Policymakers in most states across the South uphold the Southern economic development model, which is characterized by low wages for workers; few regulations on businesses; low or no corporate taxes; and strong opposition to unions (Childers 2023; 2024a). Political leaders across the region advertise these exploitative, low-road policies as “business friendly,” and offer corporations massive subsidies to lure them into the South (AFL-CIO 2019; Erickson and Herbert 2023; Wakely, Anderson, and Freyer 2023; Whiton and LeRoy 2023). 

Automobile manufacturing is among the key targets for subsidies in states like Alabama, Georgia, Kentucky, Mississippi, South Carolina, and Tennessee (Eckert 2023; Erickson and Herbert 2023; Wakely, Anderson, and Freyer 2023; Whiton and LeRoy 2023).1 Whiton and LeRoy (2023) estimate that $641 million in state and local subsidies went to just one plant in Cartersville, GA, established by Hyundai Motor Group and battery giant SK On. These subsidies combined with additional federal tax credits mean these companies will receive an estimated $2 million dollar subsidy for each job created.2 Shepardson (2023) reports that South Carolina provided $1.29 billion in subsidies to Volkswagen’s Scout Motors to build a truck and SUV factory. Across the region auto manufacturers have received similar subsidy packages. 

These subsidies have effectively persuaded auto makers, especially foreign companies, to move significant production to the region (AFL-CIO 2019). However, because of the economic development model in place across the South, workers taking these jobs are being squeezed with low wages and a lack of regulation of these companies. And it is not just Southern auto workers who are harmed by this model; the bargaining power of auto manufacturing workers outside the South is also weakened. In states or regions where workers demand better wages and working conditions, employers threaten to leave to scare workers into accepting lower wages, less safe workplaces, and greater inequality. 

Will the South become the new heart of auto production?

The Midwest has long been the heart of auto production in the United States. Detroit has been nicknamed the “Motor City.” The so-called “Big Three” U.S. automakers—Ford, General Motors, and Chrysler (now Stellantis)­—have all established their North American headquarters in Michigan (Palmer 2012). Numerous related parts suppliers and manufacturing facilities have long been key to many Midwest states’ economies (Abramson 2024). But since at least 2000, the domestic auto manufacturing industry has increasingly begun shifting elsewhere, particularly to Southern states.

Figure A shows the number of auto manufacturing jobs in each region of the country in 2001, 2019, and 2022.3 For each year, most auto manufacturing jobs are in Midwestern states, with the second highest concentration in Southern states. While the Midwest continued to have the largest share of auto manufacturing jobs in 2022, Figure A shows a shift away from the region and into the South. In 2001, more than twice as many auto manufacturing jobs were in the Midwest versus the South—62.3% of all auto manufacturing jobs compared with just 25.3% in the South. But by 2022, the percentage of all auto manufacturing jobs in the Midwest had fallen to 52%, while the share in the South had risen to 36.4%. 

Most of the auto manufacturing jobs moving to the South are concentrated in just a few states across the region. Figure B shows the 10 states nationally with the largest numbers of auto manufacturing jobs. While Michigan, Indiana, and Ohio are the top three, Tennessee and Kentucky round out the top five states for auto manufacturing jobs. Overall, five of the top 10 states for auto manufacturing are in the South. 

Proponents of the Southern economic development model likely interpret auto manufacturing jobs shifting to Southern states as an illustration of the success of their policies. But unfortunately for workers across the region, low-wage, low regulation, anti-union policies have led to a marked decline in the quality of jobs that moved to Southern states.

As jobs move South, job quality falls

The most basic indicator of job quality is wages. Adequate wages allow workers to live a dignified life and provide for their families’ needs. Manufacturing jobs—and auto manufacturing jobs in particular—are generally hailed as well-paid jobs, especially for workers without a college degree. It is important to note, however, that manufacturing jobs were not inherently well-paid jobs. They became well paid because workers organized and formed unions, which enabled them to demand better wages (Krugman 2023). As more of these jobs have shifted to Southern states where the economic development model prescribes lower wages, less regulation, and aggressive opposition to unions, wages for the industry workforce overall have fallen. 

