken down by county.

    labels states south data

    Male life expectancy, by county

    Worst fifth  (64 to 72 years)

    Middle fifth

    Best fifth  (77 to 82 years)

    The region is home to some of the lowest life expectancies for both men and women. In many counties of the Mississippi Delta, the average male dies before 70.

    Source: Institute for Health Metrics and Evaluation, University of Washington

    labels states south data

    Children living with one parent, by county

    Worst fifth  (40 to 100% of children)

    Middle fifth

    Best fifth  (Less than 24%)

    The nation has 548 counties where more than 40 percent of children live in single-parent homes. Of those, 238 are in the Deep South.

    Source: U.S. Census Bureau

    labels states south data

    Households without bank accounts, by county

    Worst fifth  (12 to 37% of households)

    Middle fifth

    Best fifth  (Less than 5%)

    Ten of 30 counties with the highest concentration of households with no bank accounts are in Mississippi.

    Source: Corporation for Enterprise Development

    labels states south data

    Median household income, by county

    Worst fifth  (Less than $36,713)

    Middle fifth

    Best fifth  (More than $53,076)

    Alabama, Louisiana, Mississippi and South Carolina — all with typical incomes below $45,000 — are among the worst states. The national median is $52,250.

    Source: U.S. Census Bureau

    labels states south data

    Upward mobility for poor children, by county

    Worst fifth  

    Middle fifth

    Best fifth  

    In the region, children who grow up in a poor home are less likely to climb the income ladder as adults. Among the 50 counties that rank worst, 29 are in the Deep South.

    Source: The Equality of Opportunity Project

    All told, according to interviews and documents reviewed by The Washington Post, Golden Dragon received subsidies worth some $200 million — the bulk of it in local and state tax abatements, plus the cash, $5 million in land and road costs and nearly $2 million in worker training. County leaders say they had little choice: They had spent years trying to lure companies, reaching out unsuccessfully to more than 100. Even Golden Dragon only settled on Wilcox after a site in a neighboring county proved too small.

    “When your hand is in the lion’s mouth, you act accordingly,” said John Moton Jr., the chairman of the county commission. “We have the highest unemployment rate in the state. Our hand was in the lion’s mouth.”

    Though many states recruit businesses with tax incentives, states in the Deep South pioneered the practice and remain aggressive users of the tool, pitching not just tax breaks but low costs and anemic union participation. The strategy has both payoffs and potential downsides. Mercedes, Honda, Hyundai, Kia, Airbus and Boeing now have plants in the Deep South, providing tens of thousands of sturdy middle-class jobs. But while those high-profile plants attract much of the attention, experts say tax breaks often are used for the many companies offering lower-wage work.

    In South Carolina, several thousand people work for newly relocated Chinese companies, including textile plants that have been lured by subsidies to depressed areas. Some companies have also resorted to using temporary workers. Nissan, which by some estimates was given more than $1 billion to open shop in Canton, Miss., depends heavily on a staffing company where advertised jobs start at $12 per hour.

    Politicians and industrial recruiters in the region portray the new jobs as transformational, capable of lifting families out of poverty and narrowing the divide between whites and blacks. Bentley said in an interview that his state’s deals “pay for themselves” within four years, by driving new jobs and new spending. His and other state offices declined to provide data supporting that claim and instead sent to The Post a single-page document with numbers from six particular projects.

    “It contributes to a stream of continuous income,” Bentley said.

    Still, some regional experts and economic analysts say the strategy amounts to a flawed attempt at a quick fix that surrenders a source of much-needed tax dollars that could be used for spending on education, health, and infrastructure. “It’s a vicious cycle, because poorer states spend less on the things that would allow them to be less poor in the long run,” said Wesley Tharpe, a senior policy analyst at the left-leaning Georgia Budget and Policy Institute.

    Golden Dragon’s main allure has been its willingness to bring on people without experience, with nothing more than a high school diploma. Shortly after the plant began hiring, in early 2014, it became a landing spot for some of the region’s most needy. A woman who had previously commuted two hours every day for a $7.75-per-hour job at a corn dog factory. A couple with five children that had roamed the country for years, filling in anywhere manufacturers were on strike. A single mother who had worked back-to-back eight-hour fast food shifts, rising every day at 3 a.m.

    Golden Dragon’s chairman, Li, said in a phone interview that the quality of workers in Wilcox “is not very good.” The company’s head of human resources, K.C. Pang, said wages are based on market value and skill set, and were determined after discussions with state officials. Pang also said that roughly half of those who apply are rejected because of felonies or failed drug tests.

