Doesn’t Jamie Dimon care about Black lives anymore?
The question immediately popped into my head upon reading that JP Morgan Chase’s CEO crowed on a call last week with his wealthy customers that among the few securities he owns is a Mexican ETF, a basket of stocks with exposure to that country.
“I bought a Mexican ETF,” Dimon said. “Did you know their labor is cheaper in Mexico than in China? And it is a secured supply chain. If you are manufacturer, it is a no-brainer. Green infrastructure will be big.”
I will forever associate Jamie Dimon with the Black Lives Matter movement, which was intended to harness racial injustice and address racial economic disparity in America. While virtue signaling among CEOs was pervasive in in the summer of 2020, billionaire Dimon bested his executive rivals staging a photograph of himself taking a knee with some staffers in front of a suburban New York City Chase branch. The New York Post credited the photo to JP Morgan Chase, making clear it was a PR stunt.
Moving EV jobs to Mexico
As I’ve written repeatedly, what angers me about the climate change provisions of the Inflation Reduction Act (IRA) President Biden signed into law yesterday is that incentivizes GM, Ford, and other automakers to expand their manufacturing operations in Mexico, where labor costs are considerably lower. So low in fact, that most Mexican automotive workers working on the assembly lines live in poverty.
Under IRA’s provisions, some and possibly all, electric vehicles assembled in Mexico are eligible for $7,500 taxpayer subsidies. Ford’s electric Mustang is assembled in Mexico, as are GM’s electric Chevy Blazer and Equinox vehicles, which are not yet available. Dimon, whose financial pontifications are highly sought by the media, said it himself, it’s a “no-brainer” for GM and Ford to build more of their EVs in Mexico.
That means more U.S. automotive manufacturing jobs will be moved to Mexico, likely resulting in more racial economic disparity in America because Black workers represent a higher share of workers in the auto industry than other manufacturing industries.
From a September 2020 report prepared by the U.S. International Trade Commission:
In 2019, Black workers made up 17.2 percent of workers in automotive manufacturing. This is a higher share than total Black employment in the labor market (12.3 percent) and a much higher share than in overall durable goods manufacturing, where Black workers only make up 9.5 percent of workers.
The automotive industry tends to pay Black workers more than other sectors of the economy, which may be why Black workers make up a higher share of automotive workers than other parts of manufacturing. As a result, Black workers in automotive manufacturing make up over a quarter of all Black workers in durable goods manufacturing.
Relatedly, Black employment in automotive manufacturing increased from less than 159,000 in 1995 to more than 250,000 in 2019. During that same time period, U.S. durable goods manufacturing employment declined from over 12 million to over 9 million people.
Charging stations disparity
The EV provisions of IRA don’t address the inequitable placement of charging stations that put Blacks at a severe EV disadvantage. Bridge Detroit, a nonprofit publication whose donors include Ford, earlier this month addressed the issue.
From Bridge Detroit:
Last fall, Detroiter William McCoy drove his electric Chevrolet Bolt from Detroit to Washington D.C., to see what EV charging infrastructure looked like across the country. He wanted firsthand experience to inform his Detroit-based EV company, Vehya.
BridgeDetroit asked McCoy whether he felt unsafe at any of the charging stations along the more than 560-mile route.
“All of them,” he said.
“It’s nerve wracking to go electric,” said McCoy, noting it’s not uncommon to arrive at an EV charging station to find it’s not working and that the next station is miles away. “One charger I went through was literally in the woods and there was nothing around it except this park bench. You could see nothing outside.”
But it’s not just a rural issue, it’s an issue in cities across the country where charging stations are being installed in places Black motorists might not feel safe, replicating the conditions for a modern-day Green Book, a yearly guidebook once published for Black motorists to safely stop, eat and sleep along their travels. With the placement of EV charging stations, some Black EV drivers find themselves once again unsure how to travel by car safely and being left out of the transition to EVs.
According to an investigation by the Washington Post, the cities with the most EV charging stations have them located primarily in majority white areas. A separate study from Humboldt State University also found that majority White and more affluent neighborhoods were more likely to have public chargers. Even in Detroit, a mostly Black city, the trend is similar.
“There are not very many chargers in the City of Detroit anyway, but they’re typically not in areas where you’ll have a large base of minorities,” McCoy said. “It’s typically tough finding charging stations in Detroit, outside of the small area around the Detroit Athletic Club.”
A McKinsey study published this month found that 43 percent of Black respondents, a higher share compared with non-Black respondents, reported they would more seriously consider buying an EV if charging stations were as available as gas stations.
“Given this mindset, greater emphasis on public and private EV charging infrastructure will be required for Black consumers to adopt EVs at scale,” McKinsey said.
That GM hasn’t made certain that its hometown is among the best and most equitable cities for charging stations likely doesn’t come as a surprise to people in the know like Byron Allen, the Black owner of the Weather Channel. Allen and executives of six other Black-owned media companies last year took out full page ads last year accusing GM CEO Mary Barra as racist.
The ads charged that GM allocated less than 0.5 percent budget to media companies owned by African Americans, calling that “horrendous, considering that we as African Americans make up approximately 14 percent of the population in America and we spend billions buying your vehicles.”
Racist auto lending
The goal of the Inflation Reduction Act is to get as many Americans into electric vehicles as soon as possible, so legislation reaffirming a 2013 Consumer Financial Protection Bureau notice that discriminatory auto lending is illegal would further that goal. Congress in 2018 voted to undo that notice, despite a National Fair Housing Alliance study showing that Blacks pay more to finance their vehicle purchases because of discriminatory lending practices.
Congress chose not to reaffirm the CFPB’s notice as a condition to passing IRA.
I’m at a loss to understand the U.S. metals and minerals battery sourcing requirements as a supposed condition for EVs to qualify for rich subsidies. President Biden was all set to declare a climate emergency if IRA hadn’t passed because many experts believe the earth is burning up. Given the circumstances, it would seem there’s an urgent need to flood the market with as many EVs as possible, regardless of where they are made.
China already has a thriving domestic EV market, including BYD, which just surpassed Tesla in global EV sales. Tellingly, Warren Buffett is an investor in BYD, while the Oracle from Omaha recently dumped his GM holdings.