The first panel in Table 1 shows wages at the 25th percentile and at the median (50th percentile) for motor vehicle parts manufacturing workers in each of the 10 largest auto manufacturing states.4 Column two of that panel shows that workers at the 25th percentile tend to have lower earnings in Southern states, with the lowest wages in Texas, Alabama, and Kentucky. The highest wages are in Illinois, Indiana, and California—states outside the South. We see a similar disparity with median annual wages: Texas, Alabama, and Tennessee have the lowest wages and Michigan, Ohio, and California have the highest. All five Southern states have lower median wages than states outside the South. Not only are motor vehicle parts manufacturing workers’ wages lower in Southern states, but median earnings in some Southern states are equivalent to the wages of workers at the 25th percentile in the Midwest: Median earnings in Texas ($37,390) and Alabama ($38,980) are what auto workers at the 25th percentile are paid in California ($38,060) and most Midwestern states. 

The second panel in Table 1 show the same data for motor vehicle manufacturing workers. At the 25th percentile of earnings, we see no clear regional differences among states. At the median, however, these data show a similar pattern to auto parts manufacturing workers, with those in Southern states paid substantially less than those in other regions. 

Lower wages in Southern states do not reflect a lower cost of living in those states. Table 2 shows the median earnings in each state, along with the cost-of-living adjusted median. Even with this adjustment, Texas, Alabama, and Tennessee remain among the lowest-wage states for motor vehicle parts workers. While California and Illinois tend to have lower wages when adjusted for the cost of living, Michigan and Ohio continue to have the highest wages of all states. These are two of the three states with the largest numbers of auto manufacturing workers, and they have large, unionized auto manufacturing sectors. The difference in wages for workers in Michigan ($51,681) is a full $13,332 more than the $38,349 cost-of-living adjusted median in Texas. The gap between Michigan and other Southern states is smaller, but the difference remains in the thousands of dollars. 

There is a similar pattern among motor vehicle manufacturing workers. While motor vehicle manufacturing workers in Illinois have the lowest cost-of-living-adjusted wages, Alabama, South Carolina, and Texas remain among the lowest-earning half of states. 

While auto manufacturing workers in states outside the South typically have higher wages than those in Southern states, wages declined in real terms for workers in both the South and the Midwest. Table 3 shows median wages for workers in each state in 2012 and 2022, in 2022 dollars. When adjusted for inflation, wages for auto parts manufacturing workers rose in only two states—California and Illinois. Motor vehicle parts workers in all other states faced falling wages with the largest declines in Michigan, South Carolina, Alabama, and Texas. 

Table 3 shows even larger declines in the wages of motor vehicle manufacturing workers. Workers in Tennessee experienced the largest decline at -$18,380 followed by Alabama (-$13,208), Kentucky (-$9,733), and South Carolina (-$9,345). Once again, wages rose only for workers in California. 

The general decline in the earnings of auto manufacturing workers in Michigan reflect, in part, concessions auto workers made after the 2008 auto industry crisis that led General Motors and Chrysler (now Stellantis) to file for bankruptcy and reorganize. While Ford did not file for bankruptcy, the company’s workers were also included in the concessions. At the time, many believed these corporations might not survive. To save the industry, auto workers gave up cost-of-living raises; permitted newer hires to be paid at lower rates; and agreed to cuts to pensions and health benefits, among other concessions (Hersh 2023; Whalen 2023). As a result, these workers’ wages have declined in real terms and the quality of their benefits have deteriorated. This is despite auto sales skyrocketing by 92% for the Big Three auto makers between 2013 and 2022, soaring profits, and a 40% increase in CEO pay (Hersh 2023). 