    “Realize, if these workers could get a job at the paper mill,” Pang said, referring to one of the last major sources of jobs in the town, “don’t you think they’d be there?”

    The average worker at Golden Dragon, among the 200 that have so far been hired, makes $13 per hour. The company says it offers generous and regular raises.

    Deshler started at $11.

    Bits and pieces of copper tubes are bundled and then melted for recycling as furnace operator Kenny Autrey looks on. Golden Dragon’s main allure has been its willingness to bring on people without prior experience. || Rosheen Hunt, left, and Ongula Perkins work on large copper tube coils that will be wrapped and shipped out. Like many in the most impoverished corner of Alabama, Perkins had to work two low-paying jobs before landing steady employment at Golden Dragon. || Chinese nationals and local residents work side by side in the Golden Dragon factory. State and local officials lured the company to the area with a massive package of state and local tax breaks.

    Unlike the majority at Golden Dragon, Deshler had manufacturing experience. Straight out of high school in 2004, he got a job at Hyundai in Montgomery. He started at $17 per hour and ended up at $25 five years later. He bought Ralph Lauren polos and American Eagle blue jeans and a big truck. The lone downsides were the noise and rush of the city, which drove him crazy. For 208 weekends in a row, he fled Montgomery for Wilcox, where to relax he drove around at dusk looking for deer. He knew good jobs were easier to find outside rural areas, but figured this would be a compromise: He left Hyundai and began school at the community college in Clarke County, which neighbors Wilcox. He graduated in 2011 as a certified machinist.

    Although he was relieved to have a job after years at the quick mart, Deshler felt he was overqualified and underpaid. Several months into the job, he applied for a promotion. He would go from operating a machine — “sitting down, pushing 30 buttons,” as he called it — to operating an entire machine shop, a crucial position in which you make the tools that keep the factory humming. Deshler had long wanted to be a machinist: He had used tools going back as far as his teenage years, when he fixed the family Jeep Cherokee, the one his dad had used for 360,000 miles while delivering mail on rickety back roads.

    The day Golden Dragon managers told Deshler he had won the promotion, in the early summer of 2014, his dad, James II, rushed to the supermarket to buy ribs and pork and sweet tea, and everybody gathered in the back yard. Deshler figured the new position would help him pivot back toward independence: He talked with his girlfriend, Lauren, about buying a home and where they might live. Deshler hadn’t pinned down his exact raise, but he guessed it would be big — maybe $16 per hour, up from $11. The average machinist in Alabama makes $19 per hour.

    And then, when Deshler checked his pay stub several days later, waking up to check the deposit on his smartphone, almost nothing had changed.

    He thought it was a mistake. The company said it wasn’t. He was now making $11.75 per hour.

    “It was like taking a big bite of lemon,” Deshler said.

    Now Deshler wondered how any job at Golden Dragon could lead toward the middle class. He started looking differently at the factory, noticing its quirks, resenting its features: The several dozen Chinese engineers who helped supervise the plant couldn’t speak English and lived in modular trailers on the factory grounds. The awkwardly translated Chinese slogans touting work ethic. (“One Quality escape erases All the good you have done in the past.”) The oil spills that sat on the floor; the minor injuries that piled up. Maybe, he wondered, this was why his father had long cursed Chinese-made tools, always the low-budget option at Lowe’s.

    Only this time, it was his life unfolding on the cheap. Deshler bought a $22,000 home on the foreclosure market, spent weeks yanking out the roach-infested interior, then months more rebuilding it by hand. He moved in with Lauren and her son because the couple were expecting a child. They got married at a courthouse, without a honeymoon. Even when Deshler’s salary finally climbed to $14.50 an hour earlier this year — the result of meeting performance goals — it didn’t cover a mortgage, insurance, light bills, baby food.

    “Literally, going to Dairy Queen is a mini-vacation,” Deshler said. “And if that’s a mini-vacation, what am I supposed to do if I have bald tires?”

    “I feel for him,” James II said. “He might as well be working at Wal-Mart.”

    In the many weeks when money hit zero, they fell back on Deshler’s father, who sometimes seemed to be the one person holding the family together. Deshler had only been able to buy the modest home — and the materials for the rebuild — with help from his dad. James II had dropped out of high school, then spent four years in the Navy, six years in the Coast Guard and almost 20 years with the Postal Service. He had a night job, too: He took classes. First he earned a GED. Then a bachelor’s degree. And finally, a law degree, for which he drove four hours round trip to Montgomery, coming home at 1 a.m. He quit the post office in 2008, on the same day he graduated from law school. He now billed clients $250 per hour and talked jokingly about starting a little “family dynasty” of wealth.

