How $2 Trillion in Public Dollars Can Achieve Racial Equity in Workplaces

Last month, the electric car company Lucid Motors, also known as Atieva, asked the State of California for an $18 million tax credit to expand its Bay Area headquarters. Although Lucid is a well-capitalized Tesla-rival (with more than one billion from the Saudi Sovereign wealth fund), the company claimed that it needed the tax support to stay in the Golden State, or it would accept a generous rival offer from the State of Arizona. 

During a public hearing with the state committee responsible for approving the credit, (on which I serve), I raised the current national reckoning with systemic racism and asked the Lucid representatives what the company plans to do to ensure that the 1,858 new taxpayer-subsidized employees represent the full breadth and diversity of the population of the Bay Area. In response, the company admitted that its leadership is mostly white and male, as are its employees, but claimed that it is making efforts to find qualified people of color and women, albeit without much success. Lucid said it would keep trying to improve its “statistics,” but the company wasn’t ready to commit to anything more.

At that point, something unusual happened that I have rarely seen as a public economic development official: members of the Committee demanded more. After chastising the Lucid representatives for glossing over the issue of systemic racism and failing to propose any real equity program, the Committee postponed approval of the credit and insisted that the company commit to the creation of a racial and gender equity plan. Ten days later, the Committee approved Lucid’s requested credit under the condition that the company return to present the equity plan in six months.

While this action by the State of California was important, it only came about because Lucid gave a thoughtless and offensive answer to a basic question. More than anything, this story begs a much bigger question: why don’t public officials across America demand that corporations asking for taxpayer-funded contracts and subsidies do more to deal with systemic racism and sexism in the workplace? 

The potential for a campaign to demand more from corporate America could be far reaching. Research shows that U.S. taxpayers fund subsidies and contracts to private companies to the tune of more than $2 trillion per year. That’s more than 12% of the U.S. Gross Domestic Product (GDP). This funding goes to support companies from every sector of the economy: manufacturing, technology, service, construction, logistics, food, utilities, oil and gas, renewable energy, agriculture, you name it. According to one journalist, 20% of all customers for manufactured goods in the U.S. are public entities. And most of the funding—like the tax credit to Lucid—comes with very few strings and even less accountability, especially when it comes to addressing systemic discrimination. 

While companies proclaim their commitment to Black Lives Matter and racial and gender equity, reports from across the country reveal that workers of color and women in many industries face systemic racism in virtually every aspect of their jobs. Black, Latinx, Asian, and women workers have faced discrimination in production facilities and corporate offices. Yet, when workers raise legitimate concerns to management or even government bodies, they are routinely subjected to retaliation or firing.

And many, if not most, of those companies have received a taxpayer subsidy or public contract in the ordinary course of their business. 

For years, corporations have cried wolf every time communities demand that enforceable commitments be written into contracts for subsidies and the purchase of services or goods. When Amazon pitted cities against each other for the privilege of subsidizing its new second headquarters, even the most progressive public officials balked at the idea of saying no or asking for more.

But now, as the systemic racism and sexism embedded in American capitalism is increasingly apparent, we must take a simple step forward to win justice for people of color and women. We must condition the awarding of public contracts and subsidies on the requirement that companies asking for this support create genuine, enforceable anti-racism programs and good, high quality jobs for all.