While not reflected in data in Table 3, unionized workers were able to use their leverage in late 2023 to force the Big Three auto makers—Ford, Stellantis, and General Motors—to raise wages for the highest paid workers by at least 25% over four and a half years; raise wages of the lowest paid to at least $40 an hour by the end of the contract; restore cost-of-living increases; and increase contributions to their 401(k) plans (Whalen 2023). This means the differences in wages between workers in the South and those in the Midwest could grow substantially, as the new contracts are implemented and the wages of unionized workers rise. 

Notably, wins by the United Auto Workers (UAW) do not just benefit unionized workers, as other nonunionized auto makers—including Toyota, Honda, and Hyundai—reported that they would also raise their wages following the announcement of the UAW contracts (Reuters 2023; Whalen 2023). This clearly illustrates that these companies could have raised workers’ wages and remained profitable much earlier. Yet they did not act until UAW was able to negotiate a better contract, which showed workers across the South what a union could do for them. These car companies’ proactive actions likely reflect, at least in part, an attempt to discourage their workers from seeking to unionize.

Southern workers face unsafe workplaces

The Southern economic development model is rooted in efforts of wealthy Southerners to extract the labor of Black Southerners without needing to provide them with fair compensation or consideration of their health or safety (Childers 2024a). Today this model is used to extract labor at the lowest cost possible from workers across the region—independent of race. In this model, workers are just another commodity, a cost to be minimized. As a result, employer practices to maintain worker safety decline as auto manufacturing jobs move to the South. 

In states across the South, employers often demonstrate terrifyingly little regard for the wellbeing of their employees. For instance, there have been cases of employers denying heat and shade breaks for staff working outside in extremely hot temperatures that resulted in worker deaths, as well as instances of employers expecting staff to brave hurricanes to keep the business open (Barrett 2023; Childers 2024b). In many states outside of the South, policymakers have established more robust regulations to ensure worker safety. Those states embracing the Southern economic development model, however, typically shun state or local regulation of businesses, which leads to predictably negative outcomes for workers. 

Worker safety in the South’s auto manufacturing industry tells a similar story. Auto industry workers across the South report high levels of illness, injury, and even death (Erickson and Herbert 2023; Waldman 2017). Erikson and Herbert (2023) report that as many as one in five workers (20%) reported being injured on the job in some of the Southern auto manufacturing plants they studied. This is compared with a national rate of 6.6 injuries per 100 full time workers.5 

Waldman (2017) details how unsafe working conditions have resulted in workers experiencing unnecessary deaths or the loss of their limbs. He reports that in 2015, the chances of losing a finger or a limb in an auto parts factory in Alabama were double the national risk for the industry and 65% higher than in Michigan. Caldwell (2019) explains that one reason for these injuries is that auto manufacturing employers are failing to train workers, who are then not following safety precautions like using lockout devices, machine guards, and energy control procedures, which would prevent machinery from starting during maintenance. 

The decline in job quality is possible thanks to the lack of unions across the South

Auto manufacturing jobs have long been viewed as good jobs that paid workers well and provided great benefits. As these jobs have begun shifting from the Midwest to the South, we observe a decline in job quality. A key factor responsible for this decline is the prevailing economic development model in the South, notably the extreme opposition to unions prescribed by the Southern model. 

Figure C shows the union coverage rates for auto manufacturing workers by region in 2010, 2019, and 2022. The figure shows that auto manufacturing workers in the South have the lowest union coverage rate of any region. In 2022, the union coverage rate across the South was just 4.5%—compared with 7% in the West, 15.4% in the Northeast, and 25.8% in the Midwest. Figure C also shows that while union coverage rates among auto manufacturing workers saw a decline between 2010 and 2019, they were on the rise again by 2022 in all regions except the South. 

In the absence of worker-friendly policies that ensure workers are paid a living wage and have a safe work environment, unions empower workers to demand these basic benefits from their employers. The low union coverage rates shown in Figure C highlight obstacles preventing many Southern workers from coming together and collectively demanding these benefits.

