by Anibel Ferus-Comelo
It’s been two years since members of Congress passed the bipartisan CHIPS and Science Act. This industrial investment is one of the Biden-Harris Administration’s landmark achievements.
But with the due diligence phase underway, it’s clear that this administration should do more to ensure that its goals to “create good-paying jobs, make more in the United States, and revitalize communities left behind” are met through CHIPS Act investment.
The Commerce Department has announced over $30 billion in public subsidies and $25.3 billion in loans to 14 multinational companies across 24 sites in 14 states. U.S.-based Intel and Micron, South Korea’s Samsung and Taiwan’s TSMC are among the corporate welfare beneficiaries.
The allocation of these funds is undemocratic, with unions, community groups, environmental organizations and independent experts largely excluded from the decision-making process. In fact, a group of U.S. Senators highlighted this in a letter sent to the Commerce Department on Aug. 7 imploring the agency to “impose clear and enforceable conditions on (CHIPS) grantees before agreements are finalized.”
Unfortunately, we’re already seeing what can happen when deals are made behind closed doors.
BAE Systems, set to receive $35 million in CHIPS funding, is reportedly investing in stock buybacks instead of “good family-sustaining jobs” promised by the National Economic Council. And it’s not the only one, even though the CHIPS Act explicitly forbids this. Microchip Technology announced furloughs for about 900 employees just days after the Commerce Department allocated $72 million of taxpayers’ money for its Oregon plant.
On Aug. 1, Intel, the largest CHIPS Act grant recipient, announced that it will lay off more than 15,000 workers as a cost-saving measure. It has spent $30.2 billion on stock buybacks between 2019 and 2023. A report estimates that this amount could have provided each of Intel’s 124,800 employees a $48,000 bonus every year for five years.
Such siphoning of public funds from workers into the pockets of the wealthy is unacceptable, but predictable — given that funding decisions are being based on the bidding companies’ priorities and promises shrouded in secrecy.
Americans need quality jobs with fair wages, safe working conditions and equity. Unfortunately, the CHIPS Act lacks a process for involving workers and the local community.
There is a better way. Unions, environmental justice organizations and coalitions like CHIPS Communities United can help ensure democratic industrial policies if they are empowered to represent local interests.
Akash Systems, a microchip company in Oakland, Calif., shows how inclusive growth can work. It has partnered with unions to ensure fair labor practices during the construction phase and has signed agreements to protect workers’ rights once its plant is open. Akash’s example disproves the notion that unions harm business. Instead, it highlights how good faith negotiations and community involvement can lead to success.
Unions and other civil society organizations can also help mitigate the environmental and health risks of semiconductor plants. Chip manufacturing requires gluttonous water and electricity consumption and the treatment of voluminous, toxic wastewater.
For instance, the new manufacturing sites of the four largest chip producers — Intel, TSMC, Samsung and Micron — are expected to demand more than double the annual electricity consumption of Seattle. Meanwhile, workers handle chemicals and toxic substances inside the plants. Without strong protections and representation, corporate interests can easily end up harming the communities hosting these plants.
In February, 126 members of Congress wrote a public letter urging the Commerce Department to require high labor and environmental standards and support union involvement. Their calls, however, have been largely ignored. It’s time to involve communities in policy decisions to ensure that reindustrialization benefits everyone and enhances democracy.
