The Chattanooga Miracle Leaves Out the Working Class

Companies like Amazon and Volkswagen have flocked to the city — but they offer seasonal, temporary, unsteady work.

Justin Smith, 37, looks through a stack of free suits at a job training program in Chattanooga.
National Journal
Nancy Cook
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Nancy Cook
Aug. 21, 2013, 10:28 a.m.

This art­icle is part of a weeklong Amer­ica 360 series on Chat­tanooga.

CHAT­TANOOGA, Tenn. — The suits in blue dry-clean­ing bags sat in heaps on the con­fer­ence room table — there for the tak­ing, provided the young men could un­earth ones that fit.

Justin Smith’s blazer fit well in the shoulders but fell 2 inches too short in the sleeves — not that it mattered too much to him. He wasn’t sure he would need to wear a jack­et to any job or even to in­ter­view as a truck driver. Driv­ing a big rig, fork­lift, or bus had be­come the 37-year-old’s most re­cent ca­reer plan; it was an idea born in a free job-train­ing pro­gram in down­town Chat­tanooga that also of­fers donated dress suits to its en­rollees.

Already, Smith had run through the gamut of loc­al em­ploy­ment op­tions for someone without a col­lege de­gree. In the late 1990s, he worked as a su­per­visor in at a yarn-dy­ing fact­ory, un­til it shipped those jobs to China. Then he worked at a DuPont plant, where he man­u­fac­tured nylon for bul­let­proof vests and earned as much as $22 per hour. For three years, he tried to make it as a small-busi­ness own­er by open­ing a re­tail store to sell mid­cen­tury mod­ern fur­niture, a pas­sion of his.

When the re­ces­sion forced Chat­tanoogans to pull back on spend­ing and his busi­ness stumbled, Smith found work at the newly opened Volk­swa­gen plant. He de­livered parts on the fact­ory floor for $13.50 an hour for a year, un­til he got laid off in May with hun­dreds of oth­er Volk­swa­gen em­ploy­ees, he says.

Now, Smith would be thrilled to earn $15 to $16 an hour, or the equi­val­ent of $33,000 an­nu­ally. That’s a huge comedown from the $65,000 he made one year in man­u­fac­tur­ing.

For him, Chat­tanooga isn’t primar­ily a tech hub or a city whose eco­nomy is on the up­swing. Smith just sees a dead-end. “If someone paid my mov­ing ex­penses, I would move now,” he says. His friend at the job-train­ing work­shop, 20-year-old Dylan Wade, in­ter­rupts. “I don’t want to be a truck driver, but it pays a lot. It’s not what I want. It’s what my wal­let wants,” Wade says. He’d prefer to work as a land­scaper or garden­er but doesn’t see op­por­tun­it­ies in that field.

Chat­tanooga gov­ern­ment of­fi­cials, eco­nom­ic-de­vel­op­ment gurus, and well-edu­cated loc­als are keen on the idea that the Chat­tanooga eco­nomy is at a turn­ing point thanks to its re­vital­ized down­town; its su­per-speed In­ter­net, one of the fast­est in the coun­try; and the city’s abil­ity to lure new com­pan­ies to the area, in­clud­ing Volk­swa­gen, Amazon, and a hand­ful of call cen­ters such as HomeServe USA or Con­vergys.

But this nar­rat­ive does not ring true to those liv­ing on the city’s lower eco­nom­ic rungs. For them, the past dec­ade has been marked by struggle and a de­cline in wages, with few­er steady, stable job pro­spects, and the on­go­ing loss of man­u­fac­tur­ing jobs. The un­em­ploy­ment rate in Chat­tanooga re­mains at 8.5 per­cent, com­pared with the na­tion­al rate of 7.4 per­cent. About 23 per­cent of Chat­tanooga res­id­ents live be­low the poverty line, ac­cord­ing to the most re­cent census fig­ures; statewide, the av­er­age is 17 per­cent.

An­ec­dot­ally, food-bank work­ers say they’re see­ing more and more fam­il­ies de­pend­ing on the food pan­tries. These are work­ing people, not des­ti­tute enough to qual­i­fy for fed­er­ally fun­ded food stamps but who non­ethe­less re­main hungry. “Be­fore the re­ces­sion, we used to see primar­ily dis­abled people who couldn’t work, or the un­em­ployed,” says Holly Ash­ley, a spokes­per­son for the Chat­tanooga Area Food Bank. “Now, we’re see­ing more people who are un­der­em­ployed.”