    Deshler sometimes wondered what lesson to make of his dad’s adult life. Was it proof that intense work pays off? Or used to pay off? He went back and forth.

    “I still believe I can do what my dad did,” Deshler said. “I have to believe that a job with $40,000 or $50,000 isn’t out of reach.”

    Deshler applied for some other positions and was tempted by an Australian shipbuilding company in Mobile. But the work was two hours away, and pay started at $14 an hour.

    Many Chinese nationals work and live on the factory grounds. One night they had a party to celebrate the coming of fall. || The company offers language classes since most of the Chinese nationals who come here to work don't speak English. Though many U.S. states recruit businesses with tax incentives, states in the Deep South pioneered the practice and remain aggressive users of the tool. || The huge Golden Dragon facility has housing units on the factory grounds for the Chinese workers. The average worker so far makes $13 per hour.

    One night in the summer of 2014, Deshler got off work, called his wife from the car and said he wasn’t coming home just yet. He drove, instead, to his dad’s law office, which held the only functional computer Deshler had access to. He pulled up Google on the browser and looked for what he called “only the most legitimate sites” — official releases, newspaper articles.

    For the next hour, he scrolled through the back story of his company. Here was the state’s commerce secretary in 2012, saying wages would average “$15 to $17” per hour. Here was the governor touting Golden Dragon in his biggest speech of 2014, saying fresh hope was coming to “disadvantaged areas.”

    Deshler called his dad.

    “Our government, they sold us down the river,” Deshler said. “They can go to hell.” His dad asked Deshler if he wanted to quit.

    Instead, Deshler did something else. He started talking at work to Joseph Boykins, a fast-talking shift worker — “almost a televangelist type,” Deshler said — who had been trying for weeks to drum up interest in a union. Unions in the South were far less common than in the rest of the nation, and Deshler’s dad had always said that unions weren’t worth the trouble.

    But now Deshler sidled up to Boykins and said he was in. In the coming weeks, Deshler pulled aside colleagues at the factory, telling them a union could improve their benefits and pay. Golden Dragon, in turn, spawned a campaign to convince workers that unions weren’t necessary.

    Deshler’s viewpoint represented only about half the workforce. Others, including many who came from unemployment or minimum wage jobs, felt thankful for Golden Dragon and said they had no interest in disrupting the factory’s work.

    “For the first time, I can go out and have a steak,” said Sue Thomas, 50, whose children are grown and who left a job in a neighboring county at a sewing plant and now makes $16 per hour at Golden Dragon.

    Days before the vote, Bentley wrote a letter to Golden Dragon employees, saying that unionizing could have a “negative impact on your community by discouraging other companies from locating there.”

    On Nov. 7, 2014, workers decided, 75 to 74, to form a union.

    Hours later, Deshler and Boykins wandered out of the factory and toward the employee parking lot. They shared a hug. But they had expected a landslide, and neither could quite shake the feeling that the moment felt like something less than a victory. If Golden Dragon had catalyzed anything in Wilcox, it was a division over how to feel about the opportunity they had.

    “Nobody wants to go back to less than nothing,” Boykins said.

    “Nobody wants to work a damn job that pays them for the rest of their life like they were cutting grass in high school,” Deshler said.

    Nothing changed quickly in the next year; it wasn’t until October that contract negotiations even started. Deshler did what he could to make Golden Dragon just a portion of his life. He turned himself into a homebody. Supper and bath time were the evening routine. He tried to be reliable at work: “No ass-kissing, but come in five minutes early and leave 10 minutes late.” He tried to think less about money, because the stress of it was riling up an old back injury and he refused to pay for painkillers.

    But then, there were some mornings, like a Thursday in September, when he awoke with $1.15 left in his bank account, a gas tank needle pushing below “E” and 24 hours until the next paycheck.

    “A royal pain,” Deshler said.

    It had happened more than a half-dozen times already, this gas tank roulette, and Deshler knew the gauge well enough to know how it would end. He just barely made it to work. He spent eight hours at the factory. And just before heading home, he called his dad to meet him at a Phillips 66 gas station. Deshler’s car was already waiting at the pump when James II pulled up, lowering his window and passing over a debit card.

    “Our little drug deal,” Deshler said, jokingly.

    They chatted for a few minutes while Deshler half-filled his tank, using $20.

    “Appreciate it,” Deshler said, and he handed back the card. Deshler said he was heading home for dinner. James II said he was returning to his law office.

    Then, they drove off in different directions.

    Xu Jing in Beijing contributed to this report.

    Read Part 1: An opportunity gamed away
    Read Part 2: Graduating, but to what?