Policymakers across the South understand that unions can counterbalance employer power and have been very intentional about blocking unions at all costs (Childers, Kamper, and Sherer 2024). They have explicitly expressed opposition to unions and passed right-to-work laws to undermine them (Daryani 2023; Harris 2024; Ivey 2024; Williams 2024). Lawmakers in the region have joined with employers to threaten workers and thwart their efforts to unionize. For example, workers at the Vance, AL, Mercedes plant described facing constant “union-avoidance” activities including a barrage of “captive audience” meetings where unions were disparaged (Kamper 2024; Leon and Slaughter 2024). These efforts were further supported by Alabama’s governor who joined with the governors of five other states to issue a statement claiming that unionizing the plant would cost the state jobs (Ivey et al. 2024). 

Most recently, several states across the South have passed laws prohibiting companies from receiving state-provided economic subsidies if they voluntarily recognize a union (AP 2024; Wiener 2023). This is a particularly telling choice, given the region’s embrace of subsidizing employers with generous economic development incentives, not to mention the Southern economic development model’s general deference to businesses and opposition to regulation. These lawmakers’ purported “pro-business” philosophy seemingly only applies to companies where workers are disempowered. 

Prohibiting economic subsidies to companies who support their workers’ desire to unionize also stands in direct contrast to recent federal laws passed by the Biden administration to help speed the country’s transition to clean energy and electric vehicles (EVs). The Inflation Reduction Act (IRA) and the Bipartisan Infrastructure Law contained provisions offering more generous federal funding to energy projects and EV-related manufacturing plant construction projects adopting strong job quality standards, typical of projects utilizing unionized labor. By trying to discourage companies from adopting those high-road labor practices, Southern lawmakers are effectively telling businesses to forgo enormous federal financial subsidies rather than let the workers at those businesses potentially share in the benefits of that subsidy.

Still, with large federal investments pouring into the region, the auto manufacturing industry in the South is likely to grow rapidly. This provides a powerful opportunity to improve job quality in the South; bolster the labor movement in the region; and ensure that workers across the nation have good jobs that benefit workers, their families, and their communities.

Indeed, in the wake of the pandemic, as a strong labor market and low rates of unemployment have strengthened workers’ bargaining power, job quality has taken on increased salience for workers across the region (Gould 2024). This is happening amid strong and growing support for unions (Shierholz et al. 2024). Labor has renewed their efforts to organize the South. And they are winning. In April 2024, 73% of Volkswagen workers in Tennessee voted to join UAW (Eckert 2024). And in May 2024, workers in Georgia, North Carolina, and Tennessee won a record contract with Daimler Truck (Shepardson 2024). 

Even in cases where union drives were ultimately unsuccessful, workers at those sites still won major concessions just by holding a union vote. For example, when UAW announced that 30% of Mercedes-Benz workers in Vance, AL, signed a union card, the company raised wages; eliminated the wage tiers among workers; and replaced the disliked CEO (Kamper 2024). The message from Mercedes and policymakers was that workers did not need to vote for the union, they could negotiate directly with management (Ivey et al. 2024)—a dubious claim since the workers’ concerns about leadership and pay were likely well-known by management prior to the union drive.

The Mercedes workers attempting to organize ultimately lost the union election, but they still won meaningful concessions because holding a union vote demonstrated their collective power. This promise of unions as a counterbalance to employer power is why proponents of the Southern model view them as such a threat. 

Importantly, the federal investments in the region are spurring growth in the industry and helping to bolster worker organizing. With billions of dollars pouring into new or upgraded manufacturing and energy production facilities, the threats from corporations and politicians that organizing and unionizing will lead companies to pull up stakes and leave the region ring hollow. Workers considering joining the union can see these threats for what they are: nothing more than scare tactics. These companies are not likely to walk away from the record levels of taxpayer-funded incentives. 