When those without col­lege de­grees do find work, they say there’s little job se­cur­ity, even at the new Volk­swa­gen or Amazon plants, ar­gu­ably two of the bright­est stars of the Chat­tanooga eco­nomy. Smith got laid off after one year at Volk­swa­gen. His friend, James Mas­sey, 21, worked a sea­son­al job at Amazon with no hope of it lead­ing to a full-time po­s­i­tion. Res­id­ents say that’s the way both plants hire most of their work­ers: through tem­por­ary agen­cies where people can be hired and fired based on the com­pan­ies’ sup­ply and de­mand.

“When busi­ness goes down, they lay off people. In peak sea­sons, they’ll hire 500 to 600 people and then lay most of them off later,” says Duane Parks, a 29-year-old Chat­tanooga nat­ive. “I want to have some sta­bil­ity in my ca­reer.”

This di­ver­gent Chat­tanooga eco­nomy — with its sep­ar­ate tracks for high-skilled versus low-skilled work­ers — is in­dic­at­ive of the na­tion­wide trend of a dis­ap­pear­ing middle class. From 1999 un­til 2011, the real me­di­an house­hold in­come in the United States dropped by 8.9 per­cent, ac­cord­ing to the Census Bur­eau. Data like this sup­port Smith, Wade, and Mas­sey’s view of the Chat­tanooga eco­nomy as lackluster, at least for them. Still, they’re try­ing to im­prove their lives by gain­ing new skills or ap­ply­ing for a wider ar­ray of jobs.

Mean­while, highly edu­cated work­ers see the Chat­tanooga eco­nomy as on the cusp of something big, a small-sized city full of op­por­tun­ity for those who are eager and am­bi­tious. “We want six-fig­ure jobs to come to Chat­tanooga,” says 30-year-old Jack Studer, an en­tre­pren­eur who re­turned here after work­ing at an in­vest­ment bank and soft­ware com­pany. “Frankly, those 2,000 or so jobs at Volk­swa­gen pay barely above the poverty line. That’s part of the old Chat­tanooga eco­nomy — where things were 10 years ago.”

But, Chat­tanooga’s “old” eco­nomy worked much bet­ter for those with less edu­ca­tion. It gave work­ers like Smith jobs that paid over $20 an hour. The new may­or, Andy Berke, says he wants to im­prove the edu­ca­tion­al sys­tem to give less-skilled work­ers more op­por­tun­it­ies. Yet there is no grand city plan to ac­com­plish that. Many of the city’s elite and eco­nom­ic-de­vel­op­ment of­fi­cials sug­gest that a know­ledge-based eco­nomy will cre­ate wealth, which will trickle down to a great­er swath of res­id­ents. So far, that has failed to hap­pen, even with a spurt of de­vel­op­ment that began in the early 1990s.

This eco­nom­ic di­vide re­mains one of Chat­tanooga’s biggest chal­lenges, ac­cord­ing a 2008 case study by the Brook­ings In­sti­tu­tion. Much of the growth of down­town and the en­su­ing de­vel­op­ment has not linked to or helped Chat­tanooga’s poorest neigh­bor­hoods, the re­port says.

“Chat­tanooga as a tech­no­logy hub? That is b.s.,” says Mas­sey at the job-train­ing work­shop. “There are not many tech jobs here.” For less-edu­cated, lower-skilled work­ers, it just seems that the city has few­er jobs over­all to of­fer them. “Chat­tanooga his­tor­ic­ally has been very fo­cused on man­u­fac­tur­ing,” says Dav­id Penn, an as­so­ci­ate pro­fess­or of eco­nom­ics at Middle Ten­ness­ee State Uni­versity. “It has made some gains in man­u­fac­tur­ing with the Volk­swa­gen plant, but it’s still down in man­u­fac­tur­ing jobs and still down in the total num­ber of jobs.”

Penn com­mends the city for try­ing to di­ver­si­fy its eco­nomy by en­cour­aging growth in tech com­pan­ies and man­u­fac­tur­ing, along­side more tra­di­tion­al com­pan­ies such as Chat­tanooga Bakery or the in­sur­ance com­pany Un­um. But many of Chat­tanooga’s res­id­ents are still wait­ing for that di­ver­si­fic­a­tion to trans­late in­to the good life for them.

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