Reality check: adding up (and subtracting) Indiana's "new jobs"
Bob Segall/13 Investigates
State leaders boast of 100,000 new Indiana jobs in the past five years, but they don't define what "new job" really means. 13 Investigates has discovered, in some cases, an announcement of new jobs also brings hundreds of layoffs subsidized by Hoosier taxpayers – something that does not show up in Indiana's economic development numbers.
Indianapolis - As far as press releases go, this one was brief and its headline was direct: "Vera Bradley hires 490 new employees."
The popular Fort Wayne-based manufacturer of fun, fashionable handbags sent the press release in August 2008 to announce it had leased a new production center that would eventually house nearly 500 new workers.
But the press release did not tell the whole story.
Three other companies in Fort Wayne had already shut down because Vera Bradley canceled their sewing contracts. 537 workers at Phoenix Sewing, Summit Production Systems and Mercury Manufacturing faced unemployment. Another sewing company in Ohio laid off dozens of its workers, too, as Vera Bradley decided to move its sewing operations in-house.
Vera Bradley announced 490 new jobs, but in order to create those jobs, more than 600 people found themselves out of work.
"We decided with much business research and from a lot of business analysts that doing vertical integration and bringing our business in-house as much as possible would really better prepare us for the future," explained Vera Bradley spokeswoman Melissa Schenkel. "It really means having better control, better quality and streamlining those jobs in order to be more efficient … We certainly feel that was a great move for us."
"Looking for a job ever since"
It was not a great move for Mapyari Ma.
"I was very sad and upset to learn [Phoenix Sewing] was closing," she recalls. "I have been looking for a job ever since."
Ma and dozens of other Burmese refugees living in Fort Wayne had been making Vera Bradley handbags when they lost their jobs as a result of Vera Bradley's vertical integration plan. She has been learning English in the hopes of being hired by Vera Bradley but, so far, that has not happened.
"I applied for a job a year ago but they have never called me back. Since I do not have a job, I feel very depressed and it's hard on my health," she said.
Many of the laid-off workers began sewing when they were children. Despite their experience, some are now receiving unemployment insurance as they struggle to pay for food and rent.
"I don't want to get unemployment insurance. All I want to do is work and earn my own money," said Kyaw Ye Lwin, an unemployed worker who used to sew Vera Bradley products at Mercury Manufacturing. "I have interviewed at Vera Bradley and they said they would call me back, but I never received a call from them."
"Often we see new jobs aren't really new jobs at all," says Tom Lewandowski, president of the Northeast Indiana Central Labor Council. "They are the same jobs that are moved or rotated, but to say those are new jobs, that's just false. It looks good to announce new jobs and to have a ribbon cutting, but in reality, many of the new jobs just aren't there."
Prescription for confusion
Dana Ingalls says she was fooled by a big job announcement, too.
In January, Gov. Mitch Daniels joined city leaders in Indianapolis to announce new jobs at Express Scripts Pharmaceutical.
"My commitment to the state is to bring in 180 more skilled jobs into this site and to continue to grow it," Express Scripts CEO George Paz said at the announcement ceremony.
But within weeks of that announcement, Express Scripts began laying off workers, including Ingalls, who had worked there as a pharmacy technician for eight months.
"I was told I was in the top five percent of employees but they had to let me go," she said on her last day of work. "They just came in and said they're bringing more jobs, and then they turn around and let people go. It's confusing."
Ingalls says many of her co-workers were laid off, too, and she estimates at least 60 to 80 people have been released by Express Scripts since its job announcement in January. "Some people have already packed up their desk in fear that they're not coming back tomorrow," she said.
The pharmaceutical company tells WTHR it is currently filling jobs in its specialty and clinical pharmacy operations and is "on track to meet our goal of adding 182 jobs to our operations in Indianapolis by 2012." Express Scripts confirmed it has been laying off workers at the same time.
"It's true that we have also reduced forces in some areas of our Indianapolis operations this year … to make sure we are operating as efficiently as possible to control healthcare costs for our clients and their patients," explained Express Scripts communications manager Thom Gross. Despite repeated requests from Eyewitness News, Gross did not say how many workers have been let go or how many more might be laid off in the near future. "Unfortunately, expansion in some areas may not eliminate the need to reduce force in others." he said.
"This type of thing is happening everywhere," said Rex Terry.
Terry says he and nearly two dozen others lost their jobs at Global Tool in Fort Wayne when it was purchased by another company that announced a so-called job expansion.