Conclusion

Auto manufacturing jobs became good jobs in the United States because workers came together in unions, organized, and went on strike to make them good jobs. Over the last few decades, the secure, middle-class life previously promised by auto manufacturing jobs has come under threat. In the Great Recession, when automakers were facing financial difficulties, workers made significant concessions to save the industry. Once these corporations went back to making record profits, they did not restore workers’ wages and benefits. At the same time, as more of the industry has shifted to the South, policymakers’ emphasis on suppressing wages and hostility to unions—core to the Southern economic development model—has undermined job quality across the industry.

In the Midwest, auto workers once again came together to strike and were able to force the Big Three auto companies to do the right thing and fairly compensate them. The strong unions that empowered those workers to succeed in their demands for fair compensation are largely missing across the South.

Fortunately, workers across the region are demanding better job quality and union recognition (Price and Estwick 2024). The increased federal investment in electric vehicle manufacturing and in infrastructure empowers workers who now understand that companies are not likely to pick up and move. Workers have also seen what a union can do for them after UAW wins for its workers, as evidenced by successful union drive at the Volkswagen plant in Tennessee. 

Together, these factors should inspire hope that even in the face of opposition from employers and politicians across the region, when workers come together to demand fair treatment, that can make all the difference.

---

Notes

1. Auto manufacturing in this report includes jobs in NAICS codes 3361 Motor Vehicle Manufacturing, 3362 Motor Vehicle bodies and trailer, and 3363 Motor vehicle parts manufacturing. 

2. The authors note that this is probably an underestimate because not all subsidies are disclosed publicly.

3. We use the U.S. Census Bureau’s definition of the South Census Region, excluding the District of Columbia which has no auto manufacturing in the data. The states included are Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, West Virginia, and the District of Columbia.

4. In analyses of the total number of workers in Figures A and B, all auto manufacturing workers in NAICS 3361, 3362, and 3363 were combined. In Tables 1 and 2, we are examining workers at the 25th and 50th percentiles and cannot combine across NAICS codes and therefore we examine the largest auto manufacturing sectors NAICS 3361 and 3363 separately. 

5. Their findings are based on surveys of workers in the plants they studied, 95% of whom were full-time workers. Some of the injuries they report would likely not be included in official statistics.

References

Abramson, Ryan. 2024. “Where Are the Top US Automotive Manufacturing Plants Located and Why?” Scoutcities.com, May 7, 2024.

AFL-CIO. 2019. “The Double Standard at Work: European Corporate Investment and Workers Rights in the American South.” October 20, 2019.

Associated Press (AP). 2024. “Some Georgia Workers Would Find It Harder to Become Union Members Under a New Bill.” March 20, 2024. 

Caldwell, Carla. 2019. Safety: OSHA Targets Southern Suppliers that Violate Workplace Safety Rules. Southern Automotive Alliance, August 2019. 

Childers, Chandra. 2023. Rooted in Racism and Economic Exploitation: The Failed Southern Economic Development Model. Economic Policy Institute, October 2023.

Childers, Chandra. 2024a. The Evolution of the Southern Economic Development Strategy. Economic Policy Institute, May 2024.

Childers, Chandra. 2024b. “Waffle House Strike Highlights the Harms of the Southern Economic Development Model.” Working Economics Blog (Economic Policy Institute), May 7, 2024.

Childers, Chandra, Dave Kamper, and Jennifer Sherer. 2024. “Operation Dixie Failed 78 Years Ago. Are Today’s Southern Workers About to Change All That?” Working Economics Blog (Economic Policy Institute), May 14, 2024.

Daryani, Connor. 2023. “Anti-Union Legislation Advances Through State House.” Nashville Scene, March 21, 2023. 

Eckert, Nora. 2023. “EV Boom Remakes Rural Towns in the American South.” Wall Street Journal, August 31, 2023. 

Eckert, Nora. 2024. “UAW Wins Big in Historic Union Vote at Volkswagen Tennessee Factory.” Reuters, April 22, 2024.

