Tesla dispute over $25/hr wage vow won't hurt tax breaks
RENO, Nev.—Tesla Motors remains on track to qualify for $1.3 billion in incentives for its Gigafactory project in northern Nevada, even as the company pushed back on the initial average wage estimate it submitted to the state.
In its application for incentives submitted to the Nevada Governor's Office of Economic Development last October, Tesla TSLA wrote that the Gigafactory will create thousands of jobs in the next four years "with an average wage estimated at $26.16 per hour." Estimates ranged from $22.79 per hour for production associates to $41.83 per hour for engineers and senior staff.
State and local officials also have touted an average wage of $25 per hour for the project since Nevada was officially announced as the Gigafactory site last year.
"When completed, it will employ 6,500 people onsite with an average wage in excess of $25 per hour with excellent benefits," said Nevada Gov. Brian Sandoval in his speech at the Capitol steps in Carson City as Tesla CEO Elon Musk watched by his side.
Video of the speech is available on Tesla's YouTube channel.
TESLA DISPUTES $25/hr
Tesla, however, disputed the $25-per-hour wage this week after it was used in a Reno Gazette-Journal article that ran Sunday and was picked up by other media outlets. The company told the Detroit Free Press that the number was inaccurate.
Tesla also emailed the Reno Gazette-Journal on Monday, saying that the only time it said anything publicly about wages involved a $22 per hour estimate submitted to the state in September. The initial email did not mention the company's incentive application, which the Gazette-Journal originally reported about in October last year.
The higher number in Tesla's incentive application is not unusual, said Steve Hill, director of the Governor's Office of Economic Development.
"Oftentimes, companies come and pay substantially more than what is required for them to receive abatements and incentives," Hill said. "We often don't hold those companies to the exact amount (in the application) because, frankly, if we did, everybody would just say they would pay the minimum amount required because they don't want to overcommit and put themselves in jeopardy in the future."
When asked Thursday about its incentive application, Tesla confirmed that the projections were higher than $22 per hour, adding that they were based on the best wage information it had at the time.
Even if the company paid an average of $22 per hour, however, Hill says it still would be within the necessary range to receive its incentives — the largest ever made by the state. The state also has not received any information that was different from what it originally discussed with Tesla, Hill said.
FREMONT, CALIF. PLANT
One automotive analyst described Tesla's decision to push back on the $25-per-hour number as unusual, especially after it has been reported in the media since last year.
Contract negotiations this year between the United Auto Workers and Detroit automakers are likely casting a spotlight on Tesla wages, said Kristin Dziczek, research director at the Center for Automotive Research. Tesla's Fremont, Calif. manufacturing operation, however, might be playing a bigger role in the wage issue, Dziczek said. The Free Press story noted, for example, that the starting pay at Tesla's Fremont facility is $17 per hour.
"They don't pay ($25 per hour) for their assembly wage," Dziczek said. "Certainly, there are forces that would like to organize the Tesla assembly plant and would use a $25-an-hour wage in Nevada to rile up assembly workers."
Tesla declined to comment on personnel-related matters at the Fremont facility. The company, however, said future employees in Northern Nevada will be an important part of Tesla.
"We offer a package of competitive wages, great benefits, and equity; our employees are company owners," a Tesla spokesperson said by email. "We couldn't be more excited about Tesla's future in Reno."