X-Y Tool & Die bought Global Tool in 2008 and promised to hire new workers and re-train old ones. X-Y Tool did add some new equipment but now admits it didn't create any new jobs. Instead, it shut down Global Tool, consolidated operations and laid off workers who had been there for decades.
"A lot of us had been there 20, 30, 40 years and we all expected to retire there," said Bruce Putman, who was laid off after 42 years at Global Tool. "There's been guys who've been out of work for a year and half now and can't find anything, and we're finding it very difficult to get [health] insurance at any price."
You're paying for it
Adding insult to the workers' injury, X-Y Tool earned a spot on the Indiana Economic Development Corporation's list of "Indiana Economic Successes" after the company requested tax breaks and state training grants for its economic development project. Vera Bradley and Express Scripts are in line for local and state tax incentives, too.
"This is tax dollars we're all paying for us losing our jobs," Putman said, pointing out that many workers at X-Y tool receive far less in salary and benefits than those who worked at Global Tool.
X-Y Tool tells 13 Investigates that IEDC listed it as a 2009 economic success even though X-Y Tool never accepted IEDC's offer of training grants, shuttered its sister company and laid off Global Tool workers long before IEDC published its list of 2009 success stories. X-Y Tool has received approval for tax abatements from DeKalb County but, in light of the company's inability to retain and hire new workers as it originally committed, a company spokesman says X-Y Tool will forego property tax breaks if asked to do so.
"We had every intention of doing all that, but the economy took a severe downturn and we had to scale back," said X-Y Tool & Die manager Greg Baker. "If we don't get the tax abatements, then we don't get them."
Lewandowski says, for decades, Indiana companies have tapped into a system that offers public money in exchange for job promises – even if the promises are suspect and the economic growth may go unrealized.
"That's a really bad deal and is this what we should be putting our tax dollars into?" he asked. "This looks more like accounting tricks that it does real job creation … If you move a job from one hand to the other, it's still the same job."
When 13 Investigates asked to meet with a Vera Bradley representative to talk about the implications of the company's vertical integration plan, Schenkel agreed to meet at one of Vera Bradley's corporate retail stores in Fort Wayne for an interview. She enthusiastically discussed her company's expansion plans, explaining that Vera Bradley has hired 627 workers in the past two years, exceeding the original forecast of 490. But that is roughly the same number of jobs as the number laid off at area sewing companies, and Schenkel did not want to discuss that.
"We directly didn't have anything to do with those jobs. I can't directly speak to any other jobs other than Vera Bradley jobs," she said.
Asked about the cause-and-effect relationship between Vera Bradley's new jobs and the hundreds of jobs lost at its sewing contractors, Schenkel responded "We believe strongly we are creating a very solid work environment for the future and creating growth for Vera Bradley by vertically integrating."
The Northeast Central Labor Council complains many of the new jobs created by Vera Bradley pay $9.50 per hour – not the minimum $12 per hour the company pledged to pay most of its new workers when Vera Bradley applied for tax abatements in 2008.
"And a lot of the jobs are temp jobs. They're not the kind of jobs you can build a family on," Lewandowski said.
Vera Bradley admits nearly 400 of its roughly 1,000 Fort Wayne-area employees are currently employed by a temporary staffing agency – not by Vera Bradley.
"After several months and after those employees meet our quality standards, we then roll those employees into Vera Bradley employee jobs," Schenkel said.
But 13 Investigates found some Vera Bradley sewers who have been working for the company through a temporary staffing agency for more than year with no indication that their status will change anytime soon.
Laid-off workers like Mapyari Ma and San Kyi say, at this point, even a temp job with Vera Bradley would be great news for their families.
"Sewing is the only thing I know," Kyi said. "I have a lot of experience and I can do the work."
Lewandowski listened nearby, shaking his head.
"Somehow we have to look at this economic development as its been practiced and look at what's gone wrong because its gone wrong for a lot of folks," he said.
Note: Over the past six months, 13 Investigates has repeatedly requested information from IEDC to show which companies followed through on their job commitments and which ones did not. IEDC will not release company-by-company job realization figures to WTHR, claiming the information is protected by state statute and releasing such details could jeopardize companies that want their job information to remain confidential. WTHR has asked IEDC to provide the specific state statute which prohibits the release of detailed job realization statistics for Indiana companies that receive publically-funded grants and incentives, but the agency has not yet produced that information.