Erickson, Emily, and Berneece S. Herbert. 2023. Job Quality and Community Wellbeing in Mississippi and Alabama’s Manufacturing Facilities. Jobs to Move America, Feburary 2023.

Gould, Elise. 2024. “Jobs Report Indicates a Strong Labor Market.” Working Economics Blog (Economic Policy Institute), June 7, 2024.

Harris, Javon L. 2024. “Gov. Henry McMaster Pushes Against Labor Unions in SC. What Other Issues Top His 2024 Agenda?” The State, January 24, 2024.

Hersh, Adam. 2023. “UAW-Automakers Negotiations Pit Falling Wages Against Skyrocketing CEO Pay.” Working Economics Blog (Economic Policy Institute), September 12, 2023.

Ivey, Kay. 2024. “Unions Want to Target One of Alabama’s Crown Jewel Industries, But I’m Standing UP for Alabamians and Protecting Our Jobs.” Made in Alabama, January 10, 2024.

Ivey, Kay, Brian Kemp, Tate Reeves, Henry McMaster, Bill Lee, and Greg Abbott. 2024. “Governor Ivey and Other Southern Governors Issue Joint Statement in Opposition to United Auto Workers (UAW)’s Unionization Campaign” (news release). The Office of Alabama Governor Kay Ivey, April 16, 2024.

Kamper, Dave. 2024. “Just by Having a Union Vote, Mercedes Worker in Alabama Won Major Concessions and Proved the Importance of Worker Power” Working Economics Blog (Economic Policy Institute), May 22, 2024.

Krugman, Paul. 2023. Wonking Out: Making Manufacturing Good Again. New York Times, September 22, 2023.

Leon, Luis Feliz, and Jane Slaughter. 2024. “Alabama Mercedes Workers Lose First Union Election, Vow to Fight On.” Labor Notes, May 17, 2024. 

Palmer, Brian. 2012. “Why Are all the Big American Car Companies Based in Michigan?” Slate, February 29, 2012.

Price, Todd A., and Gary Estwick. 2024. “Tennessee Workers at VW Plant Vote to Unionize with UAW.” The Tennessean, April 22, 2024.

Reuters. 2023. “Automakers with Non-Union Workforce Race to Bump Pay After UAW’s Record Deals.” December 19, 2023.

Shepardson, David. 2023. “Volkswagen’s Scout Unit Wins $1.3 bln in Incentives for South Carolina Factory.” Reuters, March 20, 2023. 

Shepardson, David. 2024. “UAW Workers Ratify Labor Deal with Daimler Truck.” Reuters, May 6, 2024.

Shierholz, Heidi, Celine McNicholas, Margaret Poydock, and Jennifer Sherer. 2024. Workers Want Unions, But the Latest Data Point to Obstacles in Their Path. Economic Policy Institute, January 2024. 

Wakely, Dev, Akiesha Anderson, and Allan M. Freyer. 2023. A Wheel in the Ditch: A Closer Look at Alabama’s Big Bet on the Auto Manufacturing Industry. Alabama Arise, November 2023.

Waldman, Peter. 2017. “Inside Alabama’s Auto Jobs Boom: Cheap Wages, Little Training, Crushed Limbs, the South’s Manufacturing Renaissance Comes with a Heavy Price.” Bloomberg, March 23, 2017.

Whalen, Jeanne. 2023. “UAW Members Ratify Record Contracts with Big 3 Automakers.” Washington Post, November 20, 2023.

Whiton, Jacob, and Greg LeRoy. 2023. Power Outrage: Will Heavily Subsidized Battery Factories Generate Substandard Jobs? Good Jobs First, July 2023.

Wiener, Don. 2023. “ALEC Considers Blacklisting Companies that Voluntarily Recognize Unions.” Center for Media and Democracy, July 24, 2023.

Williams, Ross. 2024. “Georgia Senate Panel Advances Bill Aimed at Making the State Even Less Hospitable to Union Workers.” Georgia Recorder, February 1